2015 Year in review

By Johanna Jainchill

Cuba. Terrorism. Mergers. Lufthansa’s GDS fee. Crystal Cruises. Fathom. The sharing economy. The open skies feud. The strong dollar.

For travelers, 2015 was bookended by news about borders. The year began with the nudging open of borders that had been closed to U.S. tourists for a half century but ended with calls to tighten borders worldwide.

In January, the historical thaw between the U.S. and Cuba began a process that makes travel to the long-forbidden island much easier, but by December, there was a very real possibility that the U.S. and Europe might tighten their borders in the face of terrorism, raising new barriers to travel.

The industry can only hope to reclaim the optimism that ushered in 2015. But given the recent terror attacks and the coming election campaign, that’s anyone’s guess.

Here, in no particular order, are the topics we think made the year most memorable:

Cuba

The extent to which Cuba managed to dominate travel talk for much of 2015 was dizzying.

It’s hard to believe that just one year ago this month, President Obama announced that the U.S. would restore diplomatic ties with the Caribbean’s largest island nation. Since then, every few months, Washington and Havana have taken steps that seemed to inch the two nations closer to normalized relations, from the U.S. removing Cuba from its list of state sponsors of terrorism to both reopening embassies in each other’s capitals for the first time since 1961.

On the travel front, the pace of change was even more frenetic. The administration eased travel restrictions to Cuba in January so U.S. citizens no longer had to apply for individual licenses from the Treasury Department to travel there but could instead self-report that they were visiting under one of 12 categories of allowable travel, ranging from educational to humanitarian to religious reasons.

The industry pounced.

Several major tour operators have since debuted their first Cuba tours, including Apple Vacations, Abercrombie & Kent and Travel Impressions.

In February, CheapAir.com became the first OTA to enable U.S. travelers to book flights between the U.S. and Cuba, albeit through third countries, a capability it expanded to direct charter flights later in the year. Several commercial airlines began increasing charter flight schedules to Cuba, and the GDSs said they had readied or were in the process of readying their systems to accept regularly scheduled commercial flights to the island.

All of that took place well before the U.S. State Department said last week that the U.S. and Cuba had reached an agreement to resume direct commercial flights between the countries.

With hotel development in Cuba still decades behind, it seemed natural that a cruise line would be among the first suppliers to introduce products for the island. Carnival Corp.’s new social impact brand, Fathom, said it would become that line, obtaining a license from the U.S. government to sail to Cuba in the spring of 2016.

The only thing that could stand in Fathom’s way of marking that milestone is the pace at which Cuba has been opening to Americans; it’s very possible that by then, all travel restrictions will have been lifted, making Cuban ports regular stops on Caribbean itineraries.

Terrorism

Since the 9/11 terrorist attacks 14 years ago, travelers in general have become more inured to threats of violence. But this year, their resilience has been tested by an increasing number of violent incidents.

It started in January with the Paris attacks on the offices of the satirical magazine Charlie Hebdo. Though tourists weren’t targeted, the attacks took place in the most visited city in the world.

Then in two separate incidents in Tunisia, cruise passengers visiting a Tunis museum were among the victims of a terrorist attack that left 23 dead, and 38 tourists, primarily from Britain, were gunned down at the seaside resort of Sousse.

Yet there were no serious ripples to the U.S. travel industry at large until November’s twin attacks by ISIS. The first brought down a Russian MetroJet airliner taking tourists home from Egypt’s Sinai peninsula, killing all 224 people onboard. The second was the terrorist attacks on Nov. 13 that killed 130 people in Paris cafes, a concert hall and a soccer stadium.

The Paris attacks brought tourism in France to a near standstill, as did raids tied to the resulting investigation in nearby Brussels. The events sparked discussions about securing borders in both the U.S. and Europe.

For the tourism industry, the fallout could have serious implications. Talks of reintroducing border controls among Europe’s 26 open-border countries would significantly change how travelers move through the Continent.

