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service excellence since 1989

November 2011
In this issue...

Airlines turn to alternate revenue sources amid declining airfares

The average domestic airfare, adjusted for inflation and minus extra fees, has dropped 21% since 1995, the Department of Transportation says, as the industry continues to suffer from a cost-intensive business structure and uncontrollable external factors. This has led to $55 billion in losses in the past decade and forced carriers to look to various ancillary charges to shore up revenue. Passenger tickets currently make up only 71% of U.S. airlines' overall passenger revenue, dropping from 88% in 1990, the DOT reports. U.S. airlines generated $1.5 billion from ancillary revenue such as fees for checked baggage during the second quarter, according to the Department of Transportation. The rate of increase is not the same as in previous years. Bag revenue was down $5.1 million from the second quarter of 2010, and fees from reservation changes rose $18.8 million. (Source:The Hill/Transportation blog, American City Business Journals/Houston, The Dallas Morning News (free content)/Airline Biz blog), The Wall Street Journal (tiered subscription model))

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Regulators approve slot swap between Delta and US Airways

US Airways and Delta recently completed an agreement for an exchange of assets at Washington's Reagan National Airport, and New York's LaGuardia Airport. Thee most valuable part of this exchange is a "slot swap" that will provide more takeoff and landing slots for US Airways at National, and more slots for Delta at LaGuardia, two of the nations only slot controlled airports. This concentration of slots among what are already the largest airlines at each airport will likely lead to higher fares for business travelers at both airports as competition is reduced. The impact will likely be felt most at National Airport which is already one of the nations most expensive places to fly to or from according to an April New York Times article. This is due to the extremely limited amount of low-cost carrier service at Reagan. To counteract the likely increase in fares, as part of the "slot swap" agreement, the FAA is requiring an auction of some of the slots previously held by US Airways and Delta. Only airlines without a significant level of service at each airport can participate in the auction, and therefore the bidders consist largely of low-cost carriers without significant service at these airports. The list of bidders includes Southwest Airlines, JetBlue, WestJet Airlines, Frontier Airlines, Spirit Airlines Inc, Allegiant Travel . and Sun Country Airlines.

"Travelers in the DC area should really be rooting for Southwest to acquire the Washington slots." Said Jason Kaufman, Senior Manager of Service Innovation with MacNair Travel Management. "While they would only serve a few destinations nonstop from DCA, their entire network would be opened up to the "Southwest Effect" which holds down pricing in almost every market they serve - whether direct or via connecting flights." Kaufman added that "while flights added by the other bidders would impact pricing, the effect would be largely limited to the markets where they add nonstop service due to their limited route networks. Additionally, should Southwest fail to win the auction, it is possible that they would reallocate some slots that they control through their AirTran Airways subsidiary to Southwest so that service could be added to key Southwest markets like Chicago Midway, and Nashville." (Source: Bloomberg, The Wall Street Journal (tiered subscription model), WTOP)

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MacNair Travel Joins Luke's Wings to Honor Members of the Armed Forces

This Friday, November 11, MacNair Travel Management will join the non-profit organization Luke's Wings along with American Airlines and Washington Life Magazine in hosting Homecoming, a black-tie cocktail reception and fundraising gala in honor of our military heroes, veterans and families. The gala will take place in Reagan National Airport's Terminal A and all proceeds will benefit Luke's Wings and go towards tickets for wounded warriors and their families so they don't have to be alone this holiday season or this Veteran's Day. For more information on Luke's Wings and the Homecoming gala, you can visit their wesbite at http://lukeswings.org.

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Slow shift to chip cards poses potential problems for U.S. travelers

The proliferation of chip-and-PIN-based credit cards in European countries may pose a problem for American travelers holding the traditional magnetic-strip credit cards. U.S. banks are only beginning to explore the new technology, while some are touting the potential of smartphone-based payment systems. (Source: Travel Weekly)

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Business travel costs will likely rise in 2012, survey finds

Rising costs will force airlines and hotels to raise rates in 2012 as demand for business travel continues to grow, reports American Express Global Business Travel. "As more and more companies understand the importance of putting people on the road and its criticality to converting prospects, retaining clients, and ultimately driving growth, particularly in emerging nations, we expect to see travel prices go up," said Christa Degnan Manning, a director at American Express Global Business Travel. MacNair Travel can help you manage these costs to get the most value from your travel. (Source: Fox Business, Travel Agent Central)

