Thursday, July 30, 2009

Southwest and Frontier?

Until recently, it looked like Frontier would emerge from bankruptcy as a wholly-owned subsidiary of otherwise-regional Republic Airlines.

The Frontier-Republic deal had already been approved but was contingent on an auction period during which time other companies would be allowed to submit offers for Frontier's assets.

And that's the twist.

According to Business Wire, "Southwest Airlines Co. has submitted an initial non-binding proposal to acquire Frontier under the auction procedures established in Frontier’s Chapter 11 bankruptcy cases and approved by the U.S. Bankruptcy Court."

Having posted a profit for Q2, Southwest has ample cash and credit to pull off an aquisition of Frontier. That would in turn eliminate Frontier from the market, depriving AirTran of its partner and strengthening America's largest low-cost carrier.

It'd make sense. Will it happen? We'll see.

Expanding Frequent Flyer Benefits

For decades, airlines have rewarded frequent flyers with perks based on how much they travel each year. The travelers in turn have given most or all of their business to the carriers with which they were entitled to the highest levels of perks.

Now, airlines shrinking to keep their planes full in the face of a recession-driven decline in travel have a new challenge: how to retain those valuable frequent flyers.

Fewer, fuller flights mean fewer opportunities for to upgrade or book free tickets, driving down the value of their miles. Cuts in staffing mean fewer people to take care of these travelers when they need to rebook flights. And, of course, service itself often takes a hit when employees experience pay or staffing cuts.

The key is to find ways to reward the most valuable frequent flyers, those who hold elite status in an airline's program, and especially those with status in the highest tier ranking. Here are a few changes already underway:
  • Delta is unveiling a new top level in its SkyMiles program (Diamond), and will now offer "rollover" qualifying miles for those who fly more than the number of miles needed to qualify.

  • United is eliminating fees previously charged for award tickets booked within 21 days of travel.

Of course, airlines need to make money, so any cut in fees or expansion of benefits to top-level elites will be felt by everyone else--and especially by the "ordinary" (non-elite) passengers.

But as United spokesperson Robin Urbanski put it, "Significant revenue comes from Mileage Plus members, so in order to continue earning their business and grow it, we are making our program more beneficial. Making it easier to use their miles will give us more repeat business."

In other words, reward the people who care. The rest will just buy the cheapest fare no matter what you do.

Sunday, July 26, 2009

Greyhound for the Next Generation

In recent months, I've introduced you to BoltBus and NeON, both of which revolutionized bus travel with innovations like onboard wireless Internet, much roomier seats, and power outlets, and fares in the $20-30 range connecting New York to destinations like Washington, D.C., Boston, Toronto, and Montreal.

In both cases, I pointed out that BoltBus and NeON were operated by Greyhound, America's largest bus network which in recent years has lost market share to curbside discounters commonly known as Chinatown buses.

Certainly, Greyhound used these new ventures to compete with the Chinatown companies (most of which were charter-based operations of questionable reliability). It also avoided waving around its role in the companies to avoid turning off potential travelers who have come to associate Greyhound with cramped, uncomfortable travel.

But the real intent behind these efforts was to fend off a far more serious challenger: MegaBus, which is operated by one of Greyhound's few real domestic competitors (Coach USA) and also offers free onboard WiFi and other goodies.

BoltBus and NeON were used to proof a concept, and now Greyhound has revealed its next step: a new-generation service that incorporates everything we loved about those services (the Internet, the roomy seats, the power outlets) under the Greyhound name. Greyhound is calling "the future of bus travel."

Private Commuter Rail: METRA Car 553

I was amazed this morning to read about Car 553, the last private commuter rail car on the Chicago-area METRA system. For a $900 annual membership, passengers who already hold valid METRA passes may ride in the car, which dates back to the 1920s.

Yesteryear's luxury parlor car has lost much of its luster. Mahogany paneling, gold trim, and crystal chandeliers have given way to blue-carpeted walls and seats that are "comfy but not cushy." But as the Tribune article points out, there are always seats, the ride is quiet (since cell phone conversations are limited to the vestibule or card room), and there are tables for work and other purposes.

This led me to wonder: is there possibly a market for private cars on today's busiest commuter rail routes?

What do you think?

Saturday, July 25, 2009

Alaska and Continental part ways

For ten years, members of Alaska Airlines' Mileage Plan have earned miles for flights flown with Continental flights, and Continental passengers have earned miles for flying with Alaska.

On October 25, 2009, the same day that Continental officially moves from SkyTeam to the Star Alliance, that partnership will end.

Most people probably didn't see this change coming. Unlike Continental's relationship with Delta, the Alaska partnership wasn't derived from SkyTeam; it's a bilateral arrangement between the two carriers.

Continental didn't offer an explanation for the change. But observers might note that United Airlines has been making headway in Alaska's home area in the northwest for some time, and dumping the CAL-ALK relationship gives Continental's frequent flyers an incentive to look to their soon-to-be Star Alliance partner for their travels in that region.

I'll miss being able to fly with Alaska and earn miles; it's something that always struck me as special about Continental. More important is whether Presidents Club members will continue to have access to Alaska Airlines' Board Room clubs, which serve tasty soup.

Officially, the issue of the clubs is "still being finalized." But with the ties cut for actual travel, does anyone believe the club reciprocity would continue?

Monday, July 20, 2009

JetAmerica - the Airline that Wasn't

In 2007, John Weikle launched a daring venture called SkyBus.

Modeled on Ireland's successful RyanAir, SkyBus promised to deliver extremely cheap air travel--as in, fares under $20--by doing away with all of the frills and connecting obscure airports, which have lower landing fees because there is no demand.

