Airlines' New Motto: We've Got a Fee for That

By Sean Williams
April 25, 2011

Just in case you were worried that airlines were going to have a problem battling rising jet fuel prices, here's news for you that should set your mind at ease: They have a solution.

Apparently, the easiest way to remedy fuel prices that are rising faster than airlines can hedge against is to charge for everything -- and I mean everything!

If you look at the quartet of quarterly results that came out last week, you'll notice a not-so-surprising trend in that airlines that could easily pass along rising costs to customers fared considerably better in their bottom lines than those that could not.

Take JetBlue (Nasdaq: JBLU ) , for example. The low-cost regional carrier usually known for its competitive fares has had no choice recently but to raise flight prices. The company has also responded to fuel costs that rose by 35% in the most recent quarter versus the same quarter last year by tacking on an additional $5 charge to preferred seats with more leg room and for second checked bags. By booking more fees per flights, JetBlue was able to log a $0.01 per-share quarterly profit.

Some of its competitors were not as lucky. Many analysts expected the United Continental (NYSE: UAL ) merger would result in millions of dollars saved as the two companies integrated their fleets and reduced overhead expenses. Instead, the company was eaten alive by merger-related costs and rising fuel expenses. Fuel expenses amounted to 32% of United Continental's quarterly revenue, and even more worrisome the company has just 46% of its fuel hedged through the remainder of the year. In response to rising prices, the company plans to cut its expansion plans altogether.

Even traditional Wall Street darling Southwest Airlines (NYSE: LUV ) isn't immune from the suffering. Despite raising ticket prices and boosting revenue, nearly all of the company's gross profit was gobbled up by rising fuel costs.

Alaska Air Group (NYSE: ALK ) , which also reported quarterly results last week, may come out as the rosiest of the bunch. By carefully hedging most of its fuel costs, the company was actually able to book a derivatives profit! Even excluding those one-time gains, Alaska performed considerably better than expectations thanks in large part to controlled fuel costs and higher passenger load yields.

The lesson here is that an airline can still be successful even in a rapidly rising cost environment if it can pass along costs to customers and keep those customers flying. Alaska Airlines and JetBlue have done an exceptional job of this so far.

Slated to report next week are Delta Air Lines (NYSE: DAL ) and US Airways (NYSE: LCC ) , and let's just say I'm not nearly as optimistic about their outlooks as I was about the smaller regional providers Alaska and JetBlue. Unfortunately, these larger carriers lack the niches of smaller counterparts. This forces them to viciously compete for passengers and drive down profits. We'll see next week whether this dynamic holds.

Appreciating Music Education and All That Jazz

Jazz great Wynton Marsalis is featured in AFT’s “American Educator” report on the importance of music education.

by James Parks, Apr 25, 2011

April is Jazz Appreciation Month and AFT, one of the national co-sponsors of the observance, has developed a content-rich curriculum that includes the arts and music.

Rich resources from the AFT include ”The Neglected Muse: Why Music Is an Essential Liberal Art“ and an interview with jazz great Wynton Marsalis from AFT’s quartrly journal “American Educator” and an “American Teacher” magazine feature on the importance of instruction in the arts. View that article here.

AFT explains that Jazz Appreciation Month is celebrated in April for two reasons: First, April is near the end of the school year student jazz ensembles culminate year-long preparations and play at their best.

Second, April is also the birth month of a number of leading figures in jazz, including: Duke Ellington, Ella Fitzgerald, Bessie Smith, Johnny Dodds, Billie Holiday, Charles Mingus, Lionel Hampton, Gerry Mulligan, Shorty Rogers, Tito Puente, and Herbie Hancock.

Jazz Appreciation Month is sponsored by the Smithsonian Institution’s National Museum of American History with the support of the U.S. Congress, numerous federal agencies and departments, non-governmental organizations, including AFT, foundations and broadcasting networks.

