Business Travel Briefing
For December 8-19, 2019
The briefing in brief: Being a bad airline means never having to make money. Hyatt adds peak and off-peak award prices. United trims Hong Kong flights. American cuts in-flight service on most narrowbody flights. Berlin says its "new" airport will finally open next year. And more.
BEING A BAD AIRLINE MEANS NEVER HAVING TO MAKE MONEY
Well-run carriers are making money hand over the proverbial fist and have been doing so for years. (Third-quarter after-tax income for U.S. carriers was up 21.5 percent from 2018's third quarter, for example.) Less savvy airlines? Not so much. They continue to gush red ink and need endless bailouts. For a variety of reasons, government interests keep the dead airlines flying. Here are the latest updates:
has burned through all 900 million euros of the last-gasp rescue package government interests arranged in 2017. The plan was to organize a long-term private bailout run by FS, the Italian state railroad. Despite occasional murmurs of interest from carriers such as Lufthansa and Delta Air Lines, however, no private rescue seems in the cards. The Italian government's reaction? Another 400 million euros of loans. In case you're keeping score, Alitalia has made money exactly once since it was founded in 1947.
may be the only carrier in the world as consistently badly run for as long as Alitalia. The Indian government has searched in vain for private investors for several years--probably because it doesn't want to relinquish its heavy-handed oversight of the carrier. As the airline continues to fly and burn through rupees, the government has another idea: extinguish more than half of Air India's US$11 billion debt as a way to lure new ownership. But that would still saddle any new operator with about $4 billion of liabilities before a rupee of new investment.
Hong Kong Airlines
, one of the many money-burning aviation divisions of China's crippled HNA conglomerate, narrowly avoided death this week. Given just five days to raise new funding, HNA claims it secured more than US$500 million from a syndicate of Chinese banks. That seems to satisfy Chinese regulators for now and it has allowed the airline to continue flying. However, the carrier had already ended its Vancouver route, its last flights to North America.
South African Airlines
, battling nearly a decade of losses, strikes and rampant corruption, this week entered a local form of bankruptcy. The government-owned carrier was then promised a bailout worth more than US$125 million. International flights continue as do intra-Africa flights as well as the operations of various subsidiary short-haul carriers.
HYATT RAISES (AND LOWERS) AWARD PRICES
The World of Hyatt
plan really can't play follow-the-leader given how much smaller the chain is than its major competitors. But that isn't stopping Hyatt from continuing to shoot itself in the foot. Starting with the new loyalty year in March, Hyatt awards will switch from flat-rate pricing to a three-tiered off-peak/standard/peak structure. That means the cheapest award, currently pegged at 5,000 points, might cost as little as 3,500 points in slack periods or 6,500 points on high-occupancy days. At the other end of the scale, Category 7 awards will now cost 25,000-35,000 points instead of the existing flat rate of 30,000 points. The newish Category 8 (mostly created for Small Luxury Hotel redemptions) will range from 35,000 to 45,000 points instead of simply 40,000 points. Hyatt insists that the three-tiered approach will be a boon for bargain-hunting travelers, but we know that's a lie because World of Hyatt was specifically created to cost hotel owners less than the former Gold Passport plan. And since Hyatt reimburses owners based on nightly rates, there is no reason to think Hyatt would ever charge us less when they pay hotels more on high-occupancy nights. Bottom line: Watch for the real price you pay for Hyatt awards to rise, especially at the chain's most desired properties. Marriott Bonvoy
switched to a peak/off-peak chart this year while Hilton Honors
and InterContinental Rewards Club
eliminated charts altogether. For more details on Hyatt's changes, surf here
UNITED CUTS HONG KONG, NORWEGIAN DUMPS SCANDINAVIA
The drastic decline of travel to Hong Kong, which has been riven by democracy demonstrations and sporadic violence for months, is taking its toll on United Airlines
service to the city. Effective April 12, it'll cut Hong Kong flights from its Newark hub to three weekly from its current daily service. Also gone is all service from Chicago/O'Hare. United continues to fly twice-daily from San Francisco, however.
continues to juggle its network. After some trims on other routes, the carrier is dropping all flights from the United States to Sweden and Denmark. But flights to Oslo will continue.
Delta Air Lines
will begin their alliance with code-shares to about four dozen destinations in Latin America. That'll cover LATAM-affiliated carriers in Colombia, Ecuador and Peru. LATAM, of course, is leaving the Oneworld Alliance
and dropping its code-share with American Airlines
BERLIN CLAIMS NEW AIRPORT WILL OPEN OCTOBER 31
You are forgiven if you've forgotten about Berlin-Brandenburg
, the supposed replacement for Tegel
, the German capital's outdated, overcrowded and threadbare airport. It was due to open in 2011, was pushed back to 2012
and was only two weeks from opening. Then it all fell apart thanks to problems with everything from the fire-suppression system to automated doors that had no electricity. It's been seven years of German angst, construction scandals and missed opening dates as the facility stood empty. For the first time in several years, however, the airport has posted its "new" opening date: October 31, 2020. Stay tuned.
travelers take note: Qatar Airways completes its move to Terminal 8 on December 15. That puts it fully under the same roof as Oneworld Alliance partners American Airlines, Cathay Pacific and Finnair.
has lost Super Shuttle service. The van operation says its volume has declined by about 40 percent in recent years, mostly due to Uber/Lyft pickups.
was home to the only United Airlines international arrivals lounge. Not anymore. The facility closed on December 1.
BUSINESS TRAVEL NEWS YOU NEED TO KNOW
is operating better now than over the summer, so, naturally, it needed something new to annoy its customers. Effective immediately, the airline is cutting some in-flight service on all narrowbody flights except its Airbus A321T transcontinental flights and the Miami-Los Angeles route. AA executives blame flight attendants who've complained about the tiny galleys on narrowbody aircraft. Of course, American executives have been installing smaller galleys (and nearly impossible to use lavatories) to make way for the extra seats it is stuffing onto aircraft. Exactly which elements of the carrier's already barebones in-flight operations will disappear was not disclosed.
Sunday, December 1, was the busiest flight day
since the TSA was formed shortly after 9/11. The TSA says it screened more than 2.8 million flyers on December 1 and more than 26 million people during the November 22-December 2 Thanksgiving period. The TSA also says that its ten busiest flight days in history have occurred since late May this year.
Why haven't fares risen lately?
Easy. The Transportation Department says U.S. carriers paid an average of $1.97 for a gallon of jet fuel in October. That's 38 cents a gallon less than the average price in October, 2018. Since a Boeing 737 burns roughly 750 gallons per flight hour, airlines are saving about $285 an hour for an average flight.