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LET'S NOT MAKE THIS COLUMN LABORIOUS
By Joe Brancatelli
September 2, 2010 -- If you are reading this, I've already won. Instead of passing me by in your mad rush to make an early break for the Labor Day weekend, you're taking a moment to check in here.
I am honored. Truly.
And I certainly won't waste your time. There's important news here. So let's just get to it. No fuss. No muss. And then I urge you to get off the computer and onto your holiday. You deserve it.
WHEN THE MAIN BENEFIT IS WHAT IT DOESN'T DO…
When Hyatt Hotels and Chase announced in February that they would create a credit card tied to Hyatt's Gold Passport program, speculation ran wild. After all, Hyatt has a reputation for doling out elaborate, sometimes over-the-top perks and promotions as a way to mitigate its size disadvantage. Hyatt has only about half the number of properties worldwide as Starwood and is about an eighth the size of Hilton, Marriott and InterContinental.
Hyatt and Chase finally unveiled the card this week and the big news is what it doesn't have: foreign exchange fees. Chase, which also issues "affinity" credit cards for United, Continental, Marriott, British Airways and Southwest, usually charges 3 percent whenever you use your card overseas. American Express, which creates cards for Delta, Starwood and JetBlue, charges 2.7 percent. Citi (American Airlines and Hilton), Bank of America (Alaska Airlines) and Barclays (US Airways and AirTran) are also at 3 percent. But like the new InterContinental Priority Club Select Visa from Chase, the Hyatt Card is free from the annoying foreign exchange fee. That alone makes it a winner for frequent flyers who travel overseas. It'll save you hundreds of dollars each year.
Otherwise, the Hyatt Card (a Visa) may not be the bonanza some Hyatt customers were expecting. There's an annual fee that's on the high side ($75) and the earnings opportunity is on the modest side: 3 Gold Passport points for each dollar spent at Hyatt and 1 point for every other $1 of purchases. There is a tiered introductory bonus: Cardholders who are new to Gold Passport or existing basic members receive two free nights at any Hyatt in the world. Existing Platinum elite Gold Passport members get two free nights and suite upgrades on two paid stays. Diamond level Gold Passport members get two free nights in suites at any Hyatt hotel worldwide. And there is a nice perk for travelers who aren't big Hyatt players: Take the Hyatt Card and you'll receive Platinum elite status, which gets you 15 percent bonus on points for each stay and a waiver of Hyatt's Internet and WiFi fees.
My suggestion? Depending on your lodging preferences, carry either the Hyatt or the InterContinental card and use it exclusively when you travel overseas.
LETTING THE FOX INTO THE LEGACY HEN HOUSE
If you were running a legacy airline, your market share was shrinking and you were desperate to do a merger, what would you do to get the Justice Department to sign off on a deal? If you're United and Continental, you apparently do the unthinkable: Let Southwest Airlines into one of your slot-controlled fortress hubs even though Southwest would have virtually no chance to get into the airport any other way.
You guys sometimes ask me why I think the legacy airlines are collapsing in on themselves and can't make money. It is decisions like this that I can easily point to: Be so eager to do a deal that you let your most ferocious competitor, whom you have never beaten in a head-to-head battle, into one of your hubs. Talk about letting the fox into the hen house.
The deal struck last week between Continental, United and Southwest will "lease" 36 take-off and landing slots at Newark, Continental's major hub, to Southwest. That'll allow Southwest to launch 18 roundtrips a day. Southwest expects to begin flights in March and have a full schedule from Newark by June. Expect Southwest to target key business markets. It seems almost sure to fly from Newark to places such as Boston and Chicago and perhaps head as far west as Minneapolis and Denver. All of these have been high-yield markets for Continental.
Literally moments after the deal was announced, the Justice Department said that it was okay with a Continental-United merger because the carriers' concentration at Newark had been addressed. Once the Transportation Department signs off, the merger is on. The two carriers are now publicly talking about completing the deal as early as November.
Continental and United currently operate about 450 flights a day from Newark. And you may think that 18 roundtrips hardly count as a challenge from Southwest. Watch what happens--and especially watch how fares plunge in the markets Southwest chooses to enter. Fares will fall to levels that are profitable for Southwest, but will bleed the bloated, merger-distracted "new" United Airlines.
THE AMERICAN WAY: WHINE AND WHINGE AND LOSE THE WAR
Remember back in early 2008 when American Airlines (and, to a lesser extent, Delta and Southwest) cancelled thousands of flights with no notice? American was forced to ground much of its domestic fleet for emergency inspections and repairs after a Federal Aviation Administration crackdown.
Over the subsequent years, American has consistently and regularly denied that its maintenance failures were anything but paperwork snafus and/or picayune little missteps. No traveler was ever at risk, the airline insisted publicly. Privately, it mounted a fevered campaign to convince opinion makers that the FAA was being petty and vindictive and had a bureaucratic obsession with meaningless regulations and procedures. In fact, just the opposite was true. The subsequent report from the Government Accountability Office revealed that the FAA had been lax and slovenly in its oversight of American Airlines.
Why talk about this now? The FAA slapped American with a $24.2 million fine last week for the 2008 maintenance violations. The fine is the largest ever levied against an airline although it could have been as high as $350 million had the FAA chosen to hit American with the maximum penalty for each of the 14,000 individual violations it found.
American's reaction? Appeal, of course. Appeals to the FAA almost always get the penalty reduced. So that's understandable. But once again, American is whining and whinging and moaning as well as appealing. Or, as one mind-boggling official comment put it: "These events happened more than two years ago, and we believe this action is unwarranted."
Interesting that the Sky Gods at American think there is a statue of limitations on safety violations. Or that litigating the entire issue again in public will somehow improve its public image. It's exactly the tin-eared attitude that got American in trouble in 2008, inconvenienced 300,000 travelers then and will convince many more flyers now that the airline is corporately delusional and operationally unreliable.
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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.
THE FINE PRINT All of the opinions and material in this column are the sole property and responsibility of Joe Brancatelli. This material may not be reproduced in any form without his express written permission.
This column is Copyright © 2010 by Joe Brancatelli. JoeSentMe.com is Copyright © 2010 by Joe Brancatelli. All rights reserved.