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Notable Airline, Hotel and Travel News: January 15, 2013

Notable Airline, Hotel and Travel News: January 14, 2013

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In other airline and travel industry news last week…

  • United Airlines reported its January 2012 operational performance and enjoyed another month of increased consolidated passenger revenue per available seat mile (PRASM) – up 8.5 to 9.5 percent. On-time performance and the number of flights successfully completed also grew about 1.1 percentage points from a year prior to 82.2% and 98.9%, respectively.
  • Staying with January performance figures, Airlines Reporting Corporation (ARC) saw its strongest January in air ticket sales since 2001, realizing a 10.7% increase from 2011 and a 22.3% gain over 2010. ARC acts as a clearinghouse between travel agencies, airlines, and other companies that sell airline tickets to ensure funds are settled as expected. Adding to the good news was the fact that total transactions were up 3.2% vs. declining transaction figures the entire previous year.
  • The TSA announced they will significantly expand the PreCheck trusted traveler program to include more than 15 new airports in the near future. The program is currently limited to select frequent flyers flying out of Atlanta, Dallas, Detroit, Las Vegas, Los Angeles, Miami and Minneapolis. American and Delta were the launch airlines, but the program has since expanded to other carriers. I’m hoping to soon receive notice from United that they’ll be participating at my home airport, LAX.
  • Airport administrators across the country have a love-hate relationship with the newly passed long-term FAA funding reauthorization bill. While they are happy with the stability it brings, many airports are balking since the bill didn’t include an increase to passenger facility charges (PFCs), the funds they use for airport improvements. The current cap is $4.50 per flight segment, originally set in 2000, and they feel it no longer covers the increases seen in construction costs during the last decade.
  • Alaska Airlines announced two new nonstops from their Seattle hub this week. Beginning June 11, they will launch daily service from Sea-Tac to Philadelphia in direct competition with US Airways, and on July 16, commence service to Ft. Lauderdale. The new Ft. Lauderdale flight will replace existing service to Miami. According to Joe Sprague, Alaska’s VP of Marketing, “By redirecting our flight to the lower-cost Fort Lauderdale airport, we can serve the same geographic area and continue to offer our customers low fares.”
  • I think I need to start a new series here on Frequently Flying devoted to the airline-traveling idiot of the week. This past week, a passenger attempted to bring a hallowed-out grenade through security in his (or her – the article is gender neutral) carry-on bag. The TSA caught it (unlike previous items), confiscated it and the passenger was denied boarding. (S)he is now also under investigation by the TSA.

And finally, here are some Quick Hits:

 

Posted by Darren | One Comment

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.”

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In other hotel and travel industry news last week…

  • Two business travel publications released their “best of” lists recently and the results go to show you how surveys can differ by reader demographics. For the 12th year in a row, readers of Global Traveler magazine named Chicago O’Hare ‘Best Airport in North America, whereas Denver International Airport was named best-in-class by readers of Business Traveler magazine for the 7th year in a row. My vote would have been for San Francisco, actually, for their outstanding food, shopping and lounge options on both the domestic and international side. I was a bit shocked Business Traveler’s readers voted Delta as having the best frequent flyer program… yikes!
  • I kill time at airports staring out the window looking at airplanes most of the time, but do admit I people watch from time to time. A recent article in the USA Today reveals just how popular the latter activity has become. Entitled, More fliers indulge their inner gawker,” the article interviews everyone from flight attendants to the casual traveler about their gawking activities. There’s even a website and smartphone app out there called FreakJet.com that enables you to post funny pics of people at airports. Will have to check it out!
  • Funding for the FAA expires this Tuesday the 31st (at the time of writing), but the House has already passed an extension through February 17th. The Senate is also expected provide an extension before the clock strikes midnight and one article reveals there actually might be a forthcoming full FAA reauthorization bill in the works to avoid further extensions of the last authorization that expired in 2007. Come on, politicians. Let’s do it this time!
  • Senator Rand Paul was “detained” by the Department of Homeland Security’s TSA last week for failing to agree to being molested at an airport. Yeah, I said it. I know virtually every blogger out there does the “opt out” of the scanner routine as a strong showing that our civil liberties are being violated, but I still go through them, as does Sen. Paul. I’d much rather do the naked scan thing than have a TSO touch my unmentionables. I just can’t bring myself to being groped.
  • Boeing had a blockbuster year in 2011 reporting a 21.5% increase in net income to $4.02 billion. 2010 wasn’t shabby, either, when they posted a $3.31 billion profit. President and CEO Jim McNerney is looking forward to increased production rates in 2012, including moving 787 production up from 2.5 per month now to 3.5 by the second quarter of 2012, and up to 10 per month by the end of 2013.
  • Also enjoying a very strong year in 2011 were U.S. hotels and their revenue per available room, up 8.2% from 2010. Total occupancy nationwide surpassed 60% for the first time since 2007 and San Francisco, Miami, Detroit(!) and Nashville saw particularly strong growth.
  • Finally, staying on the hotel front, Tnooz.com just released RateGain’s data on North American hotel prices January to March 2012. A median rate four-star hotel in Chicago this month comes in at $186.60 vs. Miami at $370.20 or Seattle at $215.30. In March, Miami again takes top spot among those cities surveyed showing a median rate at the Embassy Suites Miami Airport of $412.06. Ouch.

