Archive for October, 2009
The global economic melt-down that struck the world economy in 2008 has affected many businesses, the airlines included.
Last year started well for the industry as fuel prices dropped from their record highs of 2007; prosperity and good times were coming. Then the economy collapsed.
Many people stopped traveling for business, many stopped traveling for leisure. The airlines responded to the drop in demand by grounding aircraft, reducing service to many cities, eliminating it completely to others.
It’s one year later and while things are not yet good, they certainly are better than they were a year ago. But the business travelers who purchase those very profitable first class, business, or full fare coach tickets have not returned in the numbers they once had. Many of them are out of work. For example, Bear Stearns went bankrupt and closed, so their executives are not flying. Lehman Brothers was purchased by JP Morgan Chase, but had to lay off almost half of its staff, so they are not filling as many seats as they once did. And many companies have found that it is cheaper to hold a teleconference than to fly an executive cross-country.
The Dow Jones Newswire, discussing American Airlines, reported on Oct. 21 “Gerard Arpey, chairman and CEO of parent AMR Corp. (AMR), was less bullish than some rival executives about any upturn in business travel, forecasting in a letter to employees only “tepid” economic growth ‘well into 2010′.”
I decided to take a highly unscientific survey to see if the business traveler was back. As I mentioned in a previous post, my wife and I are going to vacation in Nassau in two-and-a-half weeks. I used my AAdvantage miles to purchase first class tickets, and wondered if the FC cabin would be crowded.
I looked at AA.com to see how many FC seats were available on our flights. We fly from Austin to Dallas on an early-morning MD-80; there are 16 seats in FC. As of today, 14 of those are available. My wife and I have the only FC reservations and since I used miles, we are not producing any revenue for AA. So, 12.5% full in FC on that flight.
We’ll fly from DFW to Miami on a 767-300, which has 30 seats in FC. As of today, 10 other people will join us, there are 18 empty seats. That’s 40% full.
We’ll fly American Eagle between Miami and Nassau. The ATR-72 has a one-class cabin with 64 seats. Our flight to Nassau is pretty full, only 12 seats are available. Our flight back to Miami has only 23 passengers booked.
We’ll fly from Miami to Dallas on a 737 with 16 seats in FC. This flight is doing well, only 2 seats are available (88% full). On our final flight, an evening MD-80 from DFW to AUS, 13 of the 16 seats are available, 19% full.
I wondered if these flights were doing any better in coach; this is what I found.
AUS-DFW: 124 seats, 51 booked, 41% full
DFW-MIA: 195 seats, 126 booked, 65% full
MIA-DFW: 132 seats, 82 booked, 62% full
DFW-AUS: 124 seats, 79 booked. 64% full
So, they are certainly doing better in coach than in First.
As we get closer to departure date, the first class section will become more full, but I wonder how much revenue AA will get. Will our fellow passengers have purchased those tickets, or will be they be non-revenue like me and my wife?
While the majority of passengers fly in coach, a huge amount of the airlines’ revenue comes from those business travelers sitting in the front of the plane. For the sake of the airlines, I hope they will return, and do it soon.
“You spent the entire weekend flying and never left the airport? Why do you do it?”
Every mileage runner, at one time or another, has to answer that question. It may be asked politely; it may be asked jokingly, or, on rare occasions, the person asking it may be overflowing with sarcasm, scorn, and ridicule, not expecting a sound logical response. I know, I have been there.
The next time someone asks, I may send them the link to a remarkable video. Gabriel Leigh is a graduate student and the University of California, Berkley, with a major in film. He is also a mileage runner. As part of his Master’s program, he produced a 20 minute documentary on mileage runs and the people who do them. Leigh not only talks about his experiences doing mileage runs, he also interviews other mileage runners, including Randy Petersen, the founder of the incredible Flyer Talk bulletin board.
Why do they do it? Where have they been? What happened when you were questioned by the DEA? These questions and others are answered in this remarkable film.
It’s a great video: I hope you’ll enjoy it!
* Frequent Flyer, by Gabriel Leigh
Thanks to my mileage runs, I have built up a large number of miles in my American Airlines AAdvantage account, and it is time to spend them on a vacation.
As I mentioned in a previous post, I tried to arrange a trip to Bangkok for my wife and I, but was not able to. So, we had to come up with another place for our vacation.
My wife gave me one criteria to follow when booking a trip: we had to go to some place warm. Since the trip will be in November, that obviously eliminated almost all of Europe and the northern United States and Canada. So, what was left?
I came up with a list of places that included Southern California, Arizona, Mexico, South America, and the Caribbean. To make a long story short, we eventually decided to visit Nassau, Bahamas, and stay at the Sheraton Nassau Beach Resort.
I used my Starwood points to reserve an ocean-front room for eight nights, and used my miles to book the flights on American Airlines. We’ll fly first class from Austin to Dallas to Miami, then take American Eagle from Miami to Nassau. Coming home, we’ll take American Eagle to Miami, and then first class on American from Miami to Dallas to Austin.
So, were all my mileage runs worth it?
Initially, I’d say no.
I used 60,000 AAdvantage miles for each ticket; if I bought them they would cost $982.20 each. That works out to 1.63 cents per mile. On average, I paid 2.5 cents per mile on my mileage runs. So, from that standpoint, this was not a good deal. (Two years ago we went to Thailand and Hong Kong, our business class tickets were worth more than 12 cents per miles, so we came out way ahead on that deal.)
At first glance, my mileage runs did not work out, but I think there is more to it than just the cost of the redeemed ticket.
Thanks to my mileage runs, I have Platinum status on American Airlines. Because of that, my wife and I did not have to pay a luggage fee when we flew to Ireland in February; that saved us $200.
My wife and I got free upgrades to first class when we flew to Orlando last year, and I was also able to get that upgrade on my trips to Chicago this year. I also saved $100 on when I renewed my Admirals Club membership. In addition, when I arrive at the airport I can use the first class line to check in, and then use the elite status line for the TSA security check. On my last trip home from Chicago that alone saved me at least a half-hour of standing in line.
So, I have certainly benefited from the elite status I earned by doing the mileage runs.
Finally, the mileage runs have given me great memories: I’ve met some really nice people (both in person and online) in the mileage run community, people that I stay in touch with. I’ve seen some beautiful scenery, eaten some wonderful meals in Seattle and San Francisco, and experienced some things (mostly pleasant) that I would otherwise have not experienced.
So, when all is said, and done, I enjoy the mileage runs, I enjoy our vacations, and will continue to do both.