ib ba aa AA and BA upgrade their partnership, but theyre still not equals
As of Friday, American Airlines and British Airways (and I suppose Iberia, too) finally made their membership in the oneworld alliance closer to equal footing: Prior to Friday, you couldn’t earn or spend AA miles on trans-Atlantic BA flights from the US. As of Friday, you can earn and burn AA on BA, which truly upgrades the alliance. But…

If you’re going to cash in your AA miles for a flight on BA, though, you’re going to pay through the nose. BA slaps fuel surcharges onto the base airfare, which are payable even on frequent flier tickets. Those fuel surcharges can run as high as $500 for a roundtrip ticket in a premium cabin, on top of the miles you cash in. What would cost you $150 cash or so on an AA flight will cost you 5 times as much if booked on BA metal. This is completely and utterly lame.

The logic (and legality) of these fees has always escaped me. When I buy a plane ticket, I’m buying transportation from point A to point B, and the on-ground and in-flight services associated with that transportation. Fuel is part of that transportation equation.

By backing out the “fuel surcharge,” airlines act as if the consumer is just renting space on the plane. But last time I checked, I wasn’t just renting a chair. I also paid for the the movement of that chair across the oceans.

AA has posted an FAQ page related to the changes. It’s worth reviewing. See also Gary’s Friday post on the issue.

Maybe I’m seeing the glass half empty here. I’ve spent much of the weekend (and all of today) in bed, sick as a dog, so I’ve had had plenty to time to get crabby. Yes, this is better than before. Yes, other airlines and airline alliances play similar games. But these discrepancies within an alliance defeat the spirit of cooperation. They insult and dispirit customers, and they embolden the critics who argue that miles are “worthless” because of airline shenanigans.

I am glad they did something to improve the alliance. But I still hoped for better.


Downgraded: Toyotas in rental car fleets
Bad enough that Toyota’s massive recall is affecting so many vehicle owners. But it’s affecting rental cars, too. Enterprise, for example, has removed 83% of their Toyotas, but that leaves 17% in the fleet. If you’re given a Toyota at the rental counter — any rental counter, not just Enterprise — you may want to request documentation that the recall repairs have been completed.

Downgraded: TSA’s notion of a background check
You really can’t make this up: An applicant for a TSA job who had been convicted of robbery when he was 18 (and who omitted it from his job application) was denied a secure-access badge to the Richmond Airport in Virginia. But the TSA wanted him hired, and demanded that the airport overrule its existing security protocol to issue this man a badge. Words fail me.

Downgraded: Airline seats
Speaking of recalls, Air Canada, ANA, Continental, JAL, KLM, SAS, Singapore, and Virgin Atlantic have seats on their planes that are subject to a recall. The manufacturer, Koito, was found to have fabricated flammability tests. And when I say “fabricated,” I’m not kidding: They “manipulated computers so normal figures would appear on monitors when officials from the ministry observed the testing procedures.” But take comfort: As long as the seats aren’t set on fire, you’re fine! (Bonus: Toyota owns 20% of Koito.)

Downgraded: Sleepytime on American Airlines
American Airlines will start charging $8 to buy a pillow and blanket. Yes, yes, it’s another fee, another downgrade. But whatever. I’ll wear a sweater.

Upgraded: oneworld
Downgraded: SkyTeam

Sure enough, American Airlines and the other members of the oneworld alliance pulled it out, keeping JAL in the alliance. At first, it really looked like Delta and their SkyTeam brethren were the ones to convert the ailing Japanese carrier to their side. But no. I called this one wrong. Delta has expressed its regrets, and plans to invest in its own brand instead of other companies. Frankly, that’s probably a smart move.

05
Jan
2010

jal 737 jex Weakening oneWorld: JAL wants to join SkyTeam
Japan’s most famous (and, recently, most beleaguered) airline, JAL, has apparently opted to leave the oneWorld alliance for SkyTeam. Viewed through an USA-based frequent flyer lens, that’s a win for Delta (and potentially those who hold Delta miles), and a definite blow for American Airlines and their mileage addicts.

