Delta accused of making business decision for bad reason [RETALIATION]

by Tom Johansmeyer on

I love the Business Travel Coalition. I really do. I see a press release from this organization in my inbox, and I start to smile. It’s like reading Business Insider headlines without stopping to think that they may be click-bait (not that I’m ever guilty of that, of course …). Well, the latest is downright hilarious. If you hate Delta, you’ll love the Business Travel Coalition.

In its latest statement, the BTC draws attention to a “predatory” move by Delta. In response to Frontier Airlines’ decision to open a route from Minneapolis to Kansas City, it says, the largest airline in the United States has pulled the trigger on routes from Kansas City to Boston, Columbus and New Orleans. According to the BTC, that’s some heavy-duty payback, intended to help Delta “maintain its monopoly position at Minneapolis St. Paul International Airport.”

Ummmmm, really? It’s a pretty costly “retaliation” play.

Of course, Delta couldn’t have come up with this idea on its own. The BTC explains:

This is a page from Northwest Airlines’ playbook reminiscent of its 1993 response to entry by tiny Reno Air when Northwest announced it would overlay the carrier’s routes from Reno to MSP, Seattle, Los Angeles and San Diego.

Yeah, of course it is. The people with aluminum foil on their heads and hanging from their ceilings are doubtless nodding in violent agreement right now. Fortunately, it gets better when you hear what BTC chairman Kevin Mitchell has to say about all this:

“As we saw in the U.S. during the 1990s, strategies of predation seek to drive low-cost competitors out of markets and create barriers – literal barriers of fear – for potential new entrants. Consumers may benefit from below-cost pricing in the short term, but once a new entrant is driven from a market, the incumbent airline can raise prices above competitive levels and recoup the “investment” in its strategy of predation.”

As the ol’ infomercial folks say, “But wait! There’s more!”

“Just as importantly, the anticompetitive behavior sends an unmistakable message to other competitors to not trespass on the incumbent’s markets anywhere in its network, negatively impacting consumers even more broadly. Make no mistake, Delta’s heavy-handed, punitive attack on this low-cost carrier is meant to chill all other low-cost airlines that might otherwise try to mount competition at one of the most concentrated hub airports in the U.S.,” added Mitchell.

Look, the BTC may have a point in all this. It won’t be communicated effectively, though, if they take this approach. In case you need a chuckle, here’s the full statement. First, though, you need a break, largely because these people are so bat-shit crazy. So, to break this up, I offer you some singing skeletons from Canada.l


Okay, now here’s the statement:

It’s deja vu all over again as Delta Air Lines seeks to maintain its monopoly position at Minneapolis St. Paul International Airport (MSP) by retaliating against Frontier Airlines for deciding to initiate scheduled service from Kansas City to MSP on June 6, 2011. In a response that can only be considered retaliatory and anticompetitive, Delta beginning on June 6 will start flights from Kansas City to Boston, Columbus and New Orleans, and from Omaha to Ronald Reagan Washington National Airport – all overlaying Frontier’s schedules. This is a page from Northwest Airlines’ playbook reminiscent of its 1993 response to entry by tiny Reno Air when Northwest announced it would overlay the carrier’s routes from Reno to MSP, Seattle, Los Angeles and San Diego.

“As we saw in the U.S. during the 1990s, strategies of predation seek to drive low-cost competitors out of markets and create barriers – literal barriers of fear – for potential new entrants. Consumers may benefit from below-cost pricing in the short term, but once a new entrant is driven from a market, the incumbent airline can raise prices above competitive levels and recoup the “investment” in its strategy of predation,” said Business Travel Coalition chairman Kevin Mitchell.

“Just as importantly, the anticompetitive behavior sends an unmistakable message to other competitors to not trespass on the incumbent’s markets anywhere in its network, negatively impacting consumers even more broadly. Make no mistake, Delta’s heavy-handed, punitive attack on this low-cost carrier is meant to chill all other low-cost airlines that might otherwise try to mount competition at one of the most concentrated hub airports in the U.S.,” added Mitchell.

In 2008 testimony before the U.S. Senate and House, in opposition to the proposed Northwest – Delta merger, BTC forewarned about the consequences of creating mega carriers and driving radical consolidation of the U.S. marketplace for commercial aviation services:

Strategies of Predation. “The resulting mega carriers would fortify their hubs with near-exclusive contracts with corporations and travel management companies, and other well-tested practices such as gate hoarding, schedule bracketing, triple frequent flyer points and travel agency override programs, making the barriers-to-entry for low-cost carriers of the 1990s seem low. Congress should be concerned with the market power of super-mega airlines and their incentive and means to frustrate new airline entry at hub airports.”

Indeed, the Delta-Northwest merger created the largest airline in the world; one that possesses the market dominance necessary to frustrate new entry at its hub airports, and one that can project its considerable power into adjacent markets, as also noted in BTC’s 2008 testimony:

Adjacent Market Power. “Congress should be concerned with these mega carriers’ ability to drive supplier prices to below competitive rates for travel agencies, travel management companies, airports, global distribution systems, parts suppliers, caterers and all manner of supply chain participants. Likewise, these carriers would have the power to accelerate the transfer of costs onto the backs of consumers.”

