JANUARY 2009 BUSINESS TRAVEL FOOTNOTES

Airlines

Airline Numbers Continue to Plummet
Airline industry figures continue to plummet across the board. The Department of Transportation said that the six largest network airlines reported an operating loss margin of 5.8 percent in the third quarter of 2008, the fourth consecutive quarter that they reported a loss. The International Air Transport Association (IATA) reported a 4.6 percent drop in international traffic in November and said that North American carriers saw international traffic decline by 4.8 percent. Until August, North American carriers had been shifting capacity to international markets. With the near collapse of the investment banking sector and consequent cuts in business travel, North Atlantic travel slumped. IATA also reported a continued decline in business class and other premium ticket travel, which fell almost seven percent in October, the latest reported month. Airlines did report an increase in one area: they collected $349.8 million in excess baggage fees in the third quarter of 2008, almost double the $178.2 million collected in the previous quarter, according to the Bureau of Transportation Statistics. (Source: DOT, IATA press releases).

Frontier Introduces Attribute-Based Pricing
Frontier Airlines is the latest carrier to adopt attribute-based pricing, a fare structure that gives travelers a choice of fares that range from one totally stripped of any amenities, including advance seat assignment, to fares that include amenities such as advance seat assignment and the ability to earn bonus miles. Frontier’s new AirFairs offers Classic Plus, Classic or Economy. Classic Plus is fully refundable, changeable and allows travelers to confirm a seat on a different flight on the same day of travel, no charge. Classic Plus Passengers get two checked bags and 150 percent mileage credit. Classic tickets, which start at $20 more than Economy, comes with advance seat assignments, two checked bags and 125 percent mileage credit. Economy classes can get seat assignments 24 hours before departure by going to the airline’s website. (Source: Frontier press release).

Airlines Keep Adding International Routes
Airlines continue to see opportunity on international routes and many keep adding flights. American Airlines will start daily nonstop flights from Dallas to Madrid in May. Continental will add seasonal daily non-stop service between Cleveland and London Heathrow in May, replacing service between Cleveland and London/Gatwick. Delta Air Lines will start its first ever daily nonstop service between Los Angeles and Sydney, Australia, effective July 1 and service three times a week between Los Angels and Sao Paulo, Brazil, beginning May 21. It also plans to start service between Detroit Metro Airport and Rome’s Leonardo da Vinci-Fiumicino Airport in June. And, V Australia said that it would start its Los Angeles-Sydney service Feb. 27. However because of the economy, Continental will end seasonal service from Cleveland to Paris/Charles de Gaulle Airport. Northwest Airlines sought approval to delay the launch of its service from Seattle Tacoma to Beijing. (Source: airline press releases).

Delta Begins to Consolidate Delta, Northwest Frequent Flyer Benefits
Delta Air Lines is aligning the benefits for both the Delta SkyMiles and Northwest WorldPerks programs. Beginning in 2009, the programs will offer segment qualification, currently a WorldPerks benefit, to allow members to reach elite status by flying a designated number of flight segments on either Delta or Northwest flights. Additionally, SkyMiles and WorldPerks members will continue to earn a minimum of 500 Elite Qualifying Miles and base miles per flight, making Delta the only major airline to maintain this minimum for all customers. (Source: Delta press release)

Delta Introduces Inflight WiFi
Delta Air Lines said it was restructuring its SkyMiles frequent flyer program, saying it wanted to give its members greater flexibility and more options when redeeming miles, including the ability to again book the last seat on a flight using miles and three redemption tiers for Award Travel within the continental United States, Alaska and Canada.. Tiers will start at 25,000, 40,000 and 60,000 miles round-trip rather than the two current Award levels starting at 25,000 and 50,000 miles for travel within the continental United States, Alaska and Canada. (Source: Delta press release).

Hotels

Hotels Begin Discounting in Face of Economic Downturn
The economic slump means more room at the inn and lower rates for hotel guests that remain. Smith Travel Research, a hotel analytics firm, said that at the last full week of December, US hotel occupancy fell 16.4 percent to 35.8 percent, and the average daily rate dropped 9.5 percent to finish the week at $92.49. Luxury occupancies dropped the most, 24 percent, while the economy segment dropped the least, 11.2 percent. Major markets that saw 20 percent or more drops in occupancy were Phoenix, San Diego and Chicago. PKF Hospitality Research said that hotels had held out against discounting until the fourth quarter, but finally started discounting in October. PKF projects that rates will decline 2.7 percent in 2009; just short of the 2.9 percent decline of 2001 and 2002. (Source STR and PKF press releases).

Hotels Work Harder to Deliver Value Through Loyalty Programs
Hoteliers are combining rewards—points, miles and merchandise—to make their loyalty programs more effective, according to Deloitte Tourism, Hospitality and Leisure division. They’re also putting even more emphasis on identifying guest needs, making sure guests are greeted by name and delivering more personalized service. Some find that gift cards are more effective than free nights for rewarding customers for their repeat business. Watch for gift cards, gas cards and similar offers from hotels as they work hard to keep the guests they have happy. (Source: Deloitte report).

Car Rental

Avis and Budget, National and Alamo Expand Toll Pass Programs
Avis Budget Group now will provide eZGo Anywhere wireless toll collection transponders with Avis Rent A Car, Budget Rent A Car and Budget truck rentals. The transponders work with more than 95 percent of all toll systems in the United States.
National Car Rental has expanded its toll pass program, which uses the E-Z Pass electronic toll payment system, to Chicago, Houston, Boston, Baltimore, Philadelphia, Pittsburgh, Rochester, Syracuse and New York City. It already included Newark and is also available through National’s sister company, Alamo Rent A Car. (Source: Avis Budget, National press releases).

Spotlight On… Hotel Construction Slowdown

The number of hotel guestrooms in the construction pipeline that have been abandoned increased by 75 percent in November 2008 over November 2007, according to the STR/TWR Dodge Construction Pipeline Report. But there were regional differences.

(Source: STR Global)

The Travel Authority is committed to providing you with useful information on the latest developments in the travel industry. The following information has been compiled from a variety of sources and is updated monthly.