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THE BRIEFING FOR JANUARY 12-26, 2012
By Joe Brancatelli
· Get Ready to Pay Higher Fares, Maybe Lots Higher
· If at First You Don't Succeed, Do Something Dumb
· American Cuts Two More Cities Off the Route Map · Mr. Deluce Goes to Washington (Well, Dulles...)
· What a Surprise: More Fancy New Hotels in China
· The 'Good' News About Those Transatlantic 757s
· Southwest Will Launch Its Own Atlanta-LAX Flights
Get Ready to Pay Higher Fares, Maybe Lots Higher Fares
Several major carriers launched the first fare increase attempt of the year yesterday (January 11) and it's hard to know whether the hike--as much as $20 roundtrip on the longest hauls--will stick. But even if it doesn't, however, 2012 will almost surely be a year of substantially higher fares. The reason? Rampaging oil prices. As of mid-afternoon on Thursday, oil was selling for $100 a barrel on New York markets. And with energy costs accounting for about a third of a carrier's total operating budget, stubbornly high fuel prices will push fares up no matter how much consumer pushback develops. And it gets worse. Even though oil at $100 a barrel is far from the historic high of $147 reached during 2008, the ongoing price of oil is higher now than it was in 2008. In 2008, after financial markets melted down, the year-long average for jet fuel was $2.96 a gallon. In 2009, it was "just" $1.66 a gallon. It jumped to $2.14 a gallon in 2010. Last year, jet fuel hit a record average price of $2.99 a gallon. Since oil prices are already higher now than at virtually any time last year, the cost of jet fuel is likely to continue to jump. Unless, of course, we have another financial meltdown. That would lower the price of oil and jet fuel. But the cost of that solution is rather extreme, don't you think?
If at First You Don't Succeed, Do the Same Dumb Thing Again
Six major hotel chains this week unveiled RoomKey.com. The idea is that you can go to Room Key, enter a destination city and travel dates and bring up a list of hotels. If you like what you see, you are redirected to the chain's proprietary Web site for booking. Why such a clunky approach? Money, of course. Hoteliers are steamed that third-party sites such as Priceline, Hotels.com, Expedia and Travelocity get such a big cut of the hotel action. As much as a third of the total price you pay goes to the third party when you book a room via that channel. If you book at Room Key, however, the nightly rate stays in the family, so to speak, because the hotel chains own the site. But there are numerous problems with the concept, not the least of which is that Room Key only offers hotels from the founding chains--Choice, Hilton, Hyatt, InterContinental, Marriott and Wyndham--or Best Western, which is an affiliate. That not only limits consumer choice, but guests who visit Room Key aren't offered anything unique for booking there. So why do it? And you'd think the hotels would understand that already since TravelWeb, a previous hotel-owned attempt to circumvent third-party sites, crashed and burned years ago.
American Airlines Dumps Two More Cities From Its Route Map American Airlines, the amazing, shrinking airline, is dropping two more cities from its route map. Burbank loses its American service when the Dallas/Fort Worth route ends on February 9. And American will pull out of Delhi, India, on March 1 when it dumps the Chicago-Delhi route. American launched Delhi with much fanfare in November, 2005. At about 7,500 nautical miles and 15 hours in the air, it has been the longest route in the American Airlines system. It has also been one of the carrier's worst performers. Some analysts say American is losing as much as $3 million a month just on the O'Hare-Delhi service.
Mr. Deluce Goes to Washington (Well, Dulles...)
Porter Airlines has slowly been building an impressive base of operations at close-in Toronto/City Island Airport. And now the carrier founded by Robert Deluce, a former commuter operator who once flew for arch-rival Air Canada, is adding another U.S. spoke to Porter's little empire. Effective April 16, Deluce says he'll run three flights a day between Washington/Dulles and Toronto/City. Porter uses Q400 turbo-props outfitted with 70 seats offering 34 inches of seat pitch. It also flies to Boston, Burlington, Chicago/Midway and Newark in the United States. ... Southwest Airlines says it will add an Atlanta-Los Angeles flight beginning on June 10. Its AirTran Airways subsidiary already flies three times daily between Atlanta and LAX. ... Priority Pass, which has a network of 600 airport clubs that you can access with membership or with certain American Express cards, has added seven more lounges. The new places where your Priority Pass or Priority Pass Select card will work are: Los Cabos and Guadalajara, Mexico; Guam; Saipan; Karachi, Pakistan; Baltra Island in the Galapagos; and Southampton, England.
