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Booking Strategy Passenger Rights

WOW Air Ceases Operations, Cancels All Flights

WOW Air ceased operations overnight and has canceled all flights, effective immediately. WOW broke the news in a very brief statement, with no details about the future of the airline or much direction for travelers affected by the cancellation.

As recently as this week, it appeared the situation at WOW had stabilized somewhat, as bondholders took action aimed at giving the airline time to find desperately needed investment. That apparently has not worked out. According to Iceland Review, “between 2,700 and 4,000 passengers are stranded in total.”

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“We have run out of time and have unfortunately not been able to secure funding for the company,” Chairman Skuli Mogensen said in a letter to employees, per Bloomberg. “I will never be able to forgive myself for not taking action sooner.”

What Travelers Can Do

The cancellation of flights leaves WOW customers stranded around the world, and WOW isn’t offering (or simply can’t offer) much in the way of assistance. WOW says “Passengers are advised to check available flights with other airlines,” and that “some airlines may offer flights at a reduced rate, so-called rescue fares, in light of the circumstances.”

WOW’s main competing carrier Icelandair announced it will provide rescue fares (read: discounted economy tickets) “[only] for passengers who have already embarked on their journey, and have a return ticket with WOW Air between 28 March and 11 April 2019. The fares are subject to availability.” Hopper also announced that it will refund all of its customers who booked a future WOW Air flight.

Per WOW’s statement, “Passengers whose ticket was paid with a credit card are advised to contact their credit card company to check whether a refund of the ticket cost will be issued.”

If you purchased travel insurance that covers bankruptcy, contact your provider immediately. Also keep in mind that insuring your airfare won’t cover additional losses, such as hotels, car rentals, or tours, so contact those providers as well if you will no longer be able to take your trip or need to reschedule.

WOW also says “passengers may be entitled to compensation from WOW Air, including in accordance with European regulation on Air Passenger Rights. In case of a bankruptcy, claims should be filed to the administrator / liquidator.”

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The Saga of WOW

The once ascendant low-cost carrier that boldly offered $99 transatlantic fares to Iceland and Europe has slowly unraveled over the past year. The first signs of trouble showed up when the carrier began cancelling US routes following an aggressive expansion. While the internal picture wasn’t clear, the move suggested financial trouble at the airline, which proved to be true.

The airline thought it had a buyer last November when its rival and fellow Icelandic carrier Icelandair agreed to purchase WOW and operate it independently. That deal collapsed, however, mere weeks after WOW announced it. This led WOW to shed nine of its 20 aircraft in late 2018, selling some for cash while generally trying to reduce costs and stay afloat.

Another investor appeared early this year and seemed ready to rescue the carrier through an acquisition. Unfortunately, that deal fell apart last week, plunging the carrier into uncertainty and leading to this week’s rash of cancelled flights.

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This week, WOW’s bondholders gave the airline a bit of breathing room by converting their bonds to an equity stake in the airline. This reprieve appeared to give WOW time to find an investor or buyer, which it needed if it hoped to continue operations. But as we learned overnight, that final push fell short.

Readers, did you ever fly with WOW? What was your impression?

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Airport Budget Travel Money Passenger Rights

Primera Air Abruptly Shuts Down, Other Airlines Offer to Help Stranded Passengers

A rising budget airline seems to have met its end. Primera Air, which recently expanded its routes to the U.S., announced that it’s suspending all operations as of October 2, 2018. Primera’s website promises “further updates,” but notes that it is no longer reachable by phone or email.

The vague Primera shutdown announcement stated that service is “suspended,” but seems to indicate that the closure is, in fact, permanent. The Independent reported that Primera passengers at London’s Stansted Airport were notified of the change, and that U.K. travelers would be stranded in the U.S. and E.U. following the airline’s abrupt shutdown. Stansted confirmed the announcement on Twitter:

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Other airlines including Delta, British Airways, and Norwegian have announced “repatriation” fares to help stranded passengers. Norwegian is offering tickets 50 percent off base economy fare and with lower taxes, though seats are subject to availability. Norwegian’s offer specifically covers any U.S. or Canadian travelers stranded in Europe by the line’s failure, along with many routes for Europeans stranded in North America or Europe. Affected travelers should contact Norwegian for bookings; proof of a Primera ticket is required.

[st_content_ad]Anyone holding tickets for future Primera flights should also contact their credit card issuer for a refund.

The 15-year-old airline is the first of the new low-fare transatlantic lines to go under, but it may not be the last. The improved capabilities of the latest A321 and B737 models have encouraged a handful of airlines to try the transatlantic low-fare market for the first time, and the chances are that not all will succeed.

This development will also likely have a chilling effect on the various wannabe lines looking at the transatlantic marketplace.

More from SmarterTravel:

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Budget Travel Money Travel Trends

Will Warren Buffett Buy Southwest Airlines?

