Business Travel Briefing
For April 2-April 16, 2020
The briefing in brief: To get bailout funds, airlines must fly too much on their existing routes. Coronavirus strategy: Be long dollars and short miles. Who's flying where if you must travel internationally. Radisson extends 2020 elite status until February, 2022, and Hyatt will extend its benefits soon. A class-action suit against Canadian carriers that refuse to refund. And more, including our daily Coronavirus update.
IN EXCHANGE FOR BAILOUTS, AIRLINES MUST FLY TOO MUCH
If internal numbers and reliable industry estimates can be believed, remaining flights are now operating with load factors in the mid-teens. In other words, if you must fly, you can take the middle seat--and keep the window and aisle chairs next to you empty. And it looks like that one-flyer-per-row scenario won't change anytime soon. In exchange for the bailout money they can receive thanks to the terms of the CARES Act, the carriers will have to keep flying. And the terms laid out by the Transportation Department this week will force them to fly far more capacity than can be justified by demand. According to the DOT, if an airline flew a route more than five times a week before March 1 they must fly at least once a day between the two cities. Routes served less frequently before March 1 must run at least once a week, the DOT says. Of course, airlines don't have to follow the department's rules if they don't want to. All they have to do is turn down their part of the $58 billion bailout. Chance of any airline passing on the cash in order to run a more rational flight schedule? Zero.
BE LONG DOLLARS AND SHORT MILES AND POINTS
Bloggers flogging credit cards claim now's the time to load up on miles and points because airlines and hotels will be happy to give you seats and hotel rooms when we're on the other side of the Coronavirus pandemic. Let me tell you why that makes little sense: The travel industry sucks. Remember, these are the same people who've begged for bailouts while refusing to refund your money on cancelled flights and won't tell you about data breaches. Relying on the kindness of these strangers seems idiotic. Besides, post-pandemic cost-cutting will be ferocious and there's no reason to assume airlines and hotels will spare loyalty programs. A better strategy: Be long cash. Until you see the lay of the post-virus land, maybe use cashback cards and ignore your mileage- and points-generating credit cards. At a minimum, don't go out of your way to pile up points and miles via spending. One other tip: Keep your eye on expiration dates and related matters. While some hotel chains (see below) and international airlines are offering status extensions, we've yet to hear from the U.S. carriers. And, in fairness, that's no surprise. They have no clue what the landscape will look like for the rest of the year, or honestly, the next few years.
WHAT'S FLYING INTERNATIONALLY? NOT A LOT.
Trying to figure out who's flying where from the United States is a lot like trying to nail jello to the wall. And more people these days are probably trying to nail jello to the wall than fly internationally. (Why do people try to nail jello to a wall anyway?) The three largest U.S. carriers--Delta, United and American--will fly fewer than 25 routes combined outside the United States in April and May. Meanwhile, Air France is down to Paris flights from Los Angeles and New York/Kennedy. British Airways, which had something like two dozen gateways before the Coronavirus pandemic, is reduced to flights to London/Heathrow from JFK, Boston, Dallas/Fort Worth and Washington/Dulles. Latin America's largest carrier, LATAM, is serving two cities--Sao Paulo and Santiago--from Miami, LAX and JFK. Across the Pacific, EVA Air of Taiwan and Cathay Pacific of Hong Kong are offering a few flights, but the largest player may be Korean Air. It is running service to its Seoul/Incheon hub from Atlanta, Chicago/O'Hare, LAX, JFK, San Francisco and Dulles.
RADISSON EXTENDS ELITE STATUS, HYATT TK
has joined Hilton
and Best Western
in extending the lifespan of their customers' elite status. Any traveler who earned a 2020 elite level will have it extended through February, 2022, instead of it expiring in February, 2021. Radisson has also extended the expiration date of expiring Radisson Rewards points by six months. Expect Hyatt
to be the next chain to fall in line. We may have details of its plan to extend elite status as early as this weekend.
U.S. hotel occupancy
plunged to 22.6 percent during the week of March 22-28, according to STR, the lodging analysts. That forced revenue per available room (revPAR), a key measure of hotel profitability, down to $18.05 a day. That's an 80 percent decline from a similar week in 2019.
The Ritz Hotel
in London has been sold. The 700-million-pound deal means the iconic property passes to investors reportedly led by former prime minister of Qatar. The property is currently closed due to the Coronavirus pandemic.
BUSINESS TRAVEL NEWS YOU NEED TO KNOW
Although hold times at the credit card companies are lengthening, U.S. travelers at least have the Fair Credit Reporting Act in their quiver. If an airline cancels your flight and refuses a refund, you can call your card company and contest the charge. Canadian travelers aren't so lucky. As we explained last week, the Canadian Transportation Association has allowed airlines to refuse refunds
on cancelled flights and substitute vouchers instead. But now a class action suit
has been launched in Federal Court seeking to force major Canadian airlines to issue refunds.
chief-executive-in-waiting Scott Kirby says the carrier is losing $100 million a day in revenue. Wait until he sees how much revenue he loses by playing hardball with flyers' money when he cancelled their flights. No one who waited two hours or more on hold to get through to their credit card company to get a United chargeback will be eager to shore up his bottom line.