Portfolio.com: Business Travel

Music to Make Time Fly By

Mon, 12 May 2008 13:30:00 GMT

Eric Grosse, founder and president of Hotwire.com, is a self-proclaimed opera-holic, so it makes sense that he passes time on long-haul flights listening to Mozart. Here are his three favorite operas:

Tannhäuser (Richard Wagner)
“This opera takes you away to another world. The score has a romantic richness that perfectly fits the set and plot. Of all Wagner’s operas, I find Tannhäuser most enjoyable to listen to outside the opera house.”

The Marriage of Figaro (Wolfgang Amadeus Mozart)
“If perfection is possible with an opera, this is probably it. The overture gets things going with a vigor and musical genius that just doesn’t let up. The brief closing aria in which the count reconciles with his wife is one of the most moving pieces of music found in any form.”

The Barber of Seville (Gioachino Rossini)
“My generation can’t help but think of Bugs Bunny when hearing the overture, but this is one great comedic opera. The plot and characters are well suited for a modern set. In fact, my favorite production was put on by the San Francisco Opera, which had Figaro dressed as a punker singing his famous opening aria on a Vespa motor scooter. Way cool.”

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Economy of Scale

Thu, 08 May 2008 04:00:00 GMT

By his own admission, Eric Grosse spends half of his workweek in the clouds.

The co-founder and president of San Francisco-based travel reseller Hotwire isn’t mentally slacking off. He has meetings to attend around the country, in particular in Los Angeles, Chicago, and New York, and—since Hotwire was bought by Expedia, in 2003—Seattle.

While his routine might not seem extraordinary to veteran business travelers, this fact might: Grosse logs tens of thousands of miles in the back of the bus.

“It’s easy for top-level executives to get complacent when they travel and expect first class every time,” says the 39-year-old company president. “One way to let everyone at the company know you’re serious about costs and saving money is to have as few distinctions as possible between the senior and junior levels. And for us, that means I fly coach.”

Spending that much time in such a limited amount of space requires a certain level of endurance. But Grosse, who usually flies United Airlines, has also come up with some tricks that help him feel like a king in coach.

The first rule: Pack light. Because fliers greatly outnumber overhead bins in the coach cabin, Grosse tries to fit everything into one small, wheeled suitcase from Orvis. If he must bring a suit, he generally wears the jacket on the plane; he also tries to travel with only one pair of shoes. On short jaunts, he’ll eschew the wheelie altogether, opting instead for a Hotwire-branded duffel bag from Timbuk2 because he can stuff it under the seat in front of him.

“Economy [class] is all about minimizing space,” he says. “The less you bring, the less you have to worry about. And the less you have to worry about, the easier the entire flight will go.”

Another strategy: B.Y.O.F. (as in Bring Your Own Food). It’s no secret that airlines have been scaling back food offerings in economy class, and fare available in airports usually falls into two categories: premade or fried. The night before every flight, Grosse’s wife makes him a sandwich on fresh sourdough bread and cuts up some vegetables for snacks. Grosse also always brings along some fruit—bananas are a standby, and depending on the season he’ll pack pears or mandarin oranges as well.

“Particularly when you’re traveling, it’s important to make sure you’re putting the very best fuel into your system,” he says.

Third rule: Self-medicate. Because coach cabins are notorious breeding grounds for germs and viruses, Grosse always pops a Trader Joe’s Vitamin C tablet on the morning of a long flight. On red-eyes, he also takes a Tylenol PM tablet just after dinner, which helps him to fall asleep but doesn’t leave him too groggy to conduct business in the morning.

“The worst feeling in the world is when you’ve traveled all night for a morning meeting, but you spend most of the meeting in a fog,” Grosse says.

Finally, Grosse tries to maximize distractions. He rarely pulls out his tiny Dell Latitude D400 laptop during flights, preferring to mark up PowerPoint printouts and jot down ideas in a Moleskine notebook. When he’s finished with work, Grosse says he likes to “zone out” and read books. He generally prefers nonfiction and recently finished Doris Kearns Goodwin’s Team of Rivals. Up next: Three Cups of Tea by Greg Mortenson and David Oliver Relin.

Grosse says that he never leaves home without his new 16-gigabyte Apple iPod Touch. Before each trip, he uploads family pictures and videos, as well as movies from iTunes. The self-proclaimed opera nut has also crammed the device with more than five gigabytes of opera. (See his recommendations.)

“Most operas are a minimum of three hours, which means one can get you halfway across the continent,” he quips. In economy class, that kind of distraction can go a long, long way.

Summer Forecast: Clear(er) Skies

Tue, 06 May 2008 04:00:00 GMT

Here is some good, old-fashioned irrational exuberance: I don't think travel this summer will be as arduous or as infuriating as it was last year.

