Carriers Exploring Inflight EntertainmentAmerican Airlines on Nov. 1 will begin a 12-week test of personal entertainment devices aboard certain MD-80 aircraft. The limited experiment will help the airline determine how best to compete with inflight products offered by competitors. Meanwhile, Air Canada starting in May will deploy new inflight entertainment systems aboard new regional jets. Installation on the carrier's international fleet would begin next September. For its part, Southwest Airlines is not yet seriously exploring inflight entertainment. "We could outfit every seatback next year with live television and it won't add one dollar of revenue," said CEO Gary Kelly. "It is just not ubiquitous yet and it is not a long-term competitive advantage that other airlines have. It is something that can be matched quite easily."
Airlines Pressing International ExpansionMajor U.S. carriers continue announcing new international routes as part of a larger strategy to focus resources on more profitable flying
(BTN, Oct. 18). The latest announcements came from American Airlines, which plans new nonstop Chicago-Nagoya service, effective April 3, and a resumption of nonstop Dallas-Osaka service, starting Nov. 1, 2005. Continental Airlines announced yet another new European route, saying it would start nonstop service June 2, 2005, between Newark and Stockholm. "We have a geographic advantage in that New York is a lot closer to secondary European cities and we can use smaller planes to those places that you couldn't use from Chicago, for example," said Continental CEO Gordon Bethune. American and Continental also are among those carriers seeking authority for new services to China
(BTN, Oct. 4). "We are a relatively small player in the Pacific and we are intent on changing that," said AMR CFO James Beer.
Downtown Hotels Outperform IndustryGiven a surge in demand, hotel companies have been able to get particularly strong rate increases in urban hotels in the country's top markets. Rate growth has outstripped occupancy growth in the top 25 markets for 18 of the past 20 weeks, ending Oct. 16, according to Smith Travel Research. Most of these markets, in fact, posted double-digit gains in revenue per available room for the week ending the 16th, compared with the same period a year ago. This is sobering news for buyers as they enter the last crucial weeks of negotiations for 2005 rates. Companies such as Hilton Hotels Corp. and Starwood Hotels & Resorts Worldwide are particularly well-positioned to benefit from the strong performance of downtown hotels. The New York market by itself contributes approximately 10 percent of Hilton's earnings and 14 percent of Starwood's.
Survey: Travel mGrs. Plan To spend MoreBusiness spending on airfares this year is expected to stay above 2003 levels and a majority of travel managers anticipate similar or higher levels of spending next year, according to a survey of 112 corporations released last week by the Business Travel Coalition. Given the 4 percent increase in spending projected this year over last, 45 percent of respondents said dollars spent should remain flat, and only 6 percent said spending will decrease in 2005. Meanwhile, 45 percent of travel managers expect an increase in airline spending for 2005. The survey also underscores the continual cost-consciousness among travel buyers. Ninety-four percent agreed that cutbacks in business travel are permanent, as higher use of low-cost carriers and nonrefundable tickets continues. Seventy percent said they will boost the use of low-fare carriers next year.