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In other airline, hotel and travel industry news this week…

  • Thai Airways will take delivery of two Airbus A380s next year and will initially operate their first whale on regional routes, of which Bangkok to Hong Kong is probable. Once they take delivery of their second A380, service to Frankfurt will begin, followed by London and Paris once additional aircraft come online.
  • All Nippon Airways (ANA) announced this week they’d begin flying their internationally configured Boeing 787s between Tokyo and both Seattle, WA and San Jose, CA beginning April 1st and between Tokyo and Boston April 22nd. The aircraft will feature 46 seats in a staggered all-aisle access Business Class and 112 seats in Economy in a 2 x 4 x 2 configuration. Will United Airlines maintain their SEA-NRT daily roundtrip once that happens? I think not.
  • The latest push to exclude U.S. carriers from the upcoming European Union Carbon Emissions Trading Scheme has failed. The highest court upheld the law that will begin charging airlines for exceeding their carbon emission allotment on flights to and from Europe beginning January 1, 2012. The article quotes one analyst who predicts the law will cost U.S. carriers $3.1 billion from 2012 to 2020. Where is that money going to come from? You and me. We’re now used to fuel surcharges, so why not throw a carbon footprint surcharge in the mix, too? Ugh.
  • Curious to know what hotel rates look like in major North American markets between now and the end of February? Check out this summary showing the lowest and median prices for stays in three-, four- and five-star properties. Chicago, Las Vegas and Toronto have the most economical rates for three- and four-star properties. For those with deep pockets, the median rate for the Ritz Carlton Battery Park in New York is $1,023.88 per night in December.
  • Airline transactions processed through the Airlines Reporting Corporation (ARC) were basically flat last month from the large travel agencies serving major corporations (e.g., American Express, Carlson Wagonlit, Omega World Travel), while tickets processed dropped for the second consecutive month from online travel agencies (OTAs) such as Expedia, Travelocity and Priceline.
  • The FAA issued a final rule this week covering airline pilot flight times and rest periods. Now instead of eight hours between duty shifts, there will be a minimum 10-hour period with eight of those required to be in a hotel room. Duty times for single cockpit crews will be capped at 14-hours, but can still be extended two hours should delays strike. The new rules don’t apply to cargo operators and UPS pilots sued the FAA on Thursday for inclusion.
  • Spirit Airlines reportedly made $50 million in its first year charging customers who have a carry-on bag that won’t fit underneath the seat in front of them. The fee is currently set at $30 per bag if you schedule it online in advance, $35 during online check-in or $40 if handled at the airport.
  • British Airways may eventually see competition for its all-Business Class London City to New York Kennedy Airbus A318 service. A previously unnamed buyer of 10 Bombardier C-Series passenger jets has come forward saying they hope to begin similar service to New York and other locations. Named Odyssey Airlines, the carrier claims they’ll be able to fly nonstop versus the one-stop refueling British Airways currently has to do in Ireland on westbound flights. The carrier isn’t expected to get off the ground until 2014, if at all.

