| Issue #18 -- October 22, 1998
**********************************
Travelers' Pain is Travelers' Gain
**********************************
Next time you find yourself shoehorned into the middle seat on a filled-to-capacity flight, nibbling an econo-meal served by a low-paid/high-attitude flight attendant, remind yourself of the silver lining: the airline-you-love-to-hate is making money hand over fist.
Actually, the silver lining is one step removed from the airline's quarterly income statement. As a smart, diversified investor, one or more of your mutual fund managers has YOU invested in one or more airlines, very likely including the one you just swore never to fly again. So the airline's gain (which seems predicated upon your pain) is your gain, too.
Notwithstanding the recent gloom and doom on Wall Street, and due in large part to the high-density/low-frills product currently on offer, the airlines are reporting record profits for the third quarter. Among them:
Net Income (Millions)
Airline Q3 (1998) Q3 (1997) Change
-------------------------------------------------------
American $433 $323 +34%
Continental $150 $114 +32%
Midwest Express $11 $8 +43%
Southwest $130 $93 +40%
United $425 $344 +24%
The highest profile exception to this profit fest was, predictably, Northwest. The 15-day pilots' strike that ended September 12, together with the pre- and post-strike effects, resulted in a third-quarter loss of $223.8 million, compared with a profit of $290.3 million during last year's third quarter. Northwest's suffering was compounded by its exposure to the soft travel markets in Asia.
So, cheer up (unless your retirement depends on the performance of Northwest's stock), and smile as you choke down those stale peanuts. And if you're one of the few living frequent travelers who isn't invested in one or more airlines, call your broker today and get your portfolio right. Whether the stock rockets or tanks, it'll put the pain of travel in a very different light.
********************************************************
Continental-Northwest Get-Together Getting Nowhere Fast
********************************************************
As you've read here, the marketing tie-ups between American and US Airways and between Delta and United have been progressing nicely. And some real frequent flyer benefits have flowed to members of those airlines' programs.
What hasn't materialized is the alliance between Continental and Northwest.
This is ironic, because it was the CO-NW combination--the announcement of it, at least--which spurred the alliances among the other major carriers. They allied as a competitive response to the pending alliance between CO and NW. So far, the response has been to a non-event. Which leaves CO and NW in the position of having pressured their rivals into becoming stronger competitors, without enhancing their own competitive position. Not exactly a case study in effective strategic management.
The stumbling block for CO and NW: the Department of Justice. Because the CO-NW deal includes a degree of cross-ownership (NW would control 51% of CO's voting stock), the DOJ is scrutinizing the alliance on antitrust grounds. Currently, the carriers are in discussions with DOJ to avert a confrontation, which would take the form of a DOJ lawsuit challenging the alliance.
In the meantime, AA-US and DL-UA are eating CO-NW's lunch.
>> More <<
A summary of the U.S. alliances
**************************************************
At Northwest, Double Miles for November Full Fares
**************************************************
Northwest Airlines is offering bonus WorldPerks miles for travel through the end of November. Purchase select first class, business class or coach class fares and complete travel between November 1 and 30 to most Northwest/KLM destinations and earn double WorldPerks miles.
>> Conditions <<
North America/International first class, world business class and coach class: Bonus Miles offer applies to residents of the U.S. 50 states for travel between November 1, 1998 and November 30, 1998. Qualifying fares must be booked in First Class, World Business Class(tm) or Coach Class (F/P/C/J/Y/B) only. Offer is valid for all NW/KLM operated flights worldwide, except KLM flights between Amsterdam and Asia/South Pacific/Mexico/South America/Central America. Travel on Northwest designated affiliate partner flights does not apply. Double miles will be awarded on credited flight miles only. Other restrictions apply.
>> More <<
Northwest
*************************************
New Programs for Cathay and Malaysian
*************************************
As has been reported here and elsewhere, Passages, the frequent flyer program operated jointly by Cathay Pacific, Malaysian and Singapore Airlines, will be discontinued at the end of January 1999, to be replaced by separate programs from each of the three airlines individually.
Preliminary information on the Cathay and Malaysian programs is as follows:
>> Cathay Pacific <<
Cathay Pacific's new frequent flyer program will be called "Asia Miles." The program will, according to the airline, "allow members to earn free flights faster and easier than before, and points for travel in all classes can be accrued, including economy." The program begins from February 1 next year. Asia Miles will extend to oneworld airline alliance members and hotel groups as well.
>> Malaysia Airlines <<
Malaysia Airlines' new program will be "Enrich." Members who enroll before February 1, 1999, will enjoy the status of "founder members" and receive 2000 reward points as a bonus. For the first time, award travel within Malaysia will be offered. And, in addition to air travel, members will be able to choose holiday packages as awards.
In a break from the ultra-conservative Passages program, both of the new programs will allow mileage accumulation for economy-class fares. What remains to be seen is whether all economy fares will qualify, and what the accumulation rate will be.