Campaign Launched for Decent Work at Olympics, World Cup

by James Parks, Apr 25, 2011

For the first time in history, the world’s two biggest sports events—the 2014 World Cup and the 2016 Olympics—are being held in the same country, within two years of each other. This month, hundreds of workers and activists met in Rio de Janeiro, Brazil, site of the events, to launch a campaign to ensure that all the workers involved in the construction of facilities and manufacturing of event products work under decent conditions.

The global Play Fair campaign includes several international trade union groups, such as the International Trade Union Confederation (ITUC), the Global Union Federation for the Textiles, Leather and Garment industry (ITGLWF), the Building and Wood Workers’ International (BWI), and other groups, such as the Clean Clothes Campaign.

“It is paramount that the principles of the decent work agenda are applied during the works for the World Cup and Summer Olympics in Brazil,” said ITUC Deputy President Nair Goulart.

The construction works are already under way—such as the infrastructure projects—and the workers are already demanding better health and safety conditions as well as decent wages. This campaign is important to raise awareness in regards to the respect of the decent work agenda. Moreover, we should make sure a collective agreement can be reached at the national level in respect to the minimum standards of the ILO [International Labor Organization].

Representatives of the British Trade Union Council (TUC) said they developed strategies to keep the 2012 Olympics in London free of sweatshop labor. Said TUC General Secretary Brendan Barber.:

We have worked together, for instance, on a complaints mechanism covering supply chains. It is hard to establish world class labor standards in a world where exploitation is rife, but we hope that London 2012 represents a big step forward and that our Brazilian colleagues benefit from and build on our experience.

You can follow the campaign on the Decent Work Towards and Beyond World Cup 2014 web site.

Listen, House Republicans: Public Doesn’t Want Medicare Cut

by James Parks, Apr 25, 2011

If congressional Republicans were listening to the American public, they wouldn’t be pushing so hard to turn Medicare over to Big Insurance through a voucher program and slash Medicaid for seniors, children and people with disabilities.

A just-released Washington Post/ABC poll shows that more than three-fourths (78 percent) of Americans do not want Medicare cut to reduce the national debt, including 65 percent who are strongly opposed. This compares with just 21 percent who favor cutting the program.

Nearly two-thirds (65 percent) prefer keeping the Medicare system the way it is rather than replacing it with a fixed amount voucher to be used to purchase private health insurance.

This week you have a chance to make sure Congress hears your voice. On April 27 and 28 in more than 50 cities in 18 states, activists from the Strengthen Social Security, Don’t Cut It, coalition, which includes the AFL-CIO and the Alliance for Retired Americans, will hold events at congressional district offices to tell their lawmakers hands off Social Security and Medicare. Visit the Alliance here and the Strengthen Social Security coalition here to find an event near you.

If you can’t make to a rally or there isn’t one in your area, you join a virtual rally here. Spread the word via e-mail, Facebook, or Twitter.

Writing today on the Center for American Progress website, Ruy Teixeira says:

This (poll) can fairly be characterized as massive opposition. Conservatives, who appear to lack any policy common sense, might want to exert some political common sense and retreat from their assault on Medicare.

NFL players can go back to work _ for now

Apr 26, 6:20 AM EDT
By DAVE CAMPBELL
AP Sports Writer

MINNEAPOLIS (AP) -- The NFL is a long way from playing football again - even if players are welcomed back to work with no lockout to stop them.

U.S. District Judge Susan Richard Nelson granted the players' request for an injunction to lift the lockout on Monday, ending the NFL's work stoppage in its 45th day but prompting an immediate notice from the league that it will appeal.

And players? They were told to show up ready for work - or workouts - on Tuesday.

Bills safety George Wilson confirmed that the NFLPA emailed players after Nelson's ruling suggesting they show up at team facilities. He said players were told if they are denied access that teams would be in violation of the judge's ruling.

