New TSA Restrictions To Damage Airline Industry Throughout 2010

A new survey indicates that, attempted terrorist attempt and new rules or not, travelers were already going to cut back on 2010 travel. The business travel sector?the bread and butter of the airline industry?was specifically picked out as unlikely to bounce back. The poll means that the cheery projections from two weeks ago, where the industry was going to "rebound" with an $11 billion loss, were probably too optimistic.

On the plus side, TSA's new totally useless restrictions are going to undermine whatever business travel was left. Business travelers will just stay home if the choice is between not flying or enduring four-hour security lines, humiliating full pat-downs and miserable flights. But let's allow the experts to better to give you a sense for how damaging these new restrictions are:

Though delays caused by the new measures might not dissuade international travellers who are already spending massive amounts of time in transit, it could put a significant dent in short hops by business travellers, some analysts said. Robert Mann, an airline consultant, said airlines must watch for the impact on business travellers,.. 'If it becomes something like a four-hour wait, business travellers aren't going to do that,' Mann said. 'They're either not going to travel or they're going to hire their own private lift, and just avoid scheduled transportation altogether.'...

Passengers who have already had to absorb at least five industrywide fare increases from major US airlines this year and faced additional fees for services such as bag checks or priority seating may find the new restrictions the last straw. Michael Boyd, president of aviation research and consultancy firm Boyd Group International, said restrictions that include not being able to use laptops for the last hour of the flight could hurt domestic travel, where one hour could be a significant chunk of the entire flight.

And now the coup de grace: effective immediately, Air Canada is already canceling select short-haul flights to the US. They're citing "protracted waits for customer security clearance at Canadian airports." Because airport congestion isn't already bad enough with heightened security, they have to add cancelled flights into the mix.

Venice Is Flooded Again; Everyone Go Wakeboarding!

 The terribly wintery weather currently hitting Europe right now is bringing the lagoon waters of Venice up into the piazzas and reminding us of one of our favorite quirky stories from last year: that of the guy who wakeboarded through a flooded St. Mark's Square. We've posted the video for you again above, and believe us that it's worth watching all two minutes because the Red Bull guy also wakeboards in a canal. This is what happens when you combine horrible weather, a sinking city, and an opportunist tourist on energy drink.
Each year, this high water, or Acqua Alta, hits the Italian city at its weakest time: when the tourists and locals are all in town to celebrate the holidays. It also doesn't help that the lowest (and therefore most affected) place in town is the visitor mecca of St. Mark's Square. When the waters get knee-high here, you'll see Venice become a network of raised platforms as sidewalks. (picture)

The World's Top Three Glittery New Year's Celebrations

You can drink, you can dance, and you can kiss someone at the stroke of midnight anywhere, but somehow the experience of New Year's has more resonance when you're doing all things in the presence of pyrotechnics or a giant crystal ball covered in lights. Hey, everyone likes something sparkly and exciting, and so we sincerely hope that you get to celebrate the turn into 2010 at one of The World's Top Three Glittery New Year's Celebrations.

3. Paris, France
Paris isn't called "The City of Lights" just for the heck of it; not only will you be able to stuff your face full of cheap Nutella crepes on the street, but you'll be able to do so while walking down a traffic-free Champs d'Elysées, bordered by Christmas light-covered trees and bookended by the illuminated Arc de Triomphe and Place de la Concorde. But with so many historical landmarks and gorgeous buildings, you'll have decisions to make. How about kissing at midnight in front of the Eiffel Tower, as it goes crazy with a lights display? C'est magnifique.

2. Sydney, Australia
If you prefer your NYE to be filled with fireworks and their deafening booms, then Sydney is the place for you. Each year, the crowds gather at the Sydney Harbor Bridge and Opera House to watch the year's theme play out in pyrotechnics. 2010 will be "Awaken the Spirit," and the theme color is blue. According to Wikipedia, microchip fireworks will be used in the show for the first time, which last longer in the sky. The whole display will "consist of $5mil worth of fireworks running for twelve minutes. Event organisers have promised the most adventurous and sophisticated Bridge Effect to date." This "Bridge Effect" is a thematic display on the bridge, and what it is won't be revealed until midnight strikes.