Warren Buffett, one of the world’s best known and most successful investors, has a wildly variable relationship with the airline industry, dating back to his ill-timed investment in USAir, in 1989, which underperformed his return-on-investment expectations. He’s been a fierce critic of the industry ever since, regularly fulminating against airline investments, as he did in this 2002 interview with The Telegraph:

(T)he airline business has been extraordinary. It has eaten up capital over the past century like almost no other business because people seem to keep coming back to it and putting fresh money in. You’ve got huge fixed costs, you’ve got strong labor unions and you’ve got commodity pricing. That is not a great recipe for success. I have an 800 (free call) number now that I call if I get the urge to buy an airline stock. I call at two in the morning and I say: ‘My name is Warren and I’m an aeroholic.’ And then they talk me down.

[st_content_ad]As recently as 2013, Buffett was still warning against the folly of putting money into the airline industry. “Investors have poured their money into airlines and airline manufacturers for 100 years with terrible results. It’s been a death trap for investors.”

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As of a year ago, however, Buffett’s Berkshire Hathaway holding company had purchased 45.5 million shares of American, 60 million shares of Delta, 43.2 million shares of Southwest, and almost 29 million shares of United Continental.

Accounting for Buffett’s pivot from seller to buyer is easy: consolidation. Today, following years of bankruptcies and mergers, 80 percent of the country’s domestic air traffic is controlled by just four airlines: American, Delta, Southwest, United. The balance of pricing power has shifted from the consumer to the airlines. And because the industry has become an oligopoly, the outlook is for continued profitability for years to come.

From Investor to Owner?

But investing in an airline and owning and airline are two different things. For Buffett, outright ownership would be a pivot of a different magnitude. And yet according to CNBC, just last month he allowed that “I wouldn’t rule out owning an entire airline.”

Which airline might that be? A Wall Street analyst quoted in the CNBC article dubs Southwest “the most logical candidate,” based on Buffet’s established record of buying companies with solid cash flows, sustainable competitive advantages, and strong management teams. Delta was mentioned as a possible second choice.

In its latest annual letter, Berkshire Hathaway already had accumulated more than $3 billion in Southwest stock. And in the same report, Buffett expressed frustration that Berkshire was sitting on $116 billion in cash and short-term Treasury bills. “This extraordinary liquidity earns only a pittance and is far beyond the level Charlie (Buffett’s partner) and I wish Berkshire to have. Our smiles will broaden when we have redeployed Berkshire’s excess funds into more productive assets.”

Southwest could just be that “more productive asset.”

More from SmarterTravel:

After 20 years working in the travel industry, and 15 years writing about it, Tim Winship knows a thing or two about travel. Follow him on Twitter @twinship.

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Booking Strategy Miscellany

Auf Wiedersehen: Air Berlin Files for Bankruptcy

German low-cost carrier Air Berlin filed for bankruptcy earlier this week, after one of it’s largest investors, Etihad Airlines, declined to finance a business-saving bailout.

Air Berlin carries more than two million passengers per year, but struggled amidst intense competition from rival carriers in the Europe market. The airline has European hubs in the eponymous German capital, as well as Dusseldorf.

For travelers booked on Air Berlin, nothing will change in the short term. The German government gave the airline a temporary loan, which allows the airline to be sold or restructured over the next three months. According to ABC News, Germany usually forces airlines to ground planes following a bankruptcy filing, but Chancellor Angela Merkel feared doing so would strand travelers already on vacation. Lufthansa may look to purchase part or all of the carrier.

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It’s too early to say what will happen to Air Berlin’s routes between the U.S. and Europe. Travel Weekly reports that if Lufthansa does acquire Air Berlin in some capacity, it could choose to maintain some routes and operate them through its own low-cost carrier, Eurowings. Air Berlin only flies direct to Dusseldorf and Berlin from the U.S., but offers connecting flights to other European destinations. Eurowings currently connects in Cologne from a handful of U.S. cities. It could also scrap the routes and deploy Air Berlin’s aircraft elsewhere. Either way, the Air Berlin brand will likely cease.

On a larger scale, a bankruptcy like this is significant. Air Berlin is popular—it’s the second largest carrier in Germany, behind Lufthansa, and the sixth largest in Europe. I personally know many people who flew the airline and either enjoyed it, or at least got a good deal on airfare. It seems to have had solid financial backing until now: On paper, it probably should have been successful. But, the low-cost space in Europe is more crowded than ever, with mainstays Ryanair and EasyJet fending off newcomers such as WOW, and Norwegian, among others.

All this competition is ultimately good for travelers. These days, there are many affordable, accommodating options for transatlantic travel. But, Air Berlin’s fate highlights the challenge of achieving and maintaining profitability, and uncertainly that is inherent in such a competitive market.

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Booking Strategy Budget Travel Travel Trends

Why Warren Buffett Loves Airlines, and You Shouldn’t

When legendary investor Warren Buffett began investing in airline stocks last year, it was big news in the investing community. Theretofore Buffett had been a staunch critic of the industry’s underlying economics, and regularly unleashed scathing takedowns of airline investments. Like this, from 2002:

(T)he airline business has been extraordinary. It has eaten up capital over the past century like almost no other business because people seem to keep coming back to it and putting fresh money in. You’ve got huge fixed costs, you’ve got strong labor unions and you’ve got commodity pricing. That is not a great recipe for success. I have an 800 (free call) number now that I call if I get the urge to buy an airline stock. I call at two in the morning and I say: ‘My name is Warren and I’m an aeroholic.’ And then they talk me down.

