EXECUTIVE TRAVEL SKYGUIDE E-ALERT 12/12/05 Welcome to EXECUTIVE TRAVEL SKYGUIDE E-ALERT for the week of December 12, the weekly e-mail of essential business travel news! To sign up for the e-Alert, click here. Virgin America hopes to start flying in 2006 Delta strike risk recedes with temporary pact U.S. airline capacity could shrink 10 percent in two years United agrees to boost connections at Denver International US Airways: Power ports will remain on our Airbus planes Independence Air may still find a white knight Delta.com adds new flexibility for SkyMiles award travel Hertz adds "fun" car models at 18 U.S. airport locations AIRLINES Virgin America hopes to start flying in 2006 Remember Virgin America? Sir Richard Branson's Virgin Group announced plans a couple of years ago to create a new low-fare carrier in the U.S., and hired former Delta President Fred Reid to run it. Then the company fell silent for a long time after it announced it was looking for U.S. investors. By law, foreign ownership of U.S. airlines is limited to 25 percent. With several major airlines in bankruptcy, it might not seem like an ideal time to invest in a new airline, but Virgin announced last week it has managed to line up $177 million in U.S. financing from firms that will hold a 75 percent stake in Virgin America. The investment group includes Black Canyon Capital and Cyrus Capital Partners. As a result, Virgin America has filed for an operating certificate from the Transportation Department, and said it hopes to start flying in 2006, using San Francisco as its base. Virgin America had originally planned to put its headquarters offices in New York, but now it says it will consolidate its offices and its flight operations in San Francisco. In its application, Virgin America said it expects to be flying 17 Airbus A319s/320s within 12 months of its start-up. It did not identify any specific cities to be served, except to say they would be major metropolitan areas. Since its majority ownership will be American, the airline will essentially operate as a franchise of Branson's successful Virgin brand. In its application, Virgin America noted that San Francisco International Airport has been losing market share to Oakland and San Jose as more customers look for lower air fares. Claiming that the major U.S. carriers are using a broken business model, Virgin America claimed that in the U.S. market, there's "still plenty of room for a new, low-cost, low-fare carrier" that provides an innovative product and services. Delta strike risk recedes with temporary pact The threat of a pilots' strike against Delta Air Lines has diminished for now, after the airline and the Air Line Pilots Association announced they have come to terms on a "tentative interim agreement" that will cut the pilots' wages while a longer-term deal is negotiated. Delta, which is operating under Chapter 11, had asked the bankruptcy court to let it impose a unilateral 20 percent pay cut if the pilots didn't agree to a new deal, and the pilots had threatened to walk off the job if that happened. A pilots' strike against a struggling company like Delta is considered likely to be fatal. The tentative pact - still subject to ratification by the rank and file - would cut hourly wages by 14 percent an hour. The company and the union set March 1, 2006 as their target for negotiating a long-term contract. U.S. airline capacity could shrink 10 percent in two years As more U.S. airlines slip into Chapter 11, what kind of impact is it having on the nation's air system? A study by USA Today published last week concluded that the number of domestic airline seats flown in early December was five percent less than the same time a year ago, or a net loss of about 126,000 seats a day. It said the biggest year-over-year capacity declines were at ATA, down 74 percent; Independence Air, down 49 percent; Delta, down 19 percent; and Northwest, down 11 percent. Meanwhile, some low-fare carriers added seats, like JetBlue, up 29 percent, and AirTran, up 24 percent. Meanwhile, airline analysts at Fitch Ratings said last week that domestic capacity could decline by another five percent in 2006. This could drive prices higher and help the airlines' bottom lines, they said. But they also warned that the positive effects of fewer domestic seats could be offset if major carriers continue to add excessive capacity on their routes to Europe and Latin America. United agrees to boost connections at Denver International Denver newspapers reported last week that United Airlines has agreed to add more flights to its hub operation there in exchange for a waiver of debt that the airline owes the airport for its defunct automated baggage system. As reported earlier, United in October stopped using the automated checked-bag system after repeated problems, but it still owed the airport millions of dollars for the space occupied by the system and for the equipment itself. If the city council approves the agreement, the airport will forgive $184 million it is owed by United. The airline, in turn, will gradually boost flight operations at DEN in an effort to raise the amount of connecting traffic there, so the city will collect more in passenger head taxes. The newspapers reported that United will carry about 7.5 million connecting passengers through Denver International this year, down from 7.7 million in 2004. The agreement calls for United to rebuild connections back to the 2004 level within three years. US Airways: Power ports will remain on our Airbus planes US Airways last week reassured customers that it will continue to offer power ports on board Airbus aircraft operated as part of the US Airways fleet. That includes A319s, A320s, A321s and A330s, or a total of 120 planes. Since US Airways now includes America West as well - still operated as a separate brand - a company official said that the airline "is analyzing whether to install power ports on additional American West-operated Airbus aircraft." The power ports provide 15 volts for use by laptops, DVD players and other electronic devices, as long as the passenger has the appropriate adapter. Independence Air may still find a white knight FLYi Inc., the parent company of Washington Dulles-based Independence Air, claims it has received "a number of expressions of interest" from parties that may want to take part in its court-supervised auction process. When it filed for Chapter 11 bankruptcy recently, FLYi said it needed outside investors to come to the rescue if it was