1. New York, USA
How could any other city beat New York for most glitziest New Year's celebrations? It's true that London, with the London Eye shooting fireworks, makes a pretty great case as does Moscow's Red Square, but NYC is where to be. The US takes partying on New Years most seriously, and the Big Apple delivers with the famous Times Square ball drop. At midnight, the giant Waterford crystal ball descends and prompts confetti, small fireworks and a light show to begin, delighting those watching it on TV but nearly blinding the hoards in the square. You'll also find the major bridges all lite up and a city pulsing with locals and visitors all on their way to or from boozy, flashy parties.

OTAs Win in Louisville on Occupancy Tax Issue

This morning, the United States 6th Circuit Court of Appeals affirmed a lower court's motion to dismiss a lawsuit filed by Louisville against the usual Online Travel Agency (OTA) suspects.

Full opinion here for your reading pleasure.

As is usual in these cases, Louisville (and some surrounding areas) filed a lawsuit claiming the OTAs had not paid occupancy taxes based on the rate charged to consumers on their website but rather on the wholesale rate remitted to lodging operators.

The lower Court rejected Louisville's suggestion that the OTAs are not "like or similar" to "motor courts, motels, hotels or inns" because they "have neither ownership, nor physical control, of the rooms they offer for rent." In fact, according to the ruling issued today, the court remarked that the Kentucky laws had "simply failed to keep up with the times."

Of course, Louisville et al appealed this ruling - Today, the court agreed with the lower court's analysis.

A few highlights:

This ruling is a clear rejection of the way the taxation statutes are written today. In particular, the Court ruled that "like or similar" was vague and unclear when questioning if the OTAs were "like or similar" to hotels etc. The Court was concerned about how broadly this "like or similar" verbiage could be construed.

Similarly, the Court ruled that taxes are collected on the "entities doing business as hotels and the like" not the individual occupants of the hotel rooms. As such, the Court rejected counties' suggestion that the amount paid by the ultimate consumer was the amount that should be taxed.

Finally, the Court looked at several other rulings where concern was raised that a hotelier could simply sell all their rooms through a subsidiary of some sort at a very low rate, collect the tax on said low rate and then simply market the rooms to consumers at a higher, marked up price. Thankfully, the Court rejected this claim and suggested that the right place to fix this problem was through legislation, not the courts. They also rightly noted that, in this case, anyway, there is no common ownership between the OTAs and the hoteliers.

This final claim, while positioned as a absurdity, shows the basic lack of understanding of hotel distribution that exists out there. While we doubt the Court has taken any of Bill Carroll's classes up at Cornell, they did a nice job of rejecting this concept which ignores the fundamental ways in which the majority of hotel rooms are distributed - which isn't via OTAs.

DOT: $27,500 PER PASSENGER Fine for Long Delays. Total insanity.

In what is being heralded as a "Christmas Miracle" by some air travel watchdog groups, the DOT announced new fines for airlines that keep passengers on board an aircraft for longer than 3 hours after departure from the gate.

While we are not advocating that passengers should be kept on aircraft for long periods of time and deprived of basic necessities, we do worry that this arbitrary time limit will have a huge (and negative) effect on how airlines operate during periods of bad weather. Airlines don't intentionally keep people stuck in a tube for hours on end - it is clearly not in their best interests either. And a few of the incidents that have drawn widespread media attention (the Continental Express flight that spent the night on the tarmac in Rochester, Minnesota, for example) are so egregious that we agree something had to be done. But issues like the one in Rochester happened because of utter stupidity and the failure of the crew and airline to properly monitor a nasty situation - not because of malice or profit motive.