And this, from 2013:

Investors have poured their money into airlines and airline manufacturers for 100 years with terrible results. It’s been a death trap for investors.

A death trap no more, apparently, given the significant airline stakes his holding company, Berkshire Hathaway, began accumulating last year. And according to an Associated Press analysis of Berkshire’s latest SEC filings, the company’s buying binge continues. The latest Berkshire airline holdings: 45.5 million shares of American, 60 million shares of Delta, 43.2 million shares of Southwest, and almost 29 million shares of United Continental.

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What accounts for Buffett’s pivot is bad news for travel consumers. In a word: consolidation.

When Buffett invested $358 million in USAir, in 1989, the airline industry was highly competitive. There were no fewer than 10 U.S. airlines referred to as “major carriers,” the Big 10 as they were known. Profits were elusive and hard-won. The consumer was king. And Buffett’s investment was nearly lost when the airline veered close to bankruptcy.

Today, following years of bankruptcies and mergers, 80 percent of the country’s domestic air traffic is controlled by just four airlines: American, Delta, Southwest, United. The balance of pricing power has shifted from the consumer to the airlines.

For 2016, the U.S. airlines are projected to have racked up profits totaling $20.3 billion. And because the industry has become an oligopoly, the outlook is for continued profitability for years to come.

That’s well and good for the airlines, and for Buffett, and for investors in Berkshire Hathaway and the airlines themselves. But it’s bad news for travel consumers, who have little choice but to pay whatever the airlines deign to charge.

The often repeated claim of the airlines and their boosters and lobbyists, that inflation-adjusted airfares have declined, is a cynical suppression of the full truth, which is that consumers would be paying even less if the industry was still dominated by the Big 10 instead of the Big 4.

There’s plenty to be learned from Buffett’s pivot to the airlines, not least this: If you’re looking for a deal, buy the airline’s stock, not its tickets.

Reader Reality Check

Are you a buyer or seller of airline stocks?

More from SmarterTravel:

After 20 years working in the travel industry, and 15 years writing about it, Tim Winship knows a thing or two about travel. Follow him on Twitter @twinship.

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Categories
Airport Historical Travel

Iconic TWA Terminal to Get Second Life as Airport Hotel

If you flew TWA to or from New York before the airline declared bankruptcy for the third and final time, in 2001, your travel experience was elevated by a walk through one of the world’s most enduring architectural spaces.

A masterpiece of midcentury modern design, recognized as a classic by the National Register of Historic Places, the swoopily organic TWA Flight Center served as the airline’s transatlantic hub from 1962, when JFK was still known as Idlewild Airport. Its Finnish architect, Eero Saarinen, also designed the St. Louis Gateway arch and the main terminal at Washington Dulles airport.

In 2018, the building will get a second lease on life, as the 505-room TWA Hotel.

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Developed by New York-based MCR Development, plans call for the addition of two new six-story hotel towers and a 10,000-square-foot observation deck, set back behind the original terminal building, which will serve as the hotel’s lobby. There will also be a new connector to the terminal of JetBlue, which has a 5 percent stake in the project.

Although repurposed, most of the structure’s original interior and exterior features will be retained, giving hotel guests a glimpse of the best of what many consider to be the Golden Age of air travel.

Sometimes, a step back is a step forward.

Reader Reality Check

Will you book a stay at the TWA Hotel?

More from SmarterTravel:

After 20 years working in the travel industry, and 15 years writing about it, Tim Winship knows a thing or two about travel. Follow him on Twitter @twinship.

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Booking Strategy Budget Travel Travel Trends

Warren Buffett Is Buying Airline Stocks. Why That’s Bad News for Travelers

Warren Buffet is famous for being one of the world’s savviest investors, earning billions for himself, and plenty for his stockholders as well. As chief of the Berkshire Hathaway conglomerate, he’s been accorded the honorary title of the Oracle of Omaha.

He is also famous in investing circles for his decades-long aversion to airline stocks, following his ill-timed investment in USAir, in 1989, which underperformed his return-on-investment expectations. He’s been a fierce critic of the industry ever since, regularly fulminating against airline investments, as he did in this 2002 interview with The Telegraph:

(T)he airline business has been extraordinary. It has eaten up capital over the past century like almost no other business because people seem to keep coming back to it and putting fresh money in. You’ve got huge fixed costs, you’ve got strong labor unions and you’ve got commodity pricing. That is not a great recipe for success. I have an 800 (free call) number now that I call if I get the urge to buy an airline stock. I call at two in the morning and I say: ‘My name is Warren and I’m an aeroholic.’ And then they talk me down.

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As recently as 2013, Buffett was still warning against the folly of putting money into the airline industry. “Investors have poured their money into airlines and airline manufacturers for 100 years with terrible results. It’s been a death trap for investors.”

And yet, this week Buffett’s Berkshire Hathaway disclosed in its quarterly regulatory statement that it has taken significant positions in three U.S. airlines: an $800 million investment in American, $249 million in Delta, and $238 in United.