In the U.S., the attacks prompted the White House to make immediate changes to the Visa Waiver Program (VWP), which allows citizens of 38 member countries to enter the U.S. and stay of up to 90 days without a visa. The concern was that most of the Paris attackers were citizens of France or Belgium, both VWP countries. And shortly thereafter, lawmakers introduced legislation that would add even more restrictions to the program. Members of the travel industry worry that further restrictions could deter the many millions of international travelers who peacefully visit the U.S. every year and add billions to the economy.

Terrorism has damaged tourism industries in places like Egypt and Tunisia, where it represents a crucial part of the gross domestic spending. It remains to be seen if the U.S. and Europe can devise policies to protect their citizens while also enabling them to move freely around the world.

Merger mania

In recent years, travel industry merger and acquisition news has been dominated by airlines. But in 2015 our attention was grabbed by Marriott International’s acquisition of Starwood Hotels & Resorts Worldwide, creating the biggest hotel company in the world by far, and before that by Expedia’s triple play: Travelocity, Orbitz and HomeAway.

Analysts quickly predicted that Marriott’s $12.2 billion acquisition would necessitate the shedding of some of the combined company’s 30 brands. Granted, Marriott CEO Arne Sorenson said shortly after the deal was announced that he expected Starwood’s 11 brands to “remain in place.” But he also noted that some of those brands compete — for example, Marriott’s Renaissance with Starwood’s Le Meridien — making the future unclear.

Travel advisers undoubtedly hope that Starwood’s trade relations approach is the one the company hangs on to. As ASTA CEO Zane Kerby told Travel Weekly last month, Starwood has a track record of being “supporters of the trade industry,” while Marriott has been “kind of on and off,” a not-so-opaque reference to the hotelier’s “Book Direct” campaign.

Top online news stories of 2015

We took a look at the articles on TravelWeekly.com this year and ranked them by page views. Here are the 10 most popular:

1.Celebrity Cruises to go mainly with bundle pricing (June 30)

2.Report: Baha Mar resort ‘unlikely’ to open this year (May 12)

3.The same old story: Baha Mar opening delayed (May 6)

4.Caribbean and Mexico resorts plagued by sargassum outbreak (Aug. 30)

5.Low water levels plague Europe river cruises (Sept. 2)

6.Dominican Republic tops in Caribbean tourism, and growing (May 21)

7.Margaritaville’s presence grows from song to eateries to resorts (Jan. 4)

8.Harmony of the Seas to sail from Barcelona in 2016 (March 13)

9.Drug violence occurs near Puerto Vallarta but not in tourist areas (May 4)

10.RCCL stops discounting close-in bookings for most cruises (April 20)

For OTAs, the Marriott/Starwood merger is not good news because the combined company will have more than 1.1 million rooms globally, giving it substantial distribution leverage.

But OTAs have been busy consolidating, as well. Expedia acquired Travelocity for $280 million in January, Orbitz Worldwide for $1.34 billion in September and HomeAway for $3.9 billion last month. HomeAway and its brands, including VRBO.com, accelerate Expedia’s efforts to gain share in the private-accommodations sector, while Orbitz and Travelocity help it compete against Priceline, which itself acquired a $60 million stake in Brazil-based OTA Hotel Urbano.

And just as OTAs can’t be thrilled about the Marriott/Starwood combo, the same goes for hotels being wary about Expedia’s buying spree. In an objection to the Orbitz deal filed with the U.S. Justice Department, the American Hotel & Lodging Association asserted the deal would raise consumer costs and hurt small hotel operators.

Lufthansa’s GDS fee

When the airlines of the Lufthansa Group (Lufthansa, Austrian Airlines, Brussels Airlines and Swiss International Air Lines) in September added a fee of 16 euros to every booking made via a GDS, they were not the first airlines to attempt to circumvent the GDSs and persuade travel agents to book direct.

But considering the way Lufthansa has dug in its heels on the issue, it apparently plans to be the first carrier to make the strategy stick. Lufthansa Chief Commercial Officer Jens Bischof said shortly after implementing the surcharge that it was intended to “disrupt” the travel distribution landscape and was about much more than the fee itself.

“We are very aware that our new distribution strategy is disruptive, and it will change the future way of distribution,” Bischof told the Association of Corporate Travel Executives.

