Southwest issues progress report on its holiday meltdown

Besides uncertainty about government travel restrictions, China travel is also being held back by the continuing rapid spread of COVID in that country after it lifted most mandatory testing rules and restrictions on internal movement by its citizens. The U.S. Centers for Disease Control and Prevention is currently urging Americans to “reconsider travel to China, Hong Kong, and Macau due to the rapid increase in COVID-19 cases and limited health care resources.” The outbreak is expected to get a whole lot worse after Jan. 22. That’s when China’s Lunar New Year celebration begins — a weekslong period when hundreds of millions of Chinese citizens travel between cities and rural hometowns, something they haven’t been able to do for the past three years. 

Although United Airlines has made some plans for a revival of China routes — e.g., its reservations system shows two daily nonstops from San Francisco to Shanghai this spring versus its current one-stop flights via Seoul four days a week — the company now appears to be lowering expectations for China service. According to a report in RoutesOnline.com, United Chief Commercial Officer Andrew Nocella said during an earnings call this week that although China indicated it would lift current limits on international flights, it still hasn’t done so. “We do not hold rights at this point to increase our service any further,” he said. “… At this point, there’s no green light to go beyond what we’re currently flying.” United is eager to resume its previous schedules to China and Hong Kong, Nocella said, but even if flight limits should be eased, “restrictions on the use of Russian airspace will constrain United from flying the bulk of our China network in 2023,” as well as its service to India.   

Southwest Airlines issued a progress report this week on its efforts to make things right with passengers whose plans were disrupted by the airline’s Christmas week meltdown — efforts that are being closely watched by the Transportation Department. In a message to the airline’s Rapid Rewards members, CEO Bob Jordan said that “virtually all” passengers’ checked bags that had piled up in airports around Southwest’s system have now been returned and that “nearly all” refunds have been issued to passengers who requested them. In addition, Southwest is “processing tens of thousands of reimbursement requests a day.” Those would be reimbursements for customers who had to pay out of pocket for things like hotel rooms, meals and ground transportation after their flights were canceled. 

Jordan also pledged that the company is taking steps to prevent a recurrence of its operational meltdown, which was spurred by winter storms but then was prolonged for days, in large part due to the airline’s inability to communicate with and reassign flight crews as its schedule fell apart. Among those steps, Southwest is assigning more rapid-response staff “that can quickly mobilize to support Crew recovery efforts”; it’s upgrading its “Crew engagement technology” for more efficient communication with crew members “during frequent schedule changes”; and it has hired an outside consulting firm, Oliver Wyman, to review the meltdown and recommend additional mitigation efforts. The company will reportedly spend almost $1 billion on upgrades to its technology. 

As if Southwest didn’t have enough problems with regulatory pressures from the Transportation Department, looming investigations from Congress, continuing complaints from customers and intense scrutiny from the media, it’s now facing a big class-action lawsuit and a strike threat from its pilots. SimpleFlying.com reports that a New York law firm filed the suit on behalf of Southwest shareholders, alleging that the company imperiled stockholders’ investments through management missteps that led to the holiday operational debacle — mostly management’s failure to invest in the technology that could have kept Southwest’s flight schedulers in contact with misplaced crews that had to be reassigned in order to keep the airline’s flights in the air. The suit also accused management of making false and misleading statements while the drama was unfolding. 

Meanwhile, the head of the Southwest pilots union said this week the group will take a strike authorization vote among its members in May. Capt. Casey Murray said the union leadership decided to move ahead with the vote “in the wake of Southwest’s largest meltdown and the utter lack of meaningful progress on a contract negotiation, with scheduling work rules and information technology asks in particular, that has been ongoing for more than three years.” While it’s true that pilot unions at major airlines often take strike authorization votes as a way to pressure management during contract talks, this is reportedly the first time the Southwest pilots have done so. 

A new survey commissioned by the American Hotel and Lodging Association suggests that the revival of business travel in the U.S., which has been lagging well behind the growth in leisure trips, is poised for a big comeback this year. That’s good news for airlines, which have traditionally depended on road warriors for the bulk of their passenger revenues. Conducted for AHLA by Morning Consult, the survey found that almost 70% of business travelers polled said their companies “have either returned to the pre-pandemic normal or increased amounts of business travel.” Just over half reported that the share of employees at their company who are “expected or encouraged” to travel for work is the same as before COVID, while another 20% say it has increased. The same proportions of respondents said the same about the average length of business trips, the number of trips and the level of spending their companies will cover on business trips. 