What happened to turn Buffett from a seller into a buyer? In a word: consolidation.

When Buffett invested $358 million in USAir, the airline industry was highly competitive. There were no fewer than 10 U.S. airlines referred to as “major carriers,” the Big 10 as they were known. Profits were elusive and hard-won. The consumer was king.

Today, following years of bankruptcies and mergers, 80 percent of the country’s domestic air traffic is controlled by just four airlines: American, Delta, Southwest, United. The balance of pricing power has shifted from the consumer to the airlines.

In 2015, the U.S. airlines racked up profits totaling $25.6 billion. And because the industry has become an oligopoly, the outlook is for continued profitability for years to come.

That’s well and good for the airlines, and for Buffett, and for investors in Berkshire Hathaway and the airlines themselves. But it’s bad news for travel consumers, who have little choice but to pay whatever the airlines deign to charge.

The often repeated claim of the airlines and their boosters and lobbyists, that inflation-adjusted airfares have declined, is a cynical suppression of the full truth, which is that consumers would be paying even less if the industry was still dominated by the Big 10 instead of the Big 4.

There’s plenty to be learned from Buffett’s pivot to the airlines, not least this: If you’re looking for a deal, buy the airline’s stock, not its tickets.

More from SmarterTravel:

After 20 years working in the travel industry, and 15 years writing about it, Tim Winship knows a thing or two about travel. Follow him on Twitter @twinship.

[st_newsletter]

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Booking Strategy Luxury Travel Travel Trends

Will Trump Hotels Survive Donald Trump the Candidate?

There’s an intriguing theory, fully articulated by the liberal filmmaker Michael Moore, circulating on the Internet that Donald Trump has no real interest in winning the race for President. Rather, the theory goes, Trump’s true goal is to enhance his personal brand, in the process driving more business to his current portfolio of enterprises and setting the stage for the creation of a Trump media empire.

Regardless of how you feel about the theory, or about Trump himself, the idea raises the question of whether Trump’s antics are a positive or a negative for his hotels.

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Clearly, Trump has his detractors. Equally clearly, he has his supporters. But gauging the effect of his candidacy on his business is not as easy as predicting his share of the popular vote, which will be confirmed on November 8. No doubt some Democrats will spurn Trump at the voting booth but book a room in his hotel out of curiosity. Visitors from overseas may be more motivated by the novelty factor than by political considerations. His notoriety is both a force of attraction and repulsion, and the net effect is far from clear.

The Trump Organization, which oversees his 15-hotel network, doesn’t disclose occupancy rates, so it’s hard to get a fix on the company’s recent financial performance.

But Foursquare, the “location intelligence company,” has determined that foot traffic to Trump hotels was down 19 percent in September 2016 versus 2014, when Trump’s name wasn’t part of the country’s political conversation. That decline follows decreases of 7.1 percent in August, 14 percent in July, and 17 percent in June.

Hipmunk, the travel-booking site, reports even steeper declines in Trump Hotel business. For the first half of 2016, bookings at Trump properties made through Hipmunk were off a hefty 58 percent over the same period last year.

Another sign that a Trump association may be a negative: When Trump Hotels announced its new “lifestyle” hotel brand in September, it was notable for its lack of a visible Trump connection. It will be called Scion, and the news release quoted three company executives, but not Donald.

So far, then, all signs point to Trump’s candidacy’s having a negative effect on his hotel business. But Trump, who has bounced back from all manner of bankruptcies and lawsuits, may be playing the long game here, betting that any losses in the short term will be more than offset by gains when his gaffes and insults have been forgotten.

Only time will tell whether Donald Trump’s brand, and Trump Hotels’ fortunes, can be resurrected.

Reader Reality Check

Are you a buyer or seller of Trump Hotels?

More from SmarterTravel:

After 20 years working in the travel industry, and 15 years writing about it, Tim Winship knows a thing or two about travel. Follow him on Twitter @twinship.

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Money Passenger Rights Travel Trends

How the Government Failed Consumers: The Sad Story of Airline Consolidation

If you closely followed the debate leading up to the American-US Airways merger, you’ll recall a period during which it seemed a safe bet that the Department of Justice would nix the tie-up on antitrust grounds. DOJ officials signaled that, after signing off on mergers between United and Continental, Delta and Northwest, and Southwest and AirTran, further consolidation was likely to impede competition and give the airlines outsize pricing power. And it was their duty to forestall just such an outcome.

And yet, in the end, the merger was approved, and today roughly 80 percent of the country’s commercial flights are controlled by just four carriers.

As I’m sure were many other industry-watchers, I was taken aback by the reversal and left wondering what had happened behind closed doors to tip support in the merger’s favor.

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An in-depth article published this week by ProPublica, the Pulitzer Prize-winning investigative journalism organization, sheds plenty of harsh light on an approval process that was anything but fair and transparent.

The article begins by confirming that the DOJ’s suit to derail the merger amounted to an admission by the Department that it had been too lenient in its previous merger approvals, and that consolidation had gone too far. But the Department’s top administrators and lawyers were convinced they had a strong case against the American-US Airways merger, and that they’d succeed in squashing it.

