Business Travel News - February 9, 2009 - (Page 3)

NEWS Southwest Makes First Capacity Cuts As Airline Traffic Drops BY JAY BOEHMER Southwest Airlines for the first time in its history plans to reduce annual capacity this year, targeting a full-year decline in available seat miles of 4 percent, company executives said last month. “The economic environment has never been more uncertain, certainly in Southwest Airlines’ history, and accordingly we have to adjust,” said CEO Gary Kelly during Southwest’s fourth-quarter earnings call last month. While legacy carriers marked 2008 with aggressive capacity cuts, with traffic “basically at 1998 levels domestically,” as Kelly said in December, low-cost carriers up until now have lagged in contributing to capacity pullbacks. JetBlue Airways also marked a first in its history in suspending growth plans and cutting available seat miles. Southwest said it plans to reduce available seat miles this quarter compared with the same period last year by 4.4 percent. A spokesperson said, “It’s fair to say 2009 is essentially the first year in our history that we do not plan to grow capacity.” Kelly said the carrier’s “fleet growth plans are suspended indefinitely,” adding, “I definitely want Southwest Airlines to grow and I believe we will be able to grow, but that is a secondary objective in this kind of economic environment.” Southwest’s immediate goal is to “protect our financial health, and we want to protect profitability,” Kelly said. “Our adjustments will be guided by those two overarching goals.” As its legacy competitors last year began planning for double-digit domestic capacity reductions in the summer, Southwest maintained growth, though it slowed its rate of capacity additions while working to optimize flight schedules and “pruning unproductive flights,” Kelly said. Southwest last summer scaled back from 8 percent to 6 percent growth in 2008, and according to its annual report filed last month, the carrier grew available seat miles by only CONTENTS February 9, 2009 Issue 670 Vol. 26, No. 2 Inside Track: Amex, Worktopia building mtg. tool . . . . 4 18 Profiles In Travel Mgmt.: Integrys starts from scratch. . 6 HERTZ DOWNSHIFTS Forum: Finding light in the economic darkness . . . . 13 CFO Douglas driving Aviation: Canada’s Porter seeks transborder niche. . 14 to meet demand. Lodging: Hilton debuts midprice extended stay. . . . 16 Car & Ground Transportation: Hertz retools . . . . . . . 18 Travel Management: Adding leisure to business . . . . 20 Destinations: Las Vegas wrestles with recession . . 22 Washington Wire: LaHood new DOT secretary . . . . . 26 FIND DAILY NEWS UPDATES AND MORE AT WWW.BTNONLINE.COM BTN (USPS 0728-870, ISSN 8750-3670) is published semi-monthly, except monthly in January, February, May,August and December, by Nielsen Business Media Inc., 770 Broadway, New York, NY 10003, tel. 646-654-5000, and is distributed free of charge to qualified corporate travel buyers and travel agents specializing in business travel in the United States and Canada.The cost of a subscription to non-qualified subscribers is $119 in the U.S.; $135 in Canada; $135 in Mexico and Central America; $200 in South America and Europe; and $200 in Asia,Africa and Australia; payable in advance in U.S.dollars. Registered for GST as Nielsen Business Media Inc. 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JetBlue last month said it plans to launch service at Los Angeles International Airport with two daily nonstops to New York’s John F. Kennedy International Airport and two daily “I definitely want nonstops to Boston in Southwest to grow mid-June. and I believe we Kelly said Southwest will be able to, but would continue to “exthat’s a secondary pand our route map” as objective in this it reallocates flights to environment. ” take advantage of “new opportunities that we GARY KELLY think are quite exciting,” Southwest Airlines CEO including its planned launch this year at Min3.6 percent for the full year. neapolis-St. Paul International AirJetBlue CEO Dave Barger said the port and its entrée to New York’s Lacarrier in the third and fourth quar- Guardia Airport, pending an ters last year cut capacity for the approved purchase of bankrupt ATA first time. “We’ve slowed our growth Airlines’ assets (BTNonline, Dec. considerably over the last few 8, 2008). years,” Barger said, noting that for Meanwhile, AirTran Airways, anthe first quarter of 2009, capacity other carrier that grew capacity in will be down by as much as 7 per- 2008, also plans to reduce it this year cent. The cuts enabled the carrier by 4 percent. CFO Arne Haak said, to charge higher fares “To accomplish this, last year, he said, not- For on-demand Webcasts, we plan to reduce our see btnonline.com/Webcasts ing that the average fleet size from 136 airJetBlue fare grew 13 percent in 2008 craft at the end of 2008 to 134 by over 2007 and that the company the end of 2009 through additional posted its highest average monthly aircraft sales.” fare in its history in December at The industry is operating with 10 $151 one-way. percent fewer seats this quarter, Though both JetBlue and South- compared with the same period last west have halted growth plans, both year, according to an OAG examiare expanding coverage to some nation of airline schedules. Several legacy carrier executives during fourth-quarter earnings calls last month praised the industry’s capacity restraint in helping them meet plummeting demand, and said they are prepared to take further capacity out of the system this year. ■ jboehmer@btnonline.com ■ ON THE RECORD “Hoteliers have touted their properties as all about experiences, so they’ll not eliminate the amenities that define the experience.” SMITH TRAVEL RESEARCH’S JEFF HIGLEY, PAGE 4 CORRECTION Belgian rail company SNCB will follow Amtrak as the next user of rail IT services provider Wandrian’s new application programming interface. BTN incorrectly said that French rail company SNCF will be the next user (BTNonline, Jan. 20). Monday, February 9, 2009 Business Travel News www.BTNonline.com 3 http://www.btnonline.com/Webcasts http://WWW.BTNONLINE.COM http://www.BTNonline.com

Table of Contents for the Digital Edition of Business Travel News - February 9, 2009

Business Travel News - February 9, 2009
Contents
Inside Track
Profiles In Travel Mgmt
Forum
Aviation
Lodging
Car & Ground Transportation
Travel Management
Destinations
Washington Wire

Business Travel News - February 9, 2009