Bischof’s words only further inflamed travel sellers who had been steering business away from Lufthansa since the surcharge went into effect, attempting to send a message to the rest of the airline industry that it should not follow suit.

Rather than reverse direction under the pressure of what at least one GDS reported were depressed Lufthansa sales after the surcharge went into effect, Lufthansa inked an enhanced distribution agreement with Google Flights, signaling that the German carrier was resolute in its trajectory away from GDSs.

Crystal Cruises

In 2015, Crystal Cruises was the mouse that roared. For years, the luxury cruise line’s loyal clientele enjoyed a high-quality product on two beautiful but aging ships. Each year travel sellers would ask if the line planned to expand, but for more than a decade, it did not.

Then along came Edie.

Upon taking the helm as Crystal’s CEO two years ago, Edie Rodriguez famously said that her plan was to grow the line to “seven ships for seven seas.” What she didn’t say then was that the boast was just a start.

Rodriguez later said that she only took the job because she had been promised the line would find a buyer willing to grow it. Genting Hong Kong became that buyer, and last summer Crystal announced the most ambitious expansion plan in recent cruise history: three new 1,000-passenger ships, plus an expansion into river cruising, yacht sailings and luxury private-jet tours.

Crystal not only ordered the ships, but to avoid any delays in delivery, Genting bought Lloyd Werft, the European shipyard that had been contracted to build them. Last month, Crystal acquired a Boeing 777-200LR for its Crystal Luxury Air startup, and Crystal Yacht Cruises was scheduled to debut just before Christmas with the Crystal Esprit, an extensively refurbished, 62-passenger yacht.

While some industry watchers might be skeptical that Crystal can deliver all that it says it will, so far it has.

Baha Mar

Bahamas’ star-crossed mega-resort was also among the industry’s most talked-about projects this year, though for all the wrong reasons.

The $3.5 billion project, the most expensive development in Bahamas’ history, was originally slated to open in Nassau by the end of 2014 and fly the flags of luxury brands Grand Hyatt, SLS and Rosewood in addition to an eponymous casino-hotel and the pre-existing Melia Nassau Beach.

Beset by delays, that date was pushed to spring, and by the time spring came and went, the question became not when but if the resort would ever open.

The Chinese-backed project filed for Chapter 11 bankruptcy protection in June under the auspices of wanting to complete construction and open as soon as possible. But instead of moving the project along, bankruptcy only made things messier: Talks among the developer, lender, contractor and the Bahamian government became contentious; Rosewood begged out of its licensing agreement with the development; the U.S. Bankruptcy Court threw out the case in September; Baha Mar laid off thousands of workers in the fall; and Bahamas court officials prepared to start a potential liquidation process in November.

All this, even as Baha Mar officials declared the project 97% finished.

With no imminent resolution likely, it appears Baha Mar has very little chance to capture any of this year’s Caribbean high-season dollars, which it sorely needs. The question for 2016 is: Will it ever

The sharing economy

As peer-to-peer travel businesses become ever more mainstream and take a larger piece of the lodging pie, it would make sense for hotels to double down in opposition to home-rental services like Airbnb, which hoteliers insist depress their revenue.

Instead, a surprising trend that emerged in 2015 was of traditional hotel brands doing the exact opposite: cutting deals with the upstarts.

Both Hyatt Hotels and Wyndham Worldwide put their money in home-sharing websites; Hyatt invested an undisclosed sum in London-based Onefinestay, which rents out luxury homes in cities such as New York and Paris, and Wyndham entered into a partnership with London-based home-exchange operator Love Home Swap.

Beyond hoteliers, other traditional travel sellers also moved into the segment. Signature Travel Network entered into an agreement for its travel adviser members to sell Onefinestay’s upscale inventory, and Expedia bought HomeAway for $3.9 billion last month, along with its brands, including VRBO.com and VacationRentals.com.

Both deals offered strong indications that the travel distribution side recognizes the value of the home-rental model.

Fathom

Fathom, Carnival Corp.’s new for-profit, social-impact cruise brand, made waves this year for many reasons, one of which was that it was so unusual for Carnival.

