InsideTrack - 2005-03-07

EC Deadline For IATA Action Passes Without Action

The final deadline of Feb. 15 set by the European Commission for the International Air Transport Association to announce pan-European agency accreditation and settlement arrangements (BTN, Nov. 8, 2004) has passed with no progress whatsoever. IATA held a meeting, facilitated by the commission, on that date in Brussels with the Guild of European Business Travel Agents and European travel agency association ECTAA. IATA told the agents' representatives it could not even negotiate any further with them because GEBTA and ECTAA are considering launching their own settlement plan, thus making them a potential competitor. "IATA is throwing its toys out of the pram," said Philip Carlisle, chief executive of the Guild of Travel Management Companies, the U.K. member of GEBTA. "If it had made an attempt to resolve the situation, we wouldn't be having to look at an alternative." Now that diplomacy has been exhausted, the next step is for the commission to decide whether it wishes to legislate to reform IATA. There is no deadline for delivering a verdict. If the commission declines to act, agency groups are likely to litigate against IATA instead.



AA, Continental Tentatively Score China Flights

The U.S. Department of Transportation last month proposed to allow American and Continental airlines to launch new passenger flights to China, following months of reviewing applications (BTN, Oct. 4, 2004). DOT's order would permit Continental to launch seven weekly nonstop Newark-Beijing flights as early as March 25. "The most serious service deficiency is the lack of U.S.-carrier nonstop service to China from New York, which represents by far the largest U.S.-China market in this proceeding," DOT said. American would have authority to begin seven weekly nonstop Chicago-Shanghai flights next spring. "We tentatively believe that it is in the public interest to select, for our 2006 award, the applicant which is most likely to provide the strongest competitive challenge to Northwest and United," DOT noted. Delta Air Lines was the largest passenger carrier denied flights to China. Both Northwest and United airlines already fly China routes. DOT will accept commentary through Wednesday and then finalize its decision.



AA To Eliminate U.K. Agency Commissions

American Airlines on May 1 no longer will pay 1 percent base commissions on tickets issued in the United Kingdom. "The travel agency will be remunerated through a mark-up of American's net fare or other ticket issuance fee determined by the agent and paid by the customer," the carrier's Web site said. "U.K. travel agents must disclose to the customer, in a clear and unambiguous manner, that any increase over the net price or any fee for issuing a ticket is not part of the ticket price quoted by or to be paid to American." American partner British Airways also on May 1 will transition from 1 percent base commissions for agents to zero (BTNonline, Jan. 18).



Continental Seeks To Finalize New Labor Agreements

Continental Airlines expects major unions by the end of the month to ratify tentative labor pacts announced last week. The agreements cover pilots, flight attendants, mechanics and dispatchers and would generate $500 million in annual cost savings. Unionized workers in exchange would receive approximately 10 million shares of Continental's common stock, representing about 15 percent of outstanding shares. Analysts were encouraged by the carrier's ability to secure new labor deals by the self-imposed Feb. 28 deadline, just three months after publicly setting the $500 million target (BTN, Dec. 6, 2004). "The new contracts, if approved, would represent a considerable accomplishment, the first case of a large U.S. airline that obtained significant concessions from its labor unions without going into or to the edge of bankruptcy," Standard & Poor's Ratings Services said.



Empire Merges With Luxury Chauffeured Service Provider

Chauffeured car service provider Empire International late last month merged with Los Angeles-based CLS Worldwide Services LLC, forming GTS Holdings Inc. The entities will continue to market their brands and sell to clients independently, yet the holding company, based in Norwood, N.J., "will utilize and share the operational efficiencies of both companies." President and CEO of Empire International Ltd. David Seelinger, who will serve as CEO and chairman of GTS, said both companies would maintain their niches in the chauffeured services market. "Empire has been very successful in the corporate marketplace," he said. "CLS, on the other hand, has been extremely successful servicing five-star hotels and private aviation. It services more high-net-worth people than any other standalone company."