My comrades in the commentary class disagree, of course. They rightfully point out the dark clouds casting the proverbial pall over the summer travel outlook: Airfares are skyrocketing. Fees for everything from ticket changes to checking bags are jumping. Airports and aircraft are crowded, flights are delayed or canceled, and service levels have deteriorated. Hotel rates are rising. Gas prices are headed to the moon, and the nation's automotive infrastructure is crumbling. And the dollar is in the tank overseas, so we can't even escape by going Over There.

But your curmudgeonly companion here in Seat 2B somehow sees silver linings this summer. A batch of airlines has gone out of business recently, so that should mean fewer flights crowding runways—and fewer delays. The government has imposed caps on flight schedules at the New York airports, and that will mitigate some of the problems at the national aeronautical choke point. The orgy of price hikes imposed by the airlines this year has probably passed the tipping point. Such a rapid runup is likely to depress demand; I think the airlines will panic and start discounting to get butts in seats. Hotels have pushed up prices a bit too fast also; they're already beginning to bargain to keep heads on beds. Even the weak dollar has shown some tentative signs of a revival in the last week, so international-travel costs this summer aren't likely to be as high as we were predicting even a month ago.

A word to the wary, however: Even irrational exuberance has its limits. This will be a challenging summer, and you'll need some strategies and tactics for maximizing your opportunities. Allow me to be your tour guide.

Watch for Fast Fare Sales
This won't be a season filled with big breaks broadcast via huge newspaper ads. The airlines will probably rely on brief sales that are announced only through select distribution channels. So if you're looking for a sale to a particular destination, sign up for the fare-watcher features from travel agencies such as Orbitz.com or Travelocity.com. Another good choice: The hyperactive alert system from FareCompare.com, which allows you to choose the routes, dates, airlines, and class of service you want to monitor.

Break the Hotel Chain
Hotel-rate rises have been fueled by our own reliance on the frequent-guest programs of the major worldwide hotel "families." We often don't look past the chains when we're seeking a hotel bargain—and they price accordingly. The solution? Check an independent site such as Quikbook.com. It offers discount rates from thousands of independent properties around the nation. Independents also offer another benefit: diversity. Unlike chain properties, each offers its own quirks and charm.
Look for Dollar-Friendly Destinations
Planning an overseas holiday this summer? Despite the dollar's rapid descent against the euro in Western Europe, it is relatively strong in Eastern Europe. You won't have Paris, but Budapest is a charming stand-in. The Dalmatian Coast, across the Adriatic Sea from Italy, does a passable imitation of the Amalfi Coast. In Asia, the Hong Kong dollar is tied to the greenback, so prices remain stable. (By the way, I don't know a single person going to the Summer Olympics in Beijing.) Closer to home, Argentina is cheap and trendy; everyone comes back raving about Buenos Aires and schlepping a case of Malbec wine. And don't forget Mexico: At 10 pesos to the dollar, it's a terrific bargain. Just avoid the sterile, overpriced resort ghettos like Cancún.

Use Your Loyalty Strategically
Airline frequent-flier miles and hotel frequent-stay points are the Zimbabwean dollars of travel: They are printed with abandon, and it takes millions of them to get the simplest commodity. Planning ahead in hopes of scoring the "best" rewards at the "restricted" levels is a Sisyphean task. But most programs allow you to cash in extra miles or points for virtually any available seat or hotel room. Using the so-called unrestricted option is a terrific strategy when you are traveling at the last minute or on a whim. One example: Continental Airlines is selling advance-purchase business-class seats from Newark to Zurich this summer for as little as $1,800 roundtrip, or 100,000 restricted OnePass miles. That means the miles are worth just 1.8 cents each. But walkup tickets to Zurich this summer will cost about $6,700 roundtrip—or 250,000 unrestricted OnePass miles. That's a much heftier payout of 2.6 cents per mile.

Stay Home
A summer getaway needn't be far away; consider hanging out in your hometown. Every decent hotel has "value-added" packages that bundle room accommodations with everything from in-room movies and museum admissions to spa treatments and shopping discounts. A package at the Ritz-Carlton, Denver, for example, includes the room, wine and fruit, breakfast in bed for two, and one admittedly practical amenity: free valet parking.

The Fine Print…
A followup to our merger column and the potential payoff for outgoing Northwest Airlines chief executive Doug Steenland: According to a Securities and Exchange Commission filing, Steenland has given up his potential merger cash-out package of $7.8 million. He traded it in for a new one worth $18.3 million. It's contingent on the merger with Delta Air Lines closing by the end of the year and his employment terminating on January 1, 2009.
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Electric Airplanes Take Flight

Tue, 29 Apr 2008 16:30:00 GMT

You're probably not going to live to see an electric 747 landing at O'Hare, but a growing number of aeronautical engineers believes electric airplanes are the future of general aviation.

They may be right.

These engineers work at places like NASA and say the battery and fuel cell technology that is pushing automobiles beyond internal combustion will do the same for light aircraft.

One company leading the way is Pipistrel and its Taurus Electro, which uses a 30 kilowatt motor to take off then glides silently on air currents. It's already received a dozen orders for the plane and plans to begin delivering them by year's end.