Posted by Darren | One Comment

In other airline and travel industry news last week…

  • Southwest Airlines placed a monumental order for 208 Boeing 737 aircraft this week that includes 150 of the manufacturer’s newest Max version, making the carrier the official launch customer. The first delivery to Southwest won’t occur until 2017. At list prices, the order value is $19 billion and $4.7 billion for the aircraft and engines respectively.
  • In addition to his new role as CEO of American Airlines, Tom Horton has been elected Chairman of the oneworld alliance this week. He offered to have another of the alliance carriers’ executives take the post, but “the unanimous view was that the alliance would benefit greatly at this time from the continuity in our leadership that Tom represents – while at the same time underlining the commitment of oneworld to American while it undergoes its restructuring.”
  • Cathay Pacific opened their new lounge at San Francisco’s International Airport, the first CX-owned facility in the United States. A grand opening reception was held this past Thursday and Loyalty Traveler has a great review of it. The carrier also introduced details of its new Premium Economy Class product that will be rolled out beginning in March next year. The seats will feature 38 inches of pitch, enhanced recline, footrests, in-seat power and much more.
  • Hearings for the dispute between Qantas and the pilots union won’t occur until June next year due in part to the complexity of the matter. The carrier has until March 19th to submit key witness statements and expert evidence to the panel of “workplace umpires,” while the pilots union has to do the same by April 30th. Other hearings will take place earlier between the carrier and baggage handler and engineer unions.
  • The FAA granted certification to the passenger Boeing 747-8 Intercontinental this week, green lighting deliveries to begin early next year. Lufthansa is the launch customer for the passenger version. The FAA also approved extended operations (ETOPS) of Boeing 777s to 330-minutes, up from 240-minutes this week. This will allow carriers to fly more direct routes between airports and reduce carbon emissions.
  • On the passenger front, a Frenchman was arrested this week for his excessive pilfering of items from Air France First Class cabins, which he then resold online. Among the items stolen were napkins, glasses, plates and blankets. The article claims he made about 10,000 euros off the sales of the items during the past three years. I’d be lying if I said I didn’t take a glass or two over the years, but I never resell the tiny amount of stuff I’ve taken. ;-)
  • Speaking of fraud, the Airlines Reporting Corporation has seen a “marked increase” in unauthorized airline tickets issued. Last year, 18 of these incidents were reported, but the figure to-date for 2011 is 113 and those tickets are valued at more than $1 million. Phishing scams are the main culprit where travel agents receive what they think is official communication from trusted GDS companies and click the link to enter their credentials.
  • Finally, staying on the GDS front, Travelport will begin charging travel agencies more for services they currently use for free. Beginning January 1st, the company’s Agility program that allows agents to use certain client databases, PNR search capabilities, fulfillment services, queues and more will come with a $35 fee per terminal per month. Agency incentives for using GDS technology still remain, but new costs such as this are pointing to a changing landscape in the GDS-Agency relationship.

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As widely reported this week, FAA Administrator Randy Babbitt resigned from his post because he made a terrible decision this past Saturday and drove drunk. As head of an agency devoted in part to regulating aviation safety for the nation, stepping down was the obvious and logical decision. Or was it?

Before being appointed to the top FAA post by President Obama, Mr. Babbitt had a celebrated career including 25-years as a pilot and Captain with Eastern Airlines, being President and CEO of the US-ALPA pilot’s union, holding a seat on the FAA’s Management Advisory Council, and I could go on and on.