SkyBus got off the ground and offered something comparable to nationwide service, albeit to places that were often very far from the destinations they claimed to serve. But fuel prices climbed and climbed, and Weikle's venture was caught up in the same doom that crushed established carriers like Aloha. SkyBus ceased operations in April 2008.

JetAmerica made the same promise, and it used the same model, neither of which should be surprising since it was also founded by John Weikle. It also had an even shorter run than its predecessor: JetAmerica collapsed today, before getting a single plane in the air.

At a time when drastically reduced demand has shaken the foundations of every domestic carrier and share prices have plunged to a third of their values at the height of the fuel crisis, one could hardly be surprised to learn that financing for a new airline held limited appeal.

But seriously, does anyone believe that it's possible to operate an airline across a landmass as big as the United States while charging fares lower than the BoltBus?

Weikle has his vision, and bravo for his enthusiasm and effort. But I don't see this model ever working.

Friday, July 17, 2009

Farewell, Larry Kellner.

Larry Kellner, Continental's Chairman and Chief Executive, surprised analysts and just about everyone else today with news that he is leaving the airline industry at the end of the year to head up newly formed private equity firm Emerald Creek Group LLC.

Kellner has headed
Continental since 2004, and while times have not been good for the airlines as a whole, the company has done much better than most of its competitors during his tenure. He'll be succeeded as CEO by the company's President, Jeff Smisek.

It's expected to be a smooth transition. But no matter how seamless it may be in the boardroom, the thousands upon thousands of us who fly with Continental will know the difference: a recorded video of Kellner has welcomed us onto every flight, and while it might seem silly, I'll miss it.

Farewell, Larry. You did a great job. I hope that Jeff lives up to the bar you placed.

The Return of Eastern Airlines?

Eastern Airlines stopped flying and dissolved in 1991. Now, a core group of former employees and new investors is lining up funding with the goal of relaunching the forgotten carrier under a new business model. Seriously.

I know what you're thinking: it's not a good time to start an airline. And you have a point. Every airline is trading in the red. Fuel prices are not favorable even with oil having fallen to a "mere" $62 per barrel, and how long will it be before we see $70 or higher again on speculation?

But hey, these people have stayed in touch for 18 years since their employer went out of business. They've spent a lot of time on this, including designing an employee stock ownership plan that should align the interests of labor and management (a perennial problem for airlines). They're also looking to start small, with just 30 planes.

Will it work? I doubt it. But at least they won't need to hire someone to design a new logo.

Tuesday, July 7, 2009

BIG sale on airfare after Labor Day!

Okay, this is huge.

To prop up booking for 2009, Southwest decided that it was going to offer ridiculously low fares in the traditionally low-demand period between Labor Day and Veterans Day.

How low? I'm talking about $30 for flights up to 400 miles, $60 out to about 800 miles, and $90 for destinations anywhere in the Lower 48 states!

It's not just Southwest, either: United, American, JetBlue, U.S. Airways, and Continental are all onboard with the same deal. I'm looking at flights from Washington to Los Angeles all through the fall months for $190 round-trip!

If you want to travel, this is a huge opportunity. Huge.

Sunday, July 5, 2009

Eating Hot Dogs in Chicago

The Capitol Limited got us into Chicago exactly on schedule, an end-to-end travel time of about 17 hours. That might sound like a long time to those unused to train travel, but it's a remarkably relaxing time when one can just watch the scenery go by while playing cards in the comfort of a roomette.

I was a little disappointed to see that the dining car has been reconfigured along the lines of the City of New Orleans' Cross Country Cafe, though: the layout looks cool, but the seating doesn't face the tables squarely so it can be a little uncomfortable.

Even so, we hadn't been on a train since our honeymoon in January, and we both had a great time.

As one might expect, Chicago was bustling with activity on Friday. People were piling into Millennium Park to stake out prime viewing locations for the fireworks, much as they would be doing the following day in D.C. Since Gwen and I were going to the Mid-America Club, though, we opted to wander the city.

We'd been to Chicago before, and we only had so much time, so we limited our plans to one goal: hot dogs.

The Chicago-style hot dog is an undertaking: beyond the basic hot dog, one has the poppy-seeded bun; mustard and relish (but not ketchup); chopped onions and tomatoes; peppers; and a full dill pickle spear. Cheese and chili are optional.

It's an undertaking to eat one without making a mess, and we didn't manage that. We did enjoy our hot dogs immensely, though, mine with cheese while Gwen added chili as well. Accompanied by fries and milkshakes, our meal easily exceeded recommended daily calorie intake. But calories on trips don't count, right?

Wednesday, July 1, 2009

Back-to-Back Fireworks

Chicago is doing its Independence Day fireworks this year on Friday, July 3. Predictably, D.C. has opted for July 4. So, Gwen and I have decided to see both.

We'll be leaving tomorrow (Thursday) afternoon on Amtrak's Capitol Limited. Overnight accommodations in a Superliner Roomette, dinner and breakfast included, and we get into Chicago-Union at 9:45 a.m. That means we have the day to sightsee in the Windy City before attending the Taste of Chicago event at the Mid-America Club.

One night in Chicago and then we fly back via Detroit. The flight is with Delta, but it's a Northwest flight, so our Continental status got us upgraded to First Class.

When we get back to Reagan on Saturday around 4:30 p.m., we'll have time to go home, shower, change, and head over to see fireworks from the party my boss is having in Arlington.

And that still leaves us Sunday!