Delta’s move against Frontier adds further evidence and warning that the U.S. commercial aviation market is failing. Indeed, some two and one half years into the widespread implementation of programs that unbundle airline services from the base ticket, market forces are inadequate to drive airlines to make fee information available to the travel agency sales channel. As a consequence, not only were many consumers surprised at the airport by some $9.2 billion in airline fees in 2010, but because those fees are withheld from travel agencies and cloaked from the pricing discipline of a comparative shopping process, they are artificially high. This resulting economic inefficiency is a strong indication of market failure and cause for concern.

The U.S. Department of Justice and State Attorneys General should be on high alert to the return of strategies of predation and other anti-competitive practices in the airline industry. As serious as predation was in the 1990s as a threat to consumers and the competitive structure of the airline industry, today consolidation has made potential consequences worse by orders of magnitude. The U.S. DOJ and State AGs should send an equally unmistakable message back to Delta that it is being watched and that abusive, anticompetitive behavior in the airline industry will not be tolerated. Business travelers and consumers have been pummeled by a series of airfare increases, many of them hidden, over the last few years. They need — and deserve — more airline competition and not the return of old tricks of the past that are designed to kill it.

[photo by Rainer Ebert via Flickr]

Five business travel challenges for small companies to overcome

by Tom Johansmeyer on

Regardless of economic conditions, owning and running a small business isn’t easy. It’s always tough to find clients, allocate your funds effectively and maximize your bang for the buck. And, business travel is a big part of this. When you go out on the road, you know you’re committing some serious cash to the endeavor, and you want to make sure you get as much value out of it as possible.

Part of this has nothing to do with what you’re spending: you want to make sure the reasons for your business trip are smart. But, you also need to keep an eye on the expense side of this to ensure you aren’t spending unnecessarily. Business planning covers the first aspect of this, and travel planning addresses the second.

So, how can white collar travel folks spend more intelligently on business travel? Here are five ideas:

1. Forget brand: are you loyal to a particular airline? Cut those ties. Sure, you’re thinking that accumulating miles can get you free business travel later … and there is some truth to that. However, you could be spending more than the price of a ticket when working toward that benefit. Also, there may be constraints on when you can take free travel.
2. Stay a little loyal, though: even if you aren’t buying on loyalty, you should still enroll in the loyalty programs for every airline, rental car company and hotel you use. It may take longer to accumulate benefits when you spread your purchases around, but the free perks you receive won’t come at the (literal) expense of your travel budget.

3. Shop around a bit: time is money, and the hours you spend looking for a flight are hours you could sink into other business activities. So, look at your effective rate per hour (i.e., how much your time is worth). Let’s say, for example, that an hour of your time is worth $100. If you could spend an hour to save $250 on a flight, that’s a good return – swallow the pill and do some comparison shopping for airfare and room rates.

4. Look at alternatives to airline loyalty: some online travel agencies have loyalty programs. Remember to join them, as you can accumulate benefits with them as well as with the airlines. As with airline choices, though, don’t choose a particular booking site just to accumulate points. Cash comes first!

5. Play the credit card game: use a branded credit card to make your travel arrangements. Choose one for the airline you use most. So, if you have a Delta card and wind up flying American Airlines every now and then to save money, you’ll still accumulate some benefits with Delta. Just don’t forget to pay the card off at the end of the month!

[photo by codepo8 via Flickr]

Five ways London will drive American business travelers nuts

by Tom Johansmeyer on

On my recent trip to London, I was asked frequently if it was my first time I didn’t quite know how to answer, as I’d spent a day wandering the city in 2008 before schlepping out to East Anglia. Instead of yes-with-a-but or no-with-an-except, I settled on kinda and used that as bait to give an explanation nobody really cared about.

Why is this important?

Subtlety matters in London, and for business travelers, time is of the essence. Fail to handle the former properly, and you will lose on the latter. Had I said I’d been to London while asking for directions, for example, the outcome would have been much different (I’d not have gotten sufficient detail). But, I remembered just enough to be dangerous.

London can be a tricky city for the white collar travel set, largely because it’s more different from what you see in the United States, given the shared language and history. Going to London on business? Here are five things that will tangle with your corporate yankee sensibilities:

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1. They drive on the other side of the road: I know; I know – this is perfectly obvious, and you should know about it already. Here’s the problem, though: I’ve spent the last three decades looking or traffic on the right side of the road. Old habits die hard. Combine this with jaywalking (a New York necessity), and the results can be unpleasant. I’m not saying this is right or wrong, but after several close calls, it becomes annoying.

2. Cold toilet seats: no explanation needed.

3. Hopstop FAIL: I love Hoptstop in New York, but it just doesn’t measure up in London. Too many streets are missing. Usually, getting “close enough” is fine, except when close enough points you in the wrong direction … when you’re on your way to a business meeting. I quickly gave up on Hopstop and started carrying a paper map.

