US Air’s Ambush Marriage Proposal to Bankrupt Delta: Great for Stockholders, Disastrous for Business Travelers If you own stock in Delta Airlines currently worth a buck-and-a-half a share and heading for zero when and if it emerges from bankruptcy sometime next year, read no further. You’ll be sick. And if you hold Delta notes and bonds, skip this. Creditors will get fattened stock and cash payouts if this scheme goes through. But if you’re a business traveler who occasionally takes a vacation, especially if your Sky Miles account is bulging with miles, pay close attention. US Airways’ $8.8 billion ambush bid for Delta, said to be the biggest buyout in airline history, is a surefire nightmare for passengers—if the shotgun marriage is consumated. I’m leaving the potential financial impact for others to dissect. Let’s focus on operations. US Air’s wheeling-dealing swashbuckling CEO, Doug Parker, former boss of America West, which gobbled up US Air not long ago, has promised bondholders a 10 percent reduction in capacity. That’s 10 percent fewer Delta flights, fewer low-priced seats, fewer seats overall, plus fewer free reward seats and upgrades for frequent flyers. This on top of Delta’s own internal reorganization to escape Chapter 11, which whacked almost 20,000 employees, 200-plus aircraft (including all those seats and a 15 percent decrease in domestic flights), shifting that lift over to more lucrative international routes. Squeeze Plays: Parker’s flight plan for Delta is scary since all the legacy airlines have been squeezing more people on to fewer flights to shave fuel and labor costs and boost profits. Plus, as airline analysts have predicted, travelers using US Air’s hubs in Charlotte and Philly, and Delta hubs in Atlanta, Cincinnati, Salt Lake City and New York will really feel the pinch with higher fares, whittled-down schedules. And either the now redundant Delta or US Air Shuttle will be sold, pushing up prices; walk-up fares from DC or Boston to NYC are already as high as $623 roundtrip, though heavy users can cut deals. Don’t expect smiles aloft or on the ground if this deal is sealed. Delta’s airport staffers and flight attendants, who suffered mightily under the demoralizing mismanagement of former CEOs Ron Allen and Leo Mullen, and have seen their own ranks thinned in the past 36 months, are praying Delta’s current chief Gerald Grinstein can pilot the airline out of bankruptcy as a solo carrier and somehow block the US Air buyout. Parker is a notorious cost slasher and Delta and even US Air employees are sitting ducks. Delta has already cut back on customer service by outsourcing phone reservations to a third-rate call center in India. Not only are the machine voice prompts a time-consuming pain for callers but the four human Delta “agents” I’ve dealt with in recent bookings were, mostly and sadly, clueless; they couldn’t answer basic questions like seat pitch in coach on a 767 without having to put me on hold and ask a “supervisor.” (United’s outsourcing to call centers in the Philippines is friendlier, smoother). Deal or No Deal: Want a glimpse into the future if, somehow, the U.S. Justice Dept. or regulators do not see Parker’s ploy as anti-trust and block it—and that could happen? Next time you’re on a US Air flight, ask a cabin crewmember how the well the US Air and America West merger is working out for them personally and ask for examples. I’ve asked and the gripes I’ve gotten were not pretty. They feel stressed and shortchanged. US Air, a crazy quilt of old airlines, hasn’t even digested America West/US Air deal and now a new, already battered culture may board. Just what you need today when you’re on the road—more in-flight frowns, angry flight attendants, and front-desk and gate agents fearing for their jobs. Still, while the deal is far from done, Parker has lined up $7.2 billion in financing from Citigroup and some of the nervous creditors are banding together and rallying behind him looking for their payday. If Parker pulls it off, Delta’s shareholders, many of its employees and a good chunk of its passengers will get the shaft. Meantime, Delta restored one free drink in coach on international flights. The days of unlimited booze in the back of the bus on overseas flights are gone probably forever on U.S. carriers. Flight Plans: Airline consolidation, cancer for business travelers who invariably lose comforts and fare discounts, is in the air. KLM-Air France is revving its jets to acquire Alitalia, the quasi-government and private sector flag carrier of Italy. Both are Skyteam Alliance members…A U.S. private equity group is making noises about buying Qantas, which has an excellent reputation for passenger service…United launches daily nonstop 120-seat A-319 service from Tucson to Washington Dulles…Check www.airtucson.com for all Tucson air service…Frontier Airlines has partnered with Air Tran Airways for earn-and-burn privileges on Frontier’s EarlyReturns frequent-flyer plan…Singapore Airlines’ new 777-300ERs with $360 million cabin upgrades in all three classes starts three-times-a-week service from San Francisco to Singapore January 1. Fully flat Business Class seat is 50 percent wider than other carriers and entertainment system for all seats has 1,000 choices. Getting Worse: The U.S. Department of Transportation has turned a blind eye to the way airlines treat passengers and obscure innerworkings of their frequent-flyer program. A harsh report in 2001 warned carriers to clean up their acts—but did not impose or recommend sanctions and penalties for scofflaws. A DOT report just released found that 40 percent of the time, airline gate agents do not make regular announcements or explain the reasons for a flight delay. Some 12 of the 15 airlines studied haven’t trained their employees who deal with disabled travelers. Nine of the 15 do not adhere to their policies for paying passengers some compensation for volunteering to give up their seat when a flight is overbooked…The National Business Travel Assn. survey response from 189 corporate members found employees in two-thirds of U.S. companies will travel more in 2007 than this year despite higher airfares and hotel room rates. Sleeping Stylishly in Seattle: Hotel 1000, said to be Seattle’s first luxury boutique hotel (120 rooms), has free Wi-Fi, in-room broadband, a 24-hour fitness center and a Golf Club where duffers can play “virtually” the world’s 50 best courses—at $60 an hour. Rooms start at $400 a night but special rates are offered. I found a king room with a city view for $225 nightly. www.hotel1000.com ....Pan Pacific opens a brand-new 160-room hotel on South Lake Union with full Internet connectivity at no charge, a fleet of Personal Stewards, access to 1,000 radio channels worldwide and dramatic bathrooms. Rates are typically about $225 a night but start as low as $169 nightly on a space-available basis. http://www.panpacific.com ....Ritz-Carlton San Francisco, fresh from a $12.5 million renovation, opens a Business Lounge for guests booking the Club Floor with free 24-hour Wi-Fi, two workstations with laser printers, a 32-inch HD TV plus access to the five meals served daily…London hotels often slam guests with a $30 a day Internet charge but the luxurious Lanesborough on Hyde Park Corner has gratis Wi-Fi throughout and can install it in your room at no charge. Interestingly, the new Triton Hilton Gurgaon in New Delhi levies $20 a day for Internet access. Meet, Greet, Eat…The Web site for travelers who want to meet fellow road warriors for business or pleasure— www.meetingaway.com —is apparently kaput. Punch in the name and your browser is redirected to a site selling everything from mortgages to motel rooms…Hungry in Hollywood—Florida, that is? Le Tub at 1100 N. Ocean Dr. (954-921-9425) grills and sears a sirloin burger that’s 10 ounces after it’s cooked. Fans, and even GQ magazine, claim it’s the best burger in the United States. Tab: $10.50 or $11 dolled up as a cheeseburger. Cash only. Le Tub itself looks like a dive. Don’t Miss: Between Christmas and New Year’s, 500 top juniors will flood onto 60 courts in midtown Tucson for U.S. Tennis Assn.’s National Winter Championships, December 27 to January1. www.visittucson.org
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