Monday, January 30, 2012

Delta Airlines Brilliant Tactical Move

Since AMR (parent of American Airlines) filed for bankruptcy in November, rumors started swirling about more mergers and consolidation in the airline sector. Private equity Texas Pacific Group, US Airways and Delta are "studying" an acquisition of AMR once it emerges from bankruptcy proceedings as a leaner and stronger company without the back-breaking obligations of bad leases and pension obligations. While any possible merger or acquisition will take months to develop, Delta over the weekend signaled what could possibly be a brilliant move by focusing instead on acquiring US Airways. Why is this a smart move? For many reasons. An acquisition by Delta of US Airways, which will pass regulatory scrutiny, will eliminate US Airways from the AMR sweepstakes. Texas Pacific as a private equity will have to team up with an airline partner to clinch a possible deal. Problem is however, there are no (legacy) airlines left to do so. United Airlines will never be able to make a deal for its rival as they compete directly in major hubs such as Chicago, LA and the New York area, not to mention that United is an anchor in the Star Alliance while American is an anchor in the rival One World Alliance. By teaming with US Airways, Delta essentially will take itself out of the American Airlines acquisition. This potential scenario will leave American Airlines without a potential acquirer and will put the airline in a weakened position vis-a-vis behemoth giants United and a supercharged Delta. Delta will have carved a huge market share of the domestic/international market, while simultaneously boxing in American. www.premieretravel.com

Sunday, January 29, 2012

Hotel Room Pricing More Complex Than Airfares

Hotels have taken a page from airlines when it comes to pricing their product. We all know how confusing airfares can be to the traveling public which has led to the recently enacted rules by the DOT, now requiring airlines and online travel agencies (OTA's) to advertise the full cost of the fares. Hotel pricing however has evolved over the years, and seem to up the ante on complexity. Major hotel chains have a dizzying array of room categories, fancy names, advance purchase requirements, non-refundable rates, upgrades, amenity packages, discounts, and endless lists of promotions that would rival anything the airlines have to offer. The explosion of OTA's and online offers will yield multiple pricing options for the same room category in the same hotel, and has become very hard for the traveler to easily judge the true cost of the advertised price. For example, one site has a hotel in Paris "listed" for 229 Euros, while another has it for $249 (USD). A traveler has to use the calculator to convert the difference and figure out a potential conversion surcharge by his credit card company while still having to navigate whether or not the advertised listing includes taxes, fees and surcharges which would not be disclosed until the very end of the process. Hotel pricing is not regulated by DOT. So the potential for misleading travelers is quite high. Finally, there is the trust factor. Some of these "scraper sites" have little or no customer service and offer limited recourse for the traveler. Hotels do not like them and often relegate the traveler to the worst available rooms. A reputable travel management company can streamline this process and offer great value without the fluff. Many hotel chains offer our clients excellent value and an array of amenities that are easy to understand and are free of any (bad) surprises. Quite often, the pricing is equal or below those of OTA's. www.premieretravel.com

Thursday, January 26, 2012

Not Ready For Prime Time

It's January 26, 2012...airlines and travel websites are supposed to comply with new required disclosure about the fares and all mandatory ancillary fees that airlines and travel websites advertise. The Department of Transportation had already postponed implementation of this requirement twice. Airlines continued to complain that the disclosure requirements were too "complicated" and that they needed more time for a variety of reasons. DOT denied the request and stuck with the January 26 deadline. Many airline sites had technical glitches and were not in compliance of the new requirements. Spirit Airlines, always known for it's "innovation", tried to turn the tables on the DOT, saying that the government wanted to "hide" the size of the taxes by lumping that into the total price. How can something so simple be so complicated to some airlines? The DOT simply wants the traveler to be informed of the total price of an airline ticket, inclusive of all mandatory service fees and taxes. www.premieretravel.com

Wednesday, January 18, 2012

The Plane Truth: Legacy Airlines' Declining Market Share

When American Airlines filed for bankruptcy last November, it was the last of the "legacy" carriers to do so. United, Continental, USAirways and Delta had previously filed their respective bankruptcy petitions and reorganized many years before American. Many of these legacy carriers have announced capacity cuts of up to 5%, citing weak conditions. However, domestic low cost carriers have happily and quietly beefed up their presence in key airports, adding new flights, routes and frequency. By definition, "low cost" airlines are those carriers that are non-unionized, do not support large infrastructures, and are free of legacy obligations such as unfavorable leases, labor contracts and expensive pension plans. Low-cost carriers such as Southwest, JetBlue, Virgin America, Spirit and Frontier operate more efficiently, have lower costs, and can make profit on routes and fares the legacy carriers cannot match. Low-cost carriers have made modest headway into the international routes as some of their advantages stop at the U.S. borders. But some have successfully forayed into closer international destinations such as Mexico, Canada and the Caribbean. Legacy airlines are not going away however. They still muster power by virtue of their mileage programs, joint-ventures and alliances, and will continue to maintain significant pricing power. The challenge for those airlines is to maintain the pricing equilibrium that will keep low-cost carriers at bay while trying making profit. 2012 could be an interesting year as we see more airline consolidation on the horizon. www.premieretravel.com

