FIVE URBAN LEGENDS DESTROYED
By Joe Brancatelli
August 21, 2013 --Business travel is confusing enough without some erroneous urban legends complicating our lives on the road. In fact, if you believe the urban legends, we're all lounging on the beach in Maui right now thanks to the free airline tickets and hotel rooms we earned in our frequent-travel programs.
I can assure you that I'm not in Maui right now. My guess is that if you're reading this, you are not on the beach, either. So while we continue our lives as worker bees, here are five other urban legends about business travel that we can dismiss and demolish.
1. Airlines are solidly profitable businesses
Government statistics show that the nation's 10 largest carriers have managed a cumulative operating profit for each of the last eight fiscal quarters. That has led some callow analysts to stoke the new urban legend that airlines are now solidly and reliably profitable businesses.
Eight profitable quarters for an industry that has lost tens of billions since 1979's deregulation is no small feat. But the recent string of profits is largely built on impossible-to-replicate factors. The big contributor to the bottom line lately has been the lower price of fuel, which accounts for 28.6 percent of the industry's costs, down from 40 percent a few years ago. The industry has also denuded itself of employees. Government figures show airlines employed 585,000 workers in May, 2013, down 23 percent from May, 2001. Remaining rank-and-filers toil for a fraction their old wages. In fact, some new flight attendants and pilots at commuter carriers qualify for food stamps. Yet even with cheaper energy and fewer, lower-paid workers, the industry's first-quarter operating profit margin was an anemic 1.3 percent. Hardly the profile of a healthy industry.
2. Richard Branson is a travel genius
Branson made a fortune in the music industry a generation ago and that has led to a panoply of firms named Virgin, many of which are franchise operations that provide Sir Richard with a hefty, low-risk cash flow. That has somehow spawned the urban legend that Branson is a travel savant who serially creates successful transportation and lodging businesses.
Nothing could be further from the truth. His European carrier, Brussels-based Virgin Express, disappeared after a merger with a Belgian competitor. Virgin Nigeria collapsed after several rebrandings and local political tussles. Virgin Trains, his British railroad franchise, is disliked for its poor service, tatty rolling stock and atrocious on-time performance. Virgin Hotels was announced three years ago, but has yet to open a single property. His oft-restructured Pacific Rim carrier, Virgin Australia, is losing money at an alarming rate. Virgin Atlantic, his flagship global carrier, is also a conspicuous money-loser and desperately needs the infusion of energy and marketing synergies provided by new minority owner Delta Air Lines. And his star-crossed U.S. venture, Virgin America, has never made money in its six years of operation.
3. In-flight WiFi is an inevitable winner
I've yet to meet a business traveler who doesn't want in-flight WiFi. That's led to the urban legend that in-flight WiFi is a winning business proposition and an inevitable reality in our uber-connected world.
The problem with that theory is the financial reality. The first in-flight WiFi venture, Boeing Connexion, ended with Boeing writing off a billion-dollar investment. That's an astonishing number considering Connexion was never installed on more than 150 aircraft. The current flag carrier for in-flight WiFi, Gogo, went public on June 21 at $17 a share. It is selling for about $11 now, down 35 percent in 30 days. Wall Street's lack of faith is rooted in the dreary realities: Gogo has wired nearly 2,000 aircraft since its 2008 launch, yet only 5.9 percent of travelers buy the service on flights where it is available. The firm's operating loss for the first half of 2013 more than doubled compared to the first six months of last year. And if you say it's early days yet, consider: Apple has sold more than 300 million iPhones since that product was introduced about a year before Gogo went live on commercial aircraft.
4. Hotel rates don't change from day to day
It's common knowledge that airline pricing computers and the carriers' "revenue management" departments change fares millions of times each day. That's somehow led to the urban legend that hotel pricing is static and rates don't change between the time you book your room and the time you arrive at the property.
Compared to airline pricing, hotel rates are a model of stability. But you're leaving money on the table if you think the lodging industry isn't aggressively yield-managing rates. Even though hotel prices are more transparent than airfares--websites controlled by the major chains display virtually all of their nightly rates on request -- they change with stunning frequency. Just one example: Three weeks ago, when booking a room in New York City for the following week, I reserved a rate I thought high ($249 a night) for the time of the month and the property, a so-called focused-service hotel. Each time in the following days that I checked back at the chain's website, the nightly rate at the property was lower. I then cancelled the existing reservation and rebooked at a lower price. I did that four times before I settled on the price the hotel displayed two days before my arrival: $134 a night.
5. Physical keyboards are dead on mobile devices
Blackberry went on the auction block and few observers are surprised that BlackBerry's save-the company phones flopped. The virtual-keyboard Z10 is now free at Amazon.com and the Q10, with the familiar BlackBerry keyboard, sells as low as $69.95 at Wirefly.com. That feeds the urban legend that physical keyboards are a thing of the past on smartphones, tablets and other mobile devices.
The New York Times claims more than 4,000 models of touchscreen phones have been released, but that hardly means physical keyboards are dead. It only means that smartphone and tablet makers require us to buy external keyboards from third-party firms. There's one that attaches to the Samsung Galaxy S4 and slides out from underneath that trendy phone. There's even one for iPhone, the granddaddy of touchscreen devices. There's a vigorous market for external iPad keyboards. The distinguishing feature of Microsoft's Surface is a cover that doubles as a keyboard. And more and more touchscreen-powered mobile devices accommodate USB On-the-Go, a handy dongle that permits you to connect a traditional mouse, a flash drive, a printer or, yes, any standard USB-powered keyboard.
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 © 2013 American City Business Journals. All rights reserved. Reprinted with permission. JoeSentMe.com is Copyright © 2013 by Joe Brancatelli. All rights reserved.