In other airline, hotel and travel industry news last week…
- American Airlines announced their intention to cut costs by more than $2 billion annually this past Wednesday through a combination of job cuts, pension overhaul and fleet optimization. The carrier is expected to work with the labor groups targeted for layoffs and if they can’t come to an agreement, American will ask the court to cut about 4,600 maintenance workers, 4,200 baggage handlers, 2,300 flight attendants, 400 pilots and 1,400 management positions.
- A long-term bill funding the FAA passed in Congress this past week finally ending a string of “short-term” extensions of the previous version that expired in 2007. The full agreement includes provisions for a Next Generation air traffic modernization program slated to end ground-based radar and bring the U.S. into the 21st century with GPS technology. Other changes will include tweaking the Essential Air Service program where smaller communities receive scheduled airline service, modifying the rules of airline union voting practices and a slot allocation for transcontinental flights out of Washington’s Reagan-National Airport.
- Spirit Airlines has added a new fee to all one-way fares in defiance of the new U.S. DOT rules requiring fares to be advertised inclusive of all government taxes and fees and allowing a 24-hour period with which to pay for airline tickets. Calling it the “Department of Transportation’s unintended consequences fee”, the carrier claims the 24-hour policy will hurt availability of seats causing load factors to fall. Fares with the airline now include this $2 one-way surcharge.
- The “No-fly” list recently doubled and now includes about 21,000 names, including 500 Americans. According to TSA head John Pistole, federal, state and other law enforcement agencies “continue to identify people who want to cause us harm, particularly in the U.S. and particularly as it relates to aviation.”
- While not as severe as American’s losses, Hawaiian Airlines reported a net loss of $2.6 million for 2011 and noted net income on an adjusted basis was $43.2 million, excluding fuel expenses and a non-recurring lease termination charge of $70 million for 15 Boeing 717 aircraft. The carrier’s CEO is optimistic looking ahead and remains committed to operational growth while at the same time controlling costs.
- Early next month, Virgin Atlantic will open a new Clubhouse at JFK airport in Terminal 4. The new lounge will be near the gates vs. outside of security as is the current situation. Senior Vice President-North America, Chris Rossi, said “the new space will create a unique experience for our passengers to complement our flagship Clubhouse and Revivals Lounge at London Heathrow Terminal 3.”
- LodgeNet, the largest provider of hotel room television services, has a free mobile app out there now that turns smartphones into hotel room remote controls. There are about 2,000 hotels in the U.S. with the LodgeNet service and this new app includes information about the specific hotel you’re staying at, local events, attractions, directions and restaurants in addition to acting as a remote control. The company’s CEO quoted research that “forty percent of users ages 18 to 34 prefer to control their TVs with a smartphone or tablet instead of a remote.”
In other airline industry news this week…
- American Airlines CEO Tom Horton issued a letter to employees this week outlining a redesign of the carrier’s management structure that will more than certainly involve layoffs. Several executives left at the end of 2011, and this letter points to additional tough decisions that will be made in the coming months. Separately, the Allied Pilots Association issued a letter to American’s passengers through a print ad in the USA Today (and likely other newspapers). It thanks American’s customers and also speaks to American’s management: “Along with financial reforms, American Airlines’ restructuring must also include a commitment by those who manage our company to cultivate a better corporate culture – a culture that values the crucial competitive edge that a fully engaged workforce provides.” It will be an interesting year to follow the changes and issues at American.
- Alaska Airlines sent an email to passengers this week saying they will discontinue providing “prayer cards” on meal trays. The company started the practice in the 1970s to differentiate the service, but now feel ending it is, “the right thing to do in order to respect the diverse religious beliefs and cultural attitudes of all our customers and employees.” I agree and think religion has no place in airline service or marketing.
- United Airlines broke ground this week on a $1 billion redevelopment project at Houston’s Intercontinental Airport. It’s a three-phase project first beginning with a $160 million redo of Terminal B’s south concourse dedicated to regional jet operations. The project will span seven to 10 years and include the redevelopment of Terminal B’s lobby and baggage claim areas, a new international-capable north concourse and other infrastructure enhancements.
- All Nippon Airlines (ANA) flew its first long-haul service with the Boeing 787 this week from Tokyo Haneda airport to Frankfurt. The cabin features 46 lie-flat business class seats and 112 standard seats in economy. ANA now has five 787s in operation, with the long-haul version currently operating three times weekly HND-FRA. 787 service on that route will become daily from February 1, 2012.
