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THE BRIEFING FOR JULY 21 - JULY 31, 2011
By Joe Brancatelli
· How the Chief Bean Counter Is Killing American
· MileagePlus Loses the Space--and Several Perks · Hyatt Gobbles Up the Sierra, Avia Hotel Chains
· Phantom Trusted Travelers, Stick-Figure Flyers
· Marriott's Autograph Brand Adds Europe Hotels
· Alaska Airlines Plans San Diego-Honolulu Route
· Lufthansa Now Sells Connecting Train Tickets
When Bean Counters Attack…
When AMR and its American Airlines division named bean counter Gerard Arpey to all of their top jobs nearly a decade ago, critics sneered that an accountant didn't have the vision to run a major carrier. Arpey's defenders claimed American desperately needed fiscal discipline. It turns out that Arpey's critics had it about right. American did avoid bankruptcy in the aftermath of 9/11, but otherwise Arpey's reign has been a disaster. Despite huge cuts around the system, a fleet of decrepit aircraft and sharply reduced in-flight service, American remains a huge financial loser. On Wednesday (July 20), it reported a $286 million second-quarter loss while most of its competitors showed a profit. The loss, a dreadful showing compared to a year-ago loss of just $11 million in the second quarter, means Arpey has had to rethink his strategy. His new plan: even more cuts. The airline is dumping at least two more routes (San Francisco-Honolulu and Los Angeles-San Salvador), wants a government waiver to "temporarily suspend" New York/Kennedy-Tokyo/Haneda flights and will make "seasonal adjustments" (that's Arpey-speak for more cuts) to its trans-Atlantic schedule. Arpey also announced that AMR will dispose of the American Eagle commuter-carrier division. But since he can't find a buyer, the disposition will come as a spin-off to shareholders. And that aging American fleet? Arpey did announce an order of 460 narrowbody jets from Boeing and Airbus. But the deliveries will stretch through 2022, long after American's competitors will have renewed their own fleets.
The New United MileagePlus: The Worst of Mileage Plus and OnePass
United has a new name for its frequent flyer program: MileagePlus. But, you say, it's always been called Mileage Plus. True, but the combined Mileage Plus and Continental OnePass program is much different: There's no space between the "Mileage" and "Plus." Unfortunately, that's about all United is telling us about MileagePlus until at least mid-September. Yet two distressing tidbits leaked out this week when Chase introduced its latest MileagePlus credit card (see here) and it is proof positive that United is taking the worst parts of the old Mileage Plus and the old OnePass. The new program will have expiring miles, for example. OnePass miles didn't expire. The new MileagePlus is also adopting a negative from OnePass. The old Mileage Plus offered last seat availability on standard (double) mileage awards, but OnePass didn't. Unless you're a MileagePlus elite (or a Chase/United cardholder), standard awards in the new MileagePlus will be capacity controlled.
Hyatt Gobbles Up the Sierra and Avia Hotel Chains
Now that Hyatt Hotels is publicly held, it is on a breakneck expansion path and attempting to catch up to global giants such as Marriott, Hilton, Accor and InterContinental. It is also bulking up by buying smaller chains and hotel companies. Last week, for example, it spent $802 million to scoop up Lodgeworks, a company that can trace its lineage to the creation of Residence Inn back in the 1980s. These days, LodgeWorks operates 17 Sierra Hotels and four Avia boutique hotels. Hyatt will convert 16 Sierra properties to the Summerfield Suites extended-stay brand. The four Avia hotels and the remaining Sierra will be reflagged as Hyatts. The acquisition will move Hyatt into nine markets where the chain currently has no presence at all, which is good news for Hyatt Gold Passport members.
Phantom Trusted Travelers and Stick-Figure Flyers
The Transportation Security Administration won a big case last week when the U.S. Court of Appeals ruled that the TSA's full-body imaging devices are legal. Although the court criticized the TSA's paper trail and slammed its rigging of the bureaucracy, the ruling cleared the way for the agency to continue to use the devices. It did throw a bone to travelers who hate so-called "nude-o-scopes," however. The court said travelers have the right to opt-out of the scanners so long as they submit to a pat-down. That means TSA agents cannot force you to use the machines. … The ruling has already been partially co-opted, however. The TSA said Wednesday (July 20) that it was eliminating passenger images from some scanners. New software for the "millimeter wave" scanners will only display stick figures rather than full-body images. The TSA says it will begin testing the stick-figure software for the "backscatter" scanners in the fall. … Meanwhile, TSA administrator John Pistole says the agency will test a trusted-traveler program this fall. But don't hold your breath. Pistole already undercut the program's effectiveness by claiming that the TSA won't give flyers what they want most: a predictable, consistent security experience. Pistole also wouldn't say what parts of security "trusted travelers" will be able to bypass.
Marriott's Autograph 'Brand' Picks Up Six 'New' Europe Hotels
Autograph Collection is the name Marriott slaps on independent hotels that use Marriott's global reservation service and allow you to earn and burn Marriott Rewards points. The "brand" got a big boost this week when six Boscolo hotels agreed to become part of the Autograph Collection. Four of the properties (the Boscolo Palace in Rome and Boscolo hotels in Venice, Prague and Budapest) join in September. The other two (the Boscolo Exedra in Rome and the Boscolo Milan) join in January. … InterContinental has opened a 121-room property in a 200-year-old palace in Porto, Portugal. But the 218-room InterContinental Eros at Nehru Plaza in New Delhi has switched affiliation and is now bookable through Hilton. Right now it's just called the Eros. It'll add the Hilton name after a $17 million renovation. … Speaking of India, the 165-room JW Marriott Chandigarh has opened in the capital of the Punjab. … Hyatt has opened a 336-room Hyatt Regency in Guiyang, the capital of China's Guizhou province. … The French government has branded eight of the country's five-star hotels as "palaces," now the highest ranking on the French lodging scale. Four of the palaces are in Paris: the Bristol, Meurice, Parc Hyatt Vendome and the Plaza Athénée. Hotels in Biarritz (Hotel du Palais), Courchevel (Les Airelles and Le Cheval Blanc) and Saint-Jean-Cap-Ferrat (Grand Hotel) were also designated as palaces.
Business-Travel News You Need to Know
Alaska Airlines, now one of the largest carriers to Hawaii, is adding still another route. Beginning November 17, it will offer daily flights between San Diego and Honolulu. …. Airlines tried a fare increase last weekend by hiking prices $4-10 roundtrip. It failed. Today (July 21), American Airlines launched still another attempt, raising prices up to $20 roundtrip. We'll know about this one's fate next week. … Legionnaire's Disease, first diagnosed at the old Bellevue-Stratford Hotel in Philadelphia in 1976, has reappeared in the lodging industry. Six guests at the Aria Resort in Las Vegas were diagnosed with the disease in recent days. … Besides throwing Admirals Club membership in as a perk with its new, $450-a-year credit card (read about it here), American Airlines now sells 30-day memberships for $99. … Lufthansa and Deutsche Bahn now sell rail tickets at the Lufthansa Web site as an adjunct to international flights. The Train to the Plane offers add-ons to anywhere in Germany for 25 euros each way in coach and 45 euros in first class.
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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 © 2011 by Joe Brancatelli. JoeSentMe.com is Copyright © 2011 by Joe Brancatelli. All rights reserved.