News for Wednesday, September 13, 2006

@...US airfares are holding steady despite flagging demand, as the airline industry seeks to consolidate its fledgling recovery after a 6 year slump, experts said. Unlike the broad fare sales offered after the September 11, 2001 attacks, US airlines are resisting the temptation for across-the-board fare cuts. And instead of giving up the pricing power they've won over the last year, they are reducing the number of seats for sale. The usual seasonal discounts are not making a big dent on overall fare levels. The restraint comes as tighter security restrictions imposed in August have dampened interest in flying, exacerbating the seasonal drop-off in demand after the summer travel season. "The discipline that they (airlines) are showing... is really good news for the industry," said airline analyst Terry Trippler. "In the past, even the hint of a downturn would have been immediately followed by a system wide sale." This newfound discipline in an industry often marked by reckless capacity increases and fare wars suggests that the recent recovery in airline profitability is on track for now. The industry finally showed a profit last quarter after racking up USD$35 billion in losses between 2001 and 2005. But the discipline is fragile, and if one airline cuts fares, others will likely follow suit, said Trippler. Since August 10, when security restrictions were tightened after a foiled bomb plot, the only large-scale pricing move was an effort led by United Airlines to raise fares. Although that attempt failed, it showed that the airlines were willing to test their pricing power. Recent business airfares are running 17 percent higher on average than a year ago, according to Harrell Associates, a research firm that tracks air fares. But fall sales are making an impact on leisure tickets, which are down 5 percent from a year ago. Southwest Airlines on Tuesday announced a fare sale, offering discounts of up to 56 percent on 14-day advanced purchase tickets bought through its web site. "It's always nice to spur more traffic and the best way to do that of course is to get people's attention by lowering fares," said Southwest spokesman Ed Stewart. But such fare sales, which are generally for a limited number of seats, are part of this season and aren't indicative of broader pricing trends, said Roger King, an airline analyst with research firm CreditSights. But there are concerns that if the downturn in demand persists, airlines will be forced to fly emptier planes or lower prices more aggressively. It's "too early to say whether this slowdown is temporary and driven by August security concerns, or permanent and reflects slowing consumer demand," said HSBC analyst Adam Hylan in a note. "(But) we believe the balance of risk is on the downside."

@...British low-cost airline easyJet said on Tuesday its forward bookings had returned to normal but it was worried tighter security arrangements at UK airports would eventually affect demand. "Financially our bookings are back to normal. Our concern is the airport experience is much worse than it used to be. How long will customers have to put up with it?" Chief Executive Andy Harrison told an industry conference in London. "The UK government needs to make some decisions quickly." EasyJet, Europe's second-largest budget carrier after Ryanair, cancelled a total of 469 flights in August after a security alert to a suspected plot to bomb planes created chaos at UK airports. EasyJet said last week it expected the financial impact from the disruptions to be about GBP4 million (USD$7.5 million) but it was not changing its expectations for current year pre-tax profits to increase 40 to 50 percent. Harrison said the airline's forward bookings were "fine" but easyJet was lobbying the UK government for a "sensible solution" to tighter hand-luggage restrictions and other airport security measures following a suspected plot to bomb airliners. He declined to comment on the outlook for the winter period but said recent predictions made by Ryanair were pessimistic. Harrison earlier told the World Low-Cost Airlines conference that easyJet had no plans to fly long-haul routes. EasyJet was also in talks with suppliers on a possible introduction of in-flight mobile phone services but there were some significant issues to overcome before it became a reality. Ryanair recently announced plans to allow passengers to use mobile phones on planes from next year.

@...Aeromexico, Mexico’s largest airline, today announced it has expanded its popular and successful partnership with Intercalifornias to include San Ysidro among 14 cities with free ground transportation to Tijuana International Airport for Aeromexico passengers in southern California. The complimentary service, which Aeromexico launched last year, is available for Aeromexico passengers traveling from Tijuana on any fare to any of more than 40 Mexico destination served from Tijuana, said Carlos de Uriarte, Aeromexico vice president of sales and marketing, U.S. Division. De Uriarte noted that the partnership with the cross-border busing service gives southern California travelers more choices, savings and convenience when traveling to Mexico. “We are very pleased to expand our service, which has proven very successful with those Mexicans and Mexican-Americans in southern California who choose to travel to their Mexican destination via Tijuana,” De Uriarte said. Aeromexico passengers booked on a flight from Tijuana will receive a voucher that entitles them to complimentary Intercalifornias airport service to Tijuana International Airport from Bakersfield, Delano, Earlimart, Fresno, Goshen, Kingsburg, Los Angeles, McFarland, San Fernando, Santa Ana, San Ysidro, Selma, Tulare and Oxnard. This offer is only valid on flights operated by Aeromexico and it’s not valid on Aeromexico flights operated by Aerolitoral. The complimentary airport service voucher with Intercalifornias is only available for Aeromexico passengers who book their reservation with a participating travel agent for information call Aeromexico’s toll-free reservation at (800) 237-6639. In addition, Aeromexico tickets must be purchased in the U.S. in order to qualify for the special offer. The complimentary transportation to Tijuana International Airport will be provided aboard Intercalifornias’ fleet of motor-coach buses.

