Business group sees "catastrophic" airline failures ahead
The Business Travel Coalition, an organization representing business travel interests of major corporations, last week urged Congress to do something to prepare for – or avert – a coming "catastrophic failure" of the U.S. airline industry. Anticipating another Chapter 11 filing, perhaps by Delta, BTC said it is "likely" that by the end of October, half of the country's airline capacity could be operated by bankrupt carriers, and that could increase to 70 percent by mid-2005. United and US Airways are already in Chapter 11.
"Major airlines are running out of cash with virtually all assets already collateralized," BTC said in a public statement, raising the prospect that the industry will suffer a "catastrophic failure" in the next 12 months – which BTC defined as two or three network airlines going into liquidation. If this happens, BTC said, it will mean severe disruptions to the business community and to the cities affected by loss of air service.
Warning that the federal government should start to plan now so that it is not caught off guard, BTC asked Congress to amend pending legislation, giving new authority to the National Academy of Sciences Transportation Research Board to develop "policy options that could be considered in a time of crisis." BTC said these might include lifting the restrictions on foreign ownership of U.S. airlines or reducing taxes on the airlines.  

AIRLINES

US Airways, United, Delta face added financial perils
US Airways told the bankruptcy court last week that its advance bookings are falling off – not surprising when you consider that airline attorneys have told the court US Airways won't last beyond mid-February unless it gets substantial pay cuts from its employees. The judge did grant the airline's request, allowing US Airways to reduce wages for most employee groups immediately by 21 percent. The order doesn't affect the pilots right away, because they are negotiating with management for an 18 percent pay cut. US Airways' unions had already taken two previous wage reductions in the past couple of years. In other developments, the federal Air Transportation Stabilization Board last week granted US Airways an extension that allows it to keep spending its cash reserves through mid-January to continue operating.
   Meanwhile, United Airlines last week told its bankruptcy court that in addition to terminating employee pension plans, it will probably need to impose new wage reductions on its employees in order to emerge from Chapter 11 as a viable entity. And Delta reported that it expects to lose up to $675 million in the third quarter – traditionally the strongest quarter for airline earnings – and that it continues to burn through its cash at an alarming rate.

US Airways outlines operational overhaul for February 2005
Starting February 6, 2005, US Airways plans a substantial revision of its flight operations, reducing average turnaround times of its aircraft by 15 percent. The company said this will allow it to operate 230 more flights per day than it does now. Another part of the strategy is to replace smaller turboprop aircraft with larger regional jets. The plan includes:
   *An increase of Philadelphia flights to 495 a day, up seven percent from the November 2004 schedule. US Airways said it will spread out existing arrival and departure banks at PHL, instead providing "a steady flow of flights throughout the day," and will add new regional service between PHL-Wilmington, N.C. and PHL-Washington Dulles.
   *An increase of operations at its Charlotte hub from the current 495 flights a day to 564, boosting arrival/departure banks there from eight a day to 10.
   *Adding new non-stop service from Washington Reagan National to six business destinations, using new 72-seat regional jets. The new schedule will provide four daily roundtrips between DCA and Atlanta, Cleveland, Detroit and Chicago O'Hare, and three each between DCA and Dallas/Ft. Worth and Houston Bush Intercontinental. US Airways said it will also replace some regional jet and turboprop flights with mainline jet service between Reagan National and Albany, Buffalo, Rochester, Syracuse, Columbus, Indianapolis, Jacksonville, Manchester and Raleigh. The use of larger planes will boost overall capacity at DCA by 40 percent.
    *Making Ft. Lauderdale-Hollywood a key departure point to Latin America and the Caribbean, and doubling daily departures there to 54. This includes adding new service from FLL to Guatemala City, Guatemala; Panama City, Panama; Kingston, Jamaica and San Salvador, El Salvador. Also, US Airways will add non-stops from FLL to Key West.
     The company said it will boost overall seat capacity at Boston and New York LaGuardia by 36 percent and 12 percent respectively through the use of larger regional jets and more mainline aircraft replacing smaller planes.     

News report says ATA might be up for sale
Is low-cost specialist ATA Airlines up for sale? The Wall Street Journal last week reported that executives of America West Airlines have been talking to their counterparts at ATA about buying part or all of the airline. The newspaper said AirTran Airways had also held some discussions with ATA. Recent reports from Chicago said that ATA – which is currently trying to restructure its debt load – might be planning to eliminate its operations at Chicago Midway, which is currently one of the airline's two biggest connecting points, along with Indianapolis. ATA denied that it intends to abandon Midway. America West, with hubs at Phoenix and Las Vegas, hasn't had a focus city in the upper Midwest since it backed away from its Columbus mini-hub several months ago.

