Thursday, May 29, 2008

United and its on-again, off-again merger plans

Earlier, there were reports that United Air Lines and U.S. Airways had advanced their merger talks to an advanced stage and anticipated an announcement within a few weeks. But now we hear quite the opposite: the merger is on hold, and United is nearing agreement on an alliance with its former merger target, Continental Airlines.

Such an arrangement would certainly shake up the industry. At the moment, Continental remains part of SkyTeam, whose other U.S. members are Delta and Northwest. Since those two airlines announced their merger, Continental has asserted its interest in "other arrangements," but few anticipated an arrangement with United (which is, along with U.S. Airways, part of the Star Alliance).

And U.S. Airways? They've found a new way to reduce costs: starting June 1, they'll no longer be serving free snacks to Coach passengers.

High-speed rail for America?

In theory, America already has high-speed rail. It's called the Acela Express, and in many regards, it's an improvement over Amtrak's creeky regional rail cars, some of which are over 20 years old.

But for all of its styling, the Acela--which operates along the Northeast Corridor routes between Washington, D.C. and Boston--only musters about 83 miles per hour. Compare that to the 200mph AGV in France or China's 350mph Shanghai Maglev, and... well, it's like standing still. And to many people, that it costs approximately twice as much to get from D.C. to New York 15 minutes faster is adding insult to injury.

So why are we, the citizens of what is still ostensibly the world superpower, consigned to such sub-par rail service? Mostly, it comes down to money: while other nations treat their train systems as public goods, we think that they should be private, profit-based entities.

Of course, passenger rail isn't and can't be profitable as a general policy, which is why we have the strange quasi-government organization formally known as the National Passenger Rail Corporation and popularly known by the brand name Amtrak. Established in 1970--when most of the private passenger rail companies had gone under and the rest were pulling out of the business--Amtrak is a corporation jointly owned by the U.S. government and the private rail companies from which it came, but all of the voting stock belongs to the government.

The government didn't find passenger rail any easier to make profitable than did its private-sector predecessors, so Amtrak gets funding from the Federal budget. Unlike a true national rail carrier, though, Amtrak's funding is given only reluctantly, with the goal of eventually making the carrier self-sufficient. Long story short, that's why the Acela is less than one quarter as fast as China's maglev.

But times may be changing. A bill introduced in the U.S. House of Representatives and approved by the Transportation and Infrastructure Committee would boost Amtrak funding by $14 billion, and that money would go to do something that Amtrak's current budget could never accommodate: build dedicated high-speed passenger rail tracks along the Northeast Corridor, tracks that would not share capacity with the existing (slow) regional or freight trains.

The result--speeds of 150mph or faster--would reduce the trip by D.C. to New York by 45 minutes, making a trip by rail about the same length as a flight when taking into account the check-in, security, and boarding procedures at airports. And while we might not get bragging rights on the world stage, at least the other countries would stop laughing.

If nothing else, isn't that a goal worth the investment?

Friday, May 23, 2008

Amtrak Guest Rewards: It's better now.

America's perpetually neglected national rail carrier has seen hard times. Recently, though, things have been on the upswing for Amtrak.

Despite opposition from the Bush administration, the National Passenger Rail Corporation--which is jointly owned by the remaining rail carriers from pre-1970 and the U.S. government, though the government holds all of the voting stock--has undertaken a big campaign to improve both its services and its image. The first National Train Day, held on May 10, 2008 to commemorate the first transcontinental railroad a century earlier, is one example of Amtrak's improved publicity.

2008 has also seen enhancements to Amtrak's Guest Rewards frequent travel program. Rail passengers will appreciate the new Web site, which is much better organized and easier to navigate than the previous style. For those who travel by train, there are particularly attractive benefits available to top-tier Select Plus members, including:
  • Open access to the ClubAcela and Metropolitan Lounge facilities operated by Amtrak at train stations around the country, a benefit that cannot be bought by separate membership and is typically restricted to First Class ticket holders;

  • Open access to Continental Airlines' Presidents Clubs around the world, a $300+ value whether one might otherwise purchase a membership outright or pay the annual fee of an American Express Platinum card; and

  • A 50% point bonus on Amtrak travel, which is much more useful now that Amtrak has online point redemption for reward tickets.
So what does it take to get Select Plus status? In one calendar year, you'll have to rack up 10,000 rail points--which, like airline elite miles, are earned only for actual travel and not as bonuses. Since passengers earn 2 points for every dollar spent, that means $5000 in simple rail travel costs (special earning rates for Acela travel make it doable for closer to $2500).

The good news: even if you fall short of the mark, you'll only need half as many rail points to get Select status. That doesn't get you club access, but it does earn you a 25% point bonus and free upgrades in the Hilton, Hertz, and Budget loyalty programs as well as some other benefits.

One thing that we're still waiting on is online point redemption for upgrades. But since so many Amtrak upgrades are given on a space-available basis within one hour of departure, this one might be a while in coming. In the interim, as its high-flying competitors struggle with fuel costs, at least the continued improvement of Guest Rewards helps Amtrak hold ground.

Wednesday, May 21, 2008

Checking a bag? It'll cost you.