"We have this technology," says Tine Tomazic, the company's test pilot. "It's here now."

Electric aircraft trace their history to 1884 and the La France, a dirigible powered by chromium-chloride batteries and 7.5-horsepower motor. It flew five miles in 23 minutes to become the first airship to take off and land from the same point.

Ninety-six years later, the solar-electric Gossamer Penguin made its first flight on Aug. 7, 1980. Solar Challenger flew 163 miles from Paris, France to Dover, England in 5 hours and 23 minutes about a year later.

Solar panels gave way to the first manned battery-electric flight on July 16, 2006, when students at Tokyo Institute of Technology built an airplane powered by 160 AA batteries. It flew almost 1,300 feet in 59 seconds. Last month, Boeing successfully tested a hybrid hydrogen fuel cell-lithium ion battery airplane. The plane flew for 20 minutes using power generated by fuel cells alone.

The Taurus Electra mates an electric motor to a glider with a 48-foot wingspan. The lithium-polymer battery pack weighs 101 pounds and provides enough power to climb to 6,000 feet at a climb rate of 560 feet per minute. Pipistrel CEO Ivo Boscarol says the battery pack recharges about as quickly as a cell phone and the Taurus Electro offers the same performance as the gasoline-powered Taurus. It will sell for around $100,000.

Pipistrel spent 1 million Euros (about $1.5 million at today's exchange rate) developing the Taurus Electro; the European Union contributed about one-third that amount to the project.

The engineers, pilots and academics who attended the Electric Aircraft Symposium in San Francisco say advancements in battery technology, composite materials and electric motors will make electric airplanes like the Taurus Electro increasingly common. AC Propulsion, for example, is developing an 15 kilowatt motor that is 17 inches in diameter and weighs 18 pounds; it hopes to see the motors used in the Solar Impulse solar-electric airplane that will attempt to fly for 36 hours straight sometime next year.

Mark Moore, an engineer at NASA Langley Research Center, says electric motors offer many benefits over internal combustion, including zero emissions, greater efficiency and improved reliability. This allows "all kinds of freedom of design" and "new and exciting possibilities."

There are still some bugs to be worked out, not the least of which is the limited range afforded by current battery technology. Greg Cole, an engineer and designer at Windward Performance, says even the best batteries don't offer more than one hour of flight time, but he expects that to double within five years. Hydrogen fuel cells are another possibility for extended range, although they remain fairly far over the horizon.

Electric aircraft advocates say two things will spur innovation and help bring electric aircraft to general aviation. The first is a proposed "Green Prize" competition by the CAFE Foundation to reward the first airplane capable of 100 mph and the equivalent of 100 mpg. The second is the Experimental Aircraft Association's request that the Federal Aviation Administration to allow the use of electric motors in ultralight and light sport aircraft.

“The EAA community is committed to this direction,” said engineer and lifetime EAA member Craig Willen. "Man can and will develop electric propulsion for flight."

Pictures and video of the Taurus Electro courtesy Pipistrel.
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Why Airline Mergers Don't Fly

Tue, 29 Apr 2008 04:00:00 GMT

In a melodramatic scene from the 1985 movie Rocky IV, the elite Soviet boxer Ivan Drago coldly assessed the wan and beaten body of his American opponent, Apollo Creed: "If he dies, he dies."

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Antitrust regulators must worry they'll come across like a bureaucratic version of Drago if they were to stand in the way of the airline industry as it rushes to consolidate. Surely no one could be so cruel and uncaring, as to let the injured die without offering a little help, a little hand up, a little love?

Airlines today look so sad, so shriveled up. Where did the profits go? First the 2001 terrorist attacks, now $120 barrels of oil? United Airlines just lost how much in the first quarter? Half a billion? Oh, it's just too painful. We can't let the airlines die. If they want to combine into three jumbo airlines, so be it. If they merge, they merge.

When Delta Air Lines agreed to buy Northwest Airlines last week, the better to reduce capacity and raise fares, nary a peep of protest was heard. When United failed to woo Continental Airlines into a similar arrangement over the weekend, the news knocked $100 million off United's market value—until United announced that it was in advanced merger talks with US Airways.

It may seem that the idea of headlong airline consolidation is a slam dunk. But not everyone is going along with the idea.

Severin Borenstein

Severin Borenstein, who was an adviser to the Justice Department as it considered, and eventually turned down, United Airlines' first pass at buying US Airways in 2000, says the government doesn't have to feel like a killer if it decides to block another United Airlines-US Airways deal.

"The only thing that changed is the airlines are broke because the price of oil is high and they'd like to make more money," said Borenstein, who is now a professor at the Haas School of Business at the University of California, Berkeley.

"That's not a particularly tough-love view," Borenstein added. "That's pretty much a standard view among economists. You don't let firms merge just because they're losing money."

Others echo the notion that competition isn't the issue. Elizabeth Bailey, a professor at the Wharton School of the University of Pennsylvania said the airline industry's problem isn't having six or seven major carriers, it's high fuel prices.

