THE MORE THINGS CHANGE...OR DON'T
By Joe Brancatelli
January 8, 2009 -- Happy New Year. Enjoying the weather yet?
But rotten weather--and the delays, cancellations and busted connections it brings--isn't the only thing that has an overwhelming aroma of déjà vu of life of the road in years past. For the first Brancatelli File of 2008, I wrote a column intended to leave a trail of business-travel breadcrumbs for 2009. I figured if I set down the start-of-08 price of oil, the exchange rates, stock prices for the Big Six and several other things, we'd have something to talk about come the start of 2009.
But very many things look weirdly like they did at the beginning of last year. A real case of déjà vu--unless you remember the wild ride of 2008. That we've gone up and down and all around and come back to jump street clearly doesn't mean that nothing's changed. I think it means the more things don't change, the more they do. Or some version of that hackneyed old saying.
Before I get lost in the aphorisms, though, let me lay out the facts. You draw your own conclusions. It's probably better that way…
The price of a barrel of crude oil closed today just north of $42. This time last year, it was selling just south of $100. Real progress if all that mattered was the numbers then and now. As we are all too painfully aware, however, oil spiked at $147 a barrel last summer. As it rose, dozens of airlines around the world tanked.
A MARKET FOR FOOLS
When I launched The Brancatelli File on the Web in 1997, a lot of business travelers used to double their pain by investing in airlines as well as flying them. Most learned hard lessons in the intervening years, but a big run-up in airline stocks in 2006 once again clouded some judgments. Airline shares plummeted in 2007 and spent most of 2008 moving in lockstep with oil. When oil rose, shares plunged; when oil dropped, shares rose. Year-over-year, though, the consistency is spooky. AMR, the parent of American Airlines and American Eagle, closed at $12.29 today, down from $13.35 this time last year. Delta (DAL) closed today at $12.22, up from $11.77 this time last year. Continental (CAL) ended the day at $21.58, up a bit from last year's $20.46. But even the market knows United (UAUA) and US Airways (LCC) are in the hands of fools. US Airways closed today at $9.57, down from 2008's $12.72, which in itself was off its 52-week high of $62.50. United (UAUA) closed at $12.77, down sharply from last year's $31.75, which itself was off its 52-week high of $51.60.
THE GREENBACK'S WILD RIDE
I wrote a Seat 2B column last spring bemoaning the parlous state of the U.S. dollar. It had slipped to $1.60 to the euro, $2.05 against the British pound and below parity against the Canadian dollar. Then came the post-Labor Day crash and the dollar has inexplicably rallied. It closed the day selling at $1.52 against the pound, just a nickel worse than this time last year. Its $1.37 rate against the euro is actually a dime better than where it stood at this time last year. The Canadian dollar is back at 85 cents against the U.S. dollar. But lest you think the greenback is a being seen as a safe haven in these difficult times, consider: The dollar has been in free fall against the Japanese yen. Last year at this time, the dollar commanded 109 yen. Now it's buying just 91--and that's a substantial improvement from just a few weeks ago, when it fell into the mid-80s.
Still, if you want to figure out whether anything really changes in business travel, I think we'll have to look past the numbers. Consider these recent snapshots of life on the road.
The names William Franke and the Killer Bs--B. Ben Baldanza and Barry Biffle--are legendary. Franke almost destroyed the old America West; the Killer Bs were the most visible figures in the decline of the old US Airways. All three have moved on and, not coincidentally, found themselves a new home: Spirit Airlines. Franke's Indigo Partners is the majority owner; Baldanza and Biffle are the day-to-day bosses. And they are running that airline into spiritual and financial oblivion, too. They fashion it as an "ultra low-cost airline," which means mounds of lost bags, cancelled flights, phony fares, hidden fees and repulsive promotions like M.I.L.F. They claim it means Many Islands, Low Fare, but everyone knows it's a greasy play on a porno acronym.
But, wait, it gets better, or worse. Just before the new year, the Transportation Department fined Spirit for deceptive fare advertising. Among Spirit's infractions: the "natural occurrence interruption fee," a $2.50 surcharge that Biffle told Aviation Daily covered the cost of refunds it gives to passengers when severe weather causes cancellations. Another Spirit innovation? The $8.50 "international service recovery fee," which supposedly covers some of Spirit's costs of operating its international flights. Want another? A "passenger usage fee" of up to $8 assessed on tickets not purchased at the airport.
MEANWHILE, BACK AT THE BIG SIX…
Two weeks ago, US Airways quietly paid $140,000 to and entered into a consent order with the Transportation Department. The problem? According to the order, US Airways failed "to solicit volunteers before involuntarily denying boarding to passengers on oversold flights; furnish the required written notice to passengers who were denied boarding involuntarily; and to provide in a timely manner bumped passengers with the appropriate amount and type of denied boarding compensation."
THIRD TIME'S THE CHARM
You may have heard of Baltia, a paper airline that has claimed since 1991 that it would launch flights between the United States and Russia. The Transportation Department twice (in 1991 and 1996) judged Baltia fit to fly only to revoke the authorizations when it turned out that Baltia didn't have money. Undaunted by its previous misjudgments, however, the Transportation Department has once again decided that Baltia is fit to fly, This time, Baltia claims it has a total of $6.5 million of cash and credit and expects to launch in the spring--as soon as it gets a plane and the required Federal Aviation Administration certificate.
THE LAST REFUGE OF A POLITICIAN
Mitt Romney made a stunningly inept run for the Republican Presidential nomination last year--and managed to blow more than $40 million of his own money on the quest. Given that level of narcissism and financial excess, it was inevitable that Romney would find his way back to the travel business. This week, Romney rejoined the board of directors of Marriott International. He'd previously been on the hotel firm's board from 1992 to 2002.
You undoubtedly heard about the nine Muslim passengers removed from an AirTran Airways flight on New Year's Day. After initially--and quite publicly--insisting that it had only followed the orders of the Transportation Security Administration and other security officials, AirTran hastily apologized to all passengers on the affected flight, refunded the removed passengers' money and paid the fare difference when they were barred from a later AirTran flight.
Unfortunately, airline hubris is all too common when it comes to bumptious racism. This week it was revealed that JetBlue Airways paid a passenger $240,000 to settle a 2006 lawsuit stemming from the airline's insistence that he cover the Arabic writing on his T-shirt or be barred from a flight. But rather than apologize for its actions, or at least shut its corporate yap after ponying up $240,000, JetBlue continued to show exactly how idiotically airlines can act. "The settlement represents a fraction of the amount originally sought," JetBlue incoherently boasted. "JetBlue continues to deny, outright, every critical aspect of [the passenger's] version of events."
ABOUT JOE BRANCATELLI Joe Brancatelli is a publication consultant, which means that he helps media companies start, fix and reposition newspapers, magazines and Web sites. He's also the former executive editor of Frequent Flyer and has been a consultant to or columnist for more business-travel and leisure-travel publishing operations than he can remember. He started his career as a business journalist and created JoeSentMe in the dark days after 9/11 while he was stranded in a hotel room in San Francisco. He lives on the Hudson River in the tourist town of Cold Spring.
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