Delta and its SkyTeam partners didn’t just win this on their good looks and winning personality. They are offering a bailout package of nearly $1 billion. (American and Texas Pacific Group offered to invest $1.1B; I’m not familiar with the details of the deals, and that’s not my concern here. And nothing is signed yet — AA says they’re still negotiating.)

The combination of JAL and Delta would be a formidable force, if traffic remains at current levels. One report estimates the JAL-enhanced Skyteam market share at 62% of traffic between the US and Japan. Star Alliance (United, ANA, and Singapore) hold 31%, leaving a mere 9% in oneworld (entirely AA).

But JAL has signaled that it would drop 30 (or even all) of its international routes, ceding that traffic to alliance partners and codesharing instead. And Japan’s other major airline, ANA, is looking to snap up routes and landing rights which JAL gives up. So those market share percentages are far from set in stone.

In the long run, the decrease in competition is bound to exert upward pressure on trans-Pacific fares. The deal will need to undergo antitrust scrutiny, of course.

Intermediate-term losers here are American Airlines’ loyal customers who use their miles to fly to Asia. A major mileage redemption opportunity for AAdvantage mileage holders is about to disappear, either through JAL’s switch to SkyTeam, or their erosion/implosion. If you’ve got American miles, your currency is about to lose value, as you’re about to lose some redemption opportunities.

(image)

09
Mar
2009

alliances Airline alliances under the microscope again

Alliances of global airlines — oneworld, Skyteam, and Star Alliance — are under attack. Attached to proposed legislation to upgrade the air traffic control system, a new proposal could be the death knell for the alliances — or at least the end of their legal presence in the United States.

Rep. James Oberstar (D-Minn.), a longtime critic of the alliance system is harnessing unease in Washington D.C. about the competitive impact of international pacts to back a bill that could have a drastic impact on existing and planned airline cooperation.

The chairman of the U.S. congressional committee that oversees airlines is pushing an aviation bill that would automatically withdraw antitrust approval for alliances within three years, although they could be restarted under more stringent rules.

The bill is attached to a $70 billion proposal to modernize the creaking U.S. air traffic control system, which gives it a greater chance of becoming law.

Its provisions could lead to the rolling back of the antitrust immunity, or ATI, already in effect for members of the Star and SkyTeam alliances. It could also derail efforts to expand these groupings and extend immunity to members of Oneworld, the smallest of the three.

Remember that Oberstar is the same legislator trying to block liberalization of airline ownership rules. I would argue that alliances would never have become necessary if nations — like the US — had more reasonable cross-border ownership rules. The alliances are a way to give the companies backdoor merger benefits (e.g., “revenue sharing” on trans-Atlantic routes) alongside the efficiencies that come with aligned schedules.

So what happens if alliances are declared a monopoly in the US, or elsewhere? Frankly, it could be a good thing for passengers, as long as codesharing isn’t entirely eliminated in the process. Alliances may have benefited travelers where schedule alignment and frequent flyer partnerships are concerned, but they’re legal oligopolies. They admit as much: That’s why they require antitrust immunity in order to function.

If airline alliances were to disappear, international passengers would likely see some inconvenience at first. But how much inconvenience? Global lounge access? Priority tags on your luggage? Really, what would change? And for how long? Over time, airlines would negotiate bilateral partnerships in lieu of broad alliances.

And what about the upside? As it stands, alliances are essentially a legalized price-fixing scheme. They’ve always been for the convenience of the airlines, not the passenger. So eliminating price fixing sounds like an easy win for the consumer.

Oberstar may be wrongheaded with his advocacy of protectionism, but he may be onto something with regard to alliances.


Downgraded: Uses of college budgets
I know that baggage fees suck, but is refunding students who fly back to school their $15 or $25 baggage fees really the best use of college funds?

Downgraded: “Fakeproof” passports
I love stories like this: British authorities touted the safety and security of their “e-passport,” effectively a passport with an embedded radio-frequency chip. Hacker-proof, they claimed. It was cracked, cloned, and altered within minutes. Minutes. Not even hours, much less days, or weeks. Minutes. The computer researcher proved his point by changing the data to make the passport appear to be Osama bin Laden’s, complete with passport photo. Just awesome. (Recall that, as posted a couple years ago, the easiest way to destroy the chip inside your passport, if you’re wary of RFID scanners stealing your personal information, is with a hammer.)