Today, American Airlines announced a new policy for checked baggage on its flights: following the model of highly profitable RyanAir in Europe, the largest U.S. carrier will now be charging $15 for the first piece of luggage that a passenger checks.

To be fair, American Airlines is hurting, and it's not alone. Higher fuel prices have affected every airline in the world. Most airlines now spend more on fuel costs than on any other aspect of their operations. There have also been massive cuts in carrier service, with nearly 30 cities across the United States so far this year losing service altogether.

The new policy applies to discounted Coach fares, so those lucky few who travel in Business or First class--or business travelers who travel on unrestricted Class Y Coach tickets--won't be affected. American also says that it will not charge to check a stroller or car seat if a parent is traveling with a child. Everyone else, though, had better be prepared to pay when the policy takes effect on June 15.

Checked bags have long been subject to fees, especially for being overweight, and some of the ultra-low fare carriers (like now-defunct Skybus) had previously tried the RyanAir model. Never before, though, has the privilege of a free checked bag been called into question by a major U.S. carrier.

For Americans, this is a real shift, as pronounced as when most(1) airlines suspended meal service for Coach-class passengers in 2004. And it matters, because at a time when every airline is looking for ways to cut costs, you can bet that American is only the first of many carriers that will adopt this new policy.

(1) Continental Airlines continues to serve complimentary meals to Coach passengers.

Monday, May 19, 2008

BoltBus: The New Way to Travel

Bus travel between New York and the cities of Philadelphia, Washington D.C., and Boston is nothing new. Greyhound has offered this service since early in the 20th century, and the advent of discounted e-fares means prices of as little as $20 each way or $35 for a round trip. Meanwhile, so-called Chinatown buses, operating under any of a dozen company names but ultimately very similar in their practices, offer competition to America's de facto national bus carrier.

Despite all of their efforts, though, neither Greyhound and its affiliates nor its Chinatown competitors have been able to escape the fundamental truths. The seats are comfortable at boarding but too cramped for long-distance trips. You can bring a laptop but you'll run out of power. In other words, you take the bus because it's cheap--but that's all.

Until now, anyway. There's a new way to travel by bus along the East Coast. It's called BoltBus, and it's different. How different? Start with legroom: by removing seats, the company has added about 3" of legroom for each passenger. That makes long trips more comfortable.

And those electronic gadgets we tend to drag along on trips? BoltBus has 110v power plugs throughout its coaches, so you can connect your laptop, iPod, DVD player, or whatever you want. There's also Wi-Fi onboard, and while the service is slow and isn't 100% reliable at every spot along the route, it's free. (As an aside, keep in mind that Amtrak is only in the process of getting power outlets for its regionals, and there is certainly no Internet connectivity on America's trains--even the Acela.)

You get all of this along with the typical amenities found on commercial buses: a restroom, air conditioning, and big windows. And unlike the Chinatown buses, BoltBus drivers are actually employees of the company and covered by standard commercial insurance.

Sounds good; now you wonder, what does it cost? That's the best part: fares start at $1 and get more expensive as you get closer to the day of departure, but even the most expensive walk-up fares go for about $20 one-way, and buying just one day in advance will usually find you a ticket for $15. Buying online also guarantees you a seat.

BoltBus has a frequent traveler program (who doesn't?) called Bolt Rewards. Members get priority boarding (something that costs $5 extra on Greyhound), and after eight one-way trips, you get a free one-way fare. Bolt Rewards also keeps your account active as long as you've had some activity in the last 18 months, so even occasional travelers can benefit.

We've had buses for a long time. We know what they're like, and we've been willing to shell out $60 to $110 cost of a one-way train fare from D.C. to New York just to avoid the bus experience. But if BoltBus can deliver more legroom, power outlets, and free Wi-Fi for $20, Amtrak may actually have found a twenty-first century competitor. That's good news for everyone.

Friday, May 9, 2008

Mergers and Hope

After being spurned by Continental last month, United entered into serious talks to merge with U.S. Airways. Most people laughed, because U.S. Airways is a total mess; its pilots haven't yet figured out seniority from the company's merger with America West a few years ago, and it routinely comes up at or near the bottom on customer service rankings. But United was serious.

They're probably serious, but their plans were complicated with today's announcement by Steve Wallach, the head of United's pilots union:

"We are aware of continued speculation in the media of a possible merger between United Airlines and US Airways, and have serious concerns that the highly touted financial benefits to be derived from such a merger are unlikely to be achieved because these benefits are based on assumptions that have no basis in reality. We therefore believe that a merger with US Airways should be a last resort and not a first choice for United."

Now, for a moment of absolute seriousness. If you haven't read Tom Friedman's article "Who will tell the people?" from May 4 in the New York Times, you should. And once you've read it, please send it to everyone you know.

Here's an excerpt: "Who will tell the people? We are not who we think we are. We are living on borrowed time and borrowed dimes. We still have all the potential for greatness, but only if we get back to work on our country."

There's more--a lot more--and it's a message that we all need to hear. Right away. Yesterday. In fact, thirty years ago would probably have been good. But now, for sure.