Get Away: April in Paris, or anywhere else

With fares dipping so low, why not go to the land of escargot?
By Adam Holdridge 
Staff Writer 

April in Paris …? With airfares to Europe as low as $199 each way and a room at the Four Seasons George V at $600 a night (a 40 percent decrease from its standard $1,000 a night rate) it is a very good reality. If you can get over the fact that the French hate us, it would be anti-American to patronize the French economy, there is a mysterious deadly pneumonia outbreak worldwide and war in Iraq, then Paris is within your reach. Not interested in Paris? How about London, Rome, Moscow, Beijing, Helsinki, Ouagadougou or Seattle? Wherever you want to go the world is on sale.

Business or leisure travelers have reduced their travel budgets by such large percentages that tour operators, hotels and airlines have felt a huge strain on their revenue. This leads to a catastrophic domino effect within the travel industry and the first component of this industry to feel its effects are the airlines. The airlines were already in a severe tailspin and bankruptcies were being filed faster than you can turn your head. However, with the slew of layoffs, equipment sell-offs and contracts being renegotiated, analysts on Wall Street felt that the airlines could survive. If the war is short, they certainly will be able to; however, most likely this war will drag itself on for a while. If this is the case, our national airlines will not survive. My prediction: United Airlines will be the first casualty of war among the industry.

There will be no airline deaths if the government comes to their aid … again. There are two camps within the Bush administration: Budget Director Mitchell Daniels and Treasury Secretary John Snow argue that it is not the administration’s responsibility to aid the airlines because of poor management and planning. On the other side, White House Chief of Staff Andrew Card and Transportation Secretary Norman Mineta argue that the administration cannot remain idle during this crisis because if the airlines fail the government will take the blame and if the airlines “die” it will be a psychological victory for Saddam and Iraq.

The airlines are praying that Card and Mineta have their way. Before the war, the airlines begged the Bush administration to release oil from its reserves to combat the rising fuel prices which would provide the airlines with much needed relief from the costs involved in operating on a day-to-day basis. In addition, airlines pleaded for the government to cut or lower the heavy amount of taxes on tickets. On a $200 ticket, approximately $52 in taxes is tacked on. The IATA (International Airline Travel Association) announced that if the conflict in the Middle East continues into summer, losses will reach an estimated $10 billion for the industry.

On Friday, the following four events demonstrated how hard times have been for the airlines:

American Airlines, the No. 1 U.S. carrier, is struggling to avoid Chapter 11 unless it can get relief from its creditors on its lease rates for its aircraft.

United Airlines is reducing its capacity 8 percent in addition to its major cuts in capacity and is said to be putting 2,300 flight attendants and 1,100 mechanics on unpaid leave.

Northwest Airlines is reducing its capacity by 12 percent and putting 4,900 of its employees on unpaid leave.

Continental Airlines will cut senior management by 25 percent and will cut another 1,200 jobs from its workforce providing the airline with a savings of $500 million.  Earlier in the week, four of Continental’s senior executive officers voluntarily began their retirement.

Hawaiian Airlines filed for Chapter 11 bankruptcy protection due to its failure to renegotiate aircraft lease rates with its creditors.

Then of course there are the happy Jet Blue and Southwest airlines who are never in the news – there are no cuts, there are no losses in revenue, and there are no pending Chapter 11 filings for either of the airlines. However, Jet Blue may change its tune in a few years when it actually has to begin making payments on its Airbus fleet.

Among all of the draining airline industry news, Chief Operating Officer and President of Southwest Airlines Colleen Barrett made the following chipper statement: “In this time of uncertainty, there is one thing you can count on: Southwest Airlines has seen you through good times and bad and we will continue to be there for you during this difficult time.” 

With comforting statements like that, it is just a shame that Southwest doesn’t fly to Paris. Then again, maybe they will someday.

* Source: The Wall Street Journal & Annual Reports from the Companies

March 27, 2003