Business Travel Briefing
For June 4-June 18, 2020
The briefing in brief: Southwest Airlines dusts off its post-9/11 playbook and will soon fly its full schedule. Delta promises to block middle seats until the end of the summer. American bails on Oakland, but will reopen more airport clubs. China folds on flight squabble after the DOT bars Chinese carriers. And much more, including our daily Coronavirus update.

The moment the nation's skies reopened after 9/11, Southwest Airlines restored its entire schedule. That put it at odds with other U.S. carriers at the time. They slashed their respective schedules from 20 to 50 percent. The result? Southwest capitalized on its wall-to-wall revival and grew dramatically while competitors went bankrupt and then merged into new entities. By some measures, Southwest has grown into the nation's largest carrier. So it won't surprise you to learn that Southwest is essentially reviving its 9/11 playbook for modern times. Although it slashed capacity around 50 percent in recent weeks that's much more aggressive than competitors. (Alaska Air, for example, cut capacity by more than 75 percent in April, May and June.) Moreover, Southwest's autumn schedule will offer nearly as many seats as it flew in the fall of 2019. There are granular differences, of course--Southwest is pulling back from the overcrowded Fort Lauderdale market, trimming secondary transcontinental routes and bulking up in Denver--but systemwide volume is about 99 percent of last year. Will the 9/11 playbook work in 2020? Hard to say, but expect Southwest to discount heavily in the months ahead to fill seats--fuel costs are comparatively low and Southwest's costs are lower than competitors--as it tries to win business with robust schedules.

Delta Air Lines, already better positioned as a (comparatively) "quality" airline compared to United and American, is adding to the pressure. It'll continue to block middle seats until September 30, a commitment neither of its mainline competitors will make. The airline says its load factor has picked up--it's now north of 45 percent--so it'll add flights to ensure middle seats remain off-limits. Through September 30, the carrier is promising to cap first class capacity at 50 percent; top out at 60 percent in coach and premium economy sections; and 75 percent in international business class. It's also restoring an upgrade perk: Effective June 10, automatic elite upgrades return. When the virus hit, Delta deactivated the automatic service and did it on an ad hoc basis at the gate.
        Canadian carriers are giving the country's transportation regulators fits. The CTA says it now has a backlog of 14,000-passenger complaints, most of them about refunds denied by Air Canada and WestJet. The backlog may take two years to clear, the agency says. Of course, the CTA has been its own worst enemy. At the beginning of the pandemic, it indicated that airlines were allowed to offer vouchers rather than refunds when they cancelled flights.

Oakland Airport has been losing carriers to San Francisco across the Bay and this week lost another. JetBlue Airways and Norwegian have both moved their flights to SFO in recent months and now American Airlines is pulling the plug, too. American already dropped Dallas/Fort Worth flights months ago and now says it'll dump service to Phoenix in August. That effectively ends AA's presence at Oakland.
        Berlin/Tegel won't close in June after all. Berlin officials have reverted to the original plan--closing Tegel after the nine-years-delayed Berlin/Brandenburg opens in late October. Tegel and Schönefeld have been handling upwards of 2,500 passengers a day combined compared to 100,000 daily last year.
        Ten American Admirals Clubs will reopen on June 22 to join the skeletal network American has maintained during the pandemic. It includes clubs in AA hubs at Charlotte (Concourse C); LAX (Terminal 4); Chicago/O'Hare (H/K Concourse); Dallas/Fort Worth (Terminals A and C); Kennedy and LaGuardia in New York; Miami (near Gate D30); Philadelphia (Terminal B/C); Phoenix (Gate A7); and Washington/National (Terminal B).
        Dallas/Love Field this week removed a statue honoring the Texas Rangers, an organization dogged by charges of racism over the centuries. The Dallas News has details.

You recall the specifics of the battle between the United States and China about restoration of flights between the two nations. But that was last week. This week it's a power move by the U.S. Department of Transportation that's led to an epic backtrack by the CAAC, China's regulatory agency. Because the Chinese used a timing technicality to bar United Airlines and Delta Air Lines from restarting flights, the DOT on Wednesday (June 3) used the nuclear option. It told Chinese airlines currently serving the U.S. on a limited basis that they'd have to end flights entirely. The ban against Air China, China Eastern, China Southern, Sichuan, Xiamen and Hainan is due to go into effect on June 16. That play led Chinese aviation authorities to switch gears overnight and say today (June 4) that United and Delta can fly to China again beginning Monday (June 8). The DOT hasn't responded to that move, however, so stay tuned.
        South African Airways apparently will live on. After saying the already bankrupt SAA would be allowed to close, the South African government now says it'll pump another US$1.2 billion into the carrier. That should be enough to allow the airline to pay off debts, relaunch flights and rack up a whole new round of losses. The airline has been grounded since late March.

Lufthansa tried to strong-arm the German government over the terms of its bailout, but this week it essentially folded. In exchange for about US$10 billion in grants and loans, the German government will get about 25 percent of Lufthansa's shares and representation on the carrier's board. Lufthansa will also surrender dozens of slots at its Frankfurt and Munich hubs. And after ringing up a 2.1-billion euro first-quarter net loss, the airline said it would slash workforces and fleets at all of its carriers--Austrian, Swiss and Brussels Airlines as well as Lufthansa.
        Greece, which reopened to visitors this week, has barred flights by Qatar Airways until the middle of the month. The reason? Twelve of 91 passengers on an arriving flight tested positive for Coronavirus.
        Italy this week launched one of Western Europe's longest direct daytime rail routes. The 862-mile high-speed run from Turin in the heart of the industrial north to Reggio Calabria in the far south takes about 10.5 hours and offers four classes of service.