Tuesday, November 4

AAA & Partners Announce 'Best and Biggest' Vacation Bargains to Kick-Start Economy

AAA, North America's largest leisure travel agency network is partnering with domestic and international travel industry leaders to offer special savings on an unprecedented set of travel experiences, TravelMole reports.

The effort,which runs Nov. 8 - 22 is intended to boost the number of Americans traveling this fall and winter, and spur an increase in overall economic activity in the process.

"At AAA's request, many of the world's leading travel providers have come forward with outstanding, special promotional discounts, extras and upgrades to help get America moving again," said Amy Nicholas, managing director of Tour, Cruise and Product Development for AAA. "World-class cruise lines, tour operators, hoteliers, theme parks and other special destinations have agreed to work with AAA in bringing consumers the widest-possible menu of incredible travel opportunities over the next few months. We are positive new and experienced travelers will like what they see," she said.

An estimated $700 billion is spent on travel annually and the travel industry directly or indirectly employs 7.5 million Americans. It contributes hundreds of billions of dollars to global trade and enriches our collective understanding and appreciation of other people and places.

To access AAA's "Best and Biggest" travel promotion, consumers will be directed through a series of media and AAA club advertisements to: www.AAA.com/SavingsEvent. Savings are available to members and the non-members, but there are additional exclusive benefits for members.

The complete list of travel industry participants and their special offers will be available via the website Oct. 31. The promotional portion of AAA's "Best and Biggest" campaign begins with a virtual travel show on Nov. 12 which will guide consumers through the various experiences and elements that are available or on sale. Consumers will be invited to attend the virtual show via advertising on web banners, regional promotions, and postcard and email campaigns.

As North America's largest motoring and leisure travel organization, AAA provides more than 51 million members with travel, insurance, financial and automotive-related services. Since its founding in 1902, the not-for-profit, fully tax-paying AAA has been a leader and advocate for the safety and security of all travelers. AAA clubs can be visited on the Internet at www.AAA.com.

Airlines Set to Turn Profits

TravelMole reports that even though the troubled economy has dimmed the 2009 outlook for most sectors, airlines are poised to equal their most profitable year this decade, according to a veteran airline industry analyst.

FTN Midwest analyst Mike Derchin said he expects carriers to produce net income of $5 billion next year, equaling the 2007 level, assuming oil is at $80 a barrel, revenue per available seat mile grows at 8% to 9%, and domestic capacity is reduced by 8% to 9%.

With similar metrics currently in place, Derchin also expects the industry to report a small profit for the fourth quarter.

"Consolidation has begun, resulting in a sharp reduction in capacity and higher average fares," he wrote in a research report. "Managements are focusing on core operations, eliminating noncore flights and grounding inefficient fleets."

Ironically, the U.S. airline industry is in a strong position because it began to reduce capacity early this year in response to high oil prices. Capacity showed slight declines in the first three quarters, but in the fourth quarter, growth by the three principal low-fare carriers slowed to zero, resulting in an industry-wide decline of 9%. Now fuel prices are falling, as is demand, but reduced capacity means current booking load factors are generally flat.

Additional favorable trends include the merger between Delta(DAL Quote - Cramer on DAL - Stock Picks) and Northwest, which was approved by regulators last week. It "is expected to result in additional capacity removed in 2009," Derchin said.

The five remaining legacy carriers have formed alliances with foreign carriers, with antitrust immunity likely, enabling coordinated pricing and scheduling. And "numerous marginal carriers have gone into liquidation," further reducing capacity.

"There may be worst cases, but most airlines have done what needs to be done to get back to profitability," said US Airways CEO Doug Parker in a recent interview.

After posting net income of $2.5 billion in 2000, the industry lost $35 billion in the next five years, then made $3.1 billion in 2006 and $5 billion in 2007, according to the Air Transport Association. Through the first three quarters of 2008, airlines lost about $4.8 billion, the ATA said.

A recent report by Avondale Partners analyst Bob McAdoo says airlines still trade at the same prices as they did when oil cost $120 to $125 a barrel, even though it now sells for half that.

"Investors seem convinced that the recession will outweigh the positives from lesser capacity and $65 oil," McAdoo wrote. "Looking back, recessionary airline revenues have only dropped about 1.2%, even during the most severe economic downturn of the last couple of decades. Combining today's jet fuel costs with capacity cuts, even with an assumed recessionary revenue shortfall of 2.0%, still leaves the airlines with near record profits.

Source: TheStreet.com