American Airlines is about to pull its airline listings out of Kayak

American Airlines is about to pull its airline listings out of Kayak and is considering doing the same with Orbitz. If it does so, other airlines such as Continental and Northwest may follow suit.

Airlines don’t like the booking sites because they have to pay them a referral fee for every ticket they sell, as opposed to capturing the full fare when travelers book on their individual sites. Even though that only amounts to a few dollars per ticket, every dollar counts to the troubled airlines?especially now with fuel prices going sky-high and the consumer spending going down.

American Airlines has a particular beef with Kayak because it tends to show AA flights through its partnership with Orbitz instead of directly from American. That means American has to pay a double tax, once to Kayak and once to Orbitz. (The deal between Kayak and Orbitz, charges the competing CEO, was meant to drive up traffic numbers on Kayak as it was potentially seeking an IPO prior to raising $200 million instead last December).

The decision to sever ties with Kayak supposedly has already been made. The only question is whether Orbitz can salvage its relationship with the airline. This should strengthen competing travel sites, especially newer ones that link directly to the airlines like Mobissimo and Yapta.

American, American Eagle Cut Chicago, LGA Service

American Airlines and its regional affiliate, American Eagle, announced additional details of their capacity reductions for the fourth quarter of 2008. The reductions are in line with American's previously announced (May 21) plans of cutting fourth quarter domestic capacity by 11 to 12 percent and regional affiliate capacity by 10 to 11 percent versus fourth quarter 2007 levels. The changes are being instituted to reduce costs and create a more sustainable supply-and-demand balance in today's high fuel-cost environment. The reductions involve additional schedule changes taking effect in November. Previously announced (May 27) reductions will take effect in September. American is reducing flights at most of its principal operations. This announcement, combined with the previously announced round of schedule reductions, means American will close its operations entirely at three of its airports, while Eagle will close five of its airports, out of a combined total of 250 airports for both. The airports/cities being closed are: American - Oakland, Calif. (previously announced); London Stansted (previously announced); and Barranquilla, Colombia; American Eagle - Albany, New York; Providence, R.I.; Harrisburg, Pa.; Samana, Dominican Republic (previously announced); and San Luis Obispo, Calif. American Eagle will also close its maintenance base in San Luis Obispo. American plans to reduce its departures in Chicago by 28 flights with American Eagle reducing 34 departures. In St. Louis, American will reduce departures by 8 flights with American Eagle and AmericanConnection reducing 35 departures. American will reduce 19 departures at Dallas/Fort Worth along with 23 American Eagle flight reductions. The company also has decided to eliminate five AA flights and 37 American Eagle jet departures at LaGuardia Airport. In addition to the expected cost savings, these changes, coupled with appropriate government action, could allow the airport to operate with less chronic disruption and improve customer experience at one of the nation's most congested airports.

FareCompare Reports Airlines Hike Fares

On Saturday night, American Airlines raised base airfare prices by $20 roundtrip on about one-third of city pairs that would normally constitute a system wide fare hike (for them), according to Rick Seaney, CEO of FareCompare.com, an airfare monitoring website. Later that evening, Seaney reported that Continental, Delta and United all quickly matched the $20 roundtrip increase across the bulk of their respective route systems – for good measure Air Canada and Midwest Airlines decided to come along for the ride. He said that Northwest Airlines and US Airways had not yet matched.

Seaney said that the number of city pairs American increased was just more than what he would normally chalk up to an "elevated level" of catch up activity, but he noted American raised prices this past Saturday by $30 to 60 roundtrip on just under one-quarter of their city pairs (including overlap with Southwest), with little matching activity by other legacy airlines. Seaney said that neither of these "micro-hikes" added up to what he would call a full blown system-wide airfare hike attempt (66 percent or more routes) but said that "it is getting close and marks a definite departure from previous fare hike activity. Seaney said that as a result of this and previous fare hikes, the domestic fuel surcharge that at the beginning of the year had been $20 roundtrip chugged with almost weekly increases up to $130 roundtrip on most non low-cost airline routes (this hike is a base airfare hike).

FAA sets up alerts for missed inspections

The Federal Aviation Administration is going to begin alerting its top headquarters officials when field inspectors miss airline safety inspections, Transportation Secretary Mary Peters announced Friday.

