Issue #14  --  September 24, 1998

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oneworld Aims to Consolidate and Conquer
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In the world of travel, the mother of all battles is shaping up to be between networks of allied airlines, rather than between individual carriers.

You've seen the magazine ads and billboards showing a stretched aircraft, missile-like, stickered with the logos of the Star Alliance carriers (United, Lufthansa, Air Canada, SAS, Thai, Varig). The promise: "seamless" service to hundreds of destinations worldwide. Uniting the world. Conquering it. For your convenience.

This week comes the announcement of the expected counteroffensive to the Star Alliance, mounted by a battalion of airlines which, like the Star lineup, represent most of the world's major regions. The name under which the new alliance will deploy: oneworld (all lower case, annoyingly). Charter members of oneworld include American, British Airways, Canadian Airlines, Cathay Pacific and Qantas. Expect to see carriers representing Japan, Latin America and Africa sign on in the coming months.

Here's an excerpt from the official oneworld news release:

Today's unveiling of the oneworld(TM) brand launches a multi-million dollar program designed to raise the standard of global air travel.

Beginning early next year, the five airlines will together phase in a wide range of initiatives designed to provide greater customer benefits, including more information and support, greater value and increased opportunities for rewards and recognition.

Oneworld will enable each carrier to offer customers services and products that it cannot provide by itself, responding to changes in the global airline marketplace.

These will include:

- smoother transfers for passengers traveling across the global networks of the five carriers.
- greater support, with employees of each airline equipped to assist and care for customers traveling with any of the oneworld airlines.
- greater value, through a range of round-the-world products.
- the intention to enhance existing cooperation between the airlines frequent flyer programs, enabling them in particular to provide more mileage awards, wider recognition for top-tier customers and access to more airport clubs and lounges.

For all the hype promoting such alliances as "customer-driven" and the like, the real driver is economics: notwithstanding consumers' increasing need for global service, individual airlines cannot cost-effectively extend their networks to all the world's nooks and crannies. So to compete, ironically, airlines must cooperate. These are, then, marriages of convenience, even of survival, and make for some strange bedfellows. (In a world in which Elvis Costello and Burt Bacharach can collaborate, maybe an alliance between American and British Air, longtime antagonists, isn't such a stretch after all.)

For frequent flyers, the specific benefits have yet to be spelled out. According to oneworld: "... if you are a loyal and frequent customer, you'll soon be receiving wider recognition and opportunities for more rewards." Let's hope that means, at a minimum, that: (a) members of any oneworld airline's program can earn miles and take awards on all oneworld partners, and (b) miles earned on any oneworld airline will count toward elite status in any oneworld frequent flyer program.

It remains to be seen whether these alliances amount to consolidation, in the microeconomic sense, in which case the price for the added benefits and convenience (if any) will be higher ticket prices. For now, we'll be waiting for more specifics on the frequent flyer program benefits.

>> More <<
o oneworld
o American
o British Airways
o Canadian
o Cathay
o Qantas

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At Northwest and Air Canada, it's Back to Business
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The good news... After short-lived but highly disruptive strikes, both Northwest and Air Canada have resumed flights and are operating at pre-strike schedules.

The better news... In their respective efforts to woo back customers, who in many cases were displaced and disgruntled, Northwest and Air Canada are offering bonus miles and discounts.

>> At Northwest, Bonus Miles <<
Effective with the resumption of service, passengers traveling on Northwest Airlines through October 31 are eligible for WorldPerks bonus miles. Passengers with first class or business class tickets will receive triple WorldPerks bonus miles. Passengers traveling in coach class will receive double WorldPerks miles. In addition, all WorldPerks miles originally scheduled to expire at the end of 1998 have been extended for one year.

>> At Air Canada, Discounts <<
For its part, Air Canada is offering savings of up to 60 percent for flights to 160 destinations worldwide, beginning as early as September 21, 1998, and ending as late as January 9, 1999, depending on the destination.

>> More <<
o Northwest's website
o Air Canada's website

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United Goes to College
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Following in the footsteps of credit card and beer marketers, United Airlines is aiming to welcome aboard customers early in their lifecycles as consumers.

Designed to reward today's traveling college students, United Airlines' new United College Plus is an Internet-based loyalty program for students attending accredited four-year colleges and universities. The program, according to United, is &quot;designed for the next generation of business travelers,&quot; introducing them to United's products and services, and offering special frequent flyer benefits and travel discounts.