"In normal times, this number of carriers is able to make money," Bailey said. "Things were looking pretty good for the last two or three years."

With the Bush administration's deal-friendly Justice Department in charge until January 20, 2009, hardly an antitrust concern has been raised in the past month of merger mania in the airline industry.

Delta's agreement to buy Northwest has set the airlines scrambling like desperate singles at a square dance. Money-losing United is especially in the grip of merger fever. "Consolidation is underway; ensuring you have the right partner is everything," United Airlines chief executive Glenn Tilton said over the weekend.

Borenstein said airline C.E.O.'s have a window of opportunity to get a deal done, and they are desperate to act before it closes.

"They see the end of the Bush administration coming and an almost certain increase in antitrust scrutiny of airline mergers after January 20," he said. "So they feel real time pressure to do something if they're ever going to."

Mergers, say the airlines, could save the industry from mounting losses, bankruptcies, and global humiliation. "The U.S. airline industry is in serious decline!" writes James May, the president of the airline industry's lobbying body, the Air Transport Association, in an open letter entitled "Final Approach."

Below a chart comparing the paltry market capitalization of the six incumbent carriers with German carrier Lufthansa, May goes on to quote the pro-consolidation views of Morgan Stanley and J.P. Morgan analysts.

The July 27, 2001, announcement that rejected United Airlines' takeover of US Airways nevertheless looks controversial in hindsight. The September 11, 2001, terror attacks flung the airline industry into its deepest hole ever, and, in many ways, it has never fully recovered.

Borenstein says the Supreme Court has long stood by the idea that rules about the concentration of market power don't go out the window when an industry is suffering.

"So what?" he said. "The airlines are losing hundreds of millions of dollars because they happen to own aircraft when the price of oil went up."

In other words: If they lose, they lose.

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Lobbying for Change

Tue, 29 Apr 2008 04:00:00 GMT

When Beijing’s first boutique hotel opens in July, guests of the 99-room Opposite House may not even notice the lack of a traditional lobby or the absence of a clichéd, imposing, officious front desk. They won’t be in the hotel’s public area long enough to see what’s missing.

“An assistant will take you directly from the hotel car to your room and check you in with a handheld computer” explains Brian Williams, managing director of Swire Hotels, the parent company. “There’s no need for a formal reception center because everything will be paperless and we’ll have the guest’s information before they arrive.”

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The disappearing lobby isn’t unique to Opposite House, the first hotel-management venture of the Swire Group, the Anglo-Sino behemoth with interests in everything from airlines to sugar. Hotels around the world at every price point and luxury level are rushing to refashion their sterile, stereotypical arrival halls into convivial lounges, alluring restaurants, hip cafés, mini-museums, and even comfortable, casual work centers and socializing areas. They’re pumping in music and designer scents and ripping out all of the visual cues and furnishings that once defined a hotel lobby.

Hoteliers speak persuasively about the societal and technological shifts driving them to reinvent their public areas. And you’ll hear the lobby being rapturously described as the hotel’s living room—or the lodging equivalent of the local coffee bar.

But the bottom line is, well, the bottom line: Hotels need to make money from their lobbies. “A vast lobby that generates no revenue just isn’t practical anymore,” says Welf Ebeling, executive vice president and chief operating officer of Leading Hotels, a worldwide marketing alliance of luxury hotels.

One logical way to turn lobbies into cash cows is with food-and-beverage outlets. The Wyndham Hotels chain, for example, is installing E.R.L. Cafés (for Eat, Refresh, Live) in the lobbies of its full-service hotels and resorts. The deluxe Montage Laguna Beach resort in California has a public area that emphasizes the property’s stunning vistas of the Pacific Ocean. But there’s also what managing director James Bermingham calls “a great room in an elegant home.” It’s decked out with Arts and Crafts-inspired decor, wooden floors, indoor and outdoor seating—and it peddles cocktails from just after breakfast until well past midnight.

At the Opposite House in Beijing, the traditional lobby space will largely be replaced by contemporary Chinese art, water features, and other architectural flourishes. But there will also be a total of five bars, restaurants, and nightclubs. “This category of hotel, a small and luxurious lifestyle property, doesn’t exist yet in Beijing,” Williams says. “It will be confusing to some people, but we’re aiming for unique—a one-off experience.”

Unique and one-off has no place at Courtyard by Marriott. The 700-hotel chain is “rooted in research, not intuition,” says Brian King, the vice president and global brand manager. But he says the chain’s research confirms other hoteliers’ intuition: The traditional lobby and its stiff transactional ambience is toast.

“It’s what I call the Starbucks phenomenon,” King explains. “Travelers want a place where they can plug in their laptop, use their iPod, mingle with other people, hang out, have a snack. And they want it some place that isn’t their guest room. For a hotel, that place has to be the lobby. But it has to be the right kind of lobby.”