He’s certainly not the first public figure to face such a charge while in office. Spending a few minutes searching for others I found:

  • Utah Senate Majority Leader Sheldon Killpack in 2010
  • Representative Vito Fossella of New York in 2008
  • Senator Ron Menor of Hawaii in 2008
  • Representative Michael Gruitza of Pennsylvania in 2000
  • Senator Chuck Graham of Missouri in 2007
  • Representative Jarrod Martin of Ohio in 2011
  • Gordon Campbell, Premier of Canada’s British Columbia in 2003
  • … and I could go on and on

Is the head of the FAA compared to Congressional and other leadership posts an apples to oranges comparison? Maybe. Some of those noted above resigned, some didn’t. Now before I put my opinion out there, let me make it clear that drunk driving is a very serious offense and Mr. Babbitt could have easily killed someone especially since it was reported he was driving on the wrong side of the road. I am not excusing his actions. Fortunately, no one was injured and he will likely plead guilty to a misdemeanor.

The politics of society seem to dictate that anyone in public office should step down after a drunk driving arrest. I disagree and think it should be taken on a case-by-case basis. Mr. Babbitt has a long and successful career and his unique experience is one of the reasons President Obama appointed him to the post after a successful vetting process. I would have liked to see him continue in his post.

Joan Lowy of the Associated Press reports Deputy Administrator Michael Huerta who has taken Mr. Babbitt’s post is, “a well-regarded manager but lacks his predecessor’s insider knowledge of the nation’s airlines.” Representative John Mica of Florida said, “(Mr. Babbitt’s) departure creates a serious setback, leaving (the) FAA in limbo at a critical time for the agency.”

Mr. Babbitt was halfway through his five-year term and Mr. Huerta will likely continue in the post through 2012 because, “the White House probably will want to avoid a possible nomination fight before the Nov. 6 presidential election.” Ugh, more politics.

Would I feel differently had he seriously injured or killed someone? Absolutely. There would be no question in my mind his resignation was appropriate. Again, please don’t misunderstand my point. His impaired decision to get in a car and drive was a terrible one, but I don’t think such an offense should automatically result in a resignation.

What do you think?

Was Randy Babbitt's resignation the right decision?

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Posted by Darren | 6 Comments

In other airline, hotel and travel industry news this week…

  • The Transportation Security Administration has officially started a “trusted traveler” program this week. According to the TSA, “This pilot program will help assess measures designed to enhance security by placing more focus on pre-screening individuals who volunteer information about themselves prior to flying in order to potentially expedite the travel experience.” I was actually offered an invitation to participate in this program, but declined since it currently only covers domestic passengers flying out of Atlanta, Detroit, Dallas and Miami. I fully look forward to such a permanent program and will definitely apply.
  • Our air traffic control system here in the United States is totally antiquated with even Jeff Smisek, CEO of United Airlines, poking jabs at it. Eventually it will be satellite-based offering efficiency unmatched by current ground radar capabilities. The $2.1 billion enhancement is still underway, but the FAA this week has stated “software problems” exist that will delay full deployment. The NextGen system was scheduled to go into effect by the end of 2012, but now won’t likely be a reality until 2014.
  • Rising airfares are always a hot topic and the mainstream media is quick to note when fares increase or when airlines add additional surcharges, such as those seen around the holidays. We are still, however, paying relatively much less when looking at it from a historical perspective. A Wall Street Journal reporter notes, “Average domestic airfares, adjusted for inflation, have fallen 16% since 1995.” When demand for air travel falls, such as it did post-9/11, airfares are noticeably cheaper. There are still, of course, sales and periods of the year when prices are incredibly cheap (January & February), but we all should recognize just how inexpensive it remains to travel hugely far distances in a matter of hours. Do I like it when fares rise? Of course not, but if you really think of the incredibility of what air travel offers, a rise in airfare shouldn’t be such an earth-shattering shock.
  • American Airlines was largely in the news this week due to its nearly 40% drop in stock price and rumors over a possible bankruptcy filing. Also, as you might recall, the carrier placed one of the largest aircraft orders in history recently. I’ve read so many articles claiming “yes they should,” or “no they wont” file Chapter 11, but do any of us really know? It’s all speculation and I think had they filed back when many of the other majors did, they’d be posting profits akin to what Delta Air Lines and United Airlines are today. Once I hit million-miler status with United, I might likely jump ship and become loyal to American as they really impressed me this year.
  • Advertisements are everywhere. Just today inside the United Club at LAX I noticed a huge ad appearing on one wall. Medford airport in Oregon is looking for additional revenue through offering up the placement of ads on its control tower. Exposure would be significant both for people at the airport and those driving nearby as the picture in the article shows. Can’t we go anywhere without ads? Yes, you can just ignore them, but I’m tired of being bombarded by them. I absolutely love that Wimbledon has consistently disallowed ads appearing around the courts. It’s so refreshing. There is one brand seen… Rolex on the clock, but otherwise it’s a clean ad-free environment.
  • I seem to write about this every week, but it’s worth mentioning again. Qantas once again has cancelled and delayed flights this week due to labor unrest. I’ll give unions credit for championing in the benefits even we non-union workers enjoy, but I think the disruptions they cause in events such as this is just ridiculous. On a more positive note for Qantas, the carrier will begin daily Sydney to Dallas service – up from four times weekly – beginning in July 2012. The Boeing 747s on that route will feature the fully-flat Skybed seats in business class and Recaro Premium Economy seats.
  • It’s common for airlines to be fined for false or misleading advertising or failure to comply with government standards, but this is the first time I’ve read that an Online Travel Agency (OTA) got dinged. France has fined Expedia $484,000 for “misleading marketing practices.” Among the charges, France claims Expedia showed hotels as being fully booked when they weren’t, incorrectly displaying hotel phone numbers and advertising prices as promotional rates when they were just standard prices. Half a million dollars, though? Ouch!