4. Late-night dining FAIL: It seems like London hates to eat after 10 PM. I worked late several nights on my last trip and found myself needing dinner after 11 PM. There just wasn’t much. If you’re in London on business, feed yourself and your team early if you have an all-nighter forming … and stock up for the early hours of the morning.

5. Nobody knows where anything is: I grew up in the Boston area, so I’ve been through this before: these tiny, crazy little streets are difficult to navigate, and the comfort of the Manhattan grid is nowhere to be found. Everything makes sense if you know where to look. But, it takes targeted knowledge to help a lost American businessman, and I mostly encountered only friendliness and willingness. Give yourself plenty of time to get to that next meeting …

Do airlines care how you’re dressed?

by Tom Johansmeyer on

The lists are almost comical. All over the travel web, you’ll find articles about how to scam score an upgrade from an airline, and invariably, one of the items involves attire. If you dress well, the thinking goes, you’ll be treated better, ostensibly because airline employees judge books by their covers. But, does it really work?

There are a lot of variables that are much more important than attire, such as whether you have elite status. So, it’s a bit much, it feels, to over-value clothing. Further, procedural constraints deemphasize the role of how you’re dressed in your general treatment by airline employees.

I’ve been fed the “well-dressed” story since I started flying frequently on business more than a decade ago. I never really bought it, though, as treatment was almost always obscured either by my temper or my status.

But, that’s all different now.

I no longer have the coveted “platinum” tag, and I’m starting to fly fairly frequently again. In the past month, I’ve been on four international flights, and I’ve learned … just what you’d expect. Treatment may be a hair better if you’re sartorially splendid, but all things rarely are equal enough to make a real call on this.

Here’s what I wore (and what I saw):1. Jeans and a respectable button-down shirt: This is what I wear to work every day, and it’s good enough for my employer. So, if it works for the people who pay me, it should be good enough for the airlines I pay, right?

Ummmmm … yes, actually.

I was treated about as well as can be by an airline (without elite status or a first-class ticket). I get neither more nor less than I had coming to me. Truth be told, the flight attendants were friendly and accommodating. Though I wasn’t dressed like an executive, I held myself like one, and that seemed to get the job done.

2. Jeans and a Gadling shirt: Nobody gave a damn that I write for one of the largest travel blogs on the web (which was perfectly fine with me, frankly). So, for all of you who think we get special treatment when we’re recognized … we’re not recognized (at least I’m not). And, the fact that I was dressed down made no noticeable difference.

3. The full uniform: As I write this, I’m wearing a suit, tie and horribly uncomfortable shiny shoes. I arrived at the airport from the Toronto Stock Exchange, where I rang the opening bell with IR magazine. I was all business – and looked it and felt it. According to the conventional wisdom, the airline should have upgraded me to first class and kicked everyone else out, right?


So, what happened?

Nothing. Nothing at all.

I was treated as I was when clad in my Gadling shirt and my button-down and jeans. The fact that the jacket matched the pants added nothing to the equation.

[photo courtesy of Inside Investor Relations]

Five good reasons to screw up your frequent flier mile strategy

by Tom Johansmeyer on

There isn’t much that’s precious to a business traveler (except time off the road) – at least not that you can touch. Maybe that’s why road warriors find frequent flier miles to be so important. They are at once a visible reward for suffering the slings and arrows of business travel, an indicator of class in an implicitly hierarchical community and a ticket to leisure travel later. If they accumulate in one place, they can become pretty useful … which is why they white collar travel folks make the flying decisions they do.

Mileage balances can influence decisions about airlines, flight times and payment methods. They can make a three-hour layover seem worthwhile. They can lead to absurd decisions which, at the moment of purchase, appear to be completely rational.

So, when decisions that run counter to this mileage-accumulation philosophy become necessary, the questions from other business travelers can be swift and judgmental. For the past two years, my miles have landed all over the place, and now that business travel is again a part of my life, that trend seems likely to continue – a prospect that would have horrified me back in 2002.

Why the change of heart? Here are five reasons I’ve abandoned the traditional business traveler’s frequent flier mileage strategy:1. Business comes first: if I can maximize my time at my destination, get better flights or use a more convenient airport, I get more out of my trip (from a business perspective). That’s what matters most to me. Period.

2. Status benefits really aren’t worth it: the time and discomfort associated with adjusting my schedule to accumulate miles, I’ve found, is ultimately more painful than flying coach from New York to London on a crowded flight. The eventual upgrade cure is far worse than the inconvenient and uncomfortable air travel disease.

3. Price matters: nothing is more important than getting to the right place at the right time, but price comes next. Travel expenses aren’t like billable hours or closed deals: they don’t benefit me or my business. Is it really worth paying extra to score some extra miles?

4. Stress sucks: after business objectives and price, I tend to value the path of least resistance. Working on the road is hard enough: making it worse to attain platinum status sooner isn’t sufficient reward for the necessary sacrifices.

5. Loyalty shouldn’t be displaced: obviously, frequent flier programs are brand loyalty plays. Like other business travelers, though, I have other loyalty considerations, such as my business and the people important to me back home. Some things are more important than early boarding.