@...Champlain Enterprises, Inc., dba CommutAir/“Continental Connection” announced today that it has signed a lease agreement with Horizon Airlines of Seattle, Washington for sixteen Bombardier Q-200 series aircraft, including maintenance and training support as well as spare parts. The aircraft will be delivered beginning in January 2007 and will be placed into service for Continental Airlines (NYSE:CAL) at its Cleveland hub. The Q-200 is a modern 37-passenger turboprop manufactured in Ontario, Canada. It is powered by an advanced series of Pratt & Whitney engines designed to produce significant fuel savings over similar-sized jet aircraft. In addition to its fuel efficiency, the Q- 200 employs a revolutionary noise and vibration suppression system which dampens cabin noise for enhanced passenger comfort. The aircraft features a spacious cabin with overhead bins, lavatory and in-flight service.

@...A Mississippi congressman is calling for the security director at the Jackson airport to be suspended pending further investigation into a newspaper report alleging that "TSA management used inside information to warn security screeners of undercover tests for improving airport security." The Clarion-Ledger reports that Rep. Bennie Thompson sent a letter to the TSA asking the agency to respond "to ensure the integrity of our entire aviation security system." The congressman called on the TSA's inspector general to investigate if workers were tipped off to impending security tests, and by whom, and also to see if dangerous items at checkpoints are properly reported. This is not the first time the Jackson airport has been involved in a security scandal -- in May the Clarion-Ledger revealed that Jackson mayor Frank Melton had posed as a police officer in order to carry guns on flights.

@...Comair has issued a memo to its pilots indicating that the airline's diagrams of the airport in Lexington, Ky., do "not accurately reflect actual airport signage," reports the Courier-Journal. The notice comes two weeks after the fatal crash of a Comair regional jet that attempted to take off on the wrong runway in Lexington. Comair now is urging its pilots to use "extreme caution" in deciphering the current charts and to seek help from air traffic control if they need guidance taxiing to the runway. Comair uses a commercial vendor for its diagrams, and the Courier Journal reports that the one for Lexington's Blue Grass Airport had last been updated Jan. 27 -- well before the current runway repaving project. But Comair spokeswoman Kate Marx would not confirm whether the chart used by the Flight 5191 crew was accurate. "That's part of NTSB's investigation," she said, referring to the National Transportation Safety Board.

@...American Airlines officials have expressed outrage over the airline's portrayal in the ABC mini-series The Path to 9/11. According to the Fort Worth Star Telegram, executives objected to a scene in the television docudrama in which American employees in Boston are depicted allowing hijacker Mohammed Atta to board a flight even after receiving a security alert about him. In reality, the incident allegedly depicted occured in Portland, Maine, on a flight operated by another airline. ABC claims the script is based on the report of the 9/11 Commission, but the network was forced to make script changes after challenges from former Clinton administration officials. An official statement from American describes ABC as "inaccurate and irresponsible in its portrayal of the airport check-in events that occurred on the morning of September 11, 2001," but stopped short of threatening legal action. TV Week tracked down further response from Roger Frizzell, American's VP of corporate communications and advertising posted on a popular blog site, "According to the 9/11 Commission Report, it was not American Airlines, nor was it even the right airport that was depicted." Both reports note that ABC did not return phone calls seeking comment.

