Airlines

Low-Cost Carriers Show Profit, Legacy Carriers Lose Money

Low-cost and regional carriers reported a profit in the first quarter while network carriers posted a second consecutive loss, according to the U.S. Department of Transportation’s Bureau of Transportation Statistics. The six network carriers posted a loss margin of 0.7 percent in the first quarter with a combined operating loss of $163 million. That was better than the previous quarter, when they reported a loss margin of 4.0 percent with a loss of $867 million. The seven low-cost carriers reported a 2.4 percent profit margin with profits of $115 million. (Source: DOT press release).

Baggage and Other Fees Adding Up For Carriers
From January to March, the airlines collected $769 million in baggage fees and $554 million from reservation change fees, according to the Department of Transportation. The numbers do not include fees from seating assignments and on-board sales of food, drink, pillows, blankets, and entertainment, which are reported in a different category. Total first quarter 2010 airline revenue from all ancillary sources was $1.9 billion, with Delta reporting the most at $592 million. Passenger fees and ancillary revenue from other sources constituted 6.2 percent of the total revenue of the 28 carriers reporting ancillary revenue. Spirit Airlines' reported the largest percent of any carrier, 21.7 percent. (Source: DOT press release).

American Pioneers Another New Fee
American Airlines is introducing “Your Choice” services, which includes a “Boarding and Flexibility Package,” that initially will start at $9 each way. This places travelers in Group 1 of General Boarding, which means they can board right after PriorityAAccess customers. It provides a $75 Flight Change Discount, which means that if travelers need to change their itinerary, they’ll save $75 off the regular service charge when applicable. It allows you to go standby for an earlier flight on your day of departure at no charge. Prices vary based by market and routing. (Source: American press release).

Delta Drops Fee for Last-Minute Frequent Flyer Tickets

Delta Air Lines has dropped its fees, which went as high as $150, for frequent flyer tickets redeemed 20 days or less before departure. Until the change, it cost $150 to book a frequent flyer ticket within three days of departure, $100 for between four and seven days and $75 to book within eight to 20 days. Tickets booked 21 days out and more had no redemption fee. Delta also instituted a first checked bag free benefit for customers with a Consumer or Business Gold, Platinum, or Reserve Delta SkyMiles Credit Card from American Express. (Source: Delta press release).

Air Traffic Inches Passed Pre-Recession Levels

Air travel inched passed pre-recessions levels, according to the International Air Transport Association. International scheduled traffic statistics for May showed an 11.7 percent increase in passenger traffic over May 2009. South America saw the biggest growth, 23.6 percent; Asia-Pacific saw a 13.2 percent growth. Europe saw 8.3 percent growth. The U.S. saw a 10.9 percent increase; the region’s careful matching of capacity to demand has driven load factors to 82.4 percent, the highest of all regions. (Source: IATA press release).

Hotels

Hoteliers Keep Adding Rooms

Despite an uncertain economic recovery, hoteliers are building new hotels, with roughly 432,000 new rooms coming online globally, according to a report from the MKG Group. Breaking it down regionally, that’s adds up to170, 000 new rooms in North America and 138,000 in Europe, an increase of 3.1 percent and 2.2 percent, respectively. Asia-Pacific is adding 98,000 rooms, a growth of only 1.9 percent. Other regions also show development resilience during the global economic challenge, with Latin America registering 63,600 new rooms (+4.8 percent), Middle East and Africa 52,700 (+4.2 percent). (Source: MKG press release).

Hotel Industry Leading Indicator Is Up for Fourth Month in a Row

The U.S. Hotel Industry Leading indicator, or HIL, went up 1.5 percent during May for the fourth consecutive month. The HIL usually leads the industry’s business activity four to five months in advance. The latest increase brought the index to a reading of 113.5. The index was set to equal 100 in 2000. Eight major indicators were up, including weekly hours in hotels, hotel profitability, future demand for international visitors, housing activity and the National Vacation Barometer. Only one major component was down—tightness in the labor market. (Source: HIL press release).

Rail and Car Rental

Amtrak to Expand Free Wi Fi

Amtrak’s three-month trial of free Wi Fi was so successful that Amtrak is making it standard on all Acela trains running between Washington, D.C., and Boston. It’s planning to offer Wi Fi on its fleet nationwide, once it gets funding. This will begin this fall on Amtrak Routes in California, with Northeast regional service. (Source: Amtrak press release).

Spotlight On…..

Rebounding Business Travel

Demand for business travel is on the upswing, according to data from American Express Business Travel, which tracks corporate travel spending.

Business travelers are beginning to return to the front of the plane
The percentage of business class tickets booked in business rose from 36 percent to 41 percent in Q1
International airfares increased 3 percent year over year
Domestic fares increased 6 percent
Hotel recovery is still lagging, with international rates down .5 percent and domestic hotel rates down 5 percent

Source: American Express press release.

The Travel Team, Inc. is committed to providing you with useful information on the latest developments in the travel industry. The following information has been compiled from a variety of sources and is updated monthly.