By my rough calculations I should be about 500 miles off the western coast of Chile right now, happily ensconced in a LAN business class seat next to my wife as we wend our way to Easter Island for the Memorial Day Weekend holiday. Alas, instead I’m sitting on my couch at home having just cancelled the last bits of the trip. Being healthy is far more important that going on the trip so we’re focused on that. But I’m also not going to simply throw away the trip completely. There was a decent amount of work to be done to unwind all the bits I had assembled.
Our trip consisted of two separate reservations. One was the American Airlines sale fare from NYC to Chile for ~$950 in business class. I booked that as an open-jaw into Easter Island and out of Santiago so that we could see both. I added on an award via British Airways Avios from Easter Island to Santiago.
For the AA ticket I did what I’d normally do on a non-refundable trip where I need to make a change; I called and begged. OK, not quite that bad, but that’s basically what I did. Alas, the agent reviewing the record stood firm and even with a doctor’s order not to fly the $200 change fee plus fare difference was going to stand. Don’t get me wrong – I still am coming out ahead in the long run paying the fee versus buying travel insurance given how many tickets I buy – but I was a bit miffed that even with a doctor saying she couldn’t fly there was no waiver of the fee. And so I did what seemingly everyone else does when "wronged" by a company. I got passive aggressive on Twitter.
The @AmericanAir team took a look at the record and after a handful of DMs eventually agreed to waive the $200 change fee for us. I’m calling that a win. Honestly, I couldn’t expect them to honor the fare, too, particularly given that I had partner segments in there. I would’ve preferred that, obviously, but I’l take what I can get.
For the second flight it was a bit easier to manage. The Avios reservation has a published cancellation fee schedule ($40/ticket) and I figured that was a reasonably small penalty for getting our 25,000 Avios/ticket refunded. The BA website actually made the cancellation process pretty easy. A few clicks and I was done:
As an added bonus, I actually wasn’t charged the $40/ticket to cancel. I had only paid $13.42 in taxes on each ticket and the refund process had me forfeit that portion of the refund but didn’t charge me anything extra. It seems that their refund process (at least online) doesn’t have the means to initiate a charge as part of the transaction. So if the taxes/fees are lower than the threshold that’s all you pay. It actually makes Avios even more valuable for domestic US trips now, in my opinion; refunds are essentially free.
It turns out that my procrastination in booking a hotel for Santiago worked out in our favor; I hadn’t booked one yet so there was nothing to cancel there. For Easter Island, on the other hand, my 4-night booking at Inaki Uhi was complete and I was past the refundable cut-off point for the booking. Fortunately I had been in communication with the proprietor via email and after I explained the situation he was graciously willing to waive the penalty. I do expect that we will eventually make our way to Easter Island and I fully intend to stay as his property when we do; that he was willing to waive this only reinforces that plan to me.
Again with the procrastination bit…there really wasn’t anything else to cancel or change. No rental cars, tours or similar. Turns out I don’t usually book many of those things when I’m traveling anyways.
And so I’m sitting here, wondering what to do with ~$950 each in American Airlines credit. There are plenty of options, obviously. None are going to be as awesome a deal as Easter Island in business class but certainly we can still have some fun. Maybe Brazil, Central America or diving in the Caribbean. Using AA to Aruba and then hopping to Bonaire and Curacao, too, has been on my list for a while so maybe that’ll be part of or plans for this summer. Roatan, Honduras has also been on the list for a while but that’s Saturday-only service and I’m not sure I want to be in one place that long. Or maybe I’ll just make a couple mileage runs out of it, hopping around for no particular reason. That’s not too likely (especially as my wife certainly wouldn’t appreciate it) but it is an option.
Ultimately the lesson here – at least for me – is that the plans may have changed from what I initially expected them to be, but we didn’t really lose much in the process. In hard costs I’m out $26.84. I think I can handle that. Even if American has stood their ground the total would be $426.84; still not horrible considering our annual travel budget.
What would you do with $950 in credit from American? Where would you go?
Heading in to the launch of the Emirates/Qantas strategic partnership this month some numbers were released by the Australian carrier regarding booking trends. Most notable, perhaps, is the claim that bookings to Europe are six times greater than the prior year. That’s a rather significant swing, and it is based almost entirely on dumping the inefficient connections via Asia in favor of better options available via Emirates’ hub in Dubai. And, depending on how one reads the tea leaves, it provides an interesting commentary on the value of global alliances.