What they were unaware of, however, was the industry-funded effort to undermine the DOJ’s efforts, deploying de facto lobbyists to make the airlines’ case to high-ranking officials in both the White House and at DOJ, which the ProPublica piece describes in considerable detail.

As we all know, those lobbying efforts were successful, and the DOJ withdrew its lawsuit, allowing the merger to proceed with only token concessions.

For anyone who puts consumer interests above those of big business, the story is a depressing one, not just for the end result but for the failure of the process itself, which was supposed to protect consumers from corporations’ oligarchic tendencies.

When a consumer-protection agency’s best instincts can be subverted by money and power, it’s no wonder that cries of “The system is rigged!” have been so loud and persistent, or that they resonate with so many.

Reader Reality Check

While not surprised, I am outraged. You?

More from SmarterTravel:

After 20 years working in the travel industry, and 15 years writing about it, Tim Winship knows a thing or two about travel. Follow him on Twitter @twinship.

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Booking Strategy In-Flight Experience Travel Trends

One Day, 2 New Airline Presidents, 1 Mystery

Yesterday, two of the world’s largest airlines got new presidents. What’s less clear is how, and why.

First up, United:

United Continental Holdings, Inc. (UAL) today announced that Scott Kirby has been named president of United Airlines. In this newly created role, Kirby will assume responsibility for United’s operations, marketing, sales, alliances, network planning and revenue management. Kirby’s appointment is effective immediately and he will report to Oscar Munoz, United’s CEO. Kirby joins United from American Airlines, where he held the title of president since the merger of American and US Airways in 2013.

So, United poached a top executive from arch-rival American. An apparent coup for United’s new CEO, Oscar Munoz, who has made bolstering the ranks of his airline’s management team a priority.

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American, in announcing Kirby’s successor, Robert Isom, put a very different spin on Kirby’s departure:

Today’s management changes are the result of the Company’s Board of Directors’ ongoing succession planning process. As part of that process, and subsequent conversations regarding career expectations and the marketability of its executives, the Company concluded it would not be able to retain its existing executive team in their current roles for an extended period. As a result, the Board chose to act proactively to establish a team and structure that will best serve American for the longer-term future.

The implication is that Kirby’s move was less a matter of his choice to join United than it was American’s decision to oust him.

Whichever of the competing narratives is true, American and United today have new presidents, Isom at American and Kirby at United. Of the two moves, Kirby’s to United is the more impactful. He is both capable and a company outsider, giving him the potential to be a real difference-maker at an airline that sorely needs to improve in just about every respect.

Isom, on the other hand, has been American’s COO since 2013 and isn’t likely to make any significant changes to the airline’s overall direction as its new president.

Advantage, United.

Reader Reality Check

What do you expect to see at American or United as a result of the personnel changes?

More from SmarterTravel:

After 20 years working in the travel industry, and 15 years writing about it, Tim Winship knows a thing or two about travel. Follow him on Twitter @twinship.

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Booking Strategy

Everything You Need to Know About Travel Insurance

All insurance is about minimizing risk, and as travelers, you face three big-dollar risks that travel insurance can cover:

  • Trip cancellation and trip interruption insurance (TCI) covers the financial risks of (1) losing some or all of the value of prepayments and deposits if you have to cancel a trip due to sickness, accident, or a variety of other reasons, and (2) the extra costs of interrupting a trip and returning home early for those reasons. It generally applies both if something happens to you and if something happens to a traveling companion or a close relative who remains at home.
  • Medical travel insurance includes coverage for doctor payments, hospitalization, and emergency transport to a medical facility if you suffer an accident or illness while traveling.
  • Rental car collision insurance covers the cost of paying the rental company for damage to a rented car while it’s in your custody.

Other travel risks, although annoying, are generally trivial compared with those. And although many travel insurance policies cover them, you shouldn’t pay a lot extra to buy coverage.

Although causes and payments for most forms of insurance are fairly obvious, the fine print of travel insurance contains numerous gotchas that can cause a lot of problems. Insurance companies pay experts to figure out ways to deny coverage, so if you don’t address the gotchas while planning a trip, coverage you thought you purchased may evaporate.

TCI is ‘Named Peril’ Insurance

In insurance jargon, “named peril” simply means that if a risk is not specifically mentioned in an insurance policy’s fine print (usually as a “covered reason”), it isn’t covered. Terrorism? With many policies, you can cancel or return early only if an overt “terrorist act” occurs in your destination, not if there’s unrest in the general area. If your tour operator defaults, you’re covered if the policy includes “default” as a covered reason. But when a policy says “bankruptcy,” you probably aren’t covered if the operator just folds without ever formally filing for bankruptcy. And most work-related cancellations are not included.

The best way to avoid running into a problem with uncertainties about covered reasons is to buy “cancel for any reason” TCI. It’s usually more expensive than conventional insurance, it may not pay in full, and the option may expire a few days before scheduled departure, but it means that you, not an insurance company bean-counter, get to decide whether to cancel a trip.

TCI is useful only if you have deposits and prepayments that are subject to forfeiture or large penalties if you have to cancel. If your arrangements are refundable, forget TCI.