>> More <<
o Cathay
o Malaysian
(So far, there's no information re the new programs on either website.)
**************************************
AirTran Extends Frequent Flyer Program
**************************************
AirTran is extending A-Plus Rewards, its frequent flyer program, through the end of 1999.
With the extension, AirTran customers can earn mileage credit through December 31, 1999. Flight credits must be redeemed by March 31, 2000, for reward travel through December 31, 2001.
AirTran customers will continue to earn free AirTran travel by flying three round trips in business class or six round trips in coach. AirTran will offer free tickets on Delta Air Lines or 13 other carriers to customers who fly six round trips in AirTran's business class or 12 round trips in AirTran's coach class.
While the extension will come as a welcome relief to AirTran regulars, any program which is extended at the airline's whim is a non-contender. The earn:burn ratio may be favorable, but your earning opportunities are limited and could be terminated altogether.
>> More <<
AirTran online
**************************************
Unlimited Trips to Hawaii, $1299
**************************************
Pleasant Hawaiian Holidays is re-introducing its AirPass for unlimited 1999 travel to Hawaii on Pleasant's scheduled service with American Trans Air (ATA).
The 1999 Pleasant AirPass is available for $1,299 per person. Consumers can use the AirPass for flights from Los Angeles and San Francisco to Honolulu and Maui on Pleasant's scheduled ATA flights. The AirPass is also available to Hawaii residents traveling to and from Los Angeles or San Francisco.
The AirPass can also be used in conjunction with any of Pleasant's land packages. Pleasant can add hotel, ground transportation, and any necessary
inter-island flights for any of the six major Hawaiian Islands.
A limited number of AirPasses will be sold. Reservations for travel can be made no more than 60 days in advance of departure based on availability at the time of booking. The AirPass cardholder is also entitled to priority standby status on ATA at any time, including blackout dates. The following dates are not available for travel by AirPass members on a confirmed basis:
TO HAWAII FROM HAWAII
New Year's 1/1/99-1/10/99
President's Day 2/11-2/15/99 2/18-2/22/99
Easter/Spring Break 3/25-4/6/99 4/3-4/16/99
Memorial Day 5/21-5/24/99 5/27-5/31/99
Labor Day 9/2-9/6/99 9/9-9/13/99
Thanksgiving 11/18-11/25/99 11/25-12/2/99
Christmas 12/15-12/27/99 12/26-12/31/99
ATA seats available for AirPass members are limited on weekend flights and during the summer months of June, July and August.
Good deal for sun-seekers. (I was going to kvetch about Pleasant's NOT having a website. On second thought, though, they may have determined that real surfers don't surf the Internet.)
>> More <<
For more information, reservations, and a complete copy of the AirPass terms and conditions, call 1-800-2-HAWAII.
**************************************
At Southwest, "Friends Fly Free" Again
**************************************
Southwest is reviving its "Friends Fly Free" promotion for a limited time.
For Southwest customers 18 years or older who purchase a full fare roundtrip ticket to any Southwest Airlines destination, a companion may travel with them free of charge. Both travelers also will receive credit in Southwest's frequent flyer program, Rapid Rewards.
"Friends Fly Free" tickets may be purchased through December 9, 1998 for travel through April 2, 1999. Seats are limited and may not be available on some flights that operate during very busy travel times and holiday periods. "Friends Fly Free" will not be available from November 24 through November 30, 1998 due to excessive customer demand.
Tickets are nonrefundable but, if unused, may be applied toward the purchase of future travel on Southwest Airlines. At least one night's stay is required, but the customer may choose what night works best with his/her schedule. Tickets must be purchased within one day of making a reservation and at least seven days before departure. Fares are subject to change until ticketed. Any change in itinerary may result in an increase in fare.
>> Rave <<
As we've come to expect from Southwest, this offer is straightforward, relatively unrestricted, and available for an adequate period.
>> Rant <<
If anyone at Southwest is listening: The website needs serious work. (The words "clunky" and "eyesore" come to mind.) Repeat after me... CHANGE IS GOOD!
>> More <<
Southwest's website*
* You've been warned.
**************************************
American Offers Halloween Weekend Fares
**************************************
American Airlines and American Eagle are offering HAAlloween Weekend Fares through the airline's AA.com website. HAAlloween Fares are available in select nonstop domestic markets.