Members of United College will enjoy many of the same privileges as other United Mileage Plus members, plus additional perks and benefits to help them to achieve award travel even faster. Members also will receive a United College Plus Welcome Kit filled with discount certificates, including:

- Exclusive Zone Fares - Up to four people can fly on United throughout the U.S. at reduced rates.
- 15% off Published Fares - Members receive 15 percent discounts on U.S. travel
- Special Dollar Discounts - Students can save up to $75 for U.S. travel

Other benefits include: a 2,500 mile bonus for members' first and third flights on United; a 1,000 mile bonus for booking flights on-line; a 500 mile bonus for student referrals; a 2,500 mile bonus for updating member's personal on-line information; additional bonuses from United College Plus partners; and a 10,000 mile graduation bonus.

United College Plus is a web-based program, with member communications provided through the collegeplus.com website, and account statements available on the United website (both listed below).

What's interesting about this program, over and above its place in United's cradle-to-grave strategy, is its Internet-only existence. Mailing and other marketing costs are reduced, allowing United to add value in the areas of discounts and bonus miles. It's a tradeoff most would be willing to make.

>> More <<
o College Plus (to enroll)
o United

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Hilton Adds Varig to Airline-Partner Lineup, and Vice Versa
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Brazil-based Varig is the latest airline to join Hilton Hotels' frequent guest program, HHonors.

Unlike most hotel programs, Hilton's allows members to double dip: HHonors members can earn both HHonors points and miles in Varig's Smiles program for the same qualifying stay. And HHonors members earn an additional 250 HHonors bonus points for each Varig flight taken in conjunction with a qualifying hotel stay.

Additionally, members of Smiles can earn 500 Smiles miles for qualifying business rate stays at any of the more than 400 participating Hilton, Flamingo, Bally's, Conrad International and Vista hotels worldwide.

Varig adds its name to what is already the longest list of airlines participating in any hotel program: AeroMexico, Air Canada, Air France, Alaska Airlines, American Airlines, America West Airlines, British Airways, British Midland, Continental Airlines, Delta Air Lines, Hawaiian Airlines, Japan Airlines, KLM, LanChile Airlines, LatinPass, Lufthansa, Mexicana Airlines, Midwest Express, Northwest Airlines, Passages (Cathay Pacific, Malaysia Airlines and Singapore Airlines), Qantas Airways, Qualiflyer (Austrian Airlines, Swissair and Sabena), South African Airways, TWA, United Airlines and US Airways.

>> More <<
Hilton's website

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AirTran Offers Bonus Miles for Online Bookings
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AirTran is joining other (mostly larger) airlines in making direct online booking available through its website. With the convenience of online, electronic ticketing, there are no paper tickets to lose and no waiting for tickets to arrive in the mail -- customers simply pick up their boarding passes at the airport on the day of travel.

The airline's website automatically presents travelers with a range of departure times and connecting travel options, starting with the least expensive flights available. Business-class ticketing is also available.

Through October 31, reservations made through the AirTran website will earn double bonus miles in AirTran's A-Plus Rewards program. With the bonus, business-class travelers will earn a free AirTran roundtrip coach ticket with just one and one-half roundtrips, while coach customers will earn a free roundtrip with only three roundtrips.

AirTran is the second largest airline serving Atlanta, and recently announced a further expansion of service this fall. With the planned expansion, AirTran will be operating over 130 daily departures from Atlanta to 30 cities by October 1998.

>> More >>
AirTran online

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Here's Your Chance to VENT
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If you're a frequent traveler between 18 and 35 years old and a U.S. resident, Linda Formichelli wants YOUR feedback. Linda is a freelance writer working on two stories for VENT, a general interest magazine for the 18-35 age group. You can check out the online version at http://www.ventmag.com.

Following is Linda's request for interview participants:

I'm writing two articles for VENT:

1. Airline food

Will discuss the trend towards more nutritious airline meals, how menus are developed, how to order special meals, etc. I need to interview men and women, ages 18-35, from the U.S. Questions will include:

- What's the best/worst inflight meal you ever had?
- What are the best/worst airlines (based on food served)?
- Do you ever order special meals? What kind?
- Are you concerned with the nutritional value of airline food? Why or why not?
- Do you have any tips for healthy inflight eating?

I also need to interview nutrition experts on the nutritional value of airline food and how travelers can eat well on flights.

2. Business travel

Will discuss the health and psychological problems that occur with frequent business travel, the cost of business travel, how much people are traveling for business and what the typical trip is like. I need to interview men and women, ages 18-35, from the U.S. Questions will include:

- How often to you travel on business? Where do you go?
- Do you feel that you travel for business too much/not enough?
- What are the best/worst things about business travel?
- What do you do on your trips when you're not engaged in business?
- Do you fly coach or first class?
- Do you notice that you get sick more often when you travel?
- What are the best/worst airlines for business travel?