Posted by Darren | No Comments

The partial shutdown of the FAA ended yesterday, but it’s only a temporary reprieve and I still hold firm in my disgust of politicians and their ability to hold citizens hostage from their employment. Sixteen days went by where airlines didn’t have to collect federal taxes that fund not only the salaries of Federal Aviation Administration employees, but also some 70,000 more workers contracted to work on the various projects on the table. Constant pressure by Transportation Secretary Ray LaHood (I’m a big fan now), President Obama and just about anyone else with a bit of rationality in them finally got two senators to approve yet another extension (the 21st) for an agency that hasn’t had a long-term funding plan in more than five years.

Before I go on, let me be clear in that my knowledge of what caused the stalemate comes only from reading about a dozen articles. I didn’t even know we’ve been funding the FAA all this time through temporary extensions, but what I learned pissed me off enough for my original rant about two weeks ago. One reader commented that my post was the same as “false equivalency arguments that do not actually consider WHO is causing the debacle…” I was hoping that person would come back to shed some light on who “WHO” is (s(he) didn’t), but at the minimum I agree to not know the full extent of each chambers’ arguments yea and nay.

I’ll throw the government a bone here, though, and say it was great that only two senators had to be present to approve the extension via ‘unanimous consent’ when it seems the rest had already left on their summer vacations after approving the new debt ceiling. Still, though, it’s temporary and only takes the funding through September 16, 2011. Rehashing my argument, isn’t it time for more significant long-term funding legislation? There really has to be some type of statute of limitations on this ridiculousness.

I like to think of myself as a perfectionist (it doesn’t exist), but as such I bury myself in the details of what I do. I’ve made mistakes and have gotten so immersed in the details that I’ve reacted to calling out the bullshit when deep in the process without taking into consideration the “big picture.” The projects I was working on in those instances is nowhere near the scale the impact of the FAA funding fiasco. Congress should be ashamed for their inability to come to some resolution prior to the break, and overall for lack of long-term funding. As it is they have less than two weeks to nail a new resolution out when they reconvene.

The estimate I’ve read most is that the government lost out on $30 million per day while no resolution was met, effectively losing $480 million in revenue for the 16 days. Totally ridiculous. Again, I’m just an armchair quarterback here not knowing the full scope of the implications, but my wish is that the big picture is indeed recognized and this event will make our elected leaders consider a rational, realistic and semi-permanent funding resolution to a critically important agency deserving of more investment. No, I don’t want my airline ticket taxes to increase further, but don’t you think they could be spent in ways more meaningful to evolving our aging ATC systems and developing effective security procedures?

Posted by Darren | 6 Comments

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