The Brancatelli File
BEWARE OF AIRLINES
BEARING SUMMER GIFTS
BY JOE BRANCATELLI
July 1, 1999 -- If I detail some of the summer promotions the airlines are offering business travelers, do you promise not to rush off to buy before you give me a chance to talk you out of succumbing to the bribery?
Do I have your word, frequent flyer to frequent flyer? Cross your heart and hope to change planes in Detroit? This is important, because if you let the airlines seduce you with a few upgrades and bonus miles this summer, all may be lost this fall, this winter and for who knows how many years to come.
Okay, here goes.
AIR FRANCE will give you a one-way upgrade to the Concorde if you buy a roundtrip business-class ticket to Paris. Buy first class and Air France will bump you up to Concorde roundtrip. You'll also get free connections to 60 cities beyond Paris. The promotion runs through September 5.
BRITISH AIRWAYS has been offering a free roundtrip ticket to London for virtually every coach ticket to London purchased for travel through September 30. The freebie can be used between November 1 and March 30. Tickets for the "Double Exposure" deal had to be purchased by June 30, so double-check to see if you qualified. Several of BA's competitors matched the offer.
SABENA created a Companions in the Sky plan for premium-class travel to Brussels completed by August 31. For $2,777 a person, two travelers flying together receive roundtrip business-class flights from New York, Newark or Boston; three nights at the Brussels Hilton; daily breakfast; and a 3-day Avis car rental. The deal is also available from Chicago ($2,977), Cincinnati ($3,223) or Atlanta ($3,223).
TWA is offering 15,000 bonus miles for travelers flying Trans World One, the airline's international business-class service. Travel must be completed by September 15 and frequent flyers must register in advance.
USAIRWAYS launched a double-miles promotion last week for full-fare flights and it was promptly matched by U.S. carriers. Although there are wrinkles in each carrier's plan, most offer double miles on any unrestricted coach or first-class fare. Travel must be completed by August 25 and frequent-flyer members must register for the promotion.
Now any right-thinking frequent-flyer should be salivating at these lavish summer offers. You will be forgiven for thinking that the carriers are finally trying to curry favor with their most profitable and frequent customers.
But beware of airlines bearing summer gifts. These promotions aren't anything like appreciation for our high-priced custom. These bonuses aren't about airlines making amends for treating us like cattle. And these gifts are certainly not about airlines attempting to bulk up their full-fare and premium-class traffic during the summer, which is when business travelers traditionally reduce their flying.
This is about something sinister. This is about the airlines trying to convince us to look away from their outrageously high business fares. This is about the airlines doing anything to avoid lowering their unrestricted coach, business and first-class fares. This is about the airlines trying to bribe you to circumvent your company's entreaties to curtail your travel or fly at the dramatically less costly restricted fares offered to leisure travelers.
Let me explain. Second-quarter earnings are due out in a few days and most airlines will report declining profits. Some analysts suggest earnings will be down about 20 percent from the second quarter of 1998. The airlines will blame their plummeting profits on the "softness" in travel at full-fare coach and premium-class levels.
Why is high-profit business travel soft? How about record high fares? The American Express Business Airfare Index released Tuesday revealed some startling statistics. The "average fare paid" by corporate travelers in April was $600. That's not only a 5 percent increase over April, 1998, it is the highest average fare ever recorded by Amex. In fact, Amex says it is 30 percent higher than April, 1996.
Think about that for a second. Inflation in the United States has been cruising along at around 2 percent annually during the last three years. But the airlines have raised our fares by 10 percent a year--or five times the rate of inflation.
Faced with this unprecedented fare spike, American business travelers have cut back. Every survey released in the last few months reports that corporations have reduced the number of travelers flying and reduced the total number of trips taken. Perhaps most important of all, the surveys show that corporations have redoubled their efforts to get travelers to fly at leisure-travel fares and worry about the restrictions later.
Confronted with this reduction of travelers, trips and fares paid by frequent flyers, the airlines nevertheless have continued to increase fares. Already this year, the carriers have pushed through two across-the-board price hikes on unrestricted walk-up fares.
If you take these summer bribes and get back on the planes, the pricing game is lost. The airlines will continue raising fares at five times the inflation rate. Prices will continue to skyrocket for business travelers without regard to what is fair or logical or affordable.
But say no to the bribes, stay home this summer and the airlines will get the message. They'll stop raising fares and bribing us to pay them. They'll be forced to bow to the inevitable and reduce their prices for business travel.
And isn't that the best gift any business traveler could ever receive from any airline?
This column originally appeared at biztravel.com
Copyright © 1993-2004 by Joe Brancatelli. All rights reserved.