SEAT 2B | By Joe Brancatelli
What Not to Worry About
On the cusp of the fall season, it might seem like there's a lot to keep you concerned about business travel. Relax. Here's what shouldn't be causing anxiety.
Tuesday, September 2, 2008; 10:16 AM
Business travelers come by paranoia legitimately. The airlines unabashedly rig their fare structures to guarantee we pay the most and often get stuck in the middle seat. Hotels deftly stack their rate cards to ensure we pay the highest rate and often end up with the room nearest the noisy ice machine.
I would never suggest that we business travelers abandon this well-earned paranoia, but I do think there are some things we need not worry about this fall. It simply won't be as bleak as the ill-informed talking heads have lead us to believe.
Don't Sweat the Prices
All year the "experts" have warned about massive and imminent airfare increases. And at least on the surface, there was plenty to worry about. Airlines were unprepared when oil jumped from last summer's $75-a-barrel price to this spring's highs around $150 a barrel. And with fuel accounting for 40 percent of costs, Delta chief executive Richard Anderson's claim that fares would need to rise 20 percent seemed chilling but rational. And fares have risen -- at least a dozen times since January.
But looking at the surface leads to superficial analysis. The experts forgot that airlines -- and airfares -- don't exist in a vacuum. As fares rose, Americans stopped booking vacations they couldn't afford. And business travelers cut flying to match the needs of their own businesses, which were negatively impacted by skyrocketing energy prices.
The result: As I predicted in a June column, airlines had to slash some fares at the last minute to fill seats. So the prices travelers paid actually rose much more slowly and much more modestly than the bloviators expected. In July, for example, Continental Airlines said its RASM (revenue per available seat mile flown) was just 4 percent higher than in July 2007. The Air Transport Association, the airline trade group, pegs the average year-over-year price increase at about 7 percent. Of course, the problem with averages is that no traveler pays the "average" price. I don't doubt that business fares have risen faster than leisure fares -- paranoia strikes deep, you know -- but year-over-year airline-revenue figures prove that prices aren't rising precipitously.
The slowdown in air travel has affected hotels and resorts too. And as we discussed in a recent column, the lodging gravy train has stalled. Hotels are discounting lustily to keep their existing rooms filled and put heads on beds on the new properties that continue to open.
Don't Sweat the Fees
Airlines have piled on the fees this year and it has led to the virtual "unbundling" of airfares. Many items once included as part of the basic fare are now à la carte options. But many of the new fees are for options that business travelers don't use or don't like anyway. Why worry about fees for checking a second bag when surveys say that about 80 percent of us don't check a second bag? And do you really mourn the loss of "free" food and snacks in coach? Most of us despise that slop anyway. Airports now have a vigorous food and beverage scene, so buy before you fly.
But one new fee might matter: Four large airlines (American, United, US Airways, and Northwest) now charge for checking a first bag. But they exempt elite and full-fare flyers like us. And they're fighting a rearguard action against three major carriers (Continental, Delta, and JetBlue) that refuse to levy a first-bag fee. If those three gain customers by keeping the first checked bag bundled in the basic fare, the other four will give way. Of course, the market is perfect: If Continental, Delta, and JetBlue don't gain market share, that means a first-bag fee doesn't bother us, so they'll add the charge too.
Don't Sweat the Capacity Cuts
This week airlines begin what can only be called the Big Pulldown. Most will slash passenger capacity by about 10 percent compared to their flight schedules last fall. That has led to a frenzied spate of analysis claiming that there'll be a shortage of seats in the skies.
In a word: Baloney. Traffic is falling faster than airlines can trim capacity. In fact, the A.T.A. predicted a 6 percent decline in passengers over the Labor Day weekend, the last busy period of the summer season. Airline executives tell me their advance bookings for fall, especially for overseas travel, aren't living up to expectations. There will be plenty of seats to go around.
Don't Sweat Laptop Seizures
The federal government says -- and courts have so far agreed -- that Customs agents have the right to seize and examine your laptop when you reenter the country. The laptop rule is based on settled law about the government's right to search baggage at the borders without suspicion of wrongdoing. This has infuriated many business travelers, who are paranoid (there's that word again) that the government will copy, store, and disseminate the data and information taken from confiscated laptops.
We can dispute the fine points of search-and-seizure rules, the rights of the individual versus a snoopy government, and the logic of equating a data-loaded laptop to a bag full of clothing. I'm all for fighting the power. Just make sure you don't have sensitive data on your laptop when you return from overseas. Upload it to an online storage site or a virtual private network, then wipe your hard drive clean.
The Fine Print . . .
Despite its continued profitability thanks to efficient operations and savvy fuel-hedging strategies, Southwest Airlines has put the brakes on its growth. In fact, its winter 2009 schedule, released last week and effective in January, shows about 200 fewer flights a day. The reductions are mostly in flight frequencies. Only three routes have been completely dropped from Southwest's route map.
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To contact Joe, visit his Contributor's page on Portfolio.com.