Category Archives for Airlines.
It would be actually be shocking if there haven’t been discussions at each U.S. airline around what a bankruptcy filing might look like. Chapter 11 bankruptcy doesn’t mean ceasing operations. It means freezing obligations and restructuring its debts. And one of the things that would be looked at in any bankruptcy is the airline’s labor contracts.
However the specifics of this rumor are utter nonsense.
Taking money from poor people in Africa to give to airlines is bat crazy. GDP per capita in Sub-Saharan Africa (2018) was US$1586. In some countries it’s much lower. 18 countries in Africa are already at their capacity for debt. Safe drinking water strikes me as a higher priority than airline subsidies, and in the current pandemic I’d focus more on lack of testing and lack of ventilators and personal protective equipment than giving it to failed airline executives.
The Wall Street Journal had reported that both Delta and United were in talks to do this again with their credit card partners, but Ed Bastian appears to deny this is the case. There was some reference during the airline’s earnings call that the government could take part of SkyMiles as collateral for a subsidized CARES Act loan although nothing was definitive.
Rolfe Shellenberger, who with a couple of other executives under American’s Senior Vice President of Sales and Marketing Tom Plaskett (once considered a possible successor to Bob Crandall) worked with consultant Hal Brierley to launch American AAdvantage as the first mileage-based frequent flyer program in 1981.
Many forget that Shellenberger’s AAdvantage was introduced as a promotion, and wasn’t made indefinite until April 1983 two years into its life. It wasn’t obvious at the start how big this would become. He wasn’t just known for frequent flyer programs, but also took credit for putting pianos on 747s.
There seems to be a new reason that American is shutting down accounts, that I had not seen before: fraudulently submitting rental car receipts for credit.
There’s one wild card that could throw a monkey wrench in the story about cheap flights as a result of limits on travel, concern about travel, and economic recession all combining to depress demand – and that’s government social distancing requirements that could be in effect in the future.
Avatar Airlines applied for $15 million in CARES Act funding seeking a portion of the federal airline bailout – even though by their own admission they “have no flights, no overhead, administrative expense, or fixed costs at the present time.”
So far $2.9 out of $25 billion has been disbursed “to 54 smaller passenger carrier and two major passenger airlines,” and agreements have been reached with Allegiant, American, Delta, Southwest, Spirit and United.
It turns out the government has put itself on a payment plan to fulfill its bailout commitments.
American Airlines today has increased first check bag fees on flights between North American (or Central or South America) and Europe on basic economy fares from $60 to $75.
American is out with a new video, You Are Why We Fly. That’s not one of American’s new slogans (e.g. “caring for people on life’s journey”) but does harken back to one of the airline’s more important messages of the past: we know why you fly.
‘You are why we fly’ speaks to why they keep going in the face of unprecedented challenges, why they continue the business with fares so low and planes so empty, why employees travel from place to place and continue to interact with customers at the airport and on board even in the face of the global pandemic.
Gary Leff is one of the foremost experts in the field of miles, points, and frequent business travel -- a topic he has covered since 2002.
Co-founder of frequent flyer community InsideFlyer.com, emcee of the Freddie Awards, and named one of the "World's Top Travel Experts" by Conde' Nast Traveler (2010-Present) Gary has been a guest on most major news media, profiled in several top print publications, and published broadly on the topic of consumer loyalty. More About Gary »
