Essential Travel News for 2/19/07

To sign up to receive an expanded version of this weekly e-Alert bulletin from Executive Travel SKYGUIDE, click here.

AIRLINES

JetBlue fiasco prompts calls for re-regulation of airlines

Although it was last Wednesday (February 14) when JetBlue’s operations at its home base of New York JFK were disrupted by an ice storm, the airline continued to cancel hundreds of flights every day since then, up to Monday of this week (February 19). That has generated plenty of ill-will and negative publicity – but not as much as the terrible press resulting from incidents of JetBlue passengers being stranded on the tarmac at JFK on Valentine’s Day.
Many JetBlue flyers were stuck on planes for nine or 10 hours, a stone’s throw from the terminal but unable to get off the aircraft. In some cases, food and water ran out, and in a few instances, even the flight crew got no information from the airline about what was going on. The situation was so bad that some members of Congress are now grumbling about the need to draft a passengers’ “bill of rights,” including a law that orders airlines to let people off grounded planes within three or four hours. The unrest spread to Newark Airport as well, where JetBlue on February 15 had to call the cops to protect its ticket counter staff after the crowd got ugly when JetBlue canceled their flight.
JetBlue CEO David Neeleman made public ‘mea culpas’ in a series of news interviews – he told the New York Times, for instance, that he was “humiliated and mortified” by what happened - and the airline promised to work up a new operational and customer treatment plan to deal with such situations in the future. Last week, passengers who couldn’t get to their destinations were offered refunds and free tickets. The operational problems continued for several days not only because JetBlue’s aircraft were out of position from their regular schedules, but also because many crew members put in so many hours that they had to take rest time to meet FAA requirements. The worst part for many JetBlue customers was that the flight cancellations continued over the long holiday weekend, disrupting their travel plans.

Frontier makes a foray into Memphis

Remember a few years ago when Frontier Airlines strayed from its Denver base and began non-stop service into a few key business markets out of Los Angeles? One of those routes was LAX-Minneapolis, but Northwest responded with such competitive fury – lower fares, extra flights – that Frontier soon pulled out. Now Frontier is straying slightly from Denver once again, this time beginning flights to three cities from another Northwest stronghold: Memphis. On May 12, Frontier will launch its Memphis operation with two flights a day to Denver, one to Las Vegas and one to Orlando. Frontier already has some new competition on one of those routes: The day after Frontier’s announcement, AirTran said it will begin a daily Memphis-Orlando non-stop on May 8.

Virgin America gets more U.S. start-up capital

In an effort to bolster its argument that it is indeed controlled by U.S. citizens and not by Sir Richard Branson and his U.K.-based Virgin Group, San Francisco-based Virgin America last week said it has received another $30 million in equity and debt investment from its majority U.S. investors – Cyrus Capital Partners and Black Canyon Capital. The Transportation Department initially blocked Virgin America’s application for an operating certificate, citing concerns about behind-the-scenes foreign control by Branson and his company. Virgin America has also hired former U.S. Transportation Secretary Sam Skinner as its vice-chairman to plead its case. With the new investment and other organizational changes, “we have now gone above and beyond the citizenship requirements and demonstrated our good faith and absolute commitment to satisfying fully all of DOT’s concerns,” Skinner said.

Northwest sees a rosy future after Chapter 11

In a disclosure statement filed with its bankruptcy court last week, Northwest Airlines said it will emerge from Chapter 11 a smaller but stronger competitor. The company said an analysis by an outside firm put Northwest’s value at about $7 billion – although unsecured claims against the airline are $8.7-$9.5 billion. “Recovery for unsecured creditors - in the form of new common stock in Northwest Airlines Corporation – would be substantial,” the company said. Northwest said its system-wide capacity shrunk by 7.5 percent in 2006 vs. 2005, and it was able to cut costs last year by 10.8 percent per available seat-mile – not counting fuel costs. The biggest savings came from labor: Northwest is spending $1.4 billion a year less on wages and benefits than it did before its bankruptcy filing. By eliminating unsecured debt and restructuring aircraft leases and other obligations, Northwest cut its debt load by $4.2 billion, the company said. It predicts that its pre-tax margins will grow year-over-year to 9.9 percent by 2010, and revenue will increase to $14 billion by that year. Northwest said fleet renewal plans include becoming the first North American carrier to put Boeings new 787 Dreamliner into service, starting in October 2008. Northwest also has eliminated aging DC-10s from its fleet and ordered 72 new 76-seat regional jets that will start flying with its regional partners later this year.

