E-MAIL JOE    PRINT    2012 COLUMNS    ARCHIVES    SEARCH ARCHIVES TRAVEL'S SILLY SEASON By Joe Brancatelli January 18, 2012 -- Exiting the customs area at New York's Kennedy Airport after an international flight last weekend, I waded into a sea of private-car drivers waiting for passengers. There among the black-suited men holding hand-written signs was a nattily dressed fellow ostentatiously cradling an iPad with his client's name elaborately displayed on the screen. "Ah," I thought. "It's travel's silly season again." If you've flown on business over the years, you know that January is the slowest month for air travel. Business flyers are mostly stuck behind their desks. Leisure travelers, strapped for cash after an orgy of holiday spending, aren't parting with vacation funds. Kids are in school, so families can't fly. It's not so cold in the north yet that the snowbirds are headed south. And skiers are skeptical about snow this early in the season, so they stay home too. All this quietude leads to silliness—and not just from bored limousine drivers finding new uses for their iPads. With little actual news to write about, airline beat reporters and other media types have to invent stories and speculate wildly about stuff that'll never happen. This year is no exception. In fact, if anything, the media is loonier then ever, spinning yarns and pushing memes that would be easily dismissed as preposterous except for that fact that some impressionable business traveler might actually take the stuff seriously. Please watch your metaphoric step as you follow me down the rabbit hole to demolish some of the stories dominating the vast wasteland of business travel in January. Delta Air Lines May Buy American Airlines I told you a few weeks ago that American Airlines faced a bleak future as an independent carrier because no airline that has gone bankrupt since the September 11 terrorist attacks has survived without a subsequent merger or buyout. But Delta Air Lines, the nation's No. 2 carrier, buying or merging with American, the No. 3 player? It is a media meme that can only make the rounds during the silly season of January. You should ignore with confidence any business story that suggests such a proposal could logically occur. For starters, a Delta-American combination would control fully 50 percent of the full-size jet service in the nation. Even assuming the Department of Transportation would permit that kind of concentration (it wouldn't), the Justice Department would logically go berserk. Justice just finished frustrating a much less dangerous potential merger between AT&T and T-Mobile. And unless Delta was to put a multi-billion-dollar breakup clause in a deal (a la AT&T's ill-fated contract with T-Mobile), why would American Airlines waste the time? American, you should know, is sitting on a cash horde of $4 billion and didn't need to arrange debtor-in-possession (DIP) financing to ride out its run in bankruptcy court. That gives American staying power far beyond the minimum 120-day exclusivity clause that permits only American executives to file a reorganization plan with the court. Moreover, any "carve outs" and divestments that Delta or American could imagine to win government approval for a merger would be economic suicide. American and Delta directly compete in the nation's two largest air-travel markets (New York and Los Angeles) and have competing hubs just a few hundred miles apart throughout the rest of the country. Any divestitures would be so huge as to far exceed the benefits of a merger. Does American need a merger or buyout partner? Recent history says yes. But look to Alaska Airlines, US Airways, or even JetBlue Airways—or perhaps some sort of pseudo-merger with British Airways and Iberia, American's Oneworld Alliance partners. American and Delta just can't happen. Airline Shares Are a Good Investment Imagine my surprise when I got back to my office on Tuesday morning and found a research firm touting airline stocks as a good investment. You can smell silly-season desperation on this one right off since the research report starts this way: "Despite the fact that air carriers are losing money due to persistent market turmoil and surging fuel prices…" What part of that introduction makes you want to throw your hard-earned money down this particular well? More to the point, airline stocks have always been a dreadful fundamental investment, something we discussed last summer, and I've been warning business travelers about them for the better part of 15 years. And if none of that convinces you to put your investment dollars elsewhere, consider this: Jet-fuel prices averaged their highest annual price in history during 2011, selling for just a shade under $3.00 a gallon. That's a higher average cost than even in 2008, when crude-oil prices spiked at a record $147 a barrel. The high price of jet fuel has already forced airlines to raise fares as much as $20 roundtrip since the start of 2012. If crude prices continue to rise (as is expected) or spike unexpectedly because of a crisis in the Strait of Hormuz, jet-fuel costs will spiral. That'll force carriers to continue to raise fares, depress the already-weak demand for tickets, and lead to the collapse of another segment of the airline market. That's exactly what happened in 2008. How does any of that auger well for investors? The Blah, Blah, Blah on Fourth-Quarter Earnings Allow me to predict some silly-season absurdity for you. The nation's airlines begin reporting fourth-quarter and full-year 2011 earnings later this week, and the news will look generally good. At least generally good by the standards of an industry that rarely makes money even in happy times. Since most carriers will actually report a 2011 profit, the analysts and the talking-head experts are sure to start babbling about the most absurd things. Exactly what, I don't know. But don't believe any of it. No one—and I mean no one—knows what 2012 will look like in the airline industry. With oil and jet-fuel prices rising—and jet fuel accounts for at least a third of an airline's operating costs now—the outlook for this year is truly unknowable. Want something else to temper the irrational exuberance you will hear? Statistics released by airline-tracking organizations show that international business-class travel is slowing. That, of course, is where most airlines make the lion’s share of their meager profits these days. (And not that this is necessarily representative or predictive, but I feel compelled to report that there were just nine passengers in a 42-seat business class on my international flight last week. And I was flying on a free ticket claimed with my frequent-flyer miles.) Bagging the Baggage-Disclosure Rules Sometimes, travel's silly season does go beyond media humbuggery, however. The silliest story of the week comes from the Department of Transportation: It has decided to delay much-needed regulations that will require airlines to fully disclose their mind-numbing array of checked-baggage fees. It's actually even sillier than that. The DOT, which has been quite proactive with passenger-protection rules in recent years, is sticking by its new rules. They go into effect, as originally planned, on January 24. However, the DOT says that it won't police the regulations or enforce them for at least six more months. Why delay enforcement of rules you impose? The DOT says the airlines have made a compelling case that their baggage fees are so convoluted and contradictory that they don't understand them and may not be able to accurately inform passengers. Now how silly is that? The Fine Print… One of our sister publications, Condé Nast Traveler, recently chose Chicago's two-year-old Elysian Hotel as the best in the nation. Effective February 1, the Elysian changes its name to the Waldorf Astoria Chicago. So anxious was Hilton Worldwide, the parent company of the Waldorf chain, to get the Elysian in the fold that it formed a joint venture to buy the 188-room property. No terms were announced.

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 © 2012 American City Business Journals. All rights reserved. Reprinted with permission. JoeSentMe.com is Copyright © 2012 by Joe Brancatelli. All rights reserved.