Then again, the launch underscored how much Carnival has changed in the last few years under its new CEO, Arnold Donald. Last year, that change was manifested in the line’s renewed outreach to the trade. This year, it was the launch of the first do-good cruise line by any major brand.

Fathom will take guests to foreign countries to participate in cooperative social projects, starting in the Dominican Republic in April, followed by Cuba in May.

The launch also pointed to the power of the millennial generation, which seems to have firmly overtaken boomers as the go-to market in almost every business segment. When Carnival launched Fathom, it was clear that millennials were on its mind, primarily ones who would not have otherwise cruised, and even more specifically, the “purpose-driven millennial,” according to the brand’s founding director, Tara Russell.

Research supports this line of thinking. The results of a comprehensive survey by Tourism Cares on the philanthropic traveler, released in September, found that millennials are particularly tuned in to social-impact travel: On average, they volunteer more than double the hours and donate nearly three times the money that travelers 55 and older do. Further, 81% volunteered during their travels in the past two years, and 50% said they intended to plan more trips around giving back.

Open skies

Few areas of travel regulation seem to divide the industry more than airline policies, and this year, the open skies debate was the most divisive issue of all.

The fight over whether or not Persian Gulf carriers Emirates, Etihad and Qatar should be investigated by the U.S. government for violating open skies agreements has divided the airline industry itself as well as travel marketing organizations and politicians.

At issue is the assertion by the Big Three U.S. airlines — Delta, American and United — that the Gulf carriers have received $42 billion in subsidies from their governments since 2004, violating open skies agreements by giving them an unfair advantage in the international aviation market. The Gulf carriers deny this charge.

U.S. cargo carriers and smaller airlines like JetBlue as well as the U.S. Travel Association oppose any restrictions on the expansion of the Gulf carriers’ U.S. routes, arguing that open competition is best for all and promote travel.

The battles escalated this fall when Delta and United said they would suspend Dubai routes from Atlanta and Washington, respectively. Delta said it would redeploy resources to “where it can compete on a level playing field that’s not distorted by subsidized, state-owned airlines.”

While many city and state politicians have voiced support for the Big Three U.S. airlines, who warn the subsidies will mean fewer jobs in their cities and states, the Obama administration has made no move so far on the issue. And if the airlines continue to enjoy record profits in 2016, it is doubtful there would be any public support for changes that could lead to higher airfares and fewer consumer choices.

Strong dollar, weak yuan

For China and the U.S., 2015 has been a tale of two currencies. The dollar surged for most of 2015, while the yuan suffered a serious slump. The impact has been a mixed bag for the industry.

The yuan’s weakness threatens to erode outbound Chinese travel, which is the fastest-growing overseas source market for U.S. travel spending. The yuan’s downturn has already affected U.S.-based hotel-casino operators in Macau, the Hong Kong-area destination where travelers from mainland China account for about two-thirds of visitors.

The strong dollar, meanwhile, has helped what agents in the spring said had been a 20% jump in international travel, according to Travel Weekly’s annual Consumer Trends report. And some tour operators, including Tauck and Trafalgar, said the strong dollar enabled them to drop prices for 2016.

 

On the downside, the U.S. Commerce Department reported that the tourism trade balance had dropped 17% for the first eight months of 2015, meaning that American were spending more money overseas than in-bound tourists were spending on U.S. soil.

Starwood’s CFO said in October that New York faced “pressure” from fewer international travelers “due to the strong dollar,” and Royal Caribbean Cruises Ltd. in April reported that with the majority of its onboard prices in U.S. dollars, international passengers were buying less while sailing.

The party may be over, or just beginning, depending on where you stand. After surging for most of the year against other world currencies, the dollar’s value began to drop in October.

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The top stories of 2013

By Bill Poling

Year in reviewYears hence, you’ll want to have an answer when the person in the next rocking chair asks, “What year was it when we didn’t have any hurricanes?” That will be 2013.

This answer will be the same if they ask when ARC shut down Helix, when Delta bought a piece of Virgin Atlantic, when the New York Hilton gave up on room service, or when Hyatt went into all-inclusives.

But that will be just for starters. For the real conversation about 2013, you’ll need to refer to one of those Top 10 lists that journalists love to conjure up this time of year.

