Monthly Archives: December 2009

TSA Offers Helpful Tips for Terrorists This Holiday Season

WASHINGTON, DC, Dec. 29 /PRNewswire-FirstCall/ — The holiday season is a great time for terrorists looking to make a name for themselves by disrupting travel in the United States.  Given the popularity of this time of year, the Transportation Security Administration (TSA) offers some helpful hints for terrorists looking to make a splash during this time of year.

– Instead of focusing on airplanes, why not break away from the pack and take a look at trains?  This option offers the popular benefit of blowing up lots of Americans without any of the hassles of sneaking items through security.  Remember, no one cares if you bring a knife, gun, poison, explosives or reading items onto a train.  Helpful TSA Hint:  The Acela usually has some politicians on it.

– If your plan is to blow up an airplane, please do it before there is one hour left in the flight.  You are no longer permitted to hold items in your lap with one hour remaining in the flight, so take care to time your bombing accordingly.

– Since in-flight maps are now turned off, a little math may come in helpful to figure out where you are during your journey.  Let’s do a quick quiz: If you are on an 8 hour flight from Amsterdam to Detroit, and you have been flying for 4 hours (we haven’t confiscated watches…yet) you are:

a) Halfway to your destination
b) Two-thirds of the way to your destination
c) 3 hours from not being able to hold your explosives in your lap.

– If train tickets are too expensive, Megabus offers lots of $1 seats from New York to Washington.  Like trains, you get the benefit of not having anyone search your baggage, so we recommend focusing your terrorist acts on buses, rather than planes, where you can make quite a splash for only a buck!

– Remember, we ask that terrorists (or other passengers) not congregate in public areas of the plane to help keep everyone safe.  However, we encourage passengers to use the bathrooms prior to the one-hour lockdown period before landing.  At that point, we encourage congregating in public areas of the plane.  This can be confusing, so let us provide this helpful list:

Do not Congregate in Public Areas: During flight until 1 hour and 15 minutes before landing.  With 1 hour or less prior to landing.

Congregate in Public Areas: During boarding.  15 minutes prior to lockdown.  After landing.

– Please remember to leave extra time for security at the airport — you don’t want to miss that flight you’ve been planning to take for the past 13 years since you first showed up in Yemen.  Security is taking a bit longer at airports as TSA agents remove shoes from 3-year-olds and old ladies to ensure they are not carrying 4 ounces of shampoo on a plane.

We hope these hints make your next (and last!) journey a safe, comfortable and on-time success.

For more information please contact tsa@tsa.gov.

Quick Update on New Security Rules

In case you haven’t heard, Air Canada and United (so far) have implemented new security rules that sound as if they are made up.  Air Canada is not permitting anyone to get out of their seats for the last hour of a flight, nor are you able to hold anything in your lap (no, really, I’m not just making that up).  Yes that sounds like something out of an Onion article, but that’s how airplane security works now.  United has shut down in-flight entertainment on international flights, likely because they do not want the in-flight map showing, because it may be helpful to terrorists to see that the airplane, which is represented as being as large as Iceland, may be somewhere between New York and Chicago.  Again, I wish I were making that up.

The TSA is recommending that terrorists wishing to kill several hundred Americans on a transportation vessel turn their eye toward Amtrak, which allows hundreds of people to board without any security whatsoever.

Goodbye to 2009, The Year of the Airline Fee

My final post of the year, and I thought I’d reflect ever-so-quickly on The Year of the Fee.  Consumer-facing media has spent lots of words noting how consumers hate airline fees.  They hate them so much that they gave US Airways upwards of $400 million in fees during 2009.  Oh yes, consumers will stop flying airlines that introduce fees.  Or not.

Fees have revolutionized the industry in a way we haven’t seen since Saturday night stays were introduced almost 30 years ago.  Before the recent fee revolution, network carriers were in a miserable situation:  LCCs had eliminated most of the restrictions that allowed airlines to charge business travelers more (ie, Saturday night stays), which drove down average fares.  LCCs could absorb this because of their cost structures.  Network carriers could not.

Until they decided to play the same game.  They eliminated economy fare restrictions and introduced fees that would allow them to make up (some-to-most) of the decrease in average fares.  Air Canada led the way by bundling various amenities together and charging different fares for each bundle.  But most reservations systems can’t handle this approach.  GDSs – the systems travel agencies use to book tickets – are trying to catch up.  Corporations are struggling to catch up as their travelers face fees that have not been built into the price of a ticket.  Airlines are figuring out how to use fees to balance yield management tools.  And how fees are impacting on-board services.  And baggage.  It’s a floor wax.  It’s a dessert topping.  It’s a floor wax.  It’s a dessert topping, you cow! (sorry)

In short – fees have touched every part of the industry, from the consumer, to the travel agent, to the corporation, to the baggage handlers.  We have just begun to see the limits of unbundling – it will go farther, trust me.  European airlines have tried unbundling credit card fees.  And check in fees (hi, Ryanair).  It’s really going to be up to the consumer to get used to it – this is not going away.