>> Details <<
-- On sale now through Oct. 28
-- 3-day advance purchase required
-- Travel period is Oct. 29 through Nov. 3, with the exception of Nov. 1,
which is blacked out
-- Saturday night stay required; tickets are non-refundable, non-
changeable, and non-reusable
>> Sample Fares <<
$68 ROUND TRIP
Los Angeles-San Diego Austin-Dallas Love Field
New York JFK-Albany Dallas/Fort Worth-Shreveport
Chicago-Duluth New York JFK-Baltimore
$98 ROUND TRIP
Chicago-Montgomery
Chicago-Shreveport
Dallas/Fort Worth-Montgomery
$178 ROUND TRIP
Chicago-Washington National New York or Newark-Chicago
Boston-Chicago Miami-Washington National
$218 ROUND TRIP
Miami-New York LaGuardia or JFK Austin-Miami
Dallas/Fort Worth-Richmond Washington National or Dulles-DFW
Los Angeles-Dallas/Fort Worth Austin-Los Angeles
New York LaGuardia or JFK-DFW Newark-Dallas/Fort Worth
$298 ROUND TRIP
New York JFK-Los Angeles Boston-Los Angeles
>> More <<
American online
***********************************
Star Alliance Adds Japanese Partner
***********************************
Star Alliance, the self-proclaimed "airline network for earth," will add All Nippon Airways (ANA), the world's sixth largest airline, to its roster of alliance partners in October 1999.
ANA will join the six founding members of Star Alliance -- Air Canada, Lufthansa, SAS, Thai Airways, United Airlines and VARIG Brazilian Airlines -- along with Air New Zealand and Ansett Australia, which have announced their intent to join in 1999.
ANA brings to the alliance access to many important business destinations in Japan. ANA is Japan's largest domestic airline and offers the most comprehensive network of destinations within the country, in addition to its expanding international route network.
ANA currently participates in the frequent flyer programs of both Delta and US Airways. So far, there's no word on the future of those tie-ups in light of the upcoming Star Alliance relationship.
>> More <<
o ANA
o Star Alliance
*******************
Cathay-JAL Alliance
*******************
Japan Airlines and Cathay Pacific have agreed to form a broad commercial alliance aimed at boosting air traffic in Asia.
Under the agreement, the two airlines will share codes on some routes between Japan and Hong Kong and link their frequent flyer programs, beginning early next year.
Members of the airlines' frequent flyer programs will be able to earn mileage points by taking each other's flights worldwide.
In addition to this bilateral relationship, the two carriers will probably be allied through their respective relationships with the oneworld alliance. Cathay is already a oneworld partner, and JAL is expected to join as well.
>> More <<
o Cathay
o JAL
*****************************************
PAL Will (!) Resume International Flights
*****************************************
Beleaguered Philippine Airlines resumed domestic flights October 7, following a labor-induced shutdown which many assumed would result in the airline's permanent demise.
While a new labor contract is now in place, the road back has been a rocky one. Plans to resume international operations last week were aborted, on the strength of concerns expressed by potential investors in the carrier.
As of this week, PAL is back on track to restart international flights, with service between Manila and Los Angeles and San Francisco now scheduled to begin on October 29.
>> More <<
PAL online
******************************
America West, TWA Say: Act Now
******************************
>> Quoting from America West's news release...
PHOENIX, Oct. 20 -- America West Airlines (NYSE: AWA) has done it again! The Airline has just lowered the cost of travel to cities across the United States.
Now through Friday, Oct. 23, customers can make reservations for travel Nov. 3, 1998 through Feb. 10, 1999 with fares starting as low as $81.50 each way, based on round-trip purchase.
... End quote <<
>> Quoting from TWA's news release...
ST. LOUIS, Oct. 20 -- Trans World Airlines (Amex: TWA - news) today announced a fare sale of up to 50% off on flights within the 50 states and between the United States and Canada. The sale starts today and lasts through Friday, Oct. 23rd.
... End quote <<
Let's see... they announce a sale on Tuesday, for tickets which must be purchased by Friday. This newsletter (as a near-at-hand example) is distributed on Thursday night, giving you, dear reader, all of one day to get through the entire awareness-consideration-intention-purchase cycle. Leaves me wondering whether America West and TWA really want to sell those seats at all. And if they do, then it's just plain rude to offer such a narrow window of opportunity.
>> More <<
If you're prepared to be rushed, hurry to:
o America West online, or call 1-800-2-FLY AWA
o TWA's website, or call 1-800-221-2000
*************************
KLM "Outs" Inflight Abuse
*************************
In the context of last week's article on inflight inebriation, I opined that travelers seemed, indeed, to be getting rowdier.
This week, the Associated Press reported on steps being taken by KLM (partner, coincidentally, of Northwest, whose flight attendants recently objected to their company's giveaway of free drink coupons) to address outbreaks of violence and abuse onboard.
KLM reported an increase in inflight incidents, and cited some specifics:
o KLM, which carries 15 million passengers a year, encounters about 100 unruly passengers a month
o Last year, 10 KLM passengers had to be handcuffed.
o In March, KLM physically restrained a passenger when he tried to force his way into the cockpit. All this transpired as the plane was on approach, forcing the pilot to abort the landing.
KLM officials felt there was a correlation between alcohol and such incidents.
|