- JetBlue and Hawaiian Airlines entered a partnership this week streamlining passenger ticketing when the two carriers are involved on one reservation. They will soon also enter into a codesharing agreement, as well as offer reciprocal benefits in each other’s frequent flyer program. Once Hawaiian begins it’s HNL-JFK service on June 5th this year, it will use JetBlue’s Terminal 5.
- Lufthansa’s 747-8 Intercontinental aircraft will (finally) offer lie-flat seats in business class and feature “warmer colors giving it a living room feel.” The carrier plans to retrofit the rest of its international fleet within the next four years to include lie-flat seats in business and full details will be forthcoming in March. First Class on the 747-8s will be located in the nose of the aircraft vs. upstairs as now seen on their 747-400 fleet.
- It seems there’s at least one airline story each week that features a passenger behaving badly. This week, a Continental Airlines flight was diverted due to some moron lighting up a cigarette in the cabin. The flight was from Houston to Ontario and he must’ve lit up pretty soon after becoming airborne because the flight landed in San Antonio where he was arrested by the FBI. When I smoked, I always used nicotine patches when flying uber long-haul flights to Australia and gum for shorter domestic hops. Hopefully he will in the future now, too.
In other airline, hotel and travel industry news this week…
- Southwest Airlines will be adding an extra row of seats on their entire fleet of 737s with the introduction of new seat cushions and seatback pocket materials. The carrier claims the new seats are more comfortable than what’s currently flying, though seat pitch will suffer an inch going from 32” to 31” to accommodate the extra row. Separately, the carrier announced it will drop service to several AirTran cities, including Allentown, Harrisburg, Lexington, Sarasota, Huntsville and White Plains.
- A woman was arrested this week after bringing a gun with her through security and onboard an American Airlines flight at DFW. What’s just amazing, though, is that TSA agents detected the gun in a scan, but the woman was able to get her bag from the conveyor belt and proceed into the terminal without being stopped. This is a clear failure of the TSA, actually, as that bag never should have proceeded to a point where she could pick it up off the belt. Oh vey!
- Hawaiian Airlines is increasing flights in Hawaii to 180 daily, up from 157 and will further expand service in Maui so it can serve as a hub for interisland flights and those to the mainland. I was surprised to read they didn’t already have nonstops between Maui and Kauai, but that route, along with flights to Hilo and Kona on the Big Island will begin on March 11. Also, during the peak summer months, Hawaiian will operate a daily nonstop from Maui to Los Angeles using a Boeing 767.
- Airbus raised the price of its A320neos by 6.1% and other aircraft by 3.9% at the beginning of the year. The company’s COO-Customers said the price increase “reflects the strong demand for our modern, eco-efficient aircraft families.” He further mentioned the A320neo offers a 15% fuel cost savings for airlines. In terms of revenue, Airbus has a 54% share of the global market to Boeing’s 46%.
- Airlines Reporting Corporation (ARC) advised the least expensive airfares processed by the clearinghouse in 2011 were bought six weeks in advance of flight time. Those fares were on average 5.8% lower than the overall average fare of $358.30. They warned that they’re not advising people to exclusively purchase tickets at that time because it’s not guaranteed that’s when the best deals are out there. Separately, ARC mentioned mega corporate travel agency air transactions (AMEX Travel, Carlson Wagonlit, etc.) dropped 4.6% in December, the biggest decline seen in 2011.
- The Occupational Safety and Health Administration (OSHA) ordered the reinstatement of a pilot who was fired from AirTran for his frequency in reporting mechanical problems. The pilot was terminated in 2007 and the carrier must now pay him more than $1 million in back wages, interest and compensatory damages. AirTran had no comment.
- Finally, President Obama signed an executive order to ease travel requirements for foreigners wanting to travel to the United States. This will entail expanding reciprocal trusted-traveler programs, adding countries to the Visa Waiver Program, streamlining visa processing, and other U.S. Travel and Tourism Advisory Board changes. The U.S. State Department issued 17% more visas in 2011 than 2010.
