The Daily Flyer

Welcome to the second edition of “The Daily Flyer,” The Higher Flyer‘s daily newsletter gathering up and summarizing some of the day’s most important happenings in the world of airlines, hotels, award points, and other travel-related things.  Today’s feature — for February 12, 2020 — covers the lesser-noticed effects that the coronavirus has on the travel industry, as well as an impending reshuffling in the World of Hyatt, American Airlines’s roll out of a less-crappy Oasis product, and a glimpse in to Delta’s future at Tokyo Haneda Airport.

Headline News

The coronavirus outbreak has, as of February 12, claimed more than 1,100 lives in China.  More than 45,000 people have fallen ill, and tens of millions more remain under an indefinite quarantine.  These containment efforts are crucial and a top priority for the ruling Communist Party, but the effects of them nevertheless are devastating to the Chinese economy (and President Xi is allegedly freaking out).  Because so many are living under a lockdown, there’s a profound labor shortage rippling across the mainland.  This in turn inhibits business productivity, and the trouble that this inactivity causes is felt far beyond ground zero in Wuhan.  Companies operating in the travel industry aren’t protected from this, and they’ve been hit hard in the past few weeks.  The immediate futures for them look bleaker by the day, and the Asian market is growing increasingly vulnerable.

On Tuesday, February 11, Hilton CEO Chris Nassetta revealed the effects that the coronavirus was having on his company.  The hotel chain has had to shutter 150 properties — which account for roughly 33,000 rooms total — in response to the outbreak.  That’s not good, and the long term implications could be even more troublesome.  If the ongoing epidemic lasts about as long as the SARS scare did (which spanned from November 2002 to July 2003), Hilton stands to lose anywhere from 25 million to 50 million dollars.

TDF February 12 2020 Coronavirus Hilton Wuhan
The Hilton Wuhan.  It shouldn’t surprise you that this is one of the 150 properties that Hilton had to shutter as a result of the coronavirus.

While Hilton is just one player in the travel industry, it’s hardly alone in the Chinese market.  Many of its peers, as well as the three legacy US airlines (as alluded to in yesterday’s publication), have all taken actions to reduce their footprints in the region and minimize their losses.  These corporations are so wealthy though that they can afford to take the hits as the outbreak runs its course; they’ll still turn profits in other markets.  Companies headquartered in less-developed Asian countries though might not be so lucky.

China, with its burgeoning middle class, is home to hundreds of millions of eager travelers who can afford to explore the region.  Unfortunately a vast majority of members of said middle class are currently grounded as a result of the coronavirus.  The neighboring Southeast Asian countries whose economies rely heavily on tourism will feel the hurt the most.  Three Vietnamese airlines for example — Vietnam Airlines, Vietjet, and Jetstar Pacific — have sustained losses totaling $430 million over the past few weeks.  Meanwhile, the Indonesian Ministry of Tourism worries that the country could suffer a $4 billion loss stemming from a decline in visitors, and in Thailand, a country where tourism accounts for 15.5% of total employment, millions of gainfully-employed workers could be in jeopardy.  Even developed countries like Australia and New Zealand aren’t immune to this threat; they too are anticipating losses totaling tens of billions of dollars.  All of these downward trends combined could be catastrophic to the global economy.

It’s a tricky situation right now because,  like an island nation in the Caribbean after a hurricane, countries like Indonesia and Thailand desperately need tourists now more than ever.  As long as the coronavirus paralyzes movements though, they may not get that relief and support.  This goes to show how important travel can be; you can argue that it’s imperative that people keep traveling (albeit responsibly) for the sake of the macroeconomy.

bangkok tour sign foreigners this way
These lines at the Grand Palace in Bangkok, Thailand aren’t going to be very long for the time being.

This essay synthesizes four articles from Skift.  They are:  “Plunging Chinese Tourist Arrivals Worry Asia as Virus Crisis Continues” ; “$4 Billion Loss From Coronavirus Is Indonesia Tourism’s Worst-Case Scenario”“Vietnamese Airlines Lose $430 Million in Revenue Due to Virus” ; and “Hilton CEO Says Business Could Be Impacted for Up to a Year From Coronavirus.”

Other happenings in the world of higher flying

1.  Hyatt, for better or for worse, announced its 2020 hotel category realignment

Effective March 22, 2020, 217 Hyatt properties will be changing award categories; 117 of them will be upgraded, while 100 will be downgraded.  If you pay for your hotels exclusively with cash, none of this will really affect you — room rates will probably remain as they are — but the same can’t be said for those who redeem points.  For some travelers, the changes will be good, and for others, not so much.  There are clear winners and losers, but more will be in the latter category.  Generally speaking, the more popular and/or desirable a place is, the more likely it is that the cost of a redemption will go up next month.  That’s too bad, but such is the nature of the beast.  Ben Schlappig, who writes One Mile At A Time, composed a useful primer documenting these changes that’s worth a read.

Sourced directly from Hyatt.

2.  The sequels to American Airlines’s infamous “Project Oasis” planes are soon taking to the skies

As American Airlines started taking delivery of (ill-fated) Boeing 737 MAX 8s, it also began rolling out a new, standardized seating plan across its domestic fleet.  Known as “Project Oasis,” the passenger experience on AA became akin to flying on a low cost carrier.  Seat pitch was cut — the notoriously frugal Ryanair amazingly offers as much legroom as AA does in economy — and all in flight entertainment systems were stripped from planes.  These changes were applied to all classes of service, and the complaints were immediate and universal.  To management’s credit, AA went back to the drawing board to rectify the flaws with its product, and its new version is soon ready for the general public.  Zach Griff at The Points Guy comprehensively documented and photographed these refined features in action.  If you fly American frequently, check it out!

Sourced from The Points Guy.

3.  Delta unveiled renderings of a swanky new SkyClub at Tokyo Haneda

Delta, starting on March 28, will be sending its Tokyo-bound flights exclusively to Haneda Airport (instead of Narita).  This development is important because access to Haneda has traditionally been limited to North American carriers, and it’s exciting because Haneda is far more convenient (relative to downtown Tokyo) than Narita is.  As part of its exhaustive relocation, Delta will be opening a new SkyClub at Haneda sometime in Summer 2020, ideally in advance of the Olympics Games that commence in late July.  Delta released renderings today, and while limited, they look quite spiffy.

TDF February 12 2020 Delta SkyClub Haneda 00
This dollhouse view doesn’t do justice showing how large this lounge will be.

The lounge be a spacious 9,000 square feet or so, and it will incorporate Japanese style in to its design, its furniture, and its dining options.

TDF February 12 2020 Delta SkyClub Haneda 02

This will also be just as accessible as domestic SkyClubs are; you can get in with an American Express Platinum card, for example, as well as with other Delta cobranded credit cards.  How handy for Higher Flyers!  If you’re traveling in business class and/or hold Gold Medallion status (or above), of course you’ll be entitled to use this before your flight too.

TDF February 12 2020 Delta SkyClub Haneda 03

Whether or not this new SkyClub can match American’s and United’s respective Flagship Lounges and Polaris Lounges in terms of quality remains to be seen.  Delta is going up against steep competition, but if it’s going to break through in to the top tier of international business class lounges, perhaps this one will do the trick…

Sourced directly from Delta.  Images courtesy of Delta.


Header image courtesy of BoyuZhang1998; accessed on Wikipedia.

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