You’re in luck. We’ve done it again, and we present Travel Weekly’s Top 10 travel news stories of 2013.

Radical change 

for Carnival Corp.

• 2/18: Cruisers booked on Carnival Triumph forced to change plans
• 2/25: Triumph suits add to Carnival woes
• 7/1: Arison steps down as CEO, names successor
• 8/5: New on the job, Carnival Corp. CEO Arnold Donald is ‘listening’

A year after the devastating loss of life from the capsizing of the Costa Concordia, Carnival Corp. was again haunted early in 2013 after an engine room fire disabled the Carnival Triumph in the Gulf of Mexico on Feb. 10. The plight of the ship and its passengers, drifting with limited power and no propulsion, grabbed the headlines, flattened the Wave season for much of the industry and set the stage for what would turn out to be a year of transformation for the world’s largest cruise company.

In June, Carnival Corp. Chairman and CEO Micky Arison hired former Carnival Cruise Lines CEO Bob Dickinson as a consultant on distribution issues and to enhance the company’s relationships with travel agents.

But that was just the beginning.

Days later, Arison — son of co-founder Ted Arison — announced he was relinquishing the CEO role to long-time board member Arnold Donald, a relative unknown in the industry despite his 12 years of service as a director.

Soon there were signs of a new approach to trade relations. An open letter from Arison to agents, in a widely circulated advertisement in October, acknowledged the role of agents in the company’s success. And in response to agent concerns, Carnival Cruise Lines revised its rate structure to simplify its categories to make them easier for agents to explain and to sell.

The evolution continues. As Donald settled into his new role, the company reshuffled its top management, creating a new advisory role for former vice chairman and COO Howard Frank. The company also created Holland America Group, creating a central management for the Holland America, Princess and Seabourn brands.

In all, Carnival Corp. underwent more radical change in 2013 than it had in the previous decade.

Radical change at American Express

• 4/15: AmEx to sell Travel Impressions to Apple
• 9/16: AmEx agrees to sell publishing unit
• 9/16: AmEx closes its 20 travel offices
• 9/30: AmEx to sell half of business-travel division to Certares

American Express might be running a close second to Carnival as the year’s most changed travel company, partly a reflection of its renewed focus on financial services and a desire to pare down noncore functions.

The first jolt came in April with the sale of Travel Impressions and other AmEx tour operations to Apple Leisure Group, parent of Apple Vacations, AMResorts and other brands. The sale was not only notable for what AmEx was giving up, but for what it portends for Apple, newly acquisitive after a cash infusion by Bain Capital in 2012.

Months later came the divestiture of American Express Publishing Corp., publisher of Travel + Leisure and Food & Wine, to Time Inc.
American Express also disclosed plans to close some 20 storefront offices that sell leisure travel, moving agents in those offices into the ranks of work-at-home travel counselors.

But the big shocker came in September when it was announced that American Express was to sell half of its Global Business Travel division, essentially turning a $30 billion travel management operation into a 50-50 joint venture with an investment group headed by Certares International Bank.

As with the Travel Impressions sale, the transaction raised eyebrows not only because of what AmEx was spinning off, but also because of the identity of the buyer: The CEO of Certares is Michael “Greg” O’Hara, co-chair of Travel Leaders Group.

Where that leads could be prove to be a major story for 2014.

Whither Travelocity?

• 6/24: Travelocity Business sold to BCD
• 8/26 Expedia to power Travelocity sales
• 9/2 Expedia-Travelocity deal could shift online sales away from hotels

Travelocity was a pioneer in the online travel game. A decade ago, if there was talk of the “Big Two” in online travel, it was understood to mean Travelocity and Expedia, often in that order.

But by 2006, Expedia’s focus on merchant hotel sales had helped vault it to the No. 3 spot on Travel Weekly’s Power List, with sales volume of $15.6 billion. That was twice the total of the former online leader, which got a late start in the race for supremacy in hotel bookings.

Since Sabre was taken private by Silver Lake Partners and Texas Pacific Group in 2007, the inner workings of its Travelocity unit have been less than transparent, but two events in 2013 strongly suggest that the brand might be succumbing to its challenges.