to survive. The company is in talks with its financial advisors about the expressions of interest, which it said included "proposals to acquire the company as a going concern, to invest in the company, and to acquire specific assets." FLYi said it believes its worth will be maximized "in a going-concern transaction, whether pursuant to an investment proposal or a going concern sale proposal." In any event, the airline sought to assure travelers that its flight operations will continue as normal during the upcoming holiday period. Delta.com adds new flexibility for SkyMiles award travel Delta has enhanced its web site (www.delta.com) so that SkyMiles members now have more flexibility in booking award trips online. With the new enhancements, members can no go online and put an award trip reservation on hold until they can finalize their travel plans; recall the held reservation and change or finalize it; or cancel an award reservation and put the miles back into their account. The airline noted that award ticket bookings made through its web site more than doubled during 2005 compared to the previous year. CAR RENTALS Hertz adds "fun" car models at 18 U.S. airport locations Air travelers who are bound for certain states will soon have a greater choice of vehicles when they rent form Hertz. The company said last week it is adding a new "Fun Collection" of various car models that include coupes, SUVs, convertibles and roadsters. They can be reserved by make and model, and will be equipped with Sirius satellite radios. They can be booked now for rentals starting January 5, 2006; they'll be available at six airport locations in Florida, seven in California and two in Hawaii (Honolulu and Maui) as well as Denver, Phoenix and Las Vegas. Convertibles include the Ford Mustang, Mazda Miata and others; coupes/roadsters include the PT Cruiser, Chevy HHR and Nissan 350Z; SUVs include the Jeep Wrangler, Ford Escape XLT Sport and Hummer H3. AIR ROUTES ATLANTA (ATL). From December 15 to March 30, Delta will increase its Atlanta-Santiago, Chile schedule from seven flights a week to 10. BOSTON (BOS). AirTran Airways will add a sixth daily 717 flight to its Boston-Philadelphia schedule as of December 15, with a seventh daily frequency to be added in mid-February. CHICAGO O'HARE (ORD). December 15 is the launch date for twice-daily American Eagle regional jet service between Chicago and Flint, Mich., and between Chicago and New York JFK. United on December 15 will convert its mainline Chicago-West Palm Beach flights to Ted service. DALLAS LOVE FIELD (DAL). Southwest Airlines on December 13 will begin service between Love Field-Kansas City and Love Field-St. Louis, with four daily flights in each market. DALLAS/FT. WORTH (DFW). Non-stop American Eagle service between DFW and Gulfport-Biloxi will start December 15, with two daily regional jet roundtrips. FT. LAUDERDALE (FLL). Spirit Airlines on December 15 starts new non-stop service between Ft. Lauderdale and Kingston, Jamaica; and between FLL and St. Thomas, USVI. HOUSTON BUSH INTERCONTINENTAL (IAH). Continental Airlines will kick off new non-stop service between Houston and Buenos Aires on December 14, using a two-class 767-200ER. The flight will originate in Newark. KANSAS CITY (MCI). The latest expansion of Midwest Airlines' growing operation at Kansas City comes December 15, when it will begin one daily non-stop roundtrip between Kansas City and Tampa, and will add a second daily frequency between Kansas City-Ft. Lauderdale. Both will offer the airline's 717 Signature Service. MIAMI (MIA). The current schedule of seven flights a week operated by Varig between Miami and Sao Paulo will increase to 13 a week starting December 15; the new flights will use three-class MD-11s. NEW YORK KENNEDY (JFK). Varig Brazilian Airlines said it will increase its JFK-Sao Paulo schedule from once a day to 11 a week effective December 15 by adding four daylight departures with a three-class 777. On the same date, American Airlines will kick off new American Eagle service between Kennedy and Chicago O'Hare, with two daily regional jet roundtrips. NEWARK (EWR). Continental on December 14 begins new Newark-Buenos Aires service, operating via Houston. PHOENIX (PHX). America West will begin daily non-stops between Phoenix-Honolulu and Phoenix-Maui effective December 16. ST. LOUIS (STL). American Connection/Trans States Airlines on December 15 begins a new daily roundtrip between St. Louis and Sarasota/Bradenton, Fla. SALT LAKE CITY (SLC). Delta Connection/SkyWest set a December 15 start for new twice-daily regional jet roundtrips between Salt Lake City and Edmonton, Alberta. SAN FRANCISCO (SFO). From December 16 to January 8, United will lay on an extra three flights a week between San Francisco and Sydney, for a total of 10 a week. DEALS AND SPECIALS FOR BUSINESS TRAVELERS Got business in Texas? Hawthorn Suites (800-527-1133; www.hawthorn.com) said that customers who book a stay at any of its 20 properties in the Lone Star State between January 2-December 31, 2006, can get a 20 percent discount if they request the TEX rate when they make reservations. Guests can also now earn points in Hyatt's Gold Passport plan. February 2006 is African-American History Month, and South African Airways is observing it by offering special low fares for travel from the U.S. to South Africa during that 28-day period. Fares start as low as $1,085 roundtrip, plus taxes. SAA's U.S. gateways include New York JFK, Washington Dulles and Atlanta; the sale fares apply for travel to Johannesburg, Cape Town, Durban, East London, George or Port Elizabeth. Fares are available online at www.flysaa.com or by calling 800-722-9675. Avis customers who book online (www.avis.com) for a European rental beginning on or before January 31, 2006, can get a free upgrade. Persons who reserve a compact vehicle for three days or more will be upgraded to an intermediate car, if they use Avis Worldwide Discount number F673100. The upgrade offer applies to rentals in Austria, Belgium, France, Germany, Italy, the Netherlands, Norway, Spain, Switzerland and the U.K. For links to other websites where you can search for bargains, click here: www.executivetravelonline.com/reference/deals.html For in-depth analysis, news, features and opinions about the current business travel scene, check out Joe Sent Me (www.joesentme.com), produced by veteran traveler advocate/journalist Joe Brancatelli and a team of contributors. By Jim Glab To sign up for the e-Alert, click here.