So Marriott and an outside design firm have reengineered the entry area of Courtyard. Out with the big check-in desks; in with several smaller areas called welcome podiums. Flexible guest-seating areas, such as a communal table at the center of the lobby and private “media booth” workstations were installed. Sectional sofas replaced traditional lobby furniture. A 52-inch L.C.D. touchscreen called the GoBoard dispenses news and conciergelike information. There’s free WiFi, lots of easy-to-find power outlets, a library, and printer stations. The furnishings are all “laptop friendly,” says King.

And, naturally, there are revenue-generating opportunities galore. A 24/7 market dispenses snacks, beverages, and sundries. The breakfast buffet has been jettisoned and replaced with all-day dining, snacking, and grazing options. There’s even evening cocktails and custom coffee drinks. And everything is coffeehouse mellow: communal yet convivial and private; casual with a veneer of style; and designed with an eye toward multitasking on a laptop or a palmtop.

“About 30 to 35 percent of our customers were literally walking out the door because they didn’t want a buffet and they thought our lobbies weren’t interesting enough,” King says. “That’s revenue that we were giving away.”

Ebeling finds all these lobby changes a matter of back-to-the-future thinking. “The old European hotels always used to have a wonderful lounge in the lobby where people could sit down, have a coffee, and read the paper,” he says. “The lounge was always the soul and heart of a great hotel. It’s where guests went to mingle, to socialize.”

The Fine Print…
The first new Courtyard lobby opened recently in a Virginia property, and the rest of the chain will be renovated by 2010. King says the changes will cost hotel owners $650,000 to $750,000 for lobby space that averages about 5,700 square feet. And in keeping with the new age, new-wave approach to public space, Marriott has built a special promotional website. Besides starring in YouTube videos flogging the lobby transformation, King writes a blog too.
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Merger Most Foul

Tue, 22 Apr 2008 04:00:00 GMT

I’ve lost track of the number of real or attempted airline mergers that I’ve flown through in the last 30 years, but I can tell you this: The play is old and the plot is tired, but there are always enough twists to keep you watching until the final scene.

If it lives up to form, the week-old proposal to combine Delta Air Lines with Northwest Airlines will be a four-act melodrama and a months-long struggle among squabbling labor unions, petulant managers, and queasy stockholders and investors.

We’re already watching Act One, in which the two C.E.O.’s do the “done-deal dance.” The chief executives of both carriers proclaim that there are no impediments—legal, regulatory, or competitive—to a swift, seamless merger of equals. They give interviews to the hometown papers that are long on platitudes and promises and short on reality and circumspection. So-called media influencers—industry analysts, talking heads, even cranky columnists like yours truly—are offered private briefings. Slick promerger websites appear; the C.E.O.’s write predictable op-ed pieces. And key national media outlets—the New York Times, the Wall Street Journal, and USA Today—crank out reams of copy and acres of charts, all of which help foster the idea that the merger is, in fact, a done deal.

In a later scene, the plot thickens as all that is revealed to be baloney. Airline mergers require the blessing of both the Justice and Transportation departments, and there are always meaningless but time-consuming congressional hearings. The process takes months—or, in the case of a never-consummated United-US Airways merger, first pitched in 2000, more than a year. As Continental Airlines, itself eyeing a merger, told its employees last week: Aviation combinations happen only after a complex, “lengthy, and rigorous regulatory review.”

And this time, the State of Minnesota has a sizable role. A $245 million bond held by a state agency immediately comes due if Northwest Airlines leaves Minnesota. The combined carriers will be based in Atlanta, so Delta chief executive Richard Anderson, who once ran Northwest, is talking about his desire to “fulfill the spirit” of the bond’s covenants. But the state’s political infrastructure, embarrassed by its past largesse toward Northwest, will want more than spiritual restitution.

Act Two of the all-too-familiar airline-merger melodrama is what I call the time’s-a’wasting warning. As the regulatory process drags on, the airlines begin to raise the specter of dire consequences: Jobs will be lost; service to small communities will disappear; travelers will be inconvenienced; and one or both of the carriers will disappear if the government doesn’t move with dispatch.

The plot twist this time? Delta and Northwest seem desperate to get the merger approved before the presumably business-friendly Bush administration departs. All of the aforementioned talking-head experts are already prophesying that the next administration will be unwilling to approve a $17.7 billion deal that would create the world’s largest carrier.
But the regulatory process at both the Justice and Transportation departments is controlled by lower-level career bureaucrats, and they are rarely motivated by the timetable of administration changes. The United-US Airways merger was passed seamlessly from the Clinton to the Bush administrations. And it was Bush’s Justice Department that spiked the deal in July of 2001.

Act Three is the “union dues” phase. Airlines are heavily unionized and longtime line employees resent highly paid, transient bosses controlling their careers. One example: Almost three years after the US Airways-America West merger was first announced, the combined carrier is still trying to consolidate its old union contracts. A bitter fight between the two competing pilots’ groups wasn’t settled even after a supposedly binding arbitrator’s ruling. And just last week, the pilots voted out their old union. The labor squabbles have helped drive US Airways to the bottom of the passenger-satisfaction charts.

