The Brancatelli File
IT'S A MAD, MAD,
MAD, MAD WORLD
BY JOE BRANCATELLI
April 1, 1999 -- I have come to one inescapable conclusion: The world of travel is mad, mad, mad, mad.
Consider, for example, that spate of "passenger's bills of rights" kicking around Congress. I'm not paying much attention to them because I don't think a single one will pass. But what is notable--and maddening--is how some airline executives are reacting to these legislative straw men.
Continental Airlines chairman Gordon Bethune, who is getting quite a reputation for saying outrageous things, claims that a passenger right's bill would add $38 to the cost of a roundtrip ticket. The price hike, he says, would result from the airlines paying fines for bad service and that would lower their overall efficiency.
Let me get this straight: If these passenger-rights bills pass, Bethune says Continental would have to pay fines for being inefficient, but the fines would cause Continental to be even less efficient, so it would charge us $38 more. This is something right out of Marx. Karl or Groucho Marx, you take your pick.
Want more from our friend Bethune? He says the "government does not need to give airlines incentive to do the right thing. …You don't need to pass a law to prevent us from running out of fuel in flight."
What is Gordo suggesting here? That airlines are doing their jobs so long as their airplanes aren't literally running on empty? Well, you know, now I'm thinking that maybe, before every flight, I should go up to the cockpit, personally check the fuel gauge and also make sure the pilot has made his potty stop before we push back from the gate.
Then Bethune dismissed the importance of a January incident where Continental's alliance partner, Northwest, stranded thousands of passengers on Detroit runways during a snowstorm. "If one airline does not do a good job in a snowstorm, should we reregulate the whole industry?" he asked.
Keep shooting off your mouth, Gordo, and maybe we will--just to shut you up.
Speaking of the Detroit debacle, Northwest's lawyer, Ben Hirst, tried to explain away his carrier's actions during testimony in front of the House Transportation aviation subcommittee. He was so singularly unconvincing that even the normally somnambulant Rep. John Sweeney (R-NY) was outraged.
"As I sit here and listen to you," Sweeney said, "it strikes me that the industry is in the great depths of denial. I suggest our role here is to provide you and the industry a wake-up call." The airlines, he said, should "adopt the old attitude that the customer is always right, rather than the customer is wrong and [airlines] have everything under control."
Hey, Joe, please, don't get these airline guys angry. Who knows how much Bethune and Hirst will want to add to the price of our plane ticket if we force them to treat us like customers, not cattle. I'm not sure I can afford to fly if the airlines start charging me for being right.
Meanwhile, there's apparently no one to stop the madness on Wall Street, either. Consider, for example, the initial public offering of Priceline.com, that phony-baloney name-your-own-price service.
Priceline.com went public Tuesday at $16 a share. By midday, it was trading for $85. It closed at $69, giving the company a market value of $9.8 billion. The astonished New York Times noted that "Priceline ... is now worth more than United, Continental and Northwest airlines combined."
Is it just me? Am I alone in thinking that it's mad to value a company at $10 billion when it's been in business for 11 months, lost $114 million last year on airline ticket sales of $35 million, and, by its own admission, has no idea when or if it will ever turn a profit?
Reminds me of the comments of a TWA flight attendant I met recently. She wondered why her TWA stock was so depressed. "We lose money all the time, we sell for $3 and we have no future," she complained. "But Amazon.com loses money all the time, it sells for $300 and it's the future of American commerce!"
For the record, TWA was trading yesterday at about $5 and Amazon.com at about $180. Thank god the market has regained its composure!
All of which brings me, as if by madness, to the Four Seasons New York, that appallingly overpriced hotel favored by the kind of folks who know why TWA sells at $3 and Amazon.com sells at $300. The hotel cost at least $500 million when it was completed in 1993 and was such a financial disaster that the first general manager once told a friend, "If I sell out every room at $600 a night for 20 years, I can't make money for the owners."
The building was sold in 1996 for $190 million. Earlier this month, the property changed hands again, this time for $275 million.
The new buyer? Ty Warner, the guy who created Beanie Babies.
Like I said, it's a mad, mad, mad, mad world.
This column originally appeared at biztravel.com.
Copyright © 1993-2004 by Joe Brancatelli. All rights reserved.