RELATED: Top 6 Reasons Travel Insurance Claims are Denied (And What You Can Do About It)

Duplicate Medical Coverage

Medical coverage purchased as travel insurance may be redundant with coverage you already have. Many year-round health insurance programs include doctor and hospital coverage while traveling, and many HMOs will reimburse medical expenses you incur in places where your HMO services are not available.

Although Medicare does not nominally provide coverage outside the U.S., supplement plans C, D, F, G, M, and N include a foreign travel benefit good for 80 percent of “emergency care” expenses, subject to a deductible of $250 per year and a lifetime cap of $50,000. This benefit is probably insufficient for many traveling seniors.

Because most travel medical insurance is secondary, it pays only what you can’t first recover from your regular health program. So if you face an expense while traveling, typically you must pay it up front and make a claim for reimbursement against your regular program when you get home. If you want to avoid having to make a big payment, several companies sell primary medical coverage: To settle a bill, just notify the insurance carrier and it will take care of the payment.

One risk that your regular health insurance may not cover adequately is emergency transport to a hospital, and even many low-end medical insurance policies cover transport only to the nearest adequate medical facility. A few programs guarantee emergency transport back to your home area even if it requires a private jet.

Pre-Existing Conditions

Overall, the biggest problem with the medical component of travel insurance is handling pre-existing medical conditions. That’s a big bone of contention in health insurance programs generally, not just travel, but it certainly applies to travel. If you so much as see a doctor—or maybe even just take an aspirin—some policies will call that treatment for a pre-existing condition and exclude payment. And the meter drops for pre-existing conditions as much as six months prior to departure.

A majority of policies waive the exclusion for pre-existing conditions, provided you insure to the full value of your prepayments and buy the insurance within a specified period of time after you make your first payment or deposit, typically one to two weeks though sometimes longer on a few policies.

But even a waiver doesn’t get you off the hook completely. Most policies do not cover even a “covered reason” that is “foreseeable” at the time you buy the insurance.

RELATED: Will Travel Insurance Cover Pre-Existing Conditions?

Duplicate Collision Coverage

A rented car can easily be worth $40,000 or even more, and whenever you rent a car, you need to have insurance for any damage to that car while it’s in your possession. You can throw money at the risk by buying the rental company’s damage and loss “waiver,” but at up to $30 a day, it can almost double the cost of a rental. Fortunately, you have less costly options:

  • Your own auto collision coverage may include rental cars, at least within the U.S.
  • By now, probably most credit cards include no-cost collision coverage, but it’s almost always secondary, meaning it pays only what you can’t first claim on your regular auto policy. Overseas, however, credit-card coverage becomes de facto primary.
  • You can buy specialized primary collision coverage from a third-party source, either as a component of a travel insurance bundle or as a separate transaction, for as little as $8 a day. If you don’t want to risk a claim against your regular policy, third-party collision insurance is a good idea.

But with anything other than the rental company’s overpriced waiver, you have to pay for the expected damage up front and afterward claim reimbursement. If you prefer to just walk away from the problem, your only option is the rental company’s overpriced waiver.

Tough on Seniors

Most travel insurance, either TCI or medical, is priced based on your age. Although young and middle aged travelers, say in their 40s, can usually buy a low-end policy for about 5 percent of total trip cost, seniors over 75 pay about double and seniors over 85 pay triple or more.

Those rates may well be justified in terms of actuarial risk. But it gives older seniors a tough choice.

RELATED: Senior Travel: Six Cards You Can’t Travel Without

‘Waivers’ Not Insurance

Some cruise lines and tour operators routinely offer “waivers” of cancellation penalties in the event of some emergencies. Typically, these waivers include roughly the same medical and accident covered reasons as conventional travel insurance, and they often cost less than conventional insurance. But these waivers are not insurance, and they usually provide weaker coverage:

  • Coverage can expire a day or two before departure, compared with the usual right-up-to-departure coverage of regular insurance.
  • Waivers typically do not include a trip-interruption component.
  • The payoff may be in terms of vouchers for future cruises or tours rather than cash.
  • Waivers may not provide relief from the exclusion of pre-existing conditions.

Unless waivers are much less expensive, regular insurance is usually a better choice than a waiver. But waivers are often not age-rated, so they may be the best option for seniors.

Follow The Rules—Perfectly

If you’re relying on TCI or medical insurance to arrange hospitalization or emergency return home, you have to follow the rules about contacting an insurance company representative to make arrangements. If you “freelance” your return home by arranging your own airline flight, for example, or go to an unauthorized hospital, the insurance company can deny your claim.

Does following the rules involve more hassle? Undoubtedly. But that’s the only way you can be sure to have your bills covered.

RELATED: 12 Glitches in Travel Insurance

The Small Stuff Doesn’t Matter

“Gold plated” policies include a small payout for relatively trivial unexpected costs such as lost or delayed baggage, expenses during a delay, and so forth. Having insurance coverage for these low-dollar risks can be nice, but it isn’t worth paying a lot extra. Moreover, many credit cards include a handful of these relatively trivial benefits—be sure to check your card.