This time, pilots are the only unionized employee group at Delta; Northwest’s rank and filers, who despise the airline’s union-breaking chief executive, Doug Steenland, might have welcomed the merger. But the atmosphere has been poisoned: Anderson, who’s slated to be top dog of the combined carrier, cut a separate, premerger contract deal with Delta’s pilots. Naturally, Northwest’s aviators now oppose the merger, and most other Northwest unions have lined up in opposition to the deal too.

The final act is what I call transition turmoil. While they await the government, Delta and Northwest will start contingency planning. Putting two carriers together entails worldwide coordination of hundreds of moving parts—fleets, employees, routes, maintenance, schedules, airports, advertising, marketing, pricing, distribution—and requires the spade work of hundreds of middle- and top-level executives. While management diverts time to planning for what may never be, ongoing operations suffer. In the runup to the doomed United-US Airways merger, for example, United’s performance was horrific. During some weeks in the summer and fall of 2000, three out of four flights ran late; hundreds were cancelled; and passengers and luggage were stranded from Hong Kong to London’s Heathrow Airport. United never recovered: It declared Chapter 11 bankruptcy two years later, spent more than three years working on a botched reorganization, and has been looking for a merger partner since it exited bankruptcy, in February 2006.

The plot twist this time? There isn’t one. The Delta-Northwest deal dwarfs any other previous airline combination and will be tricky to execute. And since neither carrier has any spare management, logic dictates that there will be months of pain inflicted on business travelers even before the two airlines learn if they will be allowed to merge.

The Fine Print…
Another familiar theme of airline-merger melodramas: Which executive has feathered his nest best? The winner this time is Northwest’s Steenland. He has a clause in his employment contract that allows him to leave in June with a $7.8 million special payout. But the payout window reopens if he departs after a merger. As currently configured, Steenland would become a director of the combined carrier with no executive role. In other words: ka-ching! Related Links
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Table for One: Seoul

Thu, 17 Apr 2008 17:30:00 GMT

Sit down for a Korean meal and before you’ve even opened your mouth to order, the waiter will bring an array of tapaslike plates for the table to share—enough kimchi, broiled fish, pickled radish, and glass noodles to constitute its own meal. Add to that the bold, spicy nature of local cuisine and the fact that, by tradition, friends pour alcohol into each other’s out-held cups (never into their own), and you’ll begin to understand the challenge Seoul poses to single diners.

For years, foreigners seeking more accessible options had few choices outside the American military base in downtown Seoul and imported chains like Pizza Hut. But the country made itself foreigner-friendly in preparation for the 2002 World Cup. In addition to a high-speed rail link to Busan, the country’s second largest city, and plenty of English signage, Seoul has sprouted excellent restaurants—with English menus and impressive wine lists.

The Han River separates Seoul’s older, historic northern half, with its universities, government buildings, old palaces, central train station, and many of the best restaurants and hotels, from the newer, flashier districts to the south, where many European and North American businesses have offices in shiny skyscrapers. The more established restaurants, including several in this story, are located north of the river.

Namsan: The Paris Grill
Grand Hyatt
747-7 Hannam 2-Dong
Yongsan-Ku
02-797-1234
The Hyatt sits on the haunches of Namsan, the mountain that rises up in the town’s center. Who needs a companion when the Paris Grill’s floor-to-ceiling windows provide the best view in the city: south over a manicured terrace to the Han River and the glittering office towers beyond. Inside, the atmosphere is ritzy, with white tablecloths and waiters in bow ties who were almost too attentive as they shuttled between tables on a slow night. The wine list runs for pages and includes 22 by-the-glass, more than most of Seoul’s best restaurants. The menu includes standards like French onion soup and filet mignon, lots of fish, and a handful of very rich desserts.

Dress: Business casual
Prices: Very expensive
Reservations: Recommended
Close to: Grand Hyatt Hotel, Shilla Hotel

Downtown: Tani
9/F Avenue L, 130
Namdaemun-ro 2-Ga Jung-gu
02-2118-6100

Seoul’s “classy” restaurants tend to overshoot the mark, favoring the gilded and gaudy. Not so at Tani, where 20-foot-high indoor trees complement the natural wood decor—including, behind a glass wall, a forest of wine racks. The top-notch Japanese fusion cuisine and swanky vibe have drawn generous comparisons to Nobu. But here you can light up a Cohiba from the cigar menu. Each course on the set menu (thinly sliced pork pastrami followed by caramelized apple salad, pumpkin soup, mustard shrimp tempura, steak, sashimi, and chocolate mousse was $40 at lunch) comes to the table just as the previous one disappears. Ask for a seat that overlooks the open kitchen and wood-fueled fire.