Well, that is until some airline proves that they can make more by not charging any fees (Southwest is sort of sticking to its guns here, but not really.  And I suspect we’ll eventually see them come around).  Concertgoers have complained about ticket fees forever, but they still flock to concerts.  Travelers can whine all they want, but I’m going to guess that exactly zero passengers who say they’ll never fly X airline again actually follow through.  Airlines are in a great position right now:  consumers shop by ticket price, not total price.  Some airlines have tried introducing the total price idea, but consumers have not yet come around.  This benefits network airlines, which can match on fares, then upsell with fees.  Not a terrible spot to be in.

Merry Christmas, everyone and happy new year.  See you in 2010.

2009 OTR Airline of the Year: Allegiant Air

Whew, has 2009 been a tough one for airlines. Globally, carriers are expected to lose $11 billion this year, with US airlines contributing about $2.5 billion worth of those losses.  Mainline carriers saw 10-15% drops in year-over-year Revenue per Available Seat Mile, and back in June US Airways reported a nearly 30% drop in year-over-year yields (roughly – the average fare paid).  Add the that a 5-7% decrease in capacity, and it would look like 2009 was the year that airlines tried to shrink themselves into a $2.5 billion loss.

Except Allegiant.  The Las Vegas-based low fare carrier continued its tradition of posting ridiculously good numbers, even as every analyst out there assumed that people would stop flying to Las Vegas altogether.  Wrong.  Allegiant diversified, flying to Phoenix and several cities in Florida, generally avoiding any competition by flying a few days a week to cities with little air service.  For $69 or so people in third-tier cities could go to a sun destination without having to change planes.  There is a lot to be said for that, even in a down economy.

During the first 3 quarters of 2009, Allegiant posted a $65 million profit on $423 million in revenue.  Their operating margin was more than 24%.  While their average fares dropped from the first quarter ($74 in Q1 vs $67 in Q3), ancillary revenues only dropped from $34 to $32 per ticket.  Yes, they derive about 1/3 of their ticket revenue from ancillary charges.  They decreased operating expenses nearly 30% year-over-year in an operation that was already lean, allowing them to post strong profits even when average fares were dropping.

Their decision to purchase MD-80s on the used market for several million dollars each, rather than investing billions in new planes is brilliant, allowing them to keep utilization pretty low and still print money.  Sure, when fuel costs increase they get hit because of their less efficient aircraft, but it is offset by their ability to manage their cashflows by buying planes outright.

Their strategy seems obvious:  do what you do well and avoid doing anything else.  I was concerned when they moved away from their Vegas strategy to diversify a bit, but it turns out to be a great move in light of decreasing travel to Vegas during the recession.  They were able to translate their strategy to a handful of new markets, offering service to small cities and selling hotel rooms, attractions, and onboard services to keep revenues at a profitable level, even as fares decreased.

Bravo to yet another year well done at Allegiant.

Senator Chuck Schumer: I’m Sorry My Flight Attendant Was a “Bitch” (I Mean for Calling Her a Bitch)Senator

Senator Chuck Schumer (D-NY) apologized yesterday for calling a US Airways flight attendant a “bitch” after she asked him to end his cellphone conversation prior to takeoff on a Shuttle flight from LaGuardia to Washington.  His seatmate, Senator Kirsten Gillibrand (D-NY) originally said that Schumer had been polite the entire time.  But then it turns out that calling someone a bitch is not polite, so she has backed away from that statement.

According to the NY Post (take this with a grain of salt), Schumer has a reputation for being “not nice” among flight attendants.

When Did Business Travel Demand Pick Up? And What Is the Real Purpose of Peak-Day Surcharges?

Airline nerds should check out the recent investor presentation given by US Airways’ Scott Kirby (as mentioned here, one of the smartest guys in the business).  You can download slides here and watch webcast here.  A couple of tidbits worth passing along:

On slide 16 you can pretty clearly see the turnaround in business travel beginning in mid-September.  Yes, it bottomed out in June or so.  But Kirby mentioned that leisure travel stayed pretty flat, while business travel absolutely collapsed.  Starting in mid-September we see yields (roughly the average fare) picking up as business travelers return to the market.  I think this shows that 2010 will, at worst, be somewhat better than 2009, but even though we’re hearing positive stories recently from the airlines, we should remember that the big carriers are still going to lose money in 2010.

The other interesting tidbit is on Slide 18:  You’ll see that year-over-year yields actually are up in November, the good sign of a possible recovery.  Kirby gives three reasons for yield improvement (other than business travelers returning to the market):  Less aggressive fare sales; canceling so-called “junk fares” (these are extremely low fares in some markets outside of a fare sale that become the defacto fare on the route); and Surcharges.

