From Peter Greenberg Worldwide Radio – May 3, 2008
ANOTHER AIRLINE BITES THE DUST
We’ve had a wild week in the world of aviation business. What a surprise: Eos Airlines, basically closed up shop last week. Eos, if you remember, was one of the great experiments in all business-class flying across the Atlantic.
They had a 757 configured only to hold 48 all first-class seats—a great concept that was great while it lasted, and you could say the same thing for MAXjet along with a number of other airlines that have tried it.
It’s important to remember in this situation that when you lose airlines—just as we’ve lost American TransAir, Aloha Airlines, and Skybus—that capacity is not necessarily being replaced. And you know what that means: ka-ching, ka-ching for consumers.
You’re going to be spending a lot more money.
HOW WILL FUEL PRICES AFFECT TRAVEL?
It’s going to be a long, hot, expensive, and crowded summer. Now, does that mean you’re not going to be traveling? Of course not!
By nature, we are creatures of habit. We look at travel as our birthright, and we take it seriously.
What’s the number one vacation spot for Americans? It’s Paris. Does the euro ring a bell at $1.60?
It’s expensive, and we’re still heading over there regardless. How did that happen?
In fact, airfare is not the only expensive travel fee these days. Look at recreational vehicles, which are nothing but a gas station surrounded by four tires. And though boat sales of mid-level boats may be down, people are putting gas in those, too. I know it—I’ve got one.
It’s amazing what we will not be denied once we like it. It’s not about affordability; it’s about accessibility. With fuel prices going up, we’re going to have to watch our desire for accessibility, as it won’t last forever.
And it’s not only fuel prices that are affecting travel. I’m going to give you a statistic that is absolutely shocking, and it may explain why your cost of travel—way beyond just the airplane ticket—is going to go crazy.
Listen to this: The percentage change since the year 2005 in the worldwide price of food is up 77 percent. We’re not just talking about rice shortages, we’re talking just what it costs for a loaf of bread—or the bun that goes on your McDonald’s cheeseburger in the middle of Beijing during the Olympics.
So, remember when you’re budgeting your trips, it’s not just the airline ticket and hotel costs, it’s also what a tube of toothpaste costs in Venezuela versus Venice. The disparities are staggering.
PASSENGER BILL OF RIGHTS … HERE WE GO AGAIN
Another item in the news from this week is in the category, “Here We Go Again!” The California state lawmakers have actually passed legislation for a passenger’s bill of rights—remember we did this last year?
In August, the New York State Legislature passed the same law unanimously, and then Governor Spitzer signed it into law. We’ve been here before.
Of course, the airlines challenged it and got it thrown out, claiming that the airlines are exempt from regulation by the states under the federal de-regulation laws.
Well, this hasn’t stopped the folks in California from trying it again. What the bill of rights states is that basically passengers may not be ill-treated by being cramped in an aircraft stranded for several hours on the tarmac. The legislation, according to the state law in California now, says that you will be guaranteed food, water, light and working bathrooms. Now wouldn’t that be great on flights that actually flew?
Forget being stuck on the ground—what about the planes that are actually in the air? That’s the law I want passed! I want a working lavatory at 35,000 feet!
But forgetting that, does this law have a chance? The answer is no, but it is a nice gesture. It’s going to get nailed.
Check out a profile of one of leading figures behind these bills, Kate Hanni of the Coalition for an Airline Passengers’ Bill of Rights.
WILL SOMEONE TAKE UNITED TO THE DANCE?
By the way, remember the famous Delta-Northwest merger? There was also a rumor of a United-Continental merger.
It certainly was a rumor alright, because Continental announced earlier this week that it ain’t gonna happen. And US Air now says, “We’re in talks with United.”
Will somebody take United to the dance?
Wilder than that: there are now rumors that British Airways, American and Continental are talking. It seems everybody’s talking these days. It’s kind of like a bad square dance, and the minute you turn around, it’s sort of like another do-si-do.
I will tell you that, for the moment, airfares across the Atlantic are still cheap, especially if you want to fly business-class. Everybody from Continental to Swiss to British Airways is offering great business-class round trip deals. Remember, American Airlines was the one that started flying into Stansted, not because they wanted to go, but because they were losing market share to—guess who—Eos, which is no longer with us.
The question of the day is then, how long with American fly to Stansted now that they don’t have to? American, in trying to match Eos’ shares, was offering all sorts of great mileage incentives. But, now you have SAS, Continental, Swiss and British all offering alternate and additional routes as an attempt to combat market competition. And how long will they keep those flights?
Between the California bill of rights, which is going to go down in flames to competitive routes and fares, which also may go down in flames, we’ve got a very difficult summer ahead.
From Peter Greenberg Worldwide Radio – May 3, 2008
Read more from Peter’s blog, the Travel Detective Files.
Check out previous coverage on some of these topics:
What’s Next for the Delta-Northwest Merger
Severe Turbulence Shakes Airline Industry
A Royal Christening, Big Savings, and a Passenger Bill of Rights
Impending Drama: Merger Mania and the Passenger Bill of Rights