"We have received inquiry from a number of players and agents. We have simply responded and told them we don't see anything wrong with it," NFL Players Association spokesman George Atallah said in a text message to The Associated Press. "Players are organizing stuff on their own."

NFL spokesman Greg Aiello said any player who shows up at team facilities will be allowed in and "treated courteously and with respect."

"As soon as Judge Nelson lifted the lockout this afternoon, a number of my teammates called and asked me if they could return to work," Browns linebacker Scott Fujita said. "Basically, I told them I don't see why not."

Others weren't ready to go that far.

United Continental paid CEO Smisek $4.4 million

For United Continental CEO Jeff Smisek, running a bigger airline is paying off

Joshua Freed, AP Airlines Writer, On Friday April 22, 2011, 7:38 pm EDT

Jeff Smisek is running a bigger airline, and now he's getting a bigger paycheck.

The president and CEO of United Continental Holdings Inc. collected compensation worth $4.4 million last year, according to an Associated Press calculation from a proxy statement the newly merged airline filed on Friday.

When 2010 began, Smisek, 56, had just taken over as CEO of Continental Airlines. He helped negotiate a merger with United. After the deal closed Oct. 1, he took over as CEO of the combined company, which will be the world's largest airline and fly under the United name.

The compensation figure for last year includes his salary for his time at both airlines plus a cash incentive of $3.6 million and $9,766 in extras. His total compensation was $3.6 million in 2009, when he was president and chief operating officer of Continental.

As head of Continental, Smisek had said he would not take a salary or bonuses until it earned a full-year profit. It did -- $854 million, counting the results for both companies. Because of that, United Continental said in the filing, it paid Smisek's salary retroactively at the end of 2010, partly at the Continental rate and partly at a higher rate after the merger.

Smisek's base salary was $730,000 as head of Continental. The combined company's board raised his salary to $975,000 after the merger "in consideration of his enhanced responsibility and leadership," the filing said.

He also received $6,735 for a 401(k) contribution and $3,031 in tax reimbursement.

US Airways Rattles Anticompetitive, Anticonsumer Claims at Sabre

April 24, 2011
by Zvi Bar

US Airways (LCC) filed a federal civil lawsuit in the Southern District of New York against Sabre Holdings Corp. to halt anticompetitive and anticonsumer practices, and seeking to recover monetary damages. US Airways noted that the Antitrust Division of the United States Department of Justice and the United States Department of Transportation previously recognized that Sabre exercises significant market power over some airlines.

US Airways complains that Sabre's distribution of airline fares and content to travel agents shows a pattern of exclusionary conduct that prevents others from competing with what they allege is monopoly pricing power and a technologically-obsolete business model. US Airways contends that Sabre makes exclusionary and anticompetitive requirements that affect travel agents, other Global Distribution Systems ("GDSs") and US Airways, among other airlines, and that Sabre's actions hurt consumers through higher prices, reduced innovation and fewer choices.

Sabre is a large American GDS and US Airways revealed that over 35% of corporate revenue is booked through Sabre and Sabre's affiliated travel agents. Saber is also the parent company of Travelocity and is owned by private-equity companies Silver Lake and TPG. The complaint claims Sabre imposes economic penalties on travel agents for bookings not made using Sabre and that Sabre can threaten that it will remove an airline's flights from its offerings, resulting in an unlikelihood that travel agents would book that airline. US Airways alleges that it must comply with monopolistic Sabre practices because it cannot survive if it were to lose that business.

Sabre and US Airways actually executed a new distribution agreement in February of this year and Us Airways now claim's it was forced to succumb to Sabre's "my way or the highway" demands (such deals are more common to roadhouse deals than airway deals). The complaint also alleges that Sabre aggressively suppresses travel agents from booking tickets directly with airlines using "direct connections."