Downgraded: American Airlines upgrades
A downgraded upgrade? Indeed. American recently rolled out copayment fees for many of its upgrade awards. See the changes on the award chart here. More evidence of the devaluation of miles, if you needed a reminder.

Upgraded: European booking war hilarity
Britain’s Thomson Holidays, part of the TUI Group, came under heat for offering vacation rentals in Greece or Turkey for £14 a week. At £2 a night, that’s some cheap sleeps. Why was this problematic? Competitors complained that Thomson was changing customer expectations, causing travelers to hold out and wait for the rock-bottom room rate, instead of booking early. Sounds like crybaby talk to me.

Upgraded: Alliance dalliance
It’s not really a surprise, given the urge to merge that’s rampant in aviation today, but American Airlines, British Airways, and Iberia are looking to link up. They’re already alliance partners within Oneworld, and this isn’t a merger (yet), but the three airlines are trying to get antitrust immunity, so they can collude and set fares together. There’s really no benefit to consumers in this, especially if you fly between London and the United States. AA and BA dominate those routes, and the companies want to expand their price-setting power.

Upgraded: Google Maps’ sense of humor
Remember how Google Maps gave directions from the U.S. to Europe which included the instruction to swim across the Atlantic? Those jokesters recently did it again, suggesting you kayak across the Pacific Ocean. (They took it down, alas.)

kayak across pacific Upgrades and Downgrades    Baggage fee refunds...from colleges? High tech passports faked.  Kayak to Australia.  And more!

Upgraded: Your chance to speak your mind on aircraft interiors
Friend of the blog Addison Schonland is doing some market research on aircraft interiors, and what you want to see inside those aluminum tubes. Take his poll, which will hopefully filter through to airline designers and execs attending the Aircraft Interiors Expo show next month.

Upgraded: Stormy weather
Priceline is once again rolling out a cute promotion, which promises to pay the cost of your vacation package if your trip is rained out, through November 16, 2008. The “Sunshine Guarantee” kicks in if a half inch of measured rainfall is present on HALF of the days of your trip. That’s a lot of rain, so don’t count on any payout. Kerala monsoon holiday, anyone?


Upgraded: Government bloggin’, government surveillance
Move over, Kip Hawley! Now there’s something bloggier! Hawley’s boss, Department of Homeland Security Secretary Michael Chertoff, has started a blog. No, wait, it’s a “leadership journal.” This blog leadership journal has nothing but eyerolling snark for that self-aggrandizing title. Maybe he could show some actual leadership by answering why the government has been collecting and preserving all sorts of minutiae about travelers who aren’t on anyone’s watch list. (Hat tip to Benet Wilson for pointing to the DHS blog. Yes, blog. We shall never refer to it as a leadership journal again.)

Downgraded: OneWorld cooperation
American Airlines AAdvantage members will no longer earn elite-qualifying elite-bonus frequent flyer miles when they fly on oneworld partner British Airways. Lovely. Remind me why we have alliances, again? Updated: Several readers have written in (and the Global Traveller has written in comments) that the linked article by Tim Winship is wrong: Elite bonus miles are cut. Elite qualifying miles remain. I note that smartertravel.com pulled the article down from their site. Thanks to all who wrote in!

Upgraded: Motel 6′s reputation
Arthur Frommer offers this tip on finding “a stunning value for the price” in hotel accommodations: Look for ones that feature an interior corridor. “Stunning value”? That’s really quite an endorsement. I appreciate the sentiment — and yes, those with interior corridors are newer than those with exterior corridors — but isn’t it still just a Motel 6? The walls are thin and the bed isn’t that comfy. Sure, it’s better than some alternatives, but “stunning value”? I’ve stayed at Hyatts for $37 a night via Priceline. THAT’S “stunning value.”

Upgraded: In-flight service, Sesame Street style
Next flight, remember: Your flight could always be worse. You could end up with Grover as your flight attendant. Video below… (via FlyAwayCafe)