Photo from the Qantas/Emirates flyover of Sydney Harbour courtesy of Qantas
It seems that the oneworld partnership between Qantas and both Cathay Pacific and British Airways was less that spectacular in pushing passengers into Europe; many of the destinations required an extra connection or less than desirable flight times. Or both. That’s not a great way to attract passengers. Emirates offers better connections and more than 50 destinations in Europe with a single connection from Australia. It is not all that difficult to believe that customers prefer that approach.
The bigger question from this data is what it means for the global alliances. Have they run their course?
Emirates doesn’t seem to want to join one and Qantas is more concerned with being profitable than with being exclusive to the oneworld group. Neither of those should be much of a surprise. Yet the partnership was quite a surprise when announced.
I still believe that the alliance serve a purpose. They provide great opportunities for joint marketing and certain customer benefits. But they are no longer the only way to build a solid international footprint. Focused bilateral partnerships (Air New Zealand and Cathay are launching a similar one) can be bar more valuable in many scenarios.
The times, they are a-changin.
Similar to last week’s post, here’s a collection of trans(north)atlantic routes offered by members of the oneworld alliance. Compared to the map from Star Alliance the network looks a bit light, but there are still a lot of options out there; nearly 100 by my initial count (and I’m sure I missed a few which y’all will remind me of, pushing the number up). And the oneworld collection is quite dispersed on the Americas side of the map, covering a lot of the Caribbean in addition to the USA, Canada and Mexico. Here’s the full collection:
For the two smaller TATL carriers in oneworld, Air Berlin and Finnair, the maps are particularly light in coverage, though Air Berlin does have a number of leisure/islands destinations with limited frequencies:
Iberia has a number of destinations, split between the USA and other countries (Note: this has been updated to remove the LatAm routes getting killed at the end of March):
American Airlines has a 20 TATL routes from what I can see (I’ve excluded BOS-LHR as that is ending soon from what I recall):
And, of course, British Airways and their coverage out of 3 London airports:
Oneworld has more coverage in the Americas than Star Alliance from a destination count; there are at least these 44 that I can find:
On the European side there are these 16 destinations, far fewer than what Star Alliance offers:
The table of all the oneworld North Atlantic routes can be found here.
The only surprise in today’s announcement from TAM that they will officially be moving from Star Alliance to oneworld in 2014 is that there is finally a date behind the change. Sortof. The company has set a target for the move in the second quarter of 2014 but still does not have a specific date. They expect to announce that later date, well, later. The shift was virtually guaranteed by the merger of TAM with LAN, as well as the merger between TACA and Avianca; authorities indicated that both groups could not be in the same alliance.
This move consolidates much of the South American market into the oneworld alliance. With the impending American Airlines/US Airways merger it also shifts much of the traffic between the Americas into oneworld. In other news out today, Finnair is seeking to join the ATI-protected joint venture for transatlantic travel currently composed of American, British Airways and Iberia. No real surprise there, either, and it seems unlikely that there will be much in the way of objections to that move.
Oneworld is seeing big gains these days, both through mergers and through natural growth in the Middle East and South Asia. While the mergers overall are reducing competition shifts like this do seem to balance out the alliance competition levels a bit, even if some of the markets become near-monopolies.
TAM has provided a FAQ here which doesn’t have a ton of details. The press release from oneworld has a few more bits to it.
PS- Here is the obligatory, "don’t worry, your points are all fine" comment because inevitably someone will ask. It is at least a year yet before anything changes.
The oneworld alliance has added a new member today (or yesterday, depending on which time zone you’re in) with Malaysian Airlines being added to the group. Malaysian is the 12th carrier in the alliance and adds a route network covering more than 60 destinations to the oneworld alliance. Sixteen of these destinations are new to the alliance with no other member service. Plus Brunei has been added as a country with oneworld service now.
In celebration of the new member other oneworld member carriers are running promotions to encourage travel on Malaysian. Passengers will earn double points for travel on Malaysian when flying between 15 February 2013 and 15 April 2013. The fine print varies by crediting program so double-check with your program of choice before booking a crazy mileage run, but the bonus is definitely a nice touch. That said, I’ve found a few of the earnings charts and the numbers aren’t pretty. I discussed the JAL chart earlier in the week and lamented the minimal earning rates at the lower end of the fare spectrum. It seems that British Airways and Qantas have followed suit. Both are offering quite limited credit for lower fares and Qantas also adds a distinction between long-haul and short-haul travel, with better credit offered for short-haul travel. No doubt this is to discourage travel on a partner in long-haul markets where Qantas competes against them. Unfortunately earning details from American Airlines are not yet available.