What a Surprise: More Fancy New Hotels for China
Most of China outside the big cities remains a hotel wilderness. But the pace at which U.S. brands are adding fancy properties does raise some eyebrows. Given how crowded Beijing and Shanghai are with half-empty luxury hotels, you have to wonder about the financial feasibility of some of the newbies. But that isn't deterring hoteliers. New this week: a 297-room St. Regis hotel at the top of a 100-story building in Shenzhen. And a 236-room Park Hyatt has opened on the banks of Dongqian Lake in Ningbo, about three hours from Shanghai. ... In less-exotic news, Marriott opened a 100-room Courtyard in Boone, North Carolina. ... Embassy Suites is now the name on the door of a 194-room hotel on Belvedere Road in West Palm Beach that has recently been called a Crowne Plaza. ... Up in Buffalo, New York, the grand former Statler Hotel is being renovated into a project called Statler City. Spearheaded by a local restaurateur who bought the landmark building out of bankruptcy for just $700,000, the project has mostly won raves for the renovation work so far. But a New Year's Eve party at the restored ballroom went badly awry, according to the Buffalo News.
Business-Travel News You Need to Know
USA 3000, a small, scheduled airline operated by a large tour operator, ends service this month. That'll mean marginally fewer seats from some major U.S. cities to the Caribbean and Mexico. ... American AAdvantage travelers take note: Regus, the virtual-office giant, has joined the program. You'll receive seven miles for each dollar spent on Regus services such as office, meeting-room or video-communications rentals. ... Southwest Airlines is pulling SiriusXM satellite radio from the aircraft operated by its AirTran Airways subsidiary. ... American Airlines and US Airways have joined United/Continental and Delta Air Lines in imposing a $6 roundtrip surcharge on flights to Europe. The putative reason: to offset the cost of the European Union's new carbon-emissions scheme. ... Here's something that may or may not be helpful: SkyTeam says all of its member airlines will be adopting Delta's Sky Priority moniker for services offered to premium-class and elite-level flyers. There's nothing new being offered, you understand, but at least it might be easier to figure out where to go and what you deserve when you are flying some of SkyTeam's less-familiar carriers.
The 'Good' News About the Bad News About Those Transatlantic 757s
Susan Carey and Andy Pasztor have done yeoman work at The Wall Street Journal this week covering Continental's Boeing 757 transatlantic flights. As you can read here and here, Continental's extensive transatlantic network centered on its Newark hub has been buffeted by high headwinds in recent weeks. Dozens of westbound 757 flights have been diverted for unscheduled fuel stops, creating missed connections and unhappy flyers. (The angriest ones are blogging here.) But there is "good" news about all the bad news. For those of us flying eastbound, the tailwinds have been fabulously productive. My December 30 flight to Rome--from New York/Kennedy, on an Alitalia 777--arrived an hour early, for example. And let's try for a little perspective on Continental's use of 757s on transatlantic routes. The 757 is smaller and substantially more cost-effective to operate than any widebody aircraft. It allows Continental to fly nonstop to many European destinations that would otherwise not financially justify a nonstop service. So while a 4 percent diversion rate for flights over the last few weeks is unacceptably high, there wouldn't even be nonstops on many of those routes without the 757s that Continental has been successfully running for nearly a decade.
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ABOUT JOE BRANCATELLI Joe Brancatelli is a publication consultant, which means that he helps media companies start, fix and reposition newspapers, magazines and Web sites. He's also the former executive editor of Frequent Flyer and has been a consultant to or columnist for more business-travel and leisure-travel publishing operations than he can remember. He started his career as a business journalist and created JoeSentMe in the dark days after 9/11 while he was stranded in a hotel room in San Francisco. He lives on the Hudson River in the tourist town of Cold Spring.
THE FINE PRINT All of the opinions and material in this column are the sole property and responsibility of Joe Brancatelli. This material may not be reproduced in any form without his express written permission.
This column is Copyright © 2012 by Joe Brancatelli. JoeSentMe.com is Copyright © 2012 by Joe Brancatelli. All rights reserved.