I also need to interview companies that require their employees to travel and psychologists who can talk about the psychological effects of frequent business travel.

If you're interested in a phone or e-mail interview, please e-mail me at linda@tp.net by October 5, 1998. I'll send you a more detailed list of questions and we can set up a date and time for the interview (if it's by phone). Everyone who participates will be sent an advance copy of the article text before it's turned in to the editor.

Thanks, and happy traveling!

Make your opinions known! (If I weren't so old, I'd participate myself.)

>> More <<
o VENT online
o Linda's e-mail

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CO.O.L Deals Can Now Be Booked Online
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Continental this week announced that subscribers to its domestic CO.O.L. Travel Specials can now book their travel online without having to call Continental reservations.

CO.O.L. Travel Specials is a free e-mail subscription service that Continental sends out weekly to notify subscribers of discount fares on domestic weekend travel.

As an incentive to avail themselves of the new service, users will receive a $20 discount, per ticket, when e-ticketing CO.O.L. Travel Specials online.

Customers without access to the Internet can still purchase CO.O.L. Travel Specials by calling Continental Airlines reservations at 1-800-642-1617.

>> More <<
Sign up here to receive CO.O.L e-mail announcements

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America West Takes First Step Toward Labor Accord
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America West and its mechanics union have reached tentative agreement on a labor contract which will, if approved, put an end to 2 1/2 years of management-labor bickering.

While pay is high on the list of disputed issues, the overriding point of contention has been outsourcing of maintenance work to outside contractors. So, in addition to a pay increase from $17 to $20 per hour (average), the new contract includes a commitment to perform all aircraft maintenance in-house.

While America West's labor disputes have not forced an outright suspension of operations, as happened at Northwest and Air Canada, anecdotal evidence (and this writer's own experience -- see related article) suggests that service at America West has been compromised by guerilla-style labor actions.

Union members are expected to vote to ratify the new 5-year contract next month. Next hurdle for America West: reach agreement with its flight attendants union, whose members have been working without a contract since 1994.

>> More <<
America West's website

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Asia Travel Costs Up, Down
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For months, you've heard me exhorting anyone who would listen to make the best of the economic crisis in Asia: air fares and hotel rates are low, and the dollar is strong. Go there NOW!

According to a new study by American Express, however, the cost of business travel in the Asia Pacific region is forecast to soar next year. Costs are expected to rise across all travel categories -- airlines, hotels, car rental, meals and entertainment. The study, &quot;1998 Business Travel Trends and Forecasts,&quot; contends that slower economic growth will cause airlines and hotels to adjust prices and target lucrative areas such as business travel in order to offset dramatic losses caused by the slowdown in discretionary travel to and within the region.

Notwithstanding the AmEx report, my forecast and recommendation remain the same: it's a bargain, and will continue to be, so take advantage. What the AmEx report points up, rightly, is the schizophrenic nature of the current market. Leisure travel is way off, and what little remains is highly price-sensitive. Business travel is also off, but less so; and what remains is relatively price-insensitive. What you do then, as a travel marketer, is keep prices low for leisure products, while increasing prices for business travel products. As a traveler, keep your eye on the discounts and other incentives (including frequent flyer mileage bonuses) being offered for leisure travel, and beware price escalation elsewhere.

>> More <<
The AmEx site

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PAL Bows Out
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In a sad footnote to the history of international civil aviation, Asia's oldest airline ceased operations at midnight, September 23.

The demise of Philippine Airlines was caused, ultimately, by a breakdown in negotiations between the airline's labor union and management over a proposal to provide union members with a 20% ownership stake in the company in exchange for the suspension of collective bargaining.

With PAL in debt to the tune of US$2 billion, the company's assets will likely be liquidated immediately to satisfy creditors. And once liquidation has begun, any efforts to resuscitate the carrier would be difficult and protracted.

>> More <<
The Pal website (still online as of September 24)

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Bill & Company Turn One Million
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Tickets, that is...

Microsoft Corp. today announced the sale of the one millionth airline ticket through Expedia.com and other online travel services powered by Microsoft Travel Technologies (MTT). The milestone purchase brings total sales transactions on MTT-licensed sites to more than $350 million since Microsoft entered the online travel market in October 1996.

MTT is anchored by Expedia.com, a member of the MSN network of Internet products and services. Other MTT licensees include Northwest Airlines, Continental Airlines, KLM and American Express (for its corporate travel product, American Express Interactive).

>> More <<
Microsoft