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How Many Miles Dance on the Head of a Pin?
April 6, 2017 -- Airlines were losing money fast in the days after 9/11. Except for American Airlines Publishing, a small division of American Airlines that published the carrier's in-flight magazines and Spirit, Southwest Airlines' in-flight magazine. AA Publishing was profitable and that led some security analysts to suggest AMR Corp., American's parent, spin off the magazine arm. (The Onion also jumped in: It joked American would stop flying to concentrate on its profitable publishing activities.) American knew that its publishing division was hardly a logical standalone operation, however, and kept the operation in-house. American Airlines Publishing's profits didn't last long, either. Southwest in 2007 moved its magazine to a different publisher. American itself farmed out its magazines in 2014 to a third-party firm. I tell you this history because the security analysts are at it again. As Bloomberg's Justin Bachman details, at least one analyst thinks airline frequent flyer programs are more profitable than the carriers' core operations. He thinks they're hidden assets that can explode airline share prices. Frequency plans are profitable--but only in the way American Airlines Publishing was profitable while American itself lost money. We've known for years that the banks pay major airlines billions of dollars each year to buy the miles they award for credit card spending. That revenue stream has been growing and airlines count a disproportionate amount of it as pure profit. But the profit is less than it seems. For example, American Airlines claims a 25,000-mile award "costs" just $34 to fulfill. That's a bookkeeping trick only blinkered airline accountants can love. Smart observers also understand something that the analysts constantly ignore: Like publishing revenue, bank revenue isn't eternal. If credit cards earn less in the future from interchange and others processing fees, banks won't be so eager to keep paying airlines so much for miles. That said, never underestimate how important miles-issuing credit cards are for banks. The Delta Air Lines portfolio is now American Express' largest revenue generator and United's cards were for years Chase's best performer.
It Came From the Archives: How the In-Flight Cookie Crumbles
There are literally two billion business travel things more important than in-flight food. Yet the Internet never seems to stop talking about in-flight food ... or what passes as food. Take Biscoff, the Belgian-made speculoo biscuit. Given the dreary nature of in-flight victuals, Biscoff has developed a cult following, so much so that you can earn Delta SkyMiles for their purchase. And the long partnership between Delta and Lotus, manufacturer of the spiced shortbread specialty, is the subject of a new piece at Thrillist.com. But here's the thing: Biscoff is about the unhealthiest snack you can choose on a flight. What's this got to do with the JoeSentMe archives? In 2007, United Airlines reduced the serving size of Biscoff packages as a way to save pennies. I used that Brancatelli File column to remind you that all those pennies went to pay its chief executive (Remember Glenn Tilton?) his $39 million annual salary and benefits package. I also used the column to track the relentless decline in the quality of in-flight fare that United has served over the years.
Now for Something Completely Different: In-Flight Food
See, like I said: All anyone talks about is in-flight food. In this case, it's Gordon Ramsey, the profane, remade-for-television celebrity chef. His televised failings notwithstanding, Ramsey makes it clear that he won't eat food on a plane. "There's no fucking way I eat on planes," Ramsey says. "I worked for airlines for ten years, so I know where this food's been and where it goes, and how long it took before it got on board." For all his asshattery, however, Ramsey is basically on the same page as other celebrity chefs. Almost a year ago, Anthony Bourdain explained that he refuses to consume airline food. "No one has ever felt better after eating plane food. I think people only eat it because they're bored," explained the star of CNN's Parts Unknown. "I don't eat on planes. I like to arrive hungry." Meanwhile, The Telegraph of London has been tracking what the airlines charge for in-flight food and drinks.
Take a Gander at This Feel-Good Musical About 9/11
Is there at less likely topic for a feel-good musical than the September 11, 2001, terrorist attacks? Come From Away proves otherwise. The show focuses on Gander, Newfoundland, where dozens of flights and nearly 6,800 flyers diverted when the United States closed its airspace after the two aircraft hit the World Trade Center in New York. Despite limited resources, insufficient lodging and no preparation, the locals hosted the displaced travelers for five days with grace, good humor and typical Canadian hospitality. That is the basis of the show, which was workshopped five years ago in Canada and had short runs in four cities before opening on Broadway in New York three weeks ago. The New York Times called it "a gale of good will." Variety said Come From Away was a "life-affirming musical" that "makes people think the human race might not be doomed, after all." The naysayers come from a churlish business press. Financial Times says the show is a "treacly message of inspirational do-gooding." And The Wall Street Journal whines that Come From Away is a "wrongheaded 9/11 lovefest." The Canadian media has been kinder, of course. The Toronto Sun called it "a brilliant, moving story based on warmth and generosity." And the CBC explains how a passenger stranded in Gander on 9/11 "remembers the kindness ... and of course, the food."
Tight Connections ...
American cities understand more of their travel dollars are coming from China. The result, according to the Associated Press, is greater cultural outreach to visitors from the world's fastest-growing economy. That means more dual-language signage and brochures, more Chinese comfort items at hotels and greater availability of Chinese-language media. ... Oregon authorities are investigating reports that hotels in the central part of the state are cancelling confirmed reservations because they can hike rates for a solar eclipse due in August. ... Chicago went almost a week without a fatal shooting for the first time in five years. ... "Who discovered the potato? Have you ever read a book that told you?" Those questions were often asked by a history teacher I once had. His point: Modern history misses the monumental moments in human development. I thought about those questions when I read this review of a new book about the history of commercial food products. Who knew that the scientists John Lea and William Perrins originally considered Worcestershire sauce a failure? -- Joe Brancatelli
This column is Copyright © 2017 by Joe Brancatelli. JoeSentMe.com is Copyright © 2017 by Joe Brancatelli. All rights reserved. All of the opinions and material in this column are the sole property and responsibility of Joe Brancatelli. This material may not be reproduced in any form without his express written permission.