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THE BRIEFING FOR MAR. 28-APRIL 11, 2013
By Joe Brancatelli
· Lufthansa Hopes You Buy Discounted First Class
· PriorityClub: Come for New Perks, Stay for Points
· Delta Adds More ATL Flights to London and Paris
· No Severance for You, Says AA Bankruptcy Judge
· TSA Adds PreCheck Service at Five More Airports
· JetBlue Now the Power Player at Boston/Logan
· Apparently, Frequent Flyers Are the '5 Percent'
Ready for Discounted International First? Lufthansa Hopes So
It's no secret that airlines are dumping international first-class cabins due to weak demand. Even Lufthansa, the German carrier that operates more planes with international first class than any other airline, is bowing to the marketplace reality. It has already reduced the number of seats up front to eight per cabin from as many as 16. And a new aircraft overhaul will reduce the number of planes with first-class cabins to about 75 percent. (Currently, 94 of 100 long-haul aircraft have first cabins.) Lufthansa won't say what routes will lose first class when the dust settles, but it wants you to know that it is discounting lustily on the first-class seats it flies from its U.S. gateways. (Well, as lustily as Germans, who have a cultural aversion to discounting, can discount.) The airline now offers four seasonal first-class sales: Thanksgiving, Easter, Christmas and the summer season. It also offers unpublished first-class discounts to deluxe cruise lines and luxury tour operators. Moreover, says Carsten Woldt, manager of pricing coordination at Lufthansa Group, it has introduced three advance-purchase first-class categories. On Los Angeles-Frankfurt, for example, the walk-up roundtrip is currently $19,461. But buy 28 days out and stay over on Sunday and the roundtrip fare is $8,933 roundtrip. There are also 14-day ($12,879) and 7-day ($14,379) advance-purchase roundtrips. The summer-sale price on LAX-Frankfurt in first is $8,069 if you purchase 60 days before departure. "We have too many empty seats and there is a market out there" for discounted first, says Woldt. "But it is limited."
PriorityClub: Come for the New Perks, Stay for Lots of Points
PriorityClub Rewards is getting a new name and some perks that other frequent-guest programs already offer, but it will remain focused on points accrual rather than on-property benefits or rich elite levels. "The currency is king," insists Don Berg, vice president of loyalty programs for InterContinental Group (IHG), which covers the eponymous chain as well as the Holiday Inn/HI Express, Hotel Indigo, Crowne Plaza and the Staybridge and Candlewood suites brands. PriorityClub's 71 million members "tell us they just can't get enough points. Everything else, including room upgrades and free breakfast, doesn't rate." Effective July 1, PriorityClub becomes IHG Rewards Club, part of the company's attempt to tie together its diverse lodging brands under the IHG brands umbrella. July 1 also brings the new-to-IHG perks: free Internet for all elites; year-to-year rollover of elite nights for Platinum Elites; and reward nights counting toward elite status. Berg is also offering a fast track to elite if you stay in multiple IHG brands. The problem with that? IHG's $49-a-year Chase-issued credit card gets you Platinum, which otherwise requires 50 nights and offers very little except bonus points. "I'd love it if everyone had our card and we give them Platinum," Berg says. "We see a 20 percent increase [in hotel spend] the first year that someone carries the card." Another reason Berg will give you Platinum cheap: He says IHG gets a 60-70 percent share of Platinum members' wallets compared to around 30 percent for basic members and about 40-50 percent for Gold elites.
JetBlue Tightens Its Hold on Beantown
Less than four years ago, Boston was an airline open city. Today, not so much. JetBlue Airways commanded 27 percent of traffic at Boston/Logan last year, up from just 17 percent four years ago. Back then, JetBlue was crowing that its Logan schedule would grow to 62 flights a day in the summer of 2009. But this week's news that the airline will add its 49th destination from Beantown--two daily flights to Houston/Hobby begin on July 25--pushed JetBlue over the 100-flight mark. The new stated goal for Logan: 150 daily departures. The combined United/Continental is a distant second at Logan with a 13.5 percent market share. A merged American and US Airways will only give the carriers about a 25 percent share. In fact, American is abandoning the Logan-London/Heathrow route on Sunday (March 31). It's turning the flight over to Oneworld partner British Airways. ... Sun Country Airlines says that it'll launch twice-daily flights to Chicago/Midway from its hometown of Minneapolis/St. Paul. Service begins July 1 ... As promised, the TSA PreCheck security bypass program opened in five new airports this month, including Austin, Cleveland, Nashville, Memphis and Raleigh-Durham. Full details, complete with locations and eligible flyers, are here.
Business-Travel News You Need to Know
You think you had a bad week? The bankruptcy judge in the American Airlines case has, at least temporarily, refused to approve the $20 million severance for outgoing chief executive Tom Horton. As you'll recall, Horton agreed to step aside to allow US Airways chief Doug Parker to run the combined carriers. Judge Sean Lane acted on a complaint from the U.S. trustee, who said the payment ran afoul of bankruptcy laws. In other news, Lane approved the merger, calling it a "tremendous result." However, the merger still faces a battery of regulatory approvals from U.S. and overseas agencies. ... Speaking of American, the airline is testing a new boarding procedure at four airports. It allows travelers with no carry-on bags to board after the elites and before flyers with carry-on bags. ... Delta Air Lines launches a late-night (11:20 pm) departure from its Atlanta hub to Paris/CDG on Saturday (March 30). That brings the number of Atlanta-Paris flights operated by Delta and its Skyteam partner Air France to four. The next day, Delta will add its third daily flight between Atlanta and London/Heathrow.
Delta Air Lines Says We're the '5 Percent'
The ongoing struggle to explain how important business travelers are to airlines has another data point. Delta's senior vice president of marketing Tim Mapes says the airline's HVCs (high-value customers) represent just 5 percent of the traffic, but 26 percent of the carrier's revenue. Mapes made his comments last week in the Atlanta Journal-Constitution, whose airline beat reporter seemed stunned to learn that Delta offers more perks and comfort to passengers who pay more.
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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.
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