@...Wendy Shanker was passing through security at the St. Louis airport Friday when the X-ray machine detected a potential weapon inside her carry-on bag. A screener dug into the satchel and found a pair of scissors that Shanker used for knitting. The scissors' blades were shorter than the 4-inch federal limit so the screener plopped them back into the bag. But he missed something else: Shanker's two-ounce container of Neutrogena hand cream, a substance banned since federal authorities clamped down last month on allowing liquids and gels into airline passenger cabins. A passenger at the San Francisco airport throws out a banned item. Some air travelers say they have flown with liquids or gels and haven't been caught. (By Justin Sullivan -- Getty Images) From The Post's Print Edition All of Today's Business Articles Today's Business Front Image More on washingtonpost.com Markets News and Research Technology Section Save & Share Tag This Article Saving options 1. Save to description: Headline (required) Byline 2. Save to notes (255 character max): Blurb 3. Tag This Article "They focused in on the scissors and didn't seem to see the cream," said Shanker, who didn't realize it was in her bag until she was on her way to Washington Dulles International Airport. Like Shanker, many people are inadvertently taking banned liquids and gels through security in their pockets and carry-on luggage, according to interviews with several dozen travelers at local airports and with pilots and security officials. Others, however, say they're simply not going to tolerate the new rules. They admit that they ignore the restrictions, slipping expensive cologne, perfume, lip gloss, lotion and other ointments into their carry-on bags or into their pockets in hopes of sneaking them past security. Some of the items get flagged by screeners, others do not. Unlike Shanker, the cream and liquid smugglers refused to give their full names. One woman said she slipped her Blistex lip balm into a pocket because her lips dry out on flights; another stashed her perfume in her carry-on because she didn't trust baggage handlers; another kept a small container of body lotion in her purse to apply in the aircraft lavatory. A business executive said he always traveled with hand sanitizer in his pocket because he worries about germs on planes. He has made about 10 trips since the restrictions went into effect and hasn't been caught. Since the rules went into effect, most travelers have abided by the law, packing their hand cream, hair gel and toothpaste in their checked luggage or leaving the items at home. The flouters, however, say they hate the hassle of long waits at baggage carousels and worry that their expensive bottles of perfume will be broken or stolen if placed in their checked luggage. A 33-year-old teacher, who was traveling with her 7-year-old son and 9-year-old daughter, brought her cosmetics case in her backpack on a trip from Orlando to Dulles Friday morning. She would give only her first name, Nicole, saying that she worried about getting in trouble. At first, she admitted to a reporter that she was carrying a $75 hydrating gel in her backpack. Then, she revealed lip gloss, toothpaste, a bottle of expensive Chanel perfume and a $300 container of facial cleanser neatly packed in a bulging cosmetic case. Screeners never noticed the items, which she had no intention of checking, she said. "There is no way I'm putting my Chanel in a checked bag," she said. Then she looked down at her two children: "Who knows what's in their bags?" The federal government banned most gels and liquids from passenger cabins last month after British authorities said they had foiled a plot to bomb transatlantic flights with liquid explosives. Officials with the Transportation Security Administration said they were confident their security efforts in place at the time would have prevented the plotters from getting through security checkpoints at U.S. airports. But they said they couldn't take any chances and hastily enacted the ban early on Aug. 10. TSA officials have no way of tracking people who succeed in disobeying the ban, but screeners have caught people trying to sneak items through checkpoints, said Ellen Howe, an agency spokeswoman. Anyone caught could face fines of several hundred dollars, Howe said, although she said it was too difficult to determine whether any fines have been levied. TSA officials point to a 20 percent increase in checked bags as an indication that most travelers seem to be complying with the rules. A passenger at the San Francisco airport throws out a banned item. Some air travelers say they have flown with liquids or gels and haven't been caught. (By Justin Sullivan -- Getty Images) From The Post's Print Edition All of Today's Business Articles Today's Business Front Image More on washingtonpost.com Markets News and Research Technology Section Save & Share Tag This Article Saving options 1. Save to description: Headline (required) Byline 2. Save to notes (255 character max): Blurb 3. Tag This Article "Travelers must realize this isn't a game," Howe said. "The threat is real and it continues, and we appreciate the public's cooperation. Is it the perfect system? No. But does it make it right to sneak things through security? No, it doesn't." Security experts said the experiences of travelers interviewed at Reagan National and Dulles airports highlighted what they say are security gaps in the current product bans. A well-trained screener must notice the sometimes-subtle signatures of containers of gels and liquids on X-ray machines. The devices are much better at picking up the shapes of dense and metal objects, such as knives, guns or bomb components, security experts said. Metal detectors at security checkpoints cannot sense plastic items that may contain liquids or gels. "There are obviously limitations to this ban," said Clark Kent Ervin, a former inspector general at the Department of Homeland Security. Ervin supports the restrictions but thinks they are flawed because authorities rely heavily on screeners' interpretations of X-ray images. "It depends entirely on screeners' alertness and training," he said, "and there are problems with both." Pilots groups have criticized the measures, saying they notice the security holes all the time. They say authorities should focus more on developing systems to identify potential terrorists, not just their weapons. Gary Boettcher, a pilot and president of the Coalition for Airline Pilots Association, a trade group that closely tracks security issues, said he constantly sees people drinking from illicit bottles of water or putting on lip gloss when he walks through the passenger cabin. Most of the time, he said, it doesn't bother him. "They are just doing their routines like they always did," Boettcher said. "An old woman drinking a bottle of water doesn't concern me. . . . The whole screening process is a facade to make the public feel safe, to show that the government is doing something." Passengers said they didn't feel any safer after reaching their destination and realizing they had inadvertently left a banned item in their carry-on bags. Libby Cole, 21, who flew into Dulles from Vermont on Friday, said she rushed to catch an early plane and didn't know until she landed that she had two lip glosses in her carry-on bag. On a past trip, TSA screeners caught one out of two lip glosses, she said. "I don't think this does anything, because obviously, if this can get through," she said, holding onto one of her lip glosses. "I think it's just kind of a pain."