‘Easy’ May Not Be ‘Best’

TCI is almost always sold as part of a “bundle” that includes medical coverage and some small stuff. Medical, on the other hand, is available separately by the trip; frequent travelers can buy it by the year.

These days, whether you buy online or through a retail travel agency, before you’ve finished the buying process, you’ll probably see an offer to buy insurance, typically a bundle that includes at least TCI and medical. Even though just clicking that “accept” button is easy, it may not be your best choice. Instead, you’re likely to find some combination of better coverage or a lower price by checking with one or more of the agencies that specialize in travel insurance. All have menu-driven websites that let you enter exactly what insurance you need and then display policies and prices from all the major agencies that offer what you want. Among them:

For primary collision coverage for a rental car check Insuremyrentalcar.com and
Protect Your Bubble.

RELATED: 8 Things You Need to Know About Travel Insurance

It’s About Money, Not the Trip

Life insurance doesn’t prevent you from dying, and travel insurance doesn’t prevent travel problems. Insurance is about money, not the experience. Yes, this may be an obvious “well, duh” observation, but you’d be surprised about how many travelers seem to forget this basic fact. Adequate insurance will make sure you don’t lose prepayments and deposits when something goes seriously wrong and that unexpected medical and transport bills will be paid.

But insurance will not pay for or even arrange substitute flights, tours, cruises, or accommodations that you might need to rescue your vacation. Even with refunds, a serious problem may well cost you a lot of money to fix. And that risk is on you, not an insurance policy.

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(Photo: Shutterstock/Thinkstock.)

US Airways’ Final Flight

As did many legacy U.S. airlines, US Airways began life as a humble mail-carrier.

Seventy-four years later, after absorbing Lake Central Airlines, Mohawk Airlines, Piedmont, and Pacific Southwest Airlines, and being acquired by America West, US Airways merged with American Airlines. And on Saturday, October 17, when flight US1939 (the year of the airline’s founding) lands in Philadelphia, US Airways will cease to exist altogether.

During the carrier’s later years, it was in and out of bankruptcy twice, and its customer-satisfaction and operational-performance ratings were routinely well below industry averages. US Airways’ passing won’t be mourned by many flyers.

But the airline played a major role in the history and development of U.S. aviation, which shouldn’t go unrecognized. And I have a few lasting memories of US Airways myself, from my days as a marketing manager with All Nippon Airways in the 1990s.

  • On March 3, 2003, I and several ANA colleagues enjoyed a splendid view of the Pentagon, on a US Airways flight from Washington to Pittsburgh. When we arrived at our hotel, to meet with the US Airways Dividend Miles marketing team, the check-in clerk informed us that U.S. troops had invaded Iraq, likely just as we had been admiring the Pentagon. Over dinner in the hotel restaurant, all eyes were on CNN’s coverage of the war; there was little discussion of reciprocal frequent-flyer program tie-ups.
  • Visiting the Dividend Miles customer-service center in Winston-Salem, I was struck by the undisguised loyalty of many of the agents to their previous employer, Piedmont, which US Airways had acquired several years earlier. T-shirts and memorabilia and under-the-breath mutterings all proclaimed, “US Air may own us, but we’ll always be Piedmont.”
  • During a trip to Tokyo to sign a joint marketing agreement, the ANA headquarters group treated the US Airways delegation to a very expensive kaiseki-style lunch in a traditional tatami-room restaurant. I had to explain to one of the US Airways representatives that no, this was not how Japanese workers normally lunched. (She was a sweet North Carolina gal, who hadn’t seen much of the world.)

Sentimentality aside, the big story here is less US Airways than it is the industry’s consolidation — the disappearance of TWA, Pan Am, Continental, Northwest, AirTran, PSA, Piedmont, and others, and the transformation of the Big Ten major airlines into the Big Four. Those four — American, Delta, Southwest, United — now control around 85 percent of the U.S. domestic market.

The Big Four, in seeking regulatory approval for the mergers and acquisitions that have given them outsized pricing power, have argued that industry consolidation would be a benefit not just to their shareholders, but to the traveling public as well.

If you believe that, I have a first-class round-the-world US Airways ticket I’d be happy to sell you.

Reader Reality Check

What will you miss about US Airways?

This article originally appeared on FrequentFlier.com.

Categories
Booking Strategy Budget Travel Cities

5 Things You Need to Know Before Traveling to Greece

A spokesman for Finance Minister Yanis Varoufakis confirmed to CNN that Greece defaulted to the International Monetary Fund, and that Greece’s bailout agreement with Europe has expired. With Greek banks remaining closed and the country’s financial future uncertain, the country’s tourism industry is already suffering. If you’re in Greece or have plans to go, here’s what you need to know.

Bring Lots of Cash

Cash is king in Greece right now. The U.S. State Department warned travelers in a security message Sunday that there could be disruption not just to ATM services but to credit-card processing. Currently, ATMs withdrawal limits are capped at 60 Euros. Carrying Euros is the safest bet, but many businesses are accepting U.S. Dollars as well. Travelers report that some hotels are asking for cash payments in advance this week.

