The Tactical Traveler By Joe Brancatelli
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The Briefing for December 11-25, 2014
The briefing in brief: Airlines roll in cash thanks to plunging fuel prices; new ways to stick with the Star Alliance while avoiding United Airlines; good frequent travel program news for a change; Delta juggles cabin names, but changes little; and much more.
Airlines Roll in Cash Thanks to Plunging Fuel Prices
A barrel of oil closed below $60 on New York markets today (December 11) for the first time in more than five years. We're saving at the pump, of course, but as we discussed a few weeks ago, don't expect the airlines to lower fares. All that money is dropping right to their bottom lines and they have no intention of sharing. How much are they saving? Literally billions. Consider that every 1-cent decline in jet fuel costs translates to a savings of about $40 million for airlines the size of Delta, United and American. And according to the Department of Transportation, the per-gallon cost of jet fuel for U.S. carriers has plummeted 31 cents to $2.68 in October from $2.99 in October, 2013. But wait, there's still more. At a financial presentation this week, Delta president Ed Bastian admitted that fuel prices are falling so fast that the airline will take a $150 million fourth-quarter hit due to its high-priced fuel hedges. But that will be partially offset by a $75 million profit at the fuel refinery the airline purchased two years ago. Including the impact of its fuel hedges and refinery, Delta expects its 2015 fuel prices to be in the $2.40-$2.50 per gallon range. That translates to a net bottom-line benefit of $1.7 billion. It'll be roughly the same at American and United, too. And unless traffic plunges and airlines are forced to reduce prices--not likely since lower energy costs tend to accelerate economic activity--we'll see none of that fuel-cost savings.
New Ways to Avoid United But Stick With the Star Alliance
Locked into the Star Alliance but hate the thought of flying United Airlines metal on international itineraries? You're in luck. Air Canada and All Nippon Airways are bulking up on routes from Star hubs. ANA, for instance, will launch daily flights on June 12 to Tokyo/Narita from United's Houston/InterContinental hub. The route will operate with Boeing 777-300ERs configured with 8 first class, 52 business class and 190 coach seats. ANA is also moving into Canada with daily nonstops between Narita and Vancouver. That flight launches March 1 using Boeing 767-300 aircraft configured with 214 seats. Meanwhile, Star's Canadian incumbent, Air Canada, is adding two new international routes from its Toronto/Pearson hub. Beginning November 1, it'll launch four weekly Boeing 787 Dreamliner flights to Delhi. Two days later, it'll add three weekly Dreamliner flights to Dubai. Air Canada's Dreamliners have 20 business-class seatbeds, 21 seats in premium economy and 210 coach chairs. ... Delta Air Lines has opened an arrivals lounge in Terminal 3 at London/Heathrow. There are 11 private showers; clothes-pressing and shoe-shine service; a business center; and hot and cold breakfast options. The arrivals lounge is open to BusinessElite flyers as well as Diamond and Platinum Medallion SkyMiles members. ... Marriott has opened a 75-room Residence Inn in Sarajevo, the capital of Bosnia and Herzegovina. ... A 172-room Hilton Garden Inn has opened in Lijiang in Yunnan Province, China. And Starwood has opened a 272-room Aloft in the Higher Education Center in Guangzhou, capital of Guangdong Province.
Good News From Amex, Hyatt, Delta and WestJet on the Frequency Front
It's the rare week that we get any good news about frequent flyer and frequent guest plans. But this week the news is almost all good. Let's start with Delta SkyMiles and its unpopular decision to restrict the number of American Express Membership Rewards you can transfer. Scheduled to go into effect on January 1, the policy would have limited transfers to 250,000 points per year. Now Delta and Amex say a new contract will permit travelers to continue to transfer unlimited amounts of Membership Rewards points to their Delta accounts. ... Hyatt Gold Passport has announced its 2015 award chart changes and about 70 of the chain's properties will switch categories. But, surprise, more hotels are going down in price than going up. The major properties bumping up a category are the Park Hyatt Maldives, Hyatt Regency Nice, Park Hyatt Seoul and the Andaz Amsterdam. Big-name properties going down a category: the Park Hyatt hotels in Washington and Chennai and the MGM Grand and Mandalay Bay in Las Vegas. Changes are effective on January 22 and complete details are here. One other change: Gold Passport will no longer offer special rates for elite Gold Passport members. Introduced last year, the so-called My Elite prices were about 20 percent off the daily rate when available. "We were interested in testing how rate might influence choice" among business travelers who are elites in several hotel programs, explains Gold Passport boss Jeff Zidell. "The return didn't warrant" continuing, he says. ... WestJet and Delta will link frequent flyer plans on January 1. Travelers will be able to earn and burn on both airlines. Details for WestJet Rewards members are here. Details for SkyMiles customers are here.