AirTran says government won’t oppose merger with Midwest

AirTran Airways, which is still pursuing a hostile acquisition of Midwest Airlines, said last week that the federal government will offer no antitrust opposition to the deal, if it goes through. A required waiting period under the Hart-Scott-Rodino antitrust law ended with no challenge to the deal from regulators, AirTran noted. “The Department of Justice’s determination not to challenge AirTran’s acquisition of the stock of Midwest during the waiting period is an important milestone on the path to combining AirTran and Midwest,” said AirTran CEO Joseph Leonard. AirTran’s tender offer for Midwest shares expires March 8, although it could be extended. Midwest brushed off the development. The government’s decision not to challenge the proposed merger “is not unexpected and does not change anything,” said Midwest CEO Tim Hoeksema. “The board’s recommendation to shareholders not to tender their shares remains in effect.”

United, American upgrade web sites for frequent flyer awards

United Airlines and American Airlines have both made enhancements to their web sites so that Mileage Plus and AAdvantage members can now easily find alternative dates for booking award travel when their preferred dates have no award seats available. In addition, United said, all customers now have more flight-search capabilities that include shopping by schedule, price or flexible dates, as well as the ability to select and change seat assignments. United flyers earn 500 miles for tickets purchased through the web site.

FAA/SECURITY

Newspaper claims TSA bungles ‘no-fly list’ web site

In a story headlined “TSA-Not Living Up to Its Middle Name,” the Washington Post last week noted that the Transportation Security Administration recently opened up a new web site for flyers whose names were mistakenly matched to those on the government’s “no-fly list” – but the newspaper said the new web site itself is not secure. To clear one’s name, a wrongly-bumped flyer must provide personal data like name, place and date of birth, passport number, etc. to the web site. But the newspaper said the TSA web site does not have a secure data transfer feature employed by most sites that require sending personal data – a so-called “secure sockets layer (SSL).” Thus if an aggrieved passenger named Johnson who was just identified as a “no-fly” undesirable tries to clear his name via the TSA site from a wireless laptop at the airport, “a digital terrorist on the other side of the terminal (could capture) the data Johnson submitted because it was sent without SSL,”: the newspaper said. When we tried to access the TSA’s “Traveler Identity Verification Program” site a couple of days after the article appeared, it wouldn’t come up on the screen (you can try at http://rms.desyne.com).

INTERNATIONAL

News Briefs: AA, Jordanian plan code-shares; SkyTeam expands

*American Airlines and Royal Jordanian have applied for permission to start code-sharing March 25; if approved, American’s AA code would go onto Royal Jordanian’s flights to Amman from Chicago, New York, London, Paris and Frankfurt.

*The global SkyTeam alliance (Delta, Northwest, Continental, Air France, KLM etc.) said it has signed agreements with three carries to become associate members of the group once they meet all its requirements. They are Nairobi-based Kenya Airways, Madrid-based Air Europe, and Panama’s Copa Airlines. Once they join, passengers traveling on them “will have the same benefits as passengers on member airlines, such as harmonized frequent flyer programs, code-shared flights and improved access to airport lounges,” a SkyTeam spokesman said.

*Swiss International Air Lines on March 1 will move its passenger operations at New York JFK from Terminal 4 to Terminal 1 – the home of Lufthansa, which now owns Swiss.

*Air France subsidiary CityJet will reportedly begin eight new intra-European routes out of London City Airport on March 26, including flights to Geneva, Madrid, Milan, Nice, Zurich, Belfast, Dundee (Scotland) and Edinburgh. It already flies from London City to Dublin and Paris Orly.


See also ...

• Alerts Archive