by Lufthansa Flyer | Dec 22, 2011 | Uncategorized |
In the past several weeks, there has been a spirited debate (read criticism) regarding the implementation of an unpopular new law that will tax airlines who operate to and from Europe. The tax will be in the form of permits that carriers will have to buy if they exceed their emission allowance as determined by the law. This law applies to all carriers, including cargo haulers such as FedEx and UPS.
Under the new European carbon tax scheme, it is forecast that fares on bookings between Europe and the US can go up as much as $50-$100 per round trip ticket. In many cases, that represents roughly a 10-20% hike on fares currently available on most US and European based carriers.
The law is set to go into effect on January 1, 2012 after the European Court of Justice rejected appeals and ruled the law as valid and constitutional. The intent of the law is to force carriers to operate more efficiently and to spur the development of more efficient fuels and aircraft. In my opinion, I think this law will have an opposite effect as it will dampen airline profitability and thus reduce funds available to purchase new and more efficient technology. With a fare hike of this magnitude, we can expect passenger demand to fall, which would in turn lead to airlines reducing capacity on routes to Europe.
Airlines for America, A US based airline industry group forecast that this tax alone could cost US carriers $3.1 billion over the next 8 years. The group also expects this cost to be almost fully passed on to the passenger since airlines are not in a position to absorb such a spike in operating costs themselves.
Here’s the funny part in all of this. NONE of the revenue collected by the EU as a result of this tax is required to go for environmental causes in Europe. In essence, it is a “general obligation” revenue that can be applied where ever the EU deems necessary.
If you haven’t been living in an Igloo in the middle of the Amazon lately, you see every day the tight rope Europe is walking to avoid economic armageddon. Does the EU really think that we believe that tax revenue will go help improve the environment and help fund research for more efficient technology?
I suspect the US based traveler is being manipulated into raising over $3 billion dollars to help Europe pay for its economic woes and negligence. If you are an American citizen, don’t worry, everyone else in the world is also being asked to chip in and help bail out Europe by being subjected to this tax. In another manipulative twist within the law, it states that this tax would not apply to carriers based in countries who adopt similar legislation. To me that sounds like a blatant attempt by the EU to influence policy in other countries which I don’t think will receive a favorable response by anyone.
By the way, if you were looking at booking travel to Europe, you may seriously want to consider booking your tickets before January 1 to avoid any potential exposure to higher fares based on the law going into effect.
Would love to hear what you think about all of this…….
by Lufthansa Flyer | Dec 22, 2011 | Uncategorized |
I thought I would take some time this evening to summarize what has seemed to have been a very busy month of contests, promos and sweepstakes being conducted by Airlines, Hotels and others.
I hope this consolidated index helps you keep track of these opportunities, some of which you can enter multiple times (you may want to bookmark this page for future reference):
AIRLINES:
LUFTHANSA:
100% Bonus Miles For Travel To Asia – Expires December 31, 2011
Business Class Fare Sale to Europe For Easter
UNITED/CONTINENTAL:
Earn 30 Miles per dollar spent at FTD.com
Check In And Share Your Location To Earn 50 Miles
AIR NEW ZEALAND:
Random Acts Of Travel Kindness Sweepstakes
FRONTIER:
Earn Double Elite Qualifying Miles for flights taken during December
US AIRWAYS:
US Air has partnered with FTD to credit you with 25 Dividend Miles for every $1.00 spent on FTD.com (terms/conditions apply!). You need to enter PROMO CODE 20550 as well as your Dividend Miles account number in order to receive the mileage credit. Visit the Promos webpage here.
AMERICAN AIRLINES: Thank Vinay!
Win 150,000 Miles On American Or Alaska Airlines
HOTELS:
HYATT:
Hyatt Gold Passport & TNT: Armchair Detective Mystery Sweepstakes
HILTON:
Win A Trip For Two To The 2012 Sundance Film Festival
MARRIOTT:
Win 1,000,000 Marriott Rewards Points
OTHERS:
AMAZON.COM
Enter to Win $1000 Gift Card
If there are any other great opportunities out there, PLEASE SHARE THEM by emailing me or posting it in a comment and I will add them to this post……
by Lufthansa Flyer | Dec 22, 2011 | Uncategorized |
Good Morning! As you wake up to Lufthansa’s Sale of BMI to IAG, here are some of the key points:
As reported by Bloomberg, it appears that IAG, parent of British Airways and Iberia has reached an agreement to purchase BMI from Lufthansa.
I was hoping that this would not be the case as I had stated in my previous post on the topic but it is what it is and I have to admit my prediction was wrong.
The deal gives IAG/British Airways an additional 56 Landing Spots at Heathrow which will allow it to expand it base and for all intensive purposes continue to block out any substantial Star Alliance presence in the UK.
What has not yet been disclosed (as of 3:30a EST) is the fate of Diamond Club, BMI’s Frequent Flyer Program. I suspect that we will hear in short order what the decision will be with Diamond Club. My opinion on this is that if you have Diamond Club miles, it may behoove you to spend them before they are potentially absorbed into IAG’s Avios Program.
IAG has indicated that it will do all it can to keep as many BMI employees as possible as it absorbs the carrier but has stated that job losses may result as part of the acquisition.
Of course, the deal is subject to regulatory approval, but IAG indicates that it has a very high degree of confidence that gaining the approval will not be difficult since other rivals have proportionately more slots at their respect hubs than IAG/British Airways would have at Heathrow. The deal is expected to close in the 1st Quarter of 2012.
The terms of the deal as reported in the Bloomberg article:
British Airways parent IAG agreed to buy Deutsche Lufthansa AG (LHA)’s BMI unit in the U.K. for 172.5 million pounds ($270.5 million), fending off a counterbid from Virgin Atlantic Airways Ltd.
Excerpt from Lufthansa’s Press Release:
Transaction highlights:
*Sale of bmi for a gross purchase price of GBP 172.5 million (approx. EUR 207 million), subject to certain reductions
*Net of total potential reductions, the net purchase price expected to be clearly negative; however, the transaction is expected to have amortized for Lufthansa after around one year
*As part of the agreement, a British holding company of Lufthansa, is to take on bmi’s defined benefit pension scheme
*Deal remains subject in particular to competition clearance
*bmi will be accounted for as “asset held for sale / discontinued operations” for Financial Year 2011
*Closing of the transaction is aimed for the first quarter of 2012
*Transaction offers sustainable future prospects for bmi
*Lufthansa aligns airline portfolio to strategic fit and benefits from stronger earnings position
Here’s the complete official Press Release from Lufthansa
I’ll have more on this developing story as more news comes out later today.
