DEJA VU ALL OVER AGAIN
By Joe Brancatelli
December 30, 2009 -- It's been another bizarre 12 months for business travel. But that shouldn't surprise you. It never surprises me because I've come to the same conclusion after each of the thirtysomething years I've been on the road.
Odd as it may be, though, business travel is nothing if not instructive. You learn things. Rarely good things, I admit, but you learn nevertheless. Here are some of the hard lessons I learned in 2009. I don't expect 2010 to be much happier, but I'm open to the prospect of good news. Honest, I am. It would be a nice surprise.
Politics Are Foul and Security Is Politics
If it wasn't so deadly serious, the thought of a lunatic boarding a flight with explosives stashed in his underwear would have been a hilarious reminder of the airport-security Kabuki sponsored by the Transportation Security Administration. Since its creation two months after the terrorist attacks of September 11, 2001, the TSA has evolved into a mindless bureaucracy that delights in playing gotcha with innocent travelers who pack a stray pair of pointy scissors or an ounce too much shampoo in a carry-on bag. The agency's response to the Christmas Day attack on Northwest Flight 253 was equally ignominious: limit our carry-on baggage, restrict our in-flight bathroom privileges, take away our blankets—and then try to keep the new rules a secret from the very travelers who are required to abide by them.
But last week's events taught us another lesson: No one is more dangerous than a headline-grabbing politician hoist on his own pettifogging petard. This year's case in point: Republican Senator Jim DeMint of South Carolina. He has personally delayed the confirmation of Erroll Southers, President Obama's choice to head the TSA, which has been in the hands of a George W. Bush administration functionary since January. A former FBI special agent and currently a top cop at LAX, Southers has received the bipartisan blessing of two Senate committees. When DeMint was called out this week about his actions, his spokesman said the TSA is better off without a leader. Southers' "crime"? DeMint thinks unions are more dangerous that terrorists, and he believes that Southers wouldn't fight efforts to unionize TSA workers. After all, why fight terrorism when you can fight unions?
The Barbarians Are Still at the Boarding Gate
Airline executives are known for their ability to fiddle financially while their companies burn. Yet their willingness to profit from the operations they are running into the ground has reached new levels. One example: The Government Accountability Office said this year that United Airlines chief executive officer Glenn Tilton and two other executives raked in $7.6 million in retirement benefits from 2002 to 2006. During the same period, the airline abandoned four pension plans covering 122,000 workers and dumped nearly $10 billion of liability on the quasi-public Pension Benefit Guarantee Corporation.
Airline analyst and commercial pilot Robert Herbst paints the broader canvas. He estimates that the five remaining legacy carriers lost a cumulative $4.6 billion in 2008. They paid their 25 top executives more than $90 million in compensation. That's an average of $3.6 million each. The average annual wage per employee at the five carriers was $57,000, unchanged from a decade ago. At the same time, the legacy carriers' cumulative market capitalization dropped to $5 billion from $21.9 billion.
Learning to Live Without Horny Bankers
Airlines have long depended on free-spending financial types to fill the front of their aircraft. The high-priced business- and first-class seats made frequent flights to many destinations possible. But now that the Horny Banker Theory of Business Travel has been debunked, airlines are going to try to get small to survive.
Ever since Lehman Brothers tanked in September 2008, premium-class travel has plummeted. Some month-to-month declines have been in the 20 percent range, according the IATA, the international airline trade group. Throughout the year, U.S. carriers have collapsed their route networks, and some estimates say the national commercial-air system is 20 percent smaller than five years ago. Now the carriers plan to eliminate many seats in their first- and business-class cabins too. Such a drastic measure defies both mathematics and aircraft geography—removing one business-class seat that sells for $10,000 requires an airline to sell 10 additional coach seats at $1,000 each, and there simply isn't space for that many more chairs—but many carriers are convinced that business-class demand will never return to pre-Lehman levels. So now we'll see if Steve Wolf, the former boss of United and US Airways, was right. He once said airlines can't shrink their way to profitability. Of course, they long ago proved they couldn't grow their way to profits, either.
The Mainstream Media Never Learns
Frequent flyers are poorly served whenever the mainstream media covers business-travel topics, and 2009 proved again that reporters and editors who sit behind a desk and make believe they understand life on the road do more harm than good. The general media continued to buy the hype and fantasies fed to them by the supporters of the hopelessly inadequate "registered traveler" programs right up to the June day that the largest provider, Clear, abruptly shut down. And my friends in the mainstream media continue to support the meme that airlines imposing checked-bag fees are racking up big gains. In fact, the opposite is true: Carriers that charge bag fees have watched their overall revenue plummet in 2009. Yet JetBlue Airways, which still allows one free checked bag, and Southwest Airlines, which maintains its two-bags-free policy, are winning passengers and revenue. Southwest's gains are most notable. It registered a startling 11.7 percent increase in revenue passenger miles in November, even though its overall seating capacity dropped by nearly 8 percent.
The Fine Print…
One final lesson learned in 2009: I'm getting really old. During a trip to Wales in June, I wandered into a pub in the town of Conwy and ordered a pint of bitter. "We have two local ones," said the waitress. "Which do you recommend?" I asked. "I'm 26! I don't drink bitter!" she replied.
ABOUT JOE BRANCATELLI Joe Brancatelli is a publication consultant, which means that he helps media companies start, fix and reposition newspapers, magazines and Web sites. He's also the former executive editor of Frequent Flyer and has been a consultant to or columnist for more business-travel and leisure-travel publishing operations than he can remember. He started his career as a business journalist and created JoeSentMe in the dark days after 9/11 while he was stranded in a hotel room in San Francisco. He lives on the Hudson River in the tourist town of Cold Spring.
THE FINE PRINT This column is Copyright © 2009 Condé Nast Inc. All rights reserved. Reprinted with permission. JoeSentMe.com is Copyright © 2009 by Joe Brancatelli. All rights reserved.