News and notes from around the interweb:
- Interview with an Etihad onboard nanny (HT: Brian Sumers)
- United gave up on New York JFK and entered a deal with Delta to swap slots. The Justice Department has filed suit to block United from acquiring Delta slots at Newark while Delta says that doesn’t keep it from completing its transaction for United’s JFK slots.
- easyJet will launch a frequent flyer program. “Flight Club will be offered perks like free name changes and no administration charges when altering a ticket..To qualify for membership, passengers will have to have flown on 20 or more EasyJet flights over a 12-month period or spent a specified amount…”
- The EU is considering protectionist legislation to benefit member nation’s airlines at the expense of consumers, potentially banning Emirates, Etihad, and Qatar flights. The commission “is also working on the development of a ‘fair competition clause’ to be inserted in future aviation agreements” recognizing that the big Gulf carriers aren’t actually violating existing law or agreements.
- Requests by American Airlines for special tax breaks don’t seem to stop. But, umm, it’s the big Gulf carriers that get subsidies. Or something. I have a hard time keeping that one straight.
- Some Cathay Pacific flight attendants are unhappy about having to provide more extensive business class meal service without additional crew. Use Google translate. (HT: @winglets747)
- Hyatt’s CEO talks about hotels being the guests in your lives, rather than your being a guest in a hotel. He mentions staying at a friend’s home in Darien, Connecticut and that has me wondering whether Starwood’s Adam Aron lives there?
My wife recently flew Cathay in business for the first time and was not impressed with the service compared to, specifically, Korean. She said how the Cathay flight attendants are rushing everywhere, bumping in to things, make frowns and always seeming tense compared to the zen, elegant Korean service model. Not a fan of the pot luck food carts either.
As usual, your coverage of the Middle East airline subsidy issue equates tax breaks worth millions (AA) with subsidies worth billions (Emirates et al).
Should north Texas governments throw a few million at AA to build a new headquarters in their jurisdictions? In an ideal world, I would say “no.” But the reality is that these tax breaks are how the headquarters game is played in the USA — and AA would be foolish not to play it.
But saving a few bucks on their tax bill is not going to cause AA to buy a fleet of A380s (note how there are now no non-Mideast customers for this aircraft) and start flying fancy pants ultra long haul flights around the world. At the end of the day, AA will still be paying taxes and not getting billions from the gov’t. In other words, they won’t be distorting the aviation marketplace by relying on the gov’t to fund their operations. That’s what this dispute is about: if Dubai wanted to throw a few million dollars at Emirates, no one would care. The fact that the subsidies are about 1000x greater than what other airlines like AA get, is what causes the crazy distortion on free market competition.
My wife and II were also similarly unimpressed with Cathay J service. Better than US airlines still by a mile, but it definitely seemed like there were not enough FA’s to provide the service at a proper pace, so they were all stressed.
Had better J service on IB…
Its partnership with Etihad is the only thing keeping Germany’s 2nd largest carrier, Air Berlin, flying. (As opposed to the frequent strike related flight cancelations by Lufthansa .) Perhaps the EU believes consumeds will benefit and competition would be enhanced by allowing Lufthansa to monopolize the German market .
@iahphx remind what’s “fancy pants” about being crammed into an airborne bus for two insanely long flights to get from Toronto to Lahore?
@iahphx you mean like the billions of dollars of obligations that the federal government removed from United, Delta, and US Airways balance sheets when assuming their pension obligations? Or the reconstruction finance corporation’s backing of American’s first large aircraft order? Sure, that was ‘a long time ago’ but it was at a similar stage in development.
The whole business world is subsidized by fed easy money. Companies that should have gone bankrupt were thrown lifelines. America is corrupt and Americans are hypocrites and only a fool willingly (as opposed to under threat of prosecution) follows laws here.
If the middle east carriers are subsidized so be it. I don’t mind enjoying free middle east money.
@Gary — As I believe you know, there’s no government money involved in the PBGC, it’s a self-funded insurance program.
http://www.forbes.com/sites/tedreed/2015/04/24/gulf-carriers-get-it-wrong-pension-benefit-guaranty-corp-doesnt-subsidize-it-insures/
Also, in the West, the people who “pay” for money-losing airlines are the employees (reduced pay) and shareholders (investment losses), not the gov’t.
@Stvr — As Gary has correctly noted, economy flying on the Mideast Airlines can be less-than-impressive. Indeed, one could argue (although I’d be highly skeptical) that there COULD be a “real” business stuffing lots of pax onto big long haul aircraft and trying to make money with low unit costs. Norwegian is trying something like this. But that’s not what the Mideast airlines actually do. While they may stuff lots of pax into coach, they fly huge premium service cabins. Like Emirates 777 flight to Orlando has 8 first class seats, 42 business class seats and only 216 coach seats. If anyone thinks that premium class-heavy configuration could possibly generate a profit on an ultra long haul flight to a leisure destination like Orlando, I have this bridge in Brooklyn I could sell you at a good price.
@iahphx that’s misleading indeed.
1) The bankruptcy process moved billions of dollars of liabilities from the books of the airlines to the federal government.
2) The Pension Benefit Guaranty Corporation was set up by the 1974 ERISA act. It is a government agency that taxes other companies’ pension plans to fund the bailouts. That the money doesn’t come from general revenue is irrelevant.
3) What’s more, it is massively underfunded, faces huge risks, and those are risks to the taxpayer. Per GAO: http://www.gao.gov/highrisk/pension_benefit/why_did_study
“At the end of fiscal year 2014, PBGC’s net accumulated financial deficit was $61.8 billion—an increase of over $26 billion from the end of fiscal year 2013—and PBGC estimated that its exposure to future losses for underfunded plans was $184 billion.”
Can others read the Cathay article? I wanted to, but it came up in Chinese characters.
My recent trip to HK in Cathay First was the best service I’ve ever had.