In June, the company sold off its corporate booking tool, Travelocity Business, to BCD Travel for an undisclosed sum. There had been speculation at the time that the spin-off was part of a housecleaning prior to an initial public offering, but the stock offering never came.

Instead, two months later, Travelocity disclosed plans to essentially outsource all of its operations to Expedia, a virtual merger — or virtual takeover — that is expected to kick in next year.

In addition to giving a big boost to Expedia in its market-share battle with Priceline, the deal, in the words of one analyst, amounted to a Travelocity “surrender” to its long-time rival.

Travelocity, however, remained insistent that even though Expedia will be powering its site, the deal was a partnership rather than a merger, and that it fully intended to grow the brand.

Where does the gnome go from here?

The debate over NDC

• 3/18: IATA seeks DOT OK on NDC resolution
• 4/22: Fear of unknown grows rampant as IATA pushes NDC initiative
• 5/6: Filings with DOT on NDC reveal deep airlines/agents split
• 7/21: IATA responds to critics of Resolution 787

IATA filed its application for DOT approval of its Resolution 787 in March, setting off a firestorm of criticism. IATA described the plan as a well-intentioned effort to set XML messaging standards so that airlines could distribute ancillary services and customized service bundles through the agency channel.

That sounded innocent enough, but critics charged that behind the veneer of innocence, the airlines were trying to force a new distribution paradigm down the industry’s throat. And the filibuster was joined.

Numerous stakeholders in the intermediary channel, including ASTA and the Travel Technology Association, said the plan would eliminate comparison shopping, prevent consumers from obtaining anonymous fare quotes and require travelers to reveal too many personal details to make a booking — all of which IATA denied.

As negative comments overwhelmed the DOT docket, the airlines passed a resolution at IATA’s Annual General Meeting in June stating that the New Distribution Capability (NDC) wouldn’t do any of the pernicious things that critics said it was trying to do.

As the year progressed, tempers cooled as IATA offered, and ASTA accepted, an opportunity to get more involved in the process. Travelport adopted a more conciliatory attitude, and other industry officials began to admit publicly that if new airline products are to be available through agents, then some kind of XML messaging standard will be a crucial part of making that happen, whether it comes from IATA or not.

Merger surprise

• 2/18: AA-US airways merger valued at $11 billion
• 8/19 DOJ antitrust suit to prolong battle that’s decades old
• 11/18 Slots deal clears way for merger

The Justice Department’s antitrust division surprised the industry in August by challenging the American-US Airways merger, an $11 billion deal announced in February and widely seen as the final act in a series of airline mega-mergers.

The department claimed that the merger would reduce competition in numerous domestic markets and give the merged carrier an impermissibly large share of takeoff and landing slots at Washington’s Reagan National Airport.

Although consumer advocates cheered the move for attempting to put the brakes on the airline merger trend, the challenge was widely criticized by business and legal analysts, who said the case rested on a faulty analysis.

The carriers vowed to fight it out in court, but after the presiding judge asked the parties to give mediation a shot, they quickly came up with a settlement.

The deal calls for the carriers to sell off 52 pairs of Washington slots and 17 pairs at New York LaGuardia and to relinquish two gates at each of five major airports around the country.

Determined to get more low-fare competitors and new entrants into the slot-controlled airports, the Justice Department will supervise the sales and approve the buyers.

American and US Airways said the divestiture and other conditions won’t cause them to miss their goal of $1 billion in synergies after the first year, and they closed the deal on Dec. 9, emerging as American Airlines Group.

Government dysfunction

• 2/25: Travel could be the public face of sequestration’s budget cuts
• 4/22 Industry gets first measure of sequester’s travel impact
• 4/29: FAA: Staffing cuts created 40% jump in delayed flights
• 5/26: FAA budget issue might obscure more weighty industry factors

Goofy government might be an everyday event in Washington, but in 2013 partisan gridlock in Congress created two avoidable fiscal crises that had a direct impact on travel: a sequester and a shutdown.

The sequester consisted of a package of automatic, across-the-board spending cuts designed to be so harsh and indiscriminate that Congress would be motivated to pass a budget in order to avoid them.