In other airline industry news this week…
- Air New Zealand was named Airline of the Year by Air Transport World Magazine as part of its 38th Airline Industry Achievement Awards. ATW bestowed the honor to NZ due to “industry-leading innovation and motivation of its staff which resulted in exceptional performance across market position, customer service, financial performance, fiscal management and operational safety.” The only U.S. carrier to receive an award was Alaska Airlines – the Joseph S. Murphy Industry Service Award – for service benefitting the airline industry and being involved in numerous environmental and corporate-giving initiatives.
- United Airlines, read Continental Airlines, received a lot of heat this week for their numerous amount of flights from Europe to the East coast that have recently required fuel stops due to unusually strong headwinds. The Wall Street Journal reports that United confirmed 43 flights operated with Boeing 757 aircraft had to stop for fuel last month due to the winds and limited range of the aircraft, up sharply from 12 the year earlier. That caused delays and misconnections for thousands of passengers and brought using the limited range jet into question. To the airline’s credit, though, the headwinds are the most extreme they’ve seen in the past 10 years.
- American Airlines will cut their Chicago-New Delhi nonstop March 1st and totally withdraw from Burbank effective February 9th, as well as lay off 150 employees citing “operational and business changes” resulting from its bankruptcy filing. The carrier is also hoping to delay their lawsuit against Sabre, a GDS, by three months while it focuses on reorganization. The still separate regional entity American Eagle, meanwhile, has hired Bain & Co. – to the tune of $525,000 per month – to assist in labor-cost assessment and negotiations.
- Tony Webber, a former Qantas executive, has boldly come out and proclaimed, “People weighing more than average should pay more for their airfares than slimmer passengers.” Ouch. He claims the extra fuel needed comes out to about $472 per plane and is affecting the airlines’ profits. As it stands, the airlines have an average weight they predict per passenger and while I don’t remember the figure from my days in Flight Dispatch with United Airlines, I do recall it being awfully low. Instead of an airfare increase, airlines need to up their average passenger weights and adjust their loads accordingly. Would you step on a scale at an airport?
- Horrible airplane etiquette continues in 2012 with a 65-year old man having been arrested for allegedly assaulting a Delta Air Lines flight attendant on a Tokyo to Honolulu flight. He was forced to surrender his passport and stay on Oahu to appear at a hearing on January 20th. His bad behavior was apparently due to over imbibing on multiple glasses of wine.
- Southwest Airlines will launch a daily flight from Atlanta to Los Angeles beginning June 10th. This is in addition to AirTran’s existing three daily flights already in the market. Southwest officially launches service February 12th with 15 daily nonstops to five cities: Baltimore, Chicago (MDW), Denver, Houston (HOU) and Austin. Las Vegas and Phoenix service from Atlanta commences March 10th.
- Finally, Hawaiian Airlines set a new company record for the most passengers carried in a single year – 8,666,319 in 2011 – a 17% increase from 2010. I imagine 2012 will be another record year as the airline continues to expand on the mainland with new service to JFK beginning in June.
In other airline, hotel and travel industry news this week…
- United Airlines has signed with Next IT to create a virtual assistant on United.com, similar to Continental’s “Ask Alex.” “Next IT will provide a natural, or every-day, language solution to create an exceptional customer experience for travelers using the website.” If you’re unfamiliar with “Ask Alex,” it’s basically an interactive help tool where you ask a question and receive an audible and text answer back.
- Today, the first Continental Airlines aircraft equipped with Economy Plus is flying. The Boeing 767-400 also features the new flatbed BusinessFirst seats, on-demand touchscreen seat-back monitors in coach and United’s popular Channel 9 featuring live air traffic control communications.
- American Eagle Airlines was fined $900,000 by the Department of Transportation this week for exceeding the three-hour tarmac rule. 15 flights were impacted at Chicago O’Hare on May 29th with a total of 608 passengers. The carrier has 30 days to pay $650,000 and the remaining $250,000 will be credited to those customers affected in the form of refunds, vouchers and frequent flyer bonus miles. If there’s money leftover, it will be used for future tarmac delays exceeding three hours.
- A Congressional report blasted the TSA this week calling the agency “bloated” and “plagued by significant problems.” Today marks the 10th anniversary of its creation and I like to call it the Thousands Standing Around agency. Among the report’s findings: too many employees, 25,000 security breaches and expensive & inadequate technology.