Delta Plays Name Game With Cabin Classes, But Changes Little
Apparently everyone on the planet got an E-mail from Delta this week announcing what seemed to be a raft of changes to its in-flight services. If you didn't, examine Delta's patter here. Bottom line: It's mostly rebranding. Delta's international and transcontinental business class, currently called BizElite, will be renamed DeltaOne. Its premium economy class, now called Economy Comfort, will become Comfort+. Back in coach, Delta's Basic Economy, designed primarily to fight Spirit Airlines on routes where the two compete head-to-head, isn't new, either. But the Basic Economy brand will be highlighted even though that won't change the fact that the fares are incredibly restrictive: If you purchase a Basic Economy fare, you can't get an upgrade or an advance seat assignment and no date or flight changes are permitted. Beyond the jargon, however, there's not much substance. The Comfort+ section will now come with free booze in domestic coach. However, only Platinum and Diamond Medallions will be able to lock in Comfort+ upgrades at booking. Gold elites can only do so 72 hours in advance and Silvers will be forced to wait until check-in time. Another change: Higher-level elites who can't get an upgrade out of coach won't get a free drinks coupon as a consolation prize. That change went into effect last week, in fact. The only other change: Delta has backed off plans to elevate its New York/JFK-Seattle run to "transcon status." That means no flat-bed seats up front, as promised two years ago.
A Crappy Suburban Hotel by Any Other Name....
We've discussed Velcro hotels, properties that change brand names so frequently that lodging insiders joke that the signage is affixed with removable tape. There's now another entry in the category, a 13-story hotel located at 2200 Freeway Blvd. in the Minneapolis suburb of Brooklyn Center. DoubleTree, Hilton's so-called "conversion brand," hoisted its flag on the 174-room hotel this week after a $4 million renovation. But it's just another name on the door for the troubled, 19-year-old hotel. It opened in 1995 as a Hilton, then converted to Holiday Inn after a few years. It became a Crowne Plaza in 2004. After a default, the property was seized by the lender and renamed the Minneapolis Boulevard Hotel. A new buyer took over last year and did the renovations so the hotel could become the DoubleTree Minneapolis North. ... Speaking of lodging concepts we've discussed, Marriott has opened another of those developments that gang more than one hotel brand into a single building. The latest is in Richmond, Virginia, where a 135-room Courtyard shares a building on 14th and Cary streets with a 75-room Residence Inn. ... And speaking of Marriott, it has opened its first AC Hotel in the United States. The 220-room property is a conversion of the Cotton Exchange Hotel at 221 Carondelet Street in New Orleans. The building is the former home of the New Orleans Cotton Exchange. ... Two more hotels of note in Indianapolis. A 1920s-era building in downtown has been converted into a 100-room Le Meridien, part of the Starwood chain. And an 82-room Courtyard has opened in the northern suburb of Noblesville.
Business-Travel News You Need to Know
American Airlines says it will add Gogo in-flight Internet to its two-class regional jets. That's about 250 aircraft. Installation will take at least a year to complete. ... Airbus says it may abandon the Airbus A380 after not signing a single new customer for the double-decked aircraft this year. The plane cost $25 billion to develop and suffers from a basic problem: Most airlines want to offer frequent flights on a route rather than fewer flights with 400 or more passengers. And, oddly, that's no different than the challenge the A380 faced back in 2007 when I reported on its "proving flight." ... Three Qantas flights were diverted in less than 24 hours earlier this week. One of the incidents involved Qantas Flight 7 from Sydney to Dallas/Fort Worth, the longest nonstop in the world. It flew about four hours before returning to Sydney. The three incidents appear unrelated.
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