The new fine of $27,500 per passenger (which is going to the government, mind you, not the passengers sitting on board!) is arbitrary and capricious. I guess the DOT was trying to send a message, but they might want to check in with the FAA what is a reasonable fine. For example, lets assume a 228 seat 767 sits on the runway for 3 hours and 5 minutes waiting to take off. This would subject the airline to a $6,270,000 fine! In contrast, the FAA recently proposed fining United Airlines $3.8M for flying a 737 on over 200 flights with shop towels covering an oil sump area rather then the proper caps. And most FAA fines are reduced by half if the error is corrected and not repeated. So, a 3 hour delay costs over $6M but 200+ flights with rags in the engine costs ~$2M. This makes no sense. Ont top of that, no compensation goes to the passengers actually sitting on the plane. At least when an airline bumps you (under rules also set by the DOT) the compensation goes to the passenger, not the enforcement agency.

Further, because the fines are so large, airlines will be extra careful in ensuring the aircraft return to the gate in order to avoid these fines. Get ready for your next flight to be sitting in line waiting for takeoff on a snowy evening and after waiting for two hours or so, you head back to the gate. As such, you lose your spot in the queue, maybe the crew goes illegal, bags have to removed etc - you end up stuck in an airport. Some Christmas Miracle indeed.

Net/net, less passengers will make it to their final destination with this new fine.

This is a classic example of the government over-reaching into the operational aspects of a business for reasons beyond protecting the safety and welfare of citizens. Yes, something had to be done to prevent another Rochester, MN but this is not the answer. This is a cheap headline, hardly a "Christmas Miracle."

AirTran Pinches SI Swimsuit Partnership Away from Southwest

AirTran announced a partnership with Sports Illustrated's Swimsuit edition this morning that culminates with AirTran flying the models from NYC to Vegas after the release of the magazine. Of course there are the usual opportunities for a contest winner to join the models on the flight and more promotional tie-ins are promised. We can only imagine. But what is interesting about this promotion (beyond the obvious) is that last year Southwest (who had yet to begin service into New York LaGuardia at the time) issued nearly the same press release including a similar flight, contest as well as a new take on Southwest's logo jets - not another Shamu plane. Rather, a full length shot of cover girl Bar Rafaeli. Southwest took a fair amount of heat (others called it a stroke of marketing genius) for the airplane pictured here. So, was SI too hot even for Southwest, the carrier formerly known as the Luv Airline? And what about SI models flying AirTran - that sounds like worlds colliding. The battle between Southwest and AirTran continues - at least this time it is in NYC rather than Milwaukee.

 

The Hottest New Airline Routes For Next Year, Plus 36 From easyJet

While we're busy speculating on what destinations are next up for Virgin America, here's the need-to-know new routes coming your way:

· easyJet is expanding for summer 2010 on an astonishing 36 new routes. After all, they've got pale Britons to get to the sunny spots! The complete, drool-worthy list is here, but a few highlights are: Basel – Thessaloniki, Rome Fiumicino – Dubrovnik, Ibiza – Venice, Paris Orly – Mykonos and Doncaster Prague.

· Iceland Express is an LCC we've had our eyes on now for some time, and starting in summer 2010, they'll be flying out way—a few miles away to be more specific, since Newark to Reykjavik is totally happening. Rest assured that we'll be all over this like syrup on some pecan pancakes.

Palm Beach: Anchors Aweigh, Tiger Woods! His Yacht 'Privacy' Is Ready To Go

Where in the world is Tiger Woods? Well, he's either still attempting to lay low at his mansion outside of Orlando, or he's en route to North Palm Beach to board his $22 million dollar, 155-foot yacht, ironically named the "Privacy." The Examiner reports that the boat, purchased in 2004 and picked out by Tiger's then fiance, now wife Elin Nordegren, spent the weekend being stocked with supplies and having its name covered up by a tarp thrown over the stern.

Someone doesn't want people to know that he's on the run. And of course Tiger will be hiding out in style. The Privacy sleeps 21 in its many bedrooms with walls of white silk., although Tiger will probably set sail solo. In addition, the boat has an 8-person jacuzzi, a gym, a theater projection system, a gourmet kitchen with espresso maker, BBQ grill, two Vespa scooters, a scuba center, and an elevator.