And, finally, the alliance used the celebration of their new member to increase benefits for their top tier elites. Effective immediately oneworld Emerald elites will now receive an additional baggage allowance on all tickets and priority handling at certain security checkpoints. The baggage allowance will permit either one additional bag or an additional 20kg, depending on the system in use for the trip. Details on where the priority security access will be offered are not so clear right now.
The successful addition of a new carrier to the alliance is a great step forward for oneworld. The carrier had two rather notable losses in 2012, with Kingfisher falling apart just days before they were due to join and Malev liquidating early in the year as well. It appears that 2013 is kicking off on quite a different path, and that’s a good thing for everyone.
After several weeks of speculation Delta, Singapore Airlines and Virgin Atlantic have come to an agreement which will see Delta acquire a 49% ownership stake in Virgin Atlantic for $360mm. Delta’s stake will come from Singapore Airlines; Virgin Group, headed by Sir Richard Branson, will retain their current 51% share and control of the company. The Virgin brand and operating certificate will remain intact. The deal is still dependent on approval from regulators on both sides of the Atlantic. The airlines expect the deal to close by the end of 2013.
Delta and Virgin Atlantic also intend to establish a joint venture operation for trans-Atlantic operations. The joint venture will not, at least for now, include other SkyTeam partners. It will, however include:
- A fully integrated joint venture that will operate on a "metal neutral" basis with both airlines sharing the costs and revenues from all joint venture flights.
- A combined trans-Atlantic network between the United Kingdom and North America with 31 peak-day round-trip flights.
- Enhanced benefits for customers including cooperation on services between New York and London, with a combined total of nine daily round-trip flights from London-Heathrow to John F. Kennedy International Airport and Newark Liberty International Airport.
- Reciprocal frequent flyer benefits.
- Shared access to Delta Sky Club and Virgin Atlantic Clubhouse airport lounges for elite passengers.
The joint venture will definitely give the combined carriers a leg up in the ultra-competitive London market. That said, the combined lift between London and New York City and Newark still doesn’t begin to reach the frequencies at British Airways/American Airlines offer. The 23 total flights daily between the USA and Heathrow will place Delta/Virgin in a solid second place, ahead of United’s 16 but well behind BA/AA’s nearly 40 daily operations.
From a passenger perspective the overall product should be very competitive in both economy and business class. Both Delta and Virgin Atlantic currently offer flat beds for all passengers in their business class cabins. For economy class the AVOD systems on both carriers should provide sufficient entertainment to distract the passengers from their tighter seating quarters. Virgin Atlantic has a proper premium economy cabin which Delta does not offer; there may be some work to reconcile that difference at some point. On the ground the Virgin Clubhouse lounges are some of the nicest business class operations, particularly in New York and London. Delta’s SkyClubs are not at the same level but in shared markets customers will have the benefit of access to both.
Delta has been looking for a way to get at more slots into Heathrow. They picked up a couple when British Airways was forced to divest them following their acquisition of bmi but that wasn’t enough to significantly change their operations. The partnership with Virgin Atlantic will open up access to many more slots eventually. And the price point was quite reasonable. Of course, Virgin Atlantic has been losing money in recent quarters so it might become a more expensive investment over time, but at least initially it looks like a positive opportunity for both carriers.
It is no secret that Singapore Airlines has tried to divest themselves of their 49% ownership stake in Virgin Atlantic from time to time. Might they have found a willing suitor in Delta Airlines? That’s what is being reported in the London media this weekend. To make the transaction work Delta would purchase the 49% stake, the maximum permitted by non-European parties, and Air France/KLM would purchase an additional stake. The SkyTeam partners would then hold a majority of the shares giving them control of the company. For Sir Richard Branson, the airline’s founder and public face it would represent the first time since he started the carrier nearly 30 years ago that he would no longer be in charge.
The move is almost entirely focused on gaining access to Virgin’s slots at London‘s Heathrow airport. The consolidation of British Airways and bmi has changed the competitive landscape at Heathrow making it even more difficult for Virgin Atlantic to compete, particularly without local and regional feed to their operations. A SkyTeam takeover of the slots and routes could see major changes to the destinations served and operational style.
Two years ago Virgin Atlantic hired outside advisors to help them explore options. Two years ago Deutsche Bank was hired to help the carrier consider different scenarios. Delta was linked to the discussions at that time as well but nothing came from it. Perhaps this time around the outcome will be different. Given the recent rumblings that Virgin Atlantic is looking to join one of the major alliances (and my guess that SkyTeam is the best fit) it really isn’t all that hard to see how having the carrier merge into the other airlines rather than just be a partner would offer some competitive advantages.