Dress: Business casual
Prices: Moderate to expensive
Reservations: Strongly recommended
Close to: City Hall, Downtown Seoul, Westin Chosun Hotel, Radisson Plaza Hotel
Kangnam: Mad for Garlic
648-19, Yeoksam Dong
Kangnam Gu
02-562-6977

Located south of the river near the offices of Nike, Samsung, Chrysler, and other large firms, Mad for Garlic’s decor—dark, exposed brick, low-slung vaulted ceiling, and dim wall fixtures—does nothing to discourage Dracula jokes. As the name implies, garlic dominates nearly every dish on the Italian menu (salad, pasta, steak, pizza that isn’t greasy). It’s not too fancy—paper place mats show photographs of the food—but the wine list is extensive, featuring a $486 bottle of Opus One. There are several locations in the business districts south of the river, such as Cheongdam, Samsung, and Gangnam. All are reliable places to duck into on the way to or from a meeting.

Dress: Casual
Prices: Inexpensive to moderate
Reservations: Recommended
Close to: Kangnam district businesses

Itaewon: Villa Sortino
124-12 Itaewon-dong
Yongsan-gu
02-553-9000

A curious thing happens when a Seoul restaurant reaches a certain level of success: The owners open a second branch down the street—or even right across from it. In Itaewon, cut-rate tailors and brothels are gradually giving way to retail storefronts and pairs of good restaurants. Expats say Sortino serves the best Italian food in Seoul—even the owners of a rival Italian place reportedly eat there. The Italian-Canadian owner makes sophisticated dishes with difficult-to-find ingredients, like guanciale (a fatty pig jowl), and wild boar. The Sortino on the south side of the street is casual and popular with groups; go to the Sortino on the north side for a quieter, fancier meal at a table that looks into the kitchen.

Dress: Casual
Prices: Moderate to expensive
Reservations: Strongly recommended
Close to: Itaewon, Hannam-dong, Yongsan military base, Hamilton Hotel, Grand Hyatt Hotel

Namdaemun: T-Won
43-205, Dongja-dong
Yongsan-gu
02-392-0985

In 2004 a high-speed rail line began whisking passengers to Busan, one of the world’s largest ports and a shipping and shipbuilding hub for East Asia. Don’t eat on the train—go to the fourth floor of the Concos department store connected to Seoul Station. Single diners are seated by default at a bar that faces a line of chefs working furiously at their woks, but ask for a table by the window overlooking the station’s main plaza. The menu includes oddities like shark’s-fin soup, but there are more-familiar Chinese dishes that are tasty and filling—and not smothered in the black-bean paste that dominates most Korean-style Chinese food.

Dress: Casual
Prices: Moderate
Reservations: Unnecessary
Close to: Seoul Station, Hilton International Hotel

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The High Cost of a Low Dollar

Tue, 15 Apr 2008 04:00:00 GMT

How would you like your analysis of the unprecedented worldwide decline of the U.S. dollar?

Political? President Bush told the Economic Club of New York last month that he “believe[s] in a strong dollar.” But since his 2001 inauguration, the greenback buys 14 percent fewer Japanese yen; 27 percent fewer British pounds; and 45 percent fewer Australian dollars. The dollar buys 43 percent fewer euros than when it launched as a street currency in 2002. So travelers who take Bush’s “strong dollar” overseas have less international buying power than at any time in decades.

Humiliating? The greenback is falling so fast that the government of India, which used to accept dollars as payment for admission to the Taj Mahal, now demands that visitors pay in rupees.

Surrealistic? With the dollar worth just 50 cents against the British pound, everything in London costs twice what it does in New York. A room at the Hilton New York, in Rockefeller Center, costs $259 next Tuesday night, but you’ll pay $518 (£259) at the Waldorf Hilton in London’s West End.

Anecdotal? I had a free Saturday in Rome not too long ago, so I grabbed a copy of the International Herald Tribune ($3.50 for the 16-page weekend edition) and sat at a coffee bar with an espresso ($8 for a two-ounce cup). Then I wandered into a kitchen-goods store. A panini press I’d purchased for $130 back home was selling for 189 euros—or $283.50.

Ironic? The traditionally enfeebled Canadian dollar was worth 62 cents against the U.S. dollar in early 2002. Now the loonie is at parity with the greenback. There’s the psychological blow of the world believing that a U.S. dollar is no more powerful than a Canadian dollar and a financial blow for businesses that purchase north of the border.

When the dollar slumped in years past, business travelers shrugged and moved on. Currency fluctuation is like air: It’s there, and there’s not much you can do about it. Usually, this year’s run on the dollar in England becomes next year’s run on the yen in Japan. Over the course of a couple of years, it all works out, give or take a shekel or a forint.

This time, though, the dollar has fallen so far, so fast, and so universally that business travelers are getting dinged—in both the wallet and the psyche.

“I cancelled a business trip to Stockholm in January. It was just too damned expensive,” says Susan Tomlinson, a frequent-flying financial-services executive whom I’ve known to be physically and financially fearless over the years. “At six krona to the dollar, everything is out of sight. So I did my business by email.”

A dollar was buying more than nine krona a few years ago. Even for business travelers, 50 percent currency shifts don’t go unnoticed.