[st_related]Cash Strategies for Europe[/st_related]

Avoid Protest Areas

For security reasons, it’s a good idea to avoid popular demonstration locations such as Syntagma Square in Athens, which is in front of the Old Royal Palace where Greek Parliament is located. “Even demonstrations intended to be peaceful can turn confrontational and possibly escalate into violence,” the State Department message says. Check the U.S. Embassy website to learn about upcoming demonstrations.
Get Travel Insurance

If you aren’t already on vacation in Greece, it’s a good idea to invest in travel insurance before your trip. There are a lot of types of insurance out there, but Trip Cancellation Insurance is probably the most important one to consider if you haven’t booked yet—that way, if things escalate further and you decide you’re not comfortable traveling, you can get your money back. Make sure to read our full rundown on the types of travelers insurance available.

[st_related]Destinations to Watch in 2015[/st_related]

Consider a Package Deal

The advantage of a package deal is that most of your costs—often including airfare, hotel stays, and even meals—are paid upfront before you even leave your home country, so there’s less of a chance that your hotel or activity guide will ask for your precious out-of-pocket cash.

Sync Up with Your Embassy

It’s a good idea not only to know the location of your embassy, but to enroll with your embassy, if possible, so that they know where you are in the event of an emergency. The U.S. Department of State offers the Smart Traveler Enrollment Program for this purpose.

—Kelsey Blodget

This article was originally published by Oyster.com under the headline 5 Things You Need to Know Before Traveling to Greece. It is reprinted here with permission.

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Delta CEO Plays the Terrorism Card

It’s not front-page news, but the three largest U.S. airlines are currently waging an intense P.R. campaign to enlist government support for restrictions on the flight rights of three Gulf carriers, Emirates, Ethiad, and Qatar Air.

The U.S. airlines argue that the three airlines are subsidized by the United Arab Emirates countries, and therefore compete unfairly against airlines that operate without such subsidies. Because such government support violates the terms of the Open Skies agreement, the offending airlines should have their route authorities rescinded or scaled back.

This week, Delta CEO Richard Anderson appeared on CNN to make the case for the U.S. majors (which has little support outside the core group). In his attempt to vilify the three Gulf airlines, Anderson alluded to “documented evidence of tens of billions of dollars in direct government subsidies” and called on the U.S. government to “level the playing field.”

That’s a substantive allegation, which can be investigated and either confirmed or refuted. But Anderson went further. Much further.

The overreach occurred when the interviewer pressed Anderson on the Gulf carriers’ contention that U.S. carriers have themselves had their hands in the “bailout trough,” through government support of their bankruptcies and restructurings. His response:

It’s a great irony to have the UAE from the Arabian peninsula talk about that given the fact that our industry was really shocked by the terrorism of 9/11 which came from terrorists from the Arabian peninsula that caused us to go through a massive restructuring.

His linking of the Gulf airlines to the terrorists who perpetrated 9/11, and his pointed repetition of “Arabian peninsula,” were transparently designed to conjure fear and prejudice toward countries with which the U.S. has a fraught relationship.

Qatar Airways CEO Akbar Al Baker minced no words in responding to Anderson: “He should be ashamed to bring up the issue of terrorism in order to hide his inefficiency in running an airline. He should compete with us instead of cry wolf for his shortcomings.”

This mini-drama is playing out against the backdrop of airlines from the Gulf states capturing an increasing share of the world’s commercial air passengers, and winning praise from flyers for their high service standards and modern equipment. In other words, the U.S. Big Three have good reason to be nervous about competition.

Rather than stoking paranoia that his competitors are somehow associated with the forces of darkness, Anderson would be well served by focusing his efforts on making Delta a more competitive airline.

Reader Reality Check

What should Anderson be doing to make Delta a better airline?

This article originally appeared on FrequentFlier.com.

Categories
Frequent Flyer

Struggling Qantas Will Shrink to Survive

Qantas, the Flying ‘Roo, has hit a rough patch. So rough, in fact, that it will have to all but reinvent itself to keep flying.

The most recent sign of trouble: a $208 loss for the first half of the airline’s fiscal year. According to Qantas CEO Alan Joyce, as quoted in Air Transport World: “We are facing some of the toughest conditions Qantas has ever seen.”

Tough conditions call for tough measures, and the airline this week outlined its plans to remain solvent and aloft. The highlights:

  • Reduce costs for A$2 billion
  • Eliminate 5,000 jobs
  • More than 50 aircraft to be sold or deferred
  • Capital expenditures cut by A$1 billion

Although not mentioned in the official plan, there have also been persistent rumors that the airline is looking to at least partially sell off its Qantas Frequent Flyer program, a prospect that many frequent flyers find alarming.

Indeed, as a general rule, companies forced to shrink to survive find their service levels eroding, as significant cost cuts inevitably affect customer-facing operations.

Seeking to address such concerns, Joyce voiced his commitment to maintaining the airline’s customer focus: “Despite the tough decisions we have to make, we will keep delivering outstanding service for our customers.”

Happy talk and good intentions are well and good, but they won’t be enough to keep the airlines’ customers onboard.

Reader Reality Check

Predictions?

This article originally appeared on FrequentFlier.com.