Keep your eyes and ears open; this one could be interesting…
As London-based carrier bmi was wrapping up operations there was a bit of a battle over who would get the opportunity to own the remnants of the company. British Airways ultimately acquired the carrier, along with its highly coveted landing slot portfolio at Heathrow, but not without loud protestations from Virgin Atlantic. In the end, BA "won" the battle. Sortof.
Authorities in England have decided to award to all the slots BA parent company IAG is divesting as a condition of the merger to Virgin Atlantic. It is only 12 slot pairs, versus the 40+ pairs which IAG will get to keep and distribute amongst BA and Iberia. But the associated burden for acquiring the slots is also much lower. Virgin Atlantic doesn’t have to deal with folding up the bmi operations or the debt that came with the acquisition.
Virgin Atlantic has indicated that the final details of their schedule will take a bit of time to iron out but they intend to launch short-haul feeder service to their Heathrow hub with these slots. They will contract with another airline to operate A320 aircraft for them on the routes, including multiple daily frequencies to Edinburgh and Aberdeen, Scotland. This service is in addition to the previously announced plans to fly to Manchester.
Maybe Virgin Atlantic didn’t win the battle. But is also doesn’t seem that they completely lost either.
It looks like the days of independence for London-based carrier Virgin Atlantic may be coming to an end. Speaking in an interview with Bloomberg in Mumbai on Friday Richard Branson indicated that the carrier is looking to join up with one of the big three and that "to survive we need to have an alliance." So, which will it be??
There’s virtually no chance of oneworld being the alliance. The vicious competition between Virgin Atlantic and British Airways, as well as the massive domination at Heathrow, simply exclude that from reasonable consideration. Singapore Airlines holds a huge minority stake (49%) in the carrier and Singapore is a member of Star Alliance. But that doesn’t necessarily mean they would join up. In some ways it is better for Singapore Air to have the diversity of their investments in both alliances rather than just one.
There are two levels of membership in the alliances these days; which level of participation Virgin is looking to reach could drive which they ultimately join. As just a member the competition issues are relatively minimal. There will be codesharing and frequent flyer reciprocity but that won’t severely shift the competitive balance in the market. If Virgin is looking to join one of the Anti-Trust Immunity (ATI) agreements, however, that will likely change things significantly.
Getting in to the ATI will require approval from government authorities on both sides of the Atlantic. Those approvals are rather more strict and look at the competitive balance more significantly. At first blush SkyTeam is more likely the winner if ATI membership is desired. Star Alliance has many more destinations in North America served from London than SkyTeam does. And Virgin’s lack of short-haul service means that, for the ATI, it is all about London.
Keep your eyes and ears open on this one…it will be interesting to watch.
The coming years should see growth in the employee ranks at American Airlines according to company CEO Thomas Horton. In a letter to employees this week Horton indicated that the company intends to grow the pilot numbers by 2,500 over the next five years. That growth is similar to the announced plans to hire flight attendants in the near future. The growth is expected to support, among other things, the growing international route map for the carrier; those flights are longer and on larger planes requiring more crew to operate. The hiring will also cover 650 pilots on furlough and offset 500-600 who are approaching mandatory retirement in the same timeframe.
The carrier announced four specific new routes this week which they intend to serve starting in Spring 2013. The new routes being launched are:
- Dallas/Fort Worth ─ Seoul, South Korea starting May 9, 2013
- Dallas/Fort Worth ─ Lima, Peru starting April 2, 2013
- Chicago O’Hare ─ Dusseldorf, Germany starting April 11, 2013
- New York JFK ─ Dublin, Ireland starting June 12, 2013
The Seoul route will operate in conjunction with American’s oneworld partner JAL. The Dublin and Dusseldorf routes will operate as part of the airline’s joint business agreement with British Airways and Iberia. The Dusseldorf route will also operate as a codeshare with oneworld partner AirBerlin. Passengers will have access to a number of onward connections on the AirBerlin route network out of Dusseldorf.
And while the pilots’ union contract issues are still out there the other labor groups seem to be on board with the latest plans. The head of the union even expressed mild satisfaction with the hiring plans, though also noting that the company still isn’t as big as it has been in the past. So, has American turned the corner in their bankruptcy reorganization? These latest moves suggest that they think they have.