The merger—or the absorption, if you will—of Iberia by British Airways is big news. It means that in the global marketplace, you’ll be seeing the first of many mergers and acquisitions.
Flag carriers may become a thing in the past. And when you think about, what is a flag carrier? It’s ego.
At one point, every country had to have its own carrier.
You’ve got Sabena in Belgium, and you know what? In 75 years, Sabena only had a profit in one year. They were heavily subsided by the government and, of course, they’re no longer in business.
Alitalia, well, that one stands for “All Landing in Tokyo, All Luggage in Athens.”
TAP, the airline of Portugal is hanging in, but where’s their route network? It’s not that big!
So, what does this mean for travelers? In the short term, absolutely nothing. British Airways and Iberia are still members of the oneworld alliance, just like Star Alliance with United, SAS and Lufthansa, and the SkyTeam with Delta and Air France.
But what it does mean is that it allows these airlines to combine overlapping routes and become more efficient in terms of where they fly and how often they fly. And you know what that means: in the long run, it allows them to cut their staff, cut their service, and increase fares.
Once that happens, if this is approved by the European Union, get ready! It’s already happening in the Pacific. There’s a big battle right now between American Airlines and Delta to see who wants to go to the dance with Japan Airlines. JAL was once one of the healthiest airlines in the world, and it’s now one of the sickest in that respect.
OASIS OF THE SEAS DOCKS IN FORT LAUDERDALE
The largest cruise ship ever built showed up last week in Fort Lauderdale. We’ve been talking about the Oasis of the Seas for quite awhile on simply because we have to ask the question: “How big is big?” or “Is it too big?”
Imagine a ship that’s 20 stories high, it’s as long as the Empire State Building is tall. Now, let’s put that in perspective. What that means is it’s too big to fit through the Panama Canal and too big to get to most ports. And of the ports it can fit in, like the island of St. Martin, the actual population of the ship dwarfs the population of the island in that area four to one.
At that point, infrastructure questions come into play, such as, “How many bathrooms can there be on port to handle all the people coming off the ship?”
You know what the answer to that question is? The people who built this ship at the Royal Caribbean really didn’t care about that simply because they didn’t build the ship to go anywhere. They built the ship as a destination.
They have so many things on this ship to generate revenue that they don’t want you to get off this ship. Of course, at the time they ordered this ship, economic times were much different. Everyone had money, and everyone expected more money.
They built this ship really to give Orlando and Las Vegas a run for their money. This is a ship that can do meetings and conventions; they can do an entire car show if they want. And they’ve got all the entertainment, they’ve got all the gambling, the spa, and everything a Vegas hotel has.
What does this do to capacity issues of the cruise lines in general?
Well, number one: it means that it’s going to become another buyer’s market. In order to fill this ship, they need to siphon off the passenger database from all the other ships.
We’re already seeing the numbers. Seven-day cruise ships to the Caribbean are from $249. That’s $35 a night including meals. You can’t wake up in Madison, Wisconsin for $35 a night!
One deal came across my desk earlier last week: A seven-day trans-Atlantic crossing on the legendary Queen Mary II for $495. I mean for $600, I think they’ll let you pilot the ship.
This a great buyer’s market with one important asterisk: onboard revenue. What these cruise lines are doing is marketing their ships to get you in the cabin because once you’re in there everything is a profit center. Ka-ching! And that’s what you have to budget for.
My advice is to take whatever fare they’re promising you for the cabin and multiply it by 3.5. That’s what your bill is going to be for going to the casino, going to the spa, and going to the signature restaurants other than the main dining rooms.
On the Oasis of the Seas, if you want to sit at a certain dining tables, there’s a $75 surcharge. It’s not the price that you need to think about, it’s the value. Everyone’s going to be competitive with the price. The key is to do your homework before you ever book a ship to make sure they’re competitive in value.
By Peter Greenberg for Peter Greenberg Worldwide Radio.
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Learn more with Inside the World’s Largest Cruise Ship on The Early Show