Germany’s Lufthansa Group is on the verge of gobbling up an even larger share of the European and international air travel market. The company said this week it has submitted an offer to the Italian government to acquire a minority stake in Italy’s ITA Airways — the successor to the defunct Alitalia — as well as “options to purchase the remaining shares at a later date.” Lufthansa Group said it asked Italy for exclusive rights to discuss the proposed deal, including talks on “the commercial and operational integration of ITA into the Lufthansa Airline Group, as well as resulting synergies.” Air France-KLM had also been considered a possible contender to buy into ITA, but the company said this week it does not intend to submit a bid. In addition to Lufthansa, the Lufthansa Group owns SWISS, Austrian Airlines, Brussels Airlines, the leisure-based carrier Eurowings Discover, and European regional carriers Lufthansa CityLine and Air Dolomiti. 

Rome-based ITA has gradually been rebuilding the old Alitalia route network and currently flies to 20 destinations in Italy; 24 in Europe, North Africa and the Middle East; and the U.S. destinations of San Francisco (due to begin July 1), New York, Los Angeles, Boston, Miami and Washington, as well as Tokyo, Buenos Aires and New Delhi. Like its predecessor Alitalia, ITA is a member of Delta’s global SkyTeam alliance, although a recent report on the website One Mile at a Time noted that ITA offers “virtually none” of the passenger benefits normally associated with SkyTeam membership. For example, members of SkyTeam partner airlines can’t redeem and “generally can’t earn” miles on ITA flights unless they are marketed as code-shares. It also cited a note on Delta’s partner page explaining that “SkyTeam Elite and Elite Plus benefits will be temporarily unavailable on ITA Airways-operated flights.” Lufthansa Group airlines are part of United’s global Star Alliance, and ITA would presumably join that family if the purchase deal goes through.

In domestic route news, low-cost Breeze Airways plans to add more nonstop transcontinental service from Los Angeles International starting May 18. The airline’s expanded schedule will include two weekly nonstop flights from LAX to Providence, Rhode Island, as well as one-stop service on that route three days a week. Breeze will also introduce three weekly flights between LAX and Richmond, Virginia. 

The latest development in the growing partnership between Alaska Airlines and American Airlines is the mutual availability of first-class upgrades for elite members of the carriers’ Mileage Plan and AAdvantage loyalty programs, according to the Points Guy. Previously, only AAdvantage Executive Platinum and Platinum Pro members could upgrade to first class on Alaska flights, but now the perk is available to all AAdvantage elites. Mileage Plan MVP Gold 75K and Gold 100K members were previously given first-class waitlist priority on some AA flights, but now all Alaska elites are eligible for upgrades. Elites in both programs are also eligible for upgrades to extra legroom space in Alaska’s Premium Class and American’s Main Cabin Extra seats. See the Points Guy for all the details.

Meanwhile, Alaska Airlines this week announced additional perks for holders of its co-branded Bank of America Visa Signature credit card. The company said cardholders will now earn two Mileage Plan miles per dollar spent when the card is used for eligible purchases, including gasoline, local transit and ride-hailing, cable TV bills, and some streaming services. Cardholders will also qualify for early boarding when their flight ticket is purchased with the card. Authorized users of the card other than the primary cardholder will be able to check a bag for free and access priority boarding even when they’re not traveling with the main cardholder, as long as they used the card to buy their ticket. And cardholders will get a $100 discount off the cost of membership in the airline’s airport lounge program.

United Airlines’ latest effort to cope with the industrywide problem of overcrowded airport lounges is the opening of a new United Club at its Chicago O’Hare hub in Terminal 1. One of four United Clubs at O’Hare, the new location is in Terminal 1’s Concourse C near Gate C10, and it replaces the previous club located near Gate C16, which is now closed. The new lounge is about twice the size of its predecessor, with seating for more than twice as many passengers. It has all the usual amenities and services, including food and beverage service, workspaces, etc. (but not a coffee bar with barista-made specialties like the new Clubs in Newark and Denver). Other United Clubs at O’Hare include two in Terminal 1’s Concourse B (near Gates B18 and B6) and one in Terminal 2 (Concourse F across from Gate F9). The old United Club near Terminal 1’s Gate C16 will reportedly be used to expand the adjacent Polaris Club for international business travelers.