It didn’t work. The spending cuts, softened by an interim amendment, went into effect in March, disrupting air traffic control and slowing customs processing at gateway airports. It even threatened to delay the reopening of Yellowstone’s snow-covered roads, until some local tourism and business interests in Wyoming chipped in to get the roads plowed.

The spike in flight delays prompted Congress to soften the impact on the FAA. The furor over funding subsided until the beginning of the fiscal year, when another budget stalemate shut down virtually the entire federal government for 16 days in October.

The shutdown emptied national parks and closed numerous attractions, monuments and museums to the puzzlement of many overseas visitors. Travel or participation in conventions or meetings by government employees also came to a halt.

The U.S. Travel Association estimated that the episode cost the economy $152 million a day in travel-related spending, or $2.4 billion in all. Whether our elected officials learned anything from it remains to be seen.

Regulating cruises?

• 3/25: New York Sen. Schumer proposes cruise bill of rights
• 5/27: Cruise lines adopt first ‘bill of rights’ for clients at sea
• 8/22: Rockefeller calls for DOT oversight tax on cruise lines

Acting to quell growing criticism and media attention, CLIA member cruise lines in May voluntarily adopted a bill of rights for passengers, specifying, among other things, the right to refunds for canceled or interrupted cruises and the lines’ obligations in the event of disruptions or emergencies.

The 10-point plan went beyond a six-point list that had been suggested by Sen. Charles Schumer (D-N.Y.), but it wasn’t enough to deter Sen. Jay Rockefeller (D-W.Va.), the powerful head of the Senate Commerce Committee.

Rockefeller, who browbeat industry executives during a July oversight hearing, introduced a Cruise Passenger Protection Act that would make the CLIA Bill of Rights enforceable in courts and empower the Transportation Department to impose a consumer protection regime on cruise lines, with the power to levy fines for violations.

He also introduced a bill to address his long-standing complaint that cruise lines don’t pay their fair share of federal taxes. The bill would subject foreign flag cruise lines to U.S. income tax and add a 5% excise tax, or “gross receipts” tax, on all U.S.-related cruise revenue, potentially amounting to hundreds of millions of dollars per year.

The cruise lines are fighting it and, from the industry’s perspective, the congressional Republicans’ general distaste for new taxes and new regulations may work in their favor, but the cruise lines’ public image is still fragile. Could another stranding or incident at sea tip the balance?

Reinventing car rental

• 1/7: Avis’ Zipcar purchase suggests car-sharing business has legs
• 4/8: Hertz bets on car-sharing as ‘future’ of auto rentals
• 7/22: Car-sharing the newest frontier for big three rental firms

When did car-sharing come of age? You could say it was in 2007 when Zipcar and Flexcar merged to create a single national brand, or in 2011 when Zipcar’s IPO gave it a market cap of $1 billion, but we vote for Jan. 1, 2013, when Avis Budget agreed to pony up $500 million to acquire Zipcar, the leading car-share operator with, at the time, some 750,000 members — many on college campuses.

Some of Zipcar’s fans saw the move as a dispiriting takeover of a plucky upstart by a corporate Goliath. But the transaction also validated the business model and signaled that car-sharing was here to stay: Avis not only wanted in, it was paying a premium and paying in cash to get in fast.

The deal closed in March, and within weeks, Hertz put its own car-share division on steroids, adding self-service technology for hourly rentals to thousands of cars in its fleet. Dubbed Hertz 24/7, the service is now available in some 300 locations in six countries.

Enterprise also got into the act by combining several acquisitions to create Enterprise CarShare, and then moved into the ride-share space by acquiring Zimride, which matches drivers with passengers — all online, of course.

Car-sharing took on an added twist at several airports this year when startups FlightCar and Hubber began to recruit airline passengers to make their own cars available for short-term rentals while they were out of town.

Why rent when you can share?

Dreamliner woes

• 1/21: Safety concerns prompt 787s to be grounded around globe
• 4/29: United eyes 787 return for Denver-Japan

In a severe blow to Boeing, the FAA grounded the entire fleet of the 787 Dreamliner for three months early this year, the first such action against a major airliner since the DC-10 grounding in 1979.