@...A passenger tried to open the exit door of a jet during a cross-country flight on Tuesday night, airline and federal officials said. United Airlines Flight 890 from Los Angeles landed as scheduled at Washington Dulles International Airport at 8:35 p.m., said Amy Kudwa, Transportation Security Administration spokeswoman. No one was injured. The passenger became unruly about 3 1/2 hours into the flight from Los Angeles and was subdued by other passengers and federal air marshals, said United spokeswoman Megan McCarthy. "After the passenger was restrained, the pilot decided to land at Dulles," McCarthy said. "It wasn't an emergency landing." Airport police and FBI agents met the flight and were interviewing the passenger, said FBI spokeswoman Debbie Wierman. There were 138 passengers and six crew members on board, McCarthy said.

@...Supporters of legislation to shrink Dallas Love Field and bar long flights there for eight more years have enlisted help in countering the charge that their proposal violates antitrust laws. Four experts in antitrust law, including two former Federal Trade Commission members, wrote to congressional leaders last week to say the restrictions are part of a necessary compromise to end a decades-long fight over Love Field. The proposed legislation, they said, "will be far better for airline competition and consumers than the regime that prevails today -- and that will continue to prevail if the legislation does not pass." The letter was released Tuesday by officials of Dallas-Fort Worth International Airport. It was signed by former FTC members Thomas B. Leary and Christine Varney, and two other private antitrust lawyers, Harry M. Reasoner of Vinson & Elkins LLP and Janet L. McDavid of Hogan & Hartson LLP. Reasoner's law firm works for the city of Dallas and Southwest Airlines Co., and the other three work for a firm that represents Dallas-Fort Worth International Airport -- all supporters of the legislation. The letter was intended to blunt a letter written two weeks ago by nine university antitrust experts, who criticized the DFW bill pending in Congress, saying it could lead to higher fares and less service for travelers. The criticism by the academics followed the leak of an unsigned memo from the Justice Department's antitrust division, which said the bill would violate antitrust laws. The department, however, has not taken an official position. The bill was introduced by Sen. Kay Bailey Hutchison, R-Texas, and modeled on a deal cut by AMR Corp.'s American Airlines, Southwest Airlines, DFW Airport and the cities of Dallas and Fort Worth. It would eventually repeal a 1979 law called the Wright Amendment. Despite its powerful backers, the bill's fate is in doubt, partly because key lawmakers object to provisions designed to protect the deal from legal challenges. Hutchison escorted Dallas Mayor Laura Miller on a lobbying tour of Capitol Hill offices Tuesday. Critics complain that the bill would preserve restrictions on long flights at Love Field for eight more years and that Love Field would shrink from 32 gates to 20 gates, which could block other airlines from competing with incumbents American, Southwest and Continental Airlines Inc. JetBlue Airways Corp., has said it would be interested in serving Love Field, near downtown Dallas, but not the more remote DFW Airport. The Consumer Federation of America and Consumers Union called the DFW bill "anti-competitive and anti-consumer." The owners of six unused Love Field gates have financed studies designed to undercut the bill, claiming that continuing limits at the Dallas airport would hurt the city's economy. Leary and Reasoner, the pro-deal lawyers, said critics of the DFW-American-Southwest bill were naive in holding out for immediate repeal of Love Field flight limits. "It's unrealistic to compare the world under the compromise legislation with the world that would exist if the Wright Amendment were repealed outright because that repeal, as explained to me, is just not going to happen," Leary said.

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