Jetsetter Speaks Out at HEDNA on Marketing and Distribution

Jetsetter CEO Drew Patterson was a panelist at this week's HEDNA convention in Las Vegas and had some great insights into marketing, distribution and revenue management.

Drew began his remarks with an observations that what is really missing in the online travel industry today is inspiration. Paraphrasing, the major OTAs are not really about exciting people to travel or getting them to book an incremental trip - they are largely order takers. (My words, not Drew's!)

Drew's comments are similar (but not as blunt) to Harrah's CEO and President Gary Loveman's remarks at this year's PhoCusWright conference during which he lamented that the OTA industry has done little to actually drive tourism and increase trips - most energy (in his opinion) is spent on beating up one another (OTA vs. OTA as well as OTA vs. supplier) vs. actually driving and inspiring consumers to travel (and stay in his hotels, obviously.)

Drew also commented on the often difficult relationship between Revenue Management and Marketing within the hotel industry. In Drew's words, "RM and marketing have to work in partnership to stimulate activity. Lowering rates without communicating the price change just dilutes an existing customer base. At the same time, marketing communication without value or a reason is a waste of money because consumers will see through it. The two have to be integrated to have an impact." Sage advice for hoteliers and distribution partners.

Clearly, Jetsetter aims to solve for these issues, but they alone can't be the total answer for what ails the industry today. (Drew has big plans but it is a big world out there.) Will anyone step up in 2010?

Shake Winter Cabin Fever With Eight Days in India For $999

                                                                

Money is tight around the holidays and the several months afterward, when you're paying off your credit card bill from Black Friday. So it's probably better to start looking to the spring for your next big trip. Head to India for an eight-day spring break that will cost you $999.

You'll have a hard time finding frat guys and kegs on this kind of spring break, though. The Travelzoo package includes round-trip airfare, hotel accommodations, a daily breakfast buffet, a farewell dinner, ground transportation in India, sightseeing tours, and entrance fees to the sights.

Lodging Recovery: 4 Years Away, OTAs vs. Suppliers, Google vs. TripA and Other Good Discussions

Check out the blog over at uptake.com for some good thought-provoking discussions following the PhoCusWright conference down in Orlando.

Yen does a nice job of explaining Bill Carroll, Chris Anderson and Jake Fuller's analysis of the lodging cycle and the opportunities for the OTAs. In a nutshell, look for another 4 years of pain for hoteliers and substantial continued opportunities for OTAs.

Solid musings on the potential GDS IPOs along with HomeAway, Kayak and ITA - should be a big year in travel IPOs

And what would a travel discussion be without thoughts on google and tripadvisor?

Catch all the details here including my thoughts on OTA vs. supplier.com innovation and growth. The reply below is in response to Yen's thoughts around the growth of OTAs during the last economic blip - good supply helps but innovation is critical as well:

I think the question is as much around supply vs. demand as it is innovation vs. the lack of it. Hotels.com and Expedia built their businesses just as much around great pricing as they did around great websites, content and functionality. The chains and airlines fought back and brought their sites (somewhat anyway) up to snuff. But, particularly for airlines, they have relied on booking fees charged by the OTAs as a crutch to create differentiation. With those fees now moot, is it any wonder why consumers, for the same price, aren't booking where a better booking experience happens – the OTAs? No wonder OTA air segments are way up – which obviously feeds the hotel and car lines of business. The innovation pendulum has swung squarely to the OTAs from the suppliers. Just look at Orbitz Price Assurance for air and hotel or Travelocity's Guarantee or Expedia's packaging product to see how the OTAs are changing the game. The suppliers are nowhere in these customer friendly areas. Will the airlines fight back with more negatives (as they are sooo prone to do) by restricting seat assignments or frequent flyer mileage accumulation to their own websites? (Remember when hoteliers did this?) Or will they match the innovation of the OTAs and really attempt to compete? We'll see next year."

