The Tactical Traveler By Joe Brancatelli
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Business-Travel Briefing for Early March, 2015
The briefing in brief: Where have Gogo users gone? Marriott devalues Rewards again. Starwood raises Preferred Guest costs at many U.S. hotels, lowers them internationally. Air Canada overhauls premium class on transcon runs. Delta gets competition in Atlanta. And more...
Where Have the Gogo Users Gone?
Delta Air Lines and Gogo, the leading provider of in-flight WiFi, tried to make a splash earlier this week with the announcement that the carrier will install higher-speed, next-generation satellite-based service on more than 250 aircraft beginning next year. But that long-anticipated deal hardly merits much discussion in light of the release today (February 26) of Gogo's fourth-quarter earnings. Financial losses widened. Even worse, Gogo's "take rate"--industry jargon for the number of passengers buying WiFi when it is available--fell in the fourth quarter to 6.8 percent from 6.9 percent in 2013. (Translated, that means only about eight passengers on a 150-seat jet purchase Gogo if you assume the industry-standard load factor of 80 percent.) How can losses increase and passenger purchases of WiFi fall when all the so-called experts insist that in-flight Internet is an absolute imperative, an inevitability and a can't-miss gold mine? Simple, really. Gogo's current air-to-ground service sucks. "Hasn't worked on my last three planes," one JoeSentMe member said this week. "I'd pay, but it's painfully slow," added another. Gogo's attempt to drive up prices while its first-generation air-to-ground service is so poor is also backfiring. "Gogo was great when it was $15 and it worked," one flyer told me this week. "Now that it's $35 (on a Virgin America flight from Boston to Los Angeles) and too slow, who needs it?"
Marriott Jacks Up Award Prices Again, But SPG Lowers Some Key Rates
The business-travel world is full of Marriott Rewards loyalists who seem unfazed by the program's consistently weak elite benefits and endless devaluations. So maybe this won't matter to them, but Marriott is jacking up award prices again. On March 20, 35 pages of award-price changes take effect and the vast majority are increases. The bottom line: About one in four Marriott properties worldwide will increase by at least one category in cost. ... The news is better at Starwood Preferred Guest, where the 2015 award-prices changes are more benign. About one in five Starwood-affiliated properties is altering their award levels beginning on March 10 and there are slightly more downward adjustments than upward ones. As you can see by the SPG chart changes, most of the increases are at hotels located in the United States. The hotels coming down in price are mostly in Canada, Europe, Asia and South America. Notable reductions: The W Paris-Opera, the Hotel Excelsior in Naples, the St. Regis Rome and dozens of hotels in China and India. ... Speaking of SPG, it is now offering points for Uber rides. Members will receive one point for each dollar spent with Uber, but rates rise as high as four points per dollar while you're staying at a Starwood property. The complete details are here. Two catches: You must have stayed at a Starwood in the last year to earn and you must link your SPG and Uber accounts. ... The Citi Thank You network has added Qantas as a points transfer partner.
Air Canada Overhauls Premium Class on Transcon Routes
Air Canada is overhauling the premium class on routes it has designated as "transcontinental." That means flights from its Toronto hub to Calgary, Vancouver, Los Angeles and San Francisco as well as the Montreal-Vancouver run. Air Canada is using four different aircraft on transcons--Boeing 767s, 777s and 787s as well as the Airbus A330--but is promising each flight offers lie-flat beds, pillows and duvets and upgraded food and beverages. On the ground, Air Canada is offering access to Maple Leaf lounges and expedited security clearance. The program officially begins Sunday (March 1) and has adopted the rather prosaic name "Business Class Transcontinental." ... Speaking of Canada, Starwood has opened a 169-room Element hotel in Burnaby, British Columbia. ... The Marriott Autograph Collection--a collection of independent properties that can be booked via Marriott and offers Marriott Rewards points--has added more international affiliates. The new outposts are the 174-room Hotel van Orange in Noordwijk, Netherlands; the 83-room Hotel Cotton House in Barcelona; and the 446-room Habtoor Grand Beach Resort in Dubai. Marriott has also opened a 189-room Courtyard in Agra, India, home of the Taj Mahal.
After AirTran, Delta Gets a New Kind of Competition in Atlanta
After Southwest Airlines bought AirTran Airways, it largely bailed on AirTran's Atlanta hub and prices have been rising at Delta's hometown airport. But when an airline has a 73 percent market share at an airport as important as Atlanta, it was inevitable new competition would come. The quality of the competition leaves much to be desired for business travelers, however. Spirit Airlines says it'll add service this spring and summer to nine new cities from Atlanta, bringing it to 15 destinations. And Frontier Airlines, which is trying to clone Spirit's low-fare/high-fee model, says it will add six cities from Atlanta beginning April 30. That's in addition to four other routes from Atlanta that Frontier says will launch next month. Delta, of course, has added a new price category called basic economy that is specifically designed to compete with Spirit and Frontier. ... Delta is the interloper at Seattle, where it is trying to build a hub in competition with the incumbent Alaska Airlines. Delta's latest move: silver SkyMiles elite status after just two roundtrips if you live in Washington, Oregon or Alaska. Six roundtrips will get you Gold Elite status. Complete details are here.
Hyatt Loses Philadelphia Penn's Landing Hotel to Hilton
Hyatt isn't strong in downtown Philadelphia, making do with two rather less-than-top-notch properties. And now it's lost one. The 348-room hotel that towers over the riverfront Penn's Landing area has been converted to a Hilton. That leaves Hyatt with only the Hyatt at the Bellevue, a small property at the top of the building that once housed the massive Bellevue-Stratford hotel. ... Marriott has opened a slew of limited-service hotels, so get out your scorecard. There are new Courtyard properties in Madeira Beach, Florida (91 rooms), and Hammond, Louisiana (95 rooms); a Fairfield Inn hotel in Fredericksburg, Texas (78 rooms); TownePlace Suites in Gainesville, Florida (96 rooms), and Laredo, Texas (124 rooms); and Residence Inn outposts in West Palm Beach (152 rooms), Florida, and Cypress, Texas (103 rooms).
Business-Travel News You Need to Know
American Express is upgrading the perks on the Premier Rewards Gold card. Effective June 1, cardholders will receive two Membership Rewards points per dollar spent at U.S. restaurants as well as a $100 airline fee credit each year. The card will also eliminate foreign transaction fees. Premier Rewards Gold already gives three points per dollar for flights and two points per dollar at gasoline stations. But nothing is free, of course. The annual fee rises to $195 a year, up from $175. ... The Department of Transportation says United Airlines does not have to make good on a "mistake fare" that priced some premium-class international seats below $100. The DOT rationale: Since the fares had to be booked in Danish krone on United's Danish site, U.S. buyers had no logical reason to think the fares were anything but an error. ... Speaking of mistakes, Delta Air Lines claims a programming glitch caused its much-vaunted new award calendar to overprice awards for elite SkyMiles members. You can judge for yourself whether Delta would have done anything about the error had it not been brought to public attention by several bloggers. ... Speaking of United, it says it will be upgrading first-class meal service on United Express flights. The changes begin March 1 on Embraer E170/E175 flights and in April on CRJ700 and Q400 equipment.
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