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Fee-disclosure rules signify progress in DOT's transparency drive

Airlines have relented, following new Transportation Department rules requiring the disclosure of optional fees in ticket prices posted on carriers' websites, marking progress in what could be a long struggle over the transparency issue, analysts say. The department says it will introduce more rules intended to benefit passengers regarding price comparisons. Analysts expect airline companies and supporters to oppose further regulations as they try to protect their profit margins. (Source: St. Louis Post-Dispatch/Tribune Media Services)

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Delta will expand "Economy Comfort" seating program to rest of fleet

Delta Air Lines plans to introduce an option for seats with three inches of extra legroom in all of its aircraft, which was previously available for selected international economy flights. Passengers can purchase the seats for an added $19 to $99 to fares. (Source: The Wall Street Journal (tiered subscription model)/Dow Jones Newswires, The Idaho Statesman (Boise)/The Associated Press))

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Airline expansion takes off in Middle East

Airline expansion in Europe and the U.S. is limited, but Middle Eastern countries such as the United Arab Emirates are building new hubs. In the Jebel Ali region of Dubai, an airport that will have six runways that can serve 150 million passengers a year has been built. The expansion contrasts with London's Heathrow Airport, which declined to add an additional runway. (Source: eTurboNews)

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Security "chat-downs" are introduced at second airport

The Transportation Safety Administration is now using "chat-downs" at two airports. After introducing the interview screening at Boston's Logan International Airport, the agency has announced that it has taken it to Detroit's Metropolitan Wayne County Airport. At least 10 arrests have been made since the chat-downs began to spot suspicious behavior. (Source: Bloomberg, The Hill/Transportation blog)

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Most airlines are expected to maintain profits due to capacity cuts

Ahead of third-quarter results, one analyst predicts that most airlines will show a profit. "We believe that most airlines can continue to make money in a moderate recession," said Maxim Group analyst Ray Neidl. "We expect guidance that will be given in the airline conference calls will be that of caution, with the expectation that economic developments can be handled." The airlines' strategy of limiting domestic seat-capacity growth will allow them to maintain higher fares even if demand drops. (Source: MarketWatch)

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Spirit's price-focused strategy leads to profits, consumer complaints

Spirit Airlines' business model of low base fares coupled with a variety of additional fees has led to the company's evolution as a rising name in the airline industry, but has also garnered numerous complaints from passengers. However, CEO Ben Baldanza says the airline's policies are not for everybody. "There's a trade-off flying Spirit," he said. MacNair Travel strongly recommends against flying Spirit due to numerous fees and poor service. (Source: St. Petersburg Times (Fla.))

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Airlines jump on growing Wi-Fi trend

Airlines across the U.S. are rushing to gain a competitive edge on a new revenue source as they upgrade planes with Wi-Fi service. At least four Wi-Fi providers are competing with one another to secure contracts, with offers of more reliable service and features such as live TV streaming. About 1,260 U.S. aircraft provide wireless Internet access now; more than half of the total number of planes is expected to offer Wi-Fi service by 2013. (Source: The Wall Street Journal (tiered subscription model))

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Amtrak Offering Wi-Fi on More Routes

Amtrak is now offering Wi-Fi on more routes. Using Wi-Fi as simple as finding the AmtrakConnect network when on board, agreeing to the terms of use and connecting. You'll have the convenience of responding to emails, catching up on work, preparing for your next big meeting or just surfing the web for your favorite sites. Also keep your devices charged with our onboard outlets. Now you can do more when you ride Amtrak.

Train routes currently offering Wi-Fi via AmtrakConnect include:

  • Northeast RegionalSM
  • Ethan Allen Express
  • Maple LeafSM
  • CarolinianSM
  • VermonterSM
  • Adirondack

  • Keystone Service
  • Empire Service
  • PalmettoSM
  • New Haven-Springfield Shuttle
  • Amtrak DowneasterSM
  • PennsylvanianSM

Onboard Wi-Fi via AmtrakConnect provides a completely different experience in business travel. Connect to more of what matters online and make it easier to do more when you're on the go. (Source: Amtrak)

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Please feel free to send comments or suggestions to our editor, Tony Torres, at ttorres@macnairtravel.com.

As always, thank you for your business,

Michael MacNair

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1101 King Street
Suite 190
Alexandria , VA 22314
(703) 836-1100
(800) 833-4382
Fax 703-836-2078


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