Tuesday, January 17, 2012

2012 United Airlines MileagePlus Program Begins March 3, 2012

We have received the following bulletin from United Airlines: MileagePlus, the loyalty program of the new United, will officially launch the 2012 program benefits on March 3, 2012. Over the coming days, MileagePlus and OnePass members will receive a merger update email directing them to log-in to a personalized preview of their 2012 status. The custom web page will contain a combination of messages that are relevant and personalized to their specific account. Messages may include: • Confirmation of 2012 Premier status as of March 3, 2012 for those who qualified based on 2011 activity • Notification that the member will receive a sticker to extend the expiration date of his/her 2011 elite status card (2011 elite members only) • Details about recalculated MileagePlus lifetime miles balances and, for members who have accounts in both programs and linked them, details regarding their combined lifetime miles balance at the start of the 2012 program • A few details about the upcoming change to eight-character alphanumeric account numbers Because we are extending the 2011 elite status and benefits until the 2012 program begins, members who had elite status in 2011 will soon receive a sticker to affix to their 2011 membership card - extending its expiration date through March 2, 2012. This sticker, once applied, will help ensure uninterrupted lounge benefits for Star Alliance Gold members traveling on partner flights, where applicable. 2011 elite members who do not receive a sticker before travel may also obtain one at any United Club location beginning January 20. Members who have qualified for 2012 Premier status can expect to receive their 2012 Premier membership kits and cards in late February. Final details about the account number transition will also be communicated at that time. For more information, log into your MileagePlus account. www.premieretravel.com

Monday, January 16, 2012

It's (AIRFARE) Jungle out There...

The Department of Transportation (DOT) is about to implement the equivalent of the "truth serum" to advertised airfares effective January 26. Despite objections from airlines who wanted to delay the effective date, DOT will require advertised fares to include all taxes, fees and surcharges. You are unlikely to see a $9 fare that used to be advertised by Spirit Airlines that came with a plethora of fees and required an "annual membership". Will the new rules solve the fare confusion? Yes and no... Yes, because many of the deceptive practices of advertising, such as an ultra low-cost fare with fine prints and lots of ifs and buts,surcharges, fuel surcharges, taxes and fees that could turn a $99 fare to London to over $700 will be gone. No, because the algorithms of search engines will then be re-calibrated to come up with itineraries that don't make sense that provide "lowest fares" but are designed to attract web traffic to certain websites. For example, the search may yield the lowest fares between origin and destination that have more than one long layover stop, may require overnight stay at a hotel, or sending the traveler through a circus-like route to his/her destination. It might be on carriers that don't actually operate the routes. These tactics are bound to make the search for low fares ever more complicated and you have to carefully weigh all the costs and the time elapsed for flights before you make an informed decision. The jungle rule will apply even more after the DOT starts enforcement. www.premieretravel.com

Friday, January 13, 2012

Air Travel: Things That Don't Make Sense

Travelers must endure a lot these days. Crazy airfare rules is only the beginning, then you have the endless fees, long lines, poor service and yes things that you wonder why they do, but nobody has clear answers for. We have become so accustomed to just obeying and following, no questions asked. For example, the 3 ounce rule of liquids and gels in the TSA lines. Many passengers had to ditch or lose 3.5 or 4 ounces of whatever it is they might be carrying. TSA has never explained why a deodorant above 3 ounces might represent a security threat. Then we have to put our smart phones down and off to pay attention to the flight attendants demonstrating how to engage and disengage the highly complex gadgets called "seat belts", or to turn off anything that "has an on/off button" so they do not "interfere" with airplane electronics! Hundreds of passengers have been kicked off flights for refusing to comply or for complying too slowly with the directives of the crew to turn their gadgets off. The craziness here is that if these gadgets are dangerous, what about the tens of thousands of people in the terminal or at gates that are within few feet of the aircraft that are still using their gadgets, shouldn't they also be told to power down their on/off switch for every aircraft taxiing, landing or taking off? And with so many people who "forget" to do so, will airlines start deploying sensors to detect these offenders and charge them another fee? Words with friends anyone? www.premieretravel.com