The surcharges thing was interesting, because I hadn’t fully understood why airlines had implemented the peak-day surcharges.  His answer:  to combat some of the yield management tools they use.  In short, there used to be a significant difference in product between the lowest fares available on a route and the more expensive fares (ie, advance purchase rules, Saturday night stay, etc).  Many-to-all of those differences have disappeared, leaving most people to simply take the lowest fare available since there’s no reason to move up a couple of fare buckets.  He says that yield management tools (the software that determines how many seats are available for a given fare) enters a “negative feedback loop” where, since no one is buying higher fare buckets, the tools keep making more seats available on lower fare buckets, which drives down yields.  Surcharges allow the yield management tools to keep working, while driving up the yield (by charging $20 or whatever on top of the cheapest fare bucket).

Certainly worth a listen if you care about this kind of stuff…

(Thanks to reader IAH-PHX for the initial heads up)

Continental Drop London Heathrow Nonstop from Cleveland; CLE Inferiority Complex Reaches New Low

Continental announced that it will be dropping its summer nonstop from Cleveland to London Heathrow, citing an unfavorable economic climate (ie, you suck).  The Heathrow slot will almost certainly be filled with an additional flight to Houston or Newark, but that news is zero consolation to those fine Midwesterners in my former home city who now find themselves with an abundance of flights to Lansing, but no way to get to Europe without a connection.

Clevelanders have worried about Continental shrinking their hub for years, though until 2008 they enjoyed nonstop service to both London and Paris, giving them a European flight presence roughly on par with rival Shelbyville Pittsburgh.  Oh to have those days back.  Paris was dropped for 2009, and now with London off the map, talk will once again focus on whether Continental, in light of its tie-up with United, needs a significant regional operation in the same general vicinity as O’Hare.   Continental has made a convincing case that it will maintain a mid-sized hub in Cleveland (certainly more convincing than Delta in Cincinnati), and I expect that to continue for the foreseeable future.  But the economic community in Cleveland sold that London connection to prospective businesses as a reason to move to the area.  While that probably overstated the value of the flight (considering nonstops to London are available from Detroit), its another blow to an area of the country that didn’t exactly need to be kicked down anymore.

The Wall Street Journal’s Scare Tactics about Airline Safety

Today’s Middle Seat column in the Wall Street Journal features a headline asking the ridiculous question, “How Safe Are International Airlines?”  Americans have wild misconceptions about airline safety, especially from airlines with which they are not familiar (I have had friends ask if AirTran is “safe.”)

Middle Seat is one of the top aviation columns in the country, but the lack of perspective in the column (and the ridiculous headline written by an editor) is striking.  Yes, there are airlines out there banned by the EU – 233 to be exact.  But most-to-nearly-all of these airlines are obscure cargo airlines (Air West Co of the Sudan, anyone?).  You will likely not find yourself on any of these airlines ever.

To suggest that “international airlines” have a problem, suggests that a perfectly legitimate airline with which you are unfamiliar is somehow “less safe” than a US airline.  That is simply nonsense.  And it’s not as if the banned airlines are exactly falling out of the sky.   Even airlines not certified by airline trade group IATA have what would be considered a major accident only .81 times per million flights (compared to .52 per million for certified airlines).

A bit of perspective?  In 2008, 34,017 people died in car accidents in the United States.  That’s 12 people for every 100,000 people in the US.  That’s unbelievable compared to the safety of even flying an obscure Angolan airlines.

Flying is safe, no matter what airline you are flying.  Let’s keep it in perspective…

Continental Rolls Out Systemwide Upgrades for Platinums; Super-Platinum “Presidential Platinum” Status for $30,000 in Spend

Continental is rolling out a couple of solid new programs that, while I’m sure some will have some nitpicky issues with, should make very frequent flyers of the airline quite happy.  In short:

— Platinums (100,000 miles annually) get 4 systemwide upgrades to be used on any fare, any flight, with no co-pay.  Yes, it’s fewer than American’s 8, but deal with it — it’s a great perk, considering Continental has not been particularly generous with the international upgrades in the past.

— They’re rolling out “Presidential Platinum” status for people who spend $30,000 annually on the airline.  That didn’t strike me as that much until I started doing the math and realized that it would be nearly impossible to hit that with only domestic travel (one r/t a week at $600 each would just hit the threshold), and that even a pretty frequent international business class traveler would be hard-pressed to hit that without some serious butt-in-seat time.  Anyway, it’s supposed to be reserved for those who spend a lot — and it is.  Benefits?  Upgrades clear 6 days in advance, and you get free President’s Club membership through the free Presidential Plus Mastercard you’ll get.  Oh, if you fly 4 million miles lifetime you’ll also earn Presidential Platinum for life.

All good news for Continental flyers…Actually, it’s been a great year for Continental frequent flyers between this and the Star move.

Why Larger Passengers Should Pay for Two Seats

Not sure how I missed this one:  The NY Post published a photo of a larger-than-average passenger squeezed into an American Airlines aisle coach seat last week (I’ll wait while you check that out).  With roughly 42% of the man spilled into the aisle, his presence in a single seat created a safety hazard for the others on the plane.  In response, the airline paid the man next to him to give up his own seat so this passenger could have two.

Southwest (and others) have gotten all sorts of grief for implementing a policy where obese passengers need to purchase two seats, but when you see this photo the reason becomes clear.

(Thanks, D-Lux)