Business Travel Briefing
For July 23-August 6, 2020
The briefing in brief: Mask mandates extend to airports and hotel chains. Four airlines report horrific second-quarter earnings. Air Canada extends validity of miles to 18 months. American Airlines cuts many first class meals and most curbside check-in. And more, including the daily Coronavirus update.

Four airlines--American, United, Southwest and Alaska--reported second-quarter "earnings" this week and the horror stories emanating from the financials and the subsequent analyst calls are rather scary. Besides the billions lost, here are some of the lowlights:
        United Airlines says it's second-quarter load factor was 33.1 percent. It says its daily cash burn in the second quarter averaged $40 million and is expected to be $25 million in the third quarter. The airline lost $24 million on its equity stake in Avianca, the Colombian carrier that filed for bankruptcy in May. United believes traffic will only return to 50 percent of 2019 levels until there is a Coronavirus vaccine.
        Southwest Airlines says revenue fell 83 percent for the quarter. July revenue is expected to be down 70-75 percent. August revenue may be down as much as 80 percent. Load factor in May was 29.9 percent and 49.5 percent in June.
        American Airlines said its Dallas/Fort Worth and Charlotte hubs are responsible for 60 percent of the carrier's current capacity. Net bookings are down 75-80 percent. Airline executives believe the carrier's site and the AA brand are worth $5 billion if the company needs to use them as collateral. American's market share in New York is now just 10 percent.
        Alaska Airlines said second quarter revenue fell 82 percent compared to 2Q 2019 and capacity was down just a shade under 75 percent. It doesn't expect 2019 levels of traffic again until the spring of 2022.

With few passengers and even fewer future hopes for any, airlines have mostly put their frequency programs on ice. Not Air Canada, however. It's made several clever moves with Aeroplan in the last few months to keep customer engagement up and make the program more appealing to flyers when travel does rebound. The latest move: Air Canada has now given miles 18 months of life instead of 12. And if your miles do expire after 18 months of inactivity, you'll have six months to take an Air Canada flight and reinstate your balance at no cost.
        Marriott Bonvoy and Marriott continue to be embroiled in a nasty lawsuit in Thailand with Minor Hotels. Minor may be best known as the owner of brands such as NH Hotels and Anantara, but it also owns the JW Marriott in Phuket and St. Regis in Bangkok. The case this week got the go-ahead to continue--Marriott had been trying to dismiss it--and most observers can't shake the feeling that Minor is trying to oust Marriott from the management contracts in Phuket and Bangkok. At issue in the suit, however, is a general claim--Marriott is diluting owner value by opening so many properties with so many brands in a geographic area--and one very specific one: Marriott Bonvoy cheats hotel owners on payments for "free" nights we claim as awards. At the JW in Phuket, Minor claims, Bonvoy reimburses it just $47 for an award night, down from $120 two years ago.

Airlines have been preening all week about their in-flight mask mandate by noting that dozens (United Airlines) or even more than a hundred (Delta Air Lines) flyers have been banned for not following the rules in-flight. Now three airlines--United, American and Southwest--have extended their mask mandates to the airports. They now expect you to wear a face covering from the moment you enter their ticket lobbies to the moment you pick up your luggage at their baggage claims. That includes customer-service counters, departure and arrival gates and all other areas controlled by the carriers. United's rules kick in tomorrow (July 24). American made its airport mandate effective next Wednesday (July 29). "Let's mandate masks [nationwide]," Southwest chief executive Gary Kelly said today on CNBC. "I mean, you have to wear pants, why can't we mandate that you have to wear a mask in a pandemic?"

Last week the U.S. hotel-industry trade group recommended its member chains adopt a mask mandate. At the moment, two chains officially have answered the call. Effective Monday (July 27), all Marriott and Hyatt properties in the United States and Canada will require guests wear masks or face coverings in all public spaces. Employees of both chains already wear masks.
        Hotel occupancy has stalled. Across the United States, occupancy rates fell into the low 20 percent range in mid-April. It's been a slow recovery ever since, but now the momentum is gone. For the week ending July 18, nationwide occupancy was 47.5 percent, right around where it has been for the last few weeks. Up in Canada, the occupancy rate is 33.3 percent nationwide. It's highest, 44.5 percent, in British Columbia and lowest (23.9 percent) in Prince Edward Island. These numbers are compiled by STR, the statisticians formerly known as Smith Travel Research.
        Hotel horrors The aforementioned lodging trade group, the American Hotel and Lodging Assn., says 8,000 hotels could be forced to close in September. Of course, the organization wants a government bailout.

Too bad you're not flying: U.S. domestic airfares plunged in the first quarter. According to the Transportation Department, it was just $336, the lowest since the beginning of fare records in 1995. The average fare--which doesn't really exist since you can't buy it per se--was down 21.6 percent from the first quarter of 2015.
        American Airlines continues to slash service anywhere you look. This week it eliminated curbside check-in at every airport in its system expect Maui/OGG (where airlines don't pay) and Miami, where the service is actually run by one of its commuter carriers. It has also trashed first class meal service on flights under 2,200 miles. And even on most longer flights, the only edible will be a small fruit and cheese plate and snacks.
        Southwest Airlines says it will continue restricting sales on flights to guarantee empty middle seats through September 30.