Thursday, January 12, 2012

"Non-Stop" Flights Take On a Whole New Meaning

To quote the late comedian George Carlin: "Would you really want to get on a non-stop flight" (SIC)?? So of course, he was going on to say that all flights have to stop... A case in point: United/Continental "non-stop" flights on the westbound transatlantic 757's. Many of those "non-stops" had to stop for refueling in off the beaten path airports such as Gander and Goose Bay. The must-stop flights to refuel were necessary according to United as they ran into serious headwinds and their fuel tanks did not have enough to sustain potential delays at destination points in the U.S. www.premieretravel.com

Monday, January 9, 2012

Traveler-Protection Measures Postponed (Again)

The U.S. Department of Transportation (DOT)once again kicked the can down the road on the start of Notice of Proposed Rulemaking (NPRM) which requires the airlines to disclose clearly the breakdown of ancillary service fees that have become a huge source of revenue for airlines. The August 10, 2012 new date is bound to be postponed again as this is an election year after all. The airlines got exactly what they had hoped for and then some. The delay amounts to to a "Confusion Fee" for the traveler. Travel Management Companies (TMC's) and travelers have no viable means to compare actual costs of travel even though all the necessary disclosure components are available. DOT can make a difference, even though this is an election year. Travelers must be given full disclosure of what their trips actually cost. Ancillary fees should be clearly disclosed. www.premieretravel.com

Thursday, January 5, 2012

New Acronym For Your Travel Experience: BDO

Many travelers have become quite familiar with so many acronyms, a crucial necessity to abbreviate all these mundane governmental departments and compartments within the departments. So please welcome the latest addition, courtesy of the TSA, a division of DHS: BDO! What is BDO you might ask? According the the TSA, it stands for Behavior Detection Officer. The TSA website goes on to explain the role of the "BDO": The Behavior Detection Officer (BDO) program utilizes non-intrusive behavior observation and analysis techniques to identify potentially high-risk passengers. BDOs are designed to detect individuals exhibiting behaviors that indicate they may be a threat to aviation and/or transportation security. The program is a derivative of other successful behavioral analysis programs that have been employed by law enforcement and security personnel both in the U.S. and around the world. TSA's BDO-trained security officers are screening travelers for involuntary physical and physiological reactions that people exhibit in response to a fear of being discovered. TSA recognizes that an individual exhibiting some of these behaviors does not automatically mean a person has terrorist or criminal intent. BDOs do, however, help our security officers focus appropriate resources on determining if an individual presents a higher risk or if his/her behavior has a non-threatening origin. Individuals exhibiting specific observable behaviors may be referred for additional screening at the checkpoint to include a handwanding, limited pat down and physical inspection of one's carry-on baggage. Referrals are based on specific observed behaviors only, not on one's appearance, race, ethnicity or religion. BDOs add an element of unpredictability to the security screening process that is easy for passengers to navigate but difficult for terrorists to manipulate. It serves as an important additional layer of security in the airport environment, requires no additional specialized screening equipment, can easily be deployed to other modes of transportation and presents yet one more challenge the terrorists need to overcome in attempt to defeat our security system. BDOs are currently operating at approximately 161 airports nationwide. www.premieretravel.com

Wednesday, January 4, 2012

2012: A Fee Odyssey

2012 is barely 4 days old, but we do have a new airline fee to report as Delta did not waste any time in imposing a new $6 fee to help cover a "Carbon Dioxide Emissions" cost imposed by the European Union. Airlines flying into and out of Europe must purchase credits to offset the emissions impact of their aircraft that is in excess of their allowance.Many other airlines are considering their options, but we do predict that many airlines will "match" Delta's move. www.premieretravel.com

Tuesday, January 3, 2012

2012 New Airline Rules on Horizon

January of this month will mark some important changes in the way airlines and travel sellers display and advertise their fares. Effective January 26, airlines must disclose and include all taxes and fees in their advertised fares. You will not see "London for as low as $199..." anymore. The new Department of Transportation (DOT) rule is actually a double-edged sword. The full disclosure will make it plain and clear for instance that on international flights, the airport authorities, government, fuel surcharges and security fees add up to amounts that are far higher than the actual "base fare" that the airlines keep. Domestically, the total fare includes 20% of taxes and fees. Some airlines have legitimately complained that the full breakdown of taxes, service and ancillary fees are so many that the "fare ladder", where a ticket breakdown appears, does not have enough room to include up to 16 different taxes and user fees imposed by a variety of authorities and will actually create more confusion especially when tickets are exchanged. Additional rules on deck this month prevents airlines from retroactively increase ticket prices post-purchase. It also allows passengers to hold reservations without payment for 24 hours from time of booking. www.premieretravel.com