Leisure travelers can stay home and rediscover America or travel to places where the dollar is still strong, such as Argentina and Turkey. But business travelers are screwed. Unless we’re prepared—and able—to scrap business trips, our options for hedging against high prices overseas are limited and not all that palatable.

We can, of course, trade down overseas, by staying in less-expensive hotels, eating at less-pricey restaurants, and switching from taxis and car services to mass transit. But trading down is risky.

Europe and Asia don’t have America’s diversity of shiny, new, low-cost lodging options. If you’re staying at a five-star grande dame property, you can trade down to a four-star Hilton or Marriott. But below the Hilton/Marriott level, there’s very little lodging stock suitable for business travel. Two- and three-star hotels overseas usually lack basics like in-room workspace, high-speed internet access, and 24-hour service.

The only other practical advice I can offer (as well as eliminating the purchase of a $3.50 newspaper) is to cut back by keeping your currency-transaction fees as low as possible. Credit-card issuers now sock you with a 2 to 5 percent “international service assessment” whenever you make a charge in a foreign currency. If you travel overseas frequently, get yourself a credit card issued by Capital One. Alone among major issuers, it offers fee-free transactions.

Large banks have also begun piling on the surcharges for those using ATM cards overseas. Before you travel, check your bank’s current ATM policy and demand that it waive any overseas fees. If it won’t, open a Capital One money-market account. It not only offers higher-than-normal interest rates, Capital One eschews fees on ATM withdrawals.

One other tip: Never sit down at an Italian coffee bar. You pay for the service—and the table. Standing at the bar generally yields espresso at half the sit-down price. In these weak-dollar times, Americans simply can’t afford to sit.

The Fine Print…
A followup to February’s column on airport clubs: Delta is closing nine Crown Rooms by the end of April, and United Airlines has already shuttered its Red Carpet Club in Sydney. But there is good news: United now offers free WiFi access in 27 Red Carpet Clubs and in five of its international first-class lounges.

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Will It Fly?

Tue, 15 Apr 2008 02:00:00 GMT

Delta Air Lines agreed to buy Northwest Airlines for about $3 billion, effectively challenging reluctant pilots at both carriers to resolve their dispute over reconciling seniority at a combined company.

Under terms announced Monday evening Delta agreed to swap 1.25 of its shares for each Northwest share. Based on Delta's closing price of $10.48 a share on Monday, the offer values each Northwest share at $13.10, a 16.8 percent premium over their close Monday.

Based on Northwest's recent disclosure that it has 236.43 million shares outstanding, the Delta offer values Northwest at $3.097 billion.

Several news reports on Monday said a deal was imminent, driven by the rapid rise in oil prices over the last year.

Rising fuel costs have forced four small airlines into bankruptcy in recent weeks.

Delta and Northwest acknowledged the effect of higher oil prices when they announced their intention to merge.

"Record fuel prices have fundamentally changed the economics of the airline industry," they said in a statement. "Fuel is the highest single expense for Delta and Northwest, significantly eroding the financial benefits of restructuring and placing the airlines' new found strength and stability at long-term risk.

"At the beginning of 2007, oil prices were approximately $55 a barrel," they added. "Now, oil prices have nearly doubled. This dramatic run-up in the price of oil makes the transaction even more compelling."

A merger would let the combined company cope with high fuel costs by generating what it said would be "more than $1 billion in annual revenue and cost synergies" from reduced overhead, and improved operational efficiency.

Sensitive to the specter of job losses and service cuts, the companies went out of their way to add: "The merged airline will maintain all hubs at Atlanta, Cincinnati, Detroit, Memphis, Minneapolis/St. Paul, New York-JFK, Salt Lake City, Amsterdam, and Tokyo-Narita—each of which will benefit from improved global connectivity."

Still, a deal would require the airlines to integrate, if not reduce, their workforces—particularly their pilots. Representatives for Delta's 6,000 pilots met last weekend in Atlanta, where Delta is based, while union leaders of Northwest's 5,000 pilots have called a meeting in Minneapolis, home of Northwest.

The main sticking point for both pilot groups appears to be seniority lists. The lists are important to pilots because they determine scheduling and routing priorities in addition to ranking for pay.

The pilot groups can't formally block a merger, but they can complicate the process. U.S. Airways and America West Airlines have been trying to combine operations for two years, but have been unable to resolve issues related to pilot seniority, the New York Times noted.

Delta chief executive Richard Anderson would run the merged airline, which would be called Delta. Delta Chairman Daniel Carp would keep that title, while Northwest Chairman Roy J. Bostock would become vice chairman. Another Delta executive, Edward H. Bastian, would be president and chief financial officer.

Delta would have seven of 13 seats on the combined board. Northwest would get five seats, one held by Bostock and another by current Northwest C.E.O. Douglas M. Steenland. One director will come from the Air Line Pilots Association.

The new airline would have its headquarters in Atlanta, but has pledged to keep "significant jobs, operations and facilities in Minnesota."

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