Boeing Thinks That In 20 Years, 41% Of Travel Will Be All About Asia

Boeing's forecasters have squinted into the future of airlines and come to basically the same conclusion that Disney came to when they made recent theme park decisions: the world's economic future lies in East and Southeast Asia, where the recession has been relatively mild and the population continues to skyrocket

Not only does the airplane company expect Southeast Asia to account for tons of new demand, but they insist the region will account for a greater proportion of global demand. If you woke up today wondering what the future of aviation looks like, here it is:

Obey The Ten Commandments Of Vegas' New CityCenter

HotelChatter does a fantastic job of covering the latest news and trends in the hotel world. We're also including a few links from VegasChatter, the newest member to the family. So check in and stay awhile.

VegasChatter:
· The Ten Commandments of CityCenter
· We check into the new Vdara Resort on opening day
· All hail Gagnaire Restaurant at the Mandarin Oriental
· Planet Hollywood unleashes dancing flash mob

HotelChatter:
· Inside the Vdara Hotel & Spa at Vegas' CityCenter
· Now is your only chance to stay at Branson's Swiss ski lodge
· A list of London hotels with free WiFi! Yippee hooray!
· Inside The Crescent Hotel in San Francisco
· easyHotels Going Gangbusters With Expansion into Bulgaria, Dubai, Berlin

Settle in for a Long Winter's Nap on Dominican Republic Beaches

When December hits, people get excited for snow, treats and spending time with family. But for many of us that translates into non-stop shoveling, nasty fruit cake and yet another family screaming match. Forget Christmas this year—and the stress that comes along with it—and head to the Dominican Republic

And how about this for a relaxing non-holiday: an all-inclusive vacay at Excellence Punta Cana that costs $123 a night for stays through December 23.

Jetblue Will Bring Back Successful 'All-You-Can-Jet' Pass Next Year

Roll up your sleeping mat and begin hoarding the snack-size bags of chex mix—Jetblue has kind of announced that a second wave of the now infamous All-You-Can-Jet Pass is coming in the future.

Yesterday, during the Jetblue corporate retreat at West Point, a few veteran AYCJers were invited to talk about their experiences using the pass, which got them all the Jetblue flights they could handle between September 8 and October 8 for only $599 (plus some international taxes, if you flew out of country). Although it seems like just yesterday that the pass ended and the #AYCJ tweets petered out on Twitter, Jetblue execs are already prepping for the remix by promising a free, second AYCJ pass to these seven founding All-You-Can-Jetters.

Is Allegiant Air Feeling the Heat From AirTran?

Allegiant Air, which has long operated exclusively from Orlando Sanford Airport, today announced that ten destinations will now be served from Orlando International Airport.

Normally, we would not consider this to be very interesting news except that we've been following the growth (or dare we say copy-catting) of AirTran from Orlando International Airport (MCO). AirTran has added significant new service over the past several months from MCO which closely follows Allegiant's strategy of operating less than daily (2-4 weekly frequencies) in under-served leisure markets such as Bangor-Orlando, Duluth-Las Vegas and the like. We doubt that AirTran hast been able to build the kind of vacation packaging revenue that Allegiant depends on, but clearly Allegiant decided they needed to compete on more equal terms.

Allegiant is moving markets where they directly or closely compete with AirTran to larger and more conveniently located MCO. These include: Allentown, Knoxville, Lexington and Des Moines where they fly wing-tip to wing-tip with AirTran as well as Greenville, Grand Rapids, Springfield MO, Tri-Cities TN, Huntington WV, and Youngstown where Airtran operates nonstop service to MCO from cities within a very easy drive.

Allegiant's press release says customer preference for MCO drove the decision but we see it really as a way to put pressure on AirTran. And AirTran is pretty good at picking fights - they have proven they can succeed in Delta's back yard in Atlanta and are waging a huge war in Milwaukee with Midwest and now Southwest. Even Northwest, which has a history of not tolerating LCC's in their hubs was not able to drive AirTran from Minneapolis, Detroit and Memphis. This will be fun to watch...