American tacks on overseas fuel surcharges up to $50 roundtrip 
American Airlines on Friday (October 15) announced new fuel surcharges on international flights, citing an estimate that recent price hikes will increase its fuel bill this year by $1..2 billion over 2003. The carrier said it will impose a surcharge of $15 each way on flights between the U.S. and the Caribbean and Bahamas, Mexico, Central America and the South American destinations of Bolivia, Colombia, Ecuador, Peru and Venezuela. The surcharge will be $25 each way for flights to and from Argentina, Brazil, Chile, Paraguay and Uruguay; and on transpacific and transatlantic flights.

Air Canada ends Saturday stay, roundtrip purchase requirements
Claiming that Saturday night-stay rules and required roundtrip purchases are "the last vestiges of old-style airline pricing," Air Canada said it is eliminating them by ending, effective immediately, its Econo fare category. The change, which applies to all North American flights, pares Air Canada's fare types from six to five. The remaining five categories – Tango, Fun, Latitude, Freedom and Executive Class – are all one-way prices. 

Continental pledges to keep Cleveland hub for at least 10 years
While some airlines are scaling back or eliminating their hub operations in the U.S., Continental Airlines apparently has no such plans for Cleveland. Executives of Continental and the City of Cleveland have signed a memorandum of understanding in which Continental pledged to extend leases for its hub operation there at least through 2015. For its part, the Cleveland Airport committed to fee levels that will keep Continental's hub there competitive with other hub airports. Continental also said it would support the airport's capital improvements program, which includes the extension of one runway so that the facility will be able to "accommodate unrestricted international flights," an airport spokesman said. 

INTERNATIONAL
Peruvian carrier stops flying, then starts again
Many air travelers in Peru were on a wild ride last Friday as the country's largest carrier, LanPeru, was grounded by a court order and then returned to service through the emergency intervention of the Peruvian government. The trouble started in a court that was hearing a case against LanPeru by a small local carrier that is no longer in business; the suit claimed LanPeru was violating a law that requires all airlines in the country to be at least 30 percent Peruvian-owned. The judge found against LanPeru, and ordered the airline's flight permit suspended, which it was effective at midnight last Thursday night (October 14). But on Friday, the government stepped in with an emergency decree that allowed LanPeru to resume flying, citing the potential for damage to the economy. By Friday afternoon, LanPeru's planes were back in the air.  

JAL to offer high-speed Internet starting in December
Japan Airlines on December 9 reportedly plans to start offering passengers on international routes new high-speed Internet access. The service will first be introduced on the carrier's London-Tokyo route, and later expanded to other long-haul flights between Japan and the Americas, and Japan-Europe. Based on the Connexion by Boeing broadband satellite technology, JAL's service will be called JAL SkyOnline. It will cost $29.95 for unlimited use during a single flight, or $9.95 for 30 minutes and 25 cents per additional minute.

BOSTON (BOS). JetBlue has kicked off new daily non-stops between Boston and Ft. Myers, with plans to increase frequencies to three a day over the next few months.

LAS VEGAS (LAS). America West Airlines on October 18 adds new daily non-stop service between Las Vegas and Houston, along with a second daily roundtrip between Las Vegas and Detroit, and a sixth between Las Vegas and San Diego.

NEW YORK KENNEDY (JFK). United Airlines on October 18 is scheduled to begin its new transcontinental "p.s." product (it stands for "premium service). It begins with the JFK-Los Angeles non-stop route, where United will use three-cabin 757s that feature lie-flat seats in first class; leather seats in business class that provide extra recline and four feet of pitch (space between rows); and an all-Economy-Plus coach cabin with 34-inch pitch. A complete roll-out on all JFK-LAX flights won't be finished for a couple of months, and then United will start to make it available on JFK-San Francisco non-stops.

ORLANDO (MCO). Low-cost specialist Independence Air, straying from its Washington Dulles home base, has started service from Orlando to Columbia, S.C. and Knoxville, Tenn.., with two daily roundtrips in each market.

London's newest hotel is The Soho Hotel (800-553-6674; www.sohohotel.com), which its owners say is the first full-service luxury hotel in that neighborhood (i.e., Soho). The 85-room property is located on Richmond Mews, between Dean and Wardour streets, and it has an introductory offer: For your first booking, you can get a rate of 195 pounds plus VAT for the best available room. Rates normally start at 235 pounds.