If the U.S. aviation industry hasn't borne enough pain in recent months, this week might pile on a few more bruises.
First, employees and frequent travelers of American Airlines could learn as early as today whether the world's largest airline will file for bankruptcy. By later today, the airline is expected to finish counting the union votes on proposed concessions. If any of the carrier's three main unions vote against cuts of $1.8 billion in pay and benefits, American executives have said the airline will have to file for Chapter 11. The tally is expected to be completed by this evening.
American's bankruptcy question comes to a head as the airline is slowly dismantling an initiative it launched in November to lower business fares for travel to dozens of cities. The carrier tried to change an industry-wide practice of charging business travelers two to five times as much as leisure travelers when it lowered last-minute business fares by as much as 40 percent. But faced with increased competition and mounting financial problems, the airline has been forced to scale back on the reduced fares. American spokeswoman Tara Baten would not elaborate on the failed attempt but said fares change "all the time."
American isn't likely to stand alone when the airlines this week begin reporting what are expected to be grim financial results for the first quarter. The first quarter is typically one of the weakest periods for the airline industry, but the first three months of this year have been particularly bleak because of declining travel due to the weak economy, the war in Iraq and the deadly disease SARS, or severe acute respiratory syndrome.
For Delta Air Lines, today marks the beginning of a new strategic push. The carrier launches its low-cost subsidiary, Song, in hopes of sharpening its competitive position against the established low-cost airlines such as Southwest Airlines and JetBlue Airways. Song makes its debut with flights from New York's John F. Kennedy International Airport to Florida. The carrier will eventually fly from other northeastern airports, and service from Dulles International Airport begins this summer.
Song spokeswoman Stacy Geagan said the airline isn't scheduled to provide service in the Washington area until later in the summer, when it begins flying out of Dulles International Airport. Song is aimed at vacationers flying between the Northeast and Florida.
Song has a Web site, www.flysong.com, but it won't begin an advertising campaign until early winter. By then, Song's fleet of 36 Boeing 757s are expected to be equipped with in-flight entertainment that allows passengers to view up to 24 channels of satellite TV from their seats as part of a partnership with EchoStar Communications Corp. and its Dish Network TV service.
Atlanta-based Delta could use a little good news. In December, the airline made it more difficult for business travelers to achieve elite frequent-flier status if they fly on heavily discounted tickets. Then, last month, Delta became the first airline to participate in a new computerized security program that collects personal information on passengers to help the government screen for potential terrorists. Both moves were met by loud outcries from travelers.
Earlier this month, Delta suffered a public relations nightmare when it revealed that its chief executive, Leo F. Mullin, got a raise of nearly $11 million in 2002 even as Delta posted a record $1.27 billion loss.
Question of the Week: It's not just the airlines that are in financial trouble these days. Many airports around the country are also hurting and are being forced to change their operations. BizClass wants to know, what are some of the operational changes that you've noticed at airports and how have these changes affected you? Send your comments, along with your name and a daytime telephone number, to firstname.lastname@example.org.