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Something To Talk About ...
Thursday, June 28, 2018 -- This week, a reader-interactive musical lede: We can go with Bonnie Raitt's 1991 bluesy classic, Something to Talk About or dig even deeper into the vaults for Martha Reeves' 1964 barnburner, the Marvin Gaye-written Dancing in the Street.
Both songs make sense this week because, as Martha informs us, summer's here and the time is right for just about anything except deep discussion of life on the road. Yet Bonnie cannot be ignored. There's something--many things, in fact--to talk about and little mysteries to figure out.
While you contemplate that musical conundrum, let me plow ahead and talk about the kind of things that may very well dominate our conversation in the second half of this year.
DELTA MAKES A PLAY FOR AUSTIN
The last time Delta looked at its route map, about a decade ago, it decided it needed a hub in Seattle-Tacoma and went to war with hometown hero Alaska Airlines. The Seattle market is growing so rapidly that both carriers are prospering with Sea-Tac hubs and Alaska is even pioneering flights at nearby Paine Field. Austin, Texas, however, is no Sea-Tac. And big as it is, Texas already is home to four major hubs (American at Dallas/Fort Worth, United at Houston/Intercontinental and Southwest at Dallas/Love and Houston/Hobby). Still, besides being the state capital, Austin is also a growing technology center and one of those almost-insufferably-cool places to live. Plus it is one of the fastest-growing airline markets in the nation and Austin-Bergstrom International is already mapping out growth opportunities. In other words, the five-county Greater Austin-Round Rock area is ripe for some point-to-point flying. Government statistics show all ten of Austin's top routes connect to hubs and that means Austin residents surely crave nonstops to their actual destinations. Delta wants to be the provider. It's already advertising for staff in Austin and has plenty of room to grow since it is currently a distant fourth in the market. Before the end of the year, expect Delta to add a new slate of flights and officially declare Austin a "focus city." And don't be surprised by a nonstop to Paris, especially since British Airways is doing quite nicely with the London service it launched in 2014 and low-fare Condor this summer is flying three weekly flights to Frankfurt.
HOW LONG CAN NORWEGIAN BURN THE FURNITURE?
Norwegian, the discounter that appeals to some business travelers because of the low fares and "premium" offering up front, continues to add new flights. On October 31, it'll begin flying between Tampa and London/Gatwick. A few days earlier, it'll launch its first Canada route from Montreal to Guadeloupe. But Norwegian is losing money, lots of it, tons of it--and losses grow with each new route it pioneers and every new Boeing 787 Dreamliner it deploys. The carrier's combative boss, Bjorn Kjos, rightly points out that Norwegian's fast-growth/new planes/new market strategy has proven that travelers will respond if you keep fares low. But Kjos, who controls about a quarter of Norwegian's stock, has not proven you can get travelers to pay profitable fares. The company's sky-high debt load and low share price seem unsustainable. Both Lufthansa and British Airways parent IAG are interested at the right price, yet Kjos does not seem inclined to sell. But how long can Norwegian burn the furniture to keep flying independently and how does it survive as oil prices rise? And as customers, how much faith should we have in Norwegian's future? (I have an answer to that last one: Not much. Book ahead with extreme caution.)
Speaking of oil prices, the directional arrow continues to point straight up. According to statistics compiled by the federal government, the price of a gallon of jet fuel rose around 17 percent in 2017 compared to 2016 and rose an additional 23 percent during the first four months of 2018. (Jet fuel was selling for $1.21 a gallon in February, 2016, and cost an average of $2.08 in April.) And the price of crude continues to jump. West Texas crude topped $73 a barrel today, its highest level in more than three years. Brent crude, the type generally used to refine jet fuel, is even higher: $77 a barrel today compared to $46 a year ago. What does that blizzard of numbers mean? Higher fares. The question is when. A few carriers already have hiked fuel surcharges this year and airline executives are making ominous noises about the inevitability of fare hikes sooner rather than later. Now what airlines want to charge and what flyers are willing to pay are often two different matters entirely. But we can say this much: Higher oil prices eventually translate to higher ticket prices.
TUESDAY, WHEN THE WORLD WAS YOUNG ...
Remember Tuesday, when the world was young and Supreme Court Justice Anthony Kennedy hadn't retired and the entire summer began to be consumed by arguments about and political machinations over his replacement? Way back on Tuesday, I was about to suggest we'd spend a lot of this summer talking about the 5-4 Court decision upholding the third version of the Trump Travel Ban. In the hours between that ruling and Kennedy's retirement, we got the expected philosophical tent posts: Trump ludicrously called it "a moment of profound vindication," some scholars supported the decision while others condemned it. A careful reading of the actual decision is really worthwhile. The third iteration's limited scope--six nations and only four Muslim-majority countries--clearly helped it pass judicial muster. Even getting to that required the supporting justices to condemn (but judicially ignore) Trump's Muslim rhetoric and separate his stated intent from the "neutral" text of the travel ban. All in it, the decision got it about right. But who's going to talk about it now as fireballs are thrown over the now-vacant Kennedy seat?
DO WE HAVE TO TALK ABOUT THIS?
You will hear a lot about it in the coming months, but it is a topic I urge you to totally ignore. British lawmakers this week approved a third runway for overcrowded, capacity-constrained Heathrow Airport. The 415-to-119 vote in Parliament was surprisingly lopsided given the decades-long battle over expanding Heathrow's capacity. But the vote is merely a baby step toward a new runway. The high cost (upwards of $20 billion) and the continued stiff opposition from many quarters will ensure that a Heathrow expansion remains at least a decade away.
Spending a moment of your precious summertime thinking about a new runway at Heathrow is the equivalent of wondering why I didn't link to the David Bowie-Mick Jagger cover of Dancing in the Street or worrying that I might find a reason to link to Mungo Jerry.
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