Peters also demanded that the FAA and American Airlines explain to her within 14 days why 250,000 U.S. air travelers endured canceled flights last week. American grounded its MD-80 jetliners and canceled 3,100 flights in order to inspect or redo wiring that was supposed to have been completed between Sept. 5, 2006, and March 5, 2008.

“No one at all was well served by what happened last week,” Peters told a news conference outside FAA headquarters.
She said she didn’t think federal regulators had overreacted in the wake of revelations about the FAA’s lax supervision of Southwest Airlines. Last month, it was revealed that the FAA allowed Southwest to fly dozens of Boeing 737s without inspecting them as required for fuselage cracks and that Southwest’s system for complying with FAA safety directives had not been inspected by the FAA since 1999.

But Peters wanted to know “why so many aircraft had to be grounded and so many travelers had to be inconvenienced” in order to “help us avoid similar disruptions” as the FAA completes an audit of all major airlines’ compliance with safety directives. The audit was ordered after the Southwest debacle came to light and helped uncover the MD-80 wiring problems.

• Flanked by acting FAA administrator Bobby Sturgell, Peters announced a series of steps to improve safety in a system she insisted was already the safest in history:
• FAA is setting up a national safety inspection review team to examine airlines for problems mostly likely to occur and in a comprehensive way.
• FAA will begin requiring senior field office officials to sign off on voluntary safety disclosures by airlines. These voluntary disclosures must show the immediate problem has been fixed and steps have been taken to ensure it won’t recur. In return, the airlines will avoid penalties for the safety problems.
• The FAA general counsel and Transportation officials will begin meeting with airlines to be sure they have plans for accommodating passengers if there are future mass aircraft groundings.
• Peters named five outside aviation and safety experts to recommend improvements for the whole system within 120 days.

“This plan appears to address some of the main problems that created the current safety crisis,” said Sen. Charles Schumer, D-N.Y. “But the question remains: Will the FAA devote the resources and manpower to get it done right?”

Many of the steps had been recommended by Transportation Department Inspector General Calvin L. Scovel III, particularly the new system to alert top headquarters officials when safety inspections fall behind schedule. Scovel concluded in a highly critical report that the FAA had “developed an overly collaborative relationship” with Southwest.

The lack of headquarters supervision of inspections was evident when Sturgell was unable to give a number when asked how many inspections were currently overdue, but he said the new alert system would remedy that.Sturgell also denied that the audit of all carriers represented a new, tougher approach by his agency. “This is not a crackdown; it’s not getting tough,” Sturgell said, but rather an attempt to verify the system is working effectively. He reinforced that by noting that during the audit the FAA had given nine different airlines approval for 14 different alternate methods of complying with FAA safety orders, including on the wiring problem.

Peters did not address Scovel’s recommendations that FAA come to better grips with massive retirements and resignations among its air traffic controllers and safety inspectors. Scovel noted that controllers-in-training now comprise 25 percent of the controller work force, compared with 15 percent in 2004, and that half of its safety inspectors are eligible to retire in the next five years.

“The real problem is there aren’t enough FAA inspectors to keep tabs on the burgeoning number of outsourced maintenance facilities,” said Teamster Union President Jim Hoffa, “especially overseas where foreign repair stations don’t have to meet the same standards as U.S. facilities do.” He called Peters’ plan “window dressing.”

The FAA had already announced it would adopt one Scovel recommendation: lengthening the “cooling off period” before former FAA inspectors can work for an airline they used to oversee or interact with the agency.

Peters emphasized that since the late 1990s the death rate in commercial aviation has dropped from 45 for every 100 million people flown to a record low five-to-eight deaths per 100 million flown. But she said, “A good system can always be made better,” and asked her panel of outside experts to help do that.

The panel includes J. Randolph Babbitt, former president of the Air Line Pilots Association; William O. McCabe, former Director of Aviation DuPont and member of the National Business Aviation Association safety committee; Malcolm K. Sparrow, a professor of public management at Harvard; Edward W. Stimpson, U.S. representative under President Clinton on the Council of the International Civil Aviation Organization; and Carl W. Vogt, former chairman of the National Transportation Safety Board.

“We fully support the formation of the commission,” said John Meenan, executive vice president of the Air Transport Association, which represents the major airlines.