Unions blast American Airlines CEO's compensation

Gerald Arpey, Chairman of the Board, Chief Executive Officer of the Company and American Airlines

Unions, locked in stalled wage talks, blast increased compensation for American Airlines CEO

David Koenig, AP Airlines Writer, On Friday April 22, 2011, 6:48 pm EDT

DALLAS (AP) -- Unions locked in wage negotiations with American Airlines accused the CEO of greed on Friday because he got an 11 percent boost in compensation, to $5.2 million, while the company was losing money.

Garry Drummond, director of the airline division at the Transport Workers Union, said CEO Gerard Arpey's increase was "almost beyond belief and certainly shameless."

The airline's other two unions also attacked the CEO's compensation. "Whatever happened to pay for actual performance?" said flight attendants' president Laura Glading.

Labor unions said their members haven't gotten raises since at least 2008. All three are in contract negotiations.

"This is the type of rhetoric expected around contract talks and is aimed at putting public pressure on the company," American spokeswoman Missy Cousino said in response to the union comments.

Cousino said employees at American, which still has pension plans and retiree medical benefits, are better off than workers at many other airlines.

American has resisted wage increases, saying its labor costs are already too high. Two of the unions have asked federal officials for permission to start a countdown toward strikes, but the requests have not been granted.

In a regulatory filing Thursday, parent company AMR Corp. disclosed that Arpey received compensation valued at more than $5.2 million in 2010, when AMR was the only major U.S. airline operator to lose money. That was up from $4.7 million in 2009 because the value of Arpey's 2010 stock grants and options was higher than similar grants the year before.

The company said Arpey was paid below the median of CEOs at similarly sized companies.

United Continental: No more bag check discounts

United Continental drops $2-$3 discount for customers who prepaid for checked bags online

On Saturday April 23, 2011, 4:37 pm EDT

CHICAGO (AP) -- There's no more incentive to prepay online for your checked bags if you're flying United Continental. The carrier has done away with the $2 to $3 discount that passengers used to get if they paid for their luggage online instead of at the ticket counter.

The charge for domestic flights operated by Chicago-based United Continental Holdings Inc. is now $25 for the first bag and $35 for the second, no matter how or when you pay. The change began for tickets sold since March 9.

United and Continental used to offer a $2 discount on the first bag and $3 off the second to encourage passengers to pay up before arriving at the airport.

Delta Air Lines Inc. still offers a similar discount. Other carriers, including AMR Corp.'s American Airlines, never offered different prices.

Southwest Airlines Co. continues to allow passengers to check two bags for free.

Florida's presidential straw poll could help pick GOP frontrunner

In 2008, Florida's January primary made John McCain the clear frontrunner in the race for the Republican presidential nomination.

By WILLIAM MARCH | The Tampa Tribune
Published: April 24, 2011

TAMPA - Florida Republicans are taking advantage of the state's size and swing-voting status to try to make this the decisive state in the 2012 Republican primary contest.

If they're successful, Republicans in Florida, more than any other state, could pick the nominee to run against President Barack Obama in 2012.

In the last two weeks, party leaders have acted to hang onto an early presidential primary date, despite opposition from the national party.

They've also set up an early presidential straw poll for this fall that insiders believe could shape the primary contest – a straw poll designed to be a more valid test of the candidates than most presidential straw polls.

In the amorphous field of potential candidates with no clear frontrunner, the Presidency 5 straw poll could pick a frontrunner; or it could create momentum for lesser-known candidates, converting them into serious contenders.

The straw poll's importance will increase if Florida gets the primary date legislative leaders have said they want, immediately after the four small, early states now scheduled to hold primaries and caucuses in February.

"Florida arguably was the state that made the decision in 2008" in the GOP primary, said University of Virginia political scientist Larry Sabato, a long-time analyst of national politics.

"If Florida could maintain its 2008 position, it could probably decide the 2012 nomination also."

In 2008, Florida's January primary made John McCain the clear frontrunner in the race, effectively ending Rudy Giuliani's campaign and leaving Mitt Romney as McCain's only significant competitor.