- Hawaiian Airlines is pushing further East here in the contiguous 48-States and will begin daily service between Honolulu and New York’s Kennedy airport on June 4, 2012. CEO Mark Dunkerley said, “New York is an important part of our growth strategy. Adding service to the largest market in the Eastern U.S., Hawaii’s second largest tourism market, was a logical step.”
- Boeing received the largest-ever commercial airplane order from Indonesian carrier Lion Air for 230 aircraft. This tops the manufacturer’s previous record from just a week ago at the Dubai Airshow when Emirates placed an order for 50 Boeing 777 jets.
- Google is reported to soon bring international destinations to its underwhelming Flight Search tool. I haven’t been back to play around with the tool since my review of it, nor do I really have any desire to return until I hear reports of “something amazing.”
- Online Travel Agency Travelocity has changed the game of hotel reviews with a new Q&A-type function. Specific, heavily moderated questions appear, such as, “Is there a parking charge?” A previous guest replied, “No.” From the article, “Travelocity hopes the new question and answer formal will help hotel bookers in their trip-planning activities and improve the user experience.”
- A recent J.D. Power and Associates car rental study heralds ACE Rent-A-Car as taking the top spot for customer service. I’ve never heard of them, but they beat out the common ones down the list in order of Enterprise, National, Hertz, Alamo, Budget, Dollar and Avis. ACE has about 200 rental facilities worldwide, all independently owned and operated.
Several smaller stories in the airline, hotel & travel industry caught my attention this week and I’ve summarized them below:
- A Canadian couple sued Air Canada and won an award of C$12,000 (plus an apology) from the airline failing to serve them “in French” aboard their flights to the United States. Records show the passenger, Mr. Thibodeau, a Canadian federal government employee, is fluently bilingual and critics claim him to be the “equivalent of a compulsive coupon clipper” demanding the Canadian law of providing airline services in both French and English be upheld at all times. (Hmm, would this equate to a Skykit on United?)
- Attention all Priority Club members, Crown Plaza London-The City now offers a “snore-absorbing” room for those pesky people with an obnoxiously loud issue upon falling asleep. The room features soundproof material on the walls and headboards, plus a white-noise machine and “anti-snoring bed wedge” to assist guests to fall into a calm REM rest while encouraging them to sleep on their sides or upright.
- The FAA is investigating a report where an ATC controller in the Denver Center tested positive for alcohol while on duty. The center in Longmount, Colorado immediately removed him/her upon failing the random testing and forwarded the results to the FAA. Air Traffic Controllers are also held to the same strict standards as pilots where anything at or above a 0.02 is against FAA guidelines.
- Identity theft has been rampant in the past decade and now thieves are targeting your hard-earned frequent flyer miles. The research firm Kaspersky Lab identified phishing scams targeting Brazilian nationals where one customer lost approximately $7,600 worth of airline miles. As is common with all such scams, these came in the form of emails that offered bonuses or other prizes after logging into a fake website with their frequent flyer data.
- Alaska Airlines announced this week new service between San Diego and Honolulu beginning November 17, 2011. The single daily nonstop in each direction will be operated with a Boeing 737 and offers direct competition with an existing Hawaiian Airlines flight between the city pairs. I’m all for a fare war to Hawaii, so my hope is this will bring down fares from (sort-of) nearby Los Angeles. That’s a lie. Having worked in United’s Revenue Management department, I know they’d only tinker with the direct SAN-HNL fare structure and leave LAX out of it.
- United Airlines (and Continental Airlines by default) signed a new multi-year agreement with Travelocity to continue their existing relationship with the Online Travel Agency (OTA). Largely a PR release by both companies, it basically means United will continue to offer its fares & schedules as usual via a Global Distribution System (GDS) to the OTA. Not really surprising in my mind as OTAs still generate a significant amount of revenue for airlines, but I still think all airlines are keen on American’s initial undertaking to challenge the distribution model. My prediction is we’ll see dramatic changes in the next 5-10 years in that model.
- And finally, while on the subject of United Airlines, they posted a second quarter 2011 profit of $538 million yesterday beating analyst expectations. Even with the revenue hit due to the Japanese earthquake & tsunami, a 30% rise in fuel costs from the same period a year ago, and $39 million in merger-related costs, United shined in the second quarter. Congrats to my preferred carrier… keep it going please!