This time, the grounding did not follow a horrendous crash, but the 787, barely into its second year of service, had experienced numerous instances of overheating, smoke and fires in its battery compartment early in January. A few such incidents could be chalked up to the teething pains common with most new aircraft types, but by midmonth the FAA had seen enough.

The immediate impact was confined to the handful of airlines that had taken delivery, with the schedules of Japanese rivals Japan Airlines and All Nippon Airways being the hardest hit.

Before its launch, the 787’s composite structure was thought to be the most radical and risky feature of the aircraft, but the grounding was triggered by something much more mundane — the backup battery for the auxiliary power system, for which Boeing had chosen lithium.

The grounding prompted Airbus, which is developing a competing aircraft, the A350, to forgo lithium batteries for the initial version of its plane and rely instead on older (and heavier) nickel-cadmium technology.

Boeing engineers came up with a solution that got the aircraft back into service, and deliveries resumed, with Boeing boldly predicting that the grounding would not have a significant financial impact.

Though the 787 program has been plagued by delays, some 60 airlines around the world have 1,000 on order. Perhaps the Dreamliner is finally over the hump.

PEDs in flight

• 11/4: FAA approves use of mobile devices at takeoff, landing
• 11/25: FCC to review ban on in-flight cellular

In-flight service has been revolutionized by seats, beds, baggage fees and WiFi, but airline passengers were mostly turned on in 2013 by government pronouncements about what they could and could not do with their personal electronic devices.

The FAA kicked things off in 2012 when it empaneled a high-level advisory committee to review all the technical and human factors related to the use of electronic devices such as laptops, e-readers, tablets and smartphones during critical phases of flight, such as takeoffs and landings.

The panel made its recommendations in September 2013, and a month later the FAA adopted a procedure that would enable airlines to permit gate-to-gate use of virtually all devices except cellphones for voice calls, which remained the subject of a ban by the Federal Communications Commission (FCC).

Within days, most major airlines were taking steps to get in compliance with the FAA guidance, to the cheers of frequent and infrequent flyers alike.

The rest of the world took notice. The European Aviation Safety Agency, which sets standards for the European Union, had a representative on the FAA panel and followed the U.S. action with a pronouncement of its own, closely matching the U.S. rule.

But the story didn’t end there. In November, the FCC made a surprise announcement that it was reviewing its ban on cellphone usage, which was based on outdated technical information.

Some foreign airlines had already proved that with so-called Picocells or cellular relay stations on their aircraft, it was possible to provide in-flight cell service without disrupting networks on the ground.

The news was greeted with trepidation by travelers, who feared an outbreak of loud and unending cellphone chatter, but the FCC cautioned that it’s merely addressing the question of technical standards.

Whether to allow mobile phone use in flight — for data, texting and/or voice — will remain a decision for individual airlines, all of whom know that passengers can vote with their feet — and their tweets.

But just hours after the FCC voted to begin its review, Transportation Secretary Anthony Foxx stated that the Department of Transportation was assuming authority over the use of cellphones onboard aircraft on the grounds that it was a matter of consumer protection.

Holiday Autos to close trade business

Holiday Autos to close trade business

By Chloe Berman

Holiday Autos to close trade businessLastminute.com parent company Travelocity Global is to close the global trade arm of Holiday Autos after the brand was sold to Cartrawler.

The trade business was not part of the deal, which only included the brand name, assets and white label business of the car hire firm.

Travel Weekly understands the move will lead to a substantial number of redundancies, but most will occur in Germany where the company employs around 200 people and has a strong trade presence.

The company said in a statement: “Following consultation with local representative bodies in each jurisdiction and after much consideration, the decision has been made to withdraw from the trade sector across all geographies.

“Holiday Autos is currently in the process of informing all partners as well as suppliers about this decision and is reviewing steps to be taken for bookings which depart after these dates.”

The UK business will continue to take bookings until August 31 for departures until October 31.

In the meantime, Holiday Autos said it would continue to provide customer support services as usual for existing bookings.

Customers who want to cancel their booking departing after that date can do so without a cancellation fee and will receive a refund.