Archive for May, 2010

Govt to hit airlines harder for bumping passengers (AP)

Monday, May 31st, 2010 | Finance News

DALLAS – Giving up your airline seat may become a little less painful.

Federal officials are expected to announce this week a plan to raise the maximum amount that airlines must pay passengers who get bumped off an oversold flight, currently at $400 or $800 depending on how long a trip is delayed.

Bumpings rose in three of the past four years and jumped 10 percent to 762,422 in 2009, the highest total since 2002. They soared 17 percent in this year's first quarter.

The potential inconvenience is greater now too. Airlines have cut back on flights and planes are more crowded, so bumped passengers could wait hours or even days to find alternate arrangements.

Passenger-rights groups have pushed the Transportation Department to raise the payout limits to $800 and $1,200 per traveler if the airline bumps you involuntarily. The agency has signaled that it plans some type of inflation adjustment in the limits, which were last raised in 2008. Officials declined to provide details.

The issue is overbooked flights. Airlines are allowed to sell more tickets than they have seats on the assumption that some passengers — usually those with refundable tickets — won't show up. What travelers' groups such as FlyersRights want is a limit on how many extra seats airlines can sell per flight. But industry insiders say that may be impractical because no-show rates vary by route, day and even hour.

When a flight is overbooked, airlines must first ask for volunteers before involuntarily bumping ticket holders. While volunteers can get travel vouchers, people forced off flights must be paid in cash or check. Critics say airlines often flout that rule. The Transportation Department recently fined Southwest Airlines $200,000 for that and other shortcomings in its bumping practices.

In the first three months of this year, American Eagle, the regional affiliate of American Airlines, was most likely to bump passengers involuntarily. US Airways, Continental, ExpressJet and Southwest were next. For several years, JetBlue has been the least likely to bump — it says it gives customers $1,000 if they're booted off a flight.

The government has been moving to give airline customers more protections. One new rule prohibits the airlines from keeping passengers on a plane on the tarmac more than three hours. This week, the agency will also unveil proposed requirements for more information about advertised fares and checked-bag fees, and for contingency plans when aircraft are stuck on the tarmac for long delays.

Last year one in every 763 passengers got bumped from a flight, according to government figures. That includes volunteers and those forced to give up their seat. The numbers show that more passengers are volunteering to give up their seats, a reversal of the trend a few years ago.

Passenger-rights advocates say bigger payments to people forced to give up their seats could in turn force airlines to give volunteers more generous offers. But that remains to be seen.

Kate Hanni, who organized FlyersRights, says without limits on how many extra seats airlines can sell, "they'll find more deceptive ways to grab people's money and not give it back."

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Apple: iPad sales top 2 million since launch (AP)

Monday, May 31st, 2010 | Finance News

CUPERTINO, Calif. – Apple Inc. said Monday that iPad sales have topped 2 million since its launch almost two months ago.

The Cupertino, Calif., company began selling the iPad on Friday in Asia and Europe. The iPad launched April 3 in the United States April 3.

The company does not publicly break out sales figures by region, according to Natalie Harrison, an Apple spokeswoman.

The company had previously said it sold 1 million iPads in the United States just 28 days after its launch. As a result of the strong demand at home, Apple had pushed back the start date of its international sales.

The iPad can be used to send e-mails, draw pictures and play games. It can also be used as an electronic reader. The basic model costs $499 in the United States, not including extras.

This past weekend, Apple began selling iPads in Australia, Canada, France, Germany, Italy, Japan, Spain, Switzerland and the United Kingdom.

The company said the device will be available in nine more countries in July and additional countries later this year.

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Spain presses for labor market reform deal (AP)

Monday, May 31st, 2010 | Finance News

MADRID – Spain's Socialist government warned Monday it will impose labor market reforms if unions and management fail to agree on changes needed for Spain to resurrect its economy — and reassure markets worried about the country's ability to show growth and pay off debt.

The labor market talks have taken on new urgency with Prime Minister Jose Luis Rodriguez Zapatero under pressure from the European Union, the International Monetary Fund and even President Barack Obama to take bold action and ward off a Greek-style debt crisis that would further hurt the euro.

Two ministers warned the government will give unions and management a few more days, then act decisively if needed. Hours later, another round of talks ended inconclusively.

Unions have said that if such a unilateral government decree goes against the interests of workers, they will call a general strike, adding to problems faced by the Socialist government, which last week won passage of a key austerity package by only one vote in Parliament.

Monday had been the deadline for a deal. Industry Minister Miguel Sebastian said the government will be flexible but wants an answer this week or "will have to act on its own."

"Rest assured, if those talks ultimately do not produce the results we all want, the government is going to implement labor market reforms over the very short term," Finance Minster Elena Salgado told a business forum.

Many economists criticize Spanish labor law as excessively rigid, discouraging employers from hiring, which is what Spain needs desperately now. In the first quarter of this year, Spain limped out of nearly two years of recession with a jobless rate of just over 20 percent, the highest in the 16-nation euro zone.

Most workers now are entitled to severance pay of 45 days per year if they are laid off — one of the highest levels in Europe and the main bone of contention in the talks between Spanish unions and the country's main business federation.

Businesses say that kind of expense makes them wary of hiring, and thus they often resort to temporary, fixed-term contracts that cost them nothing in severance pay.

Indeed, a full third of the Spanish work force has this kind of contracts — a proportion also very high by European standards_ and most of the people laid off in Spain during the recession had them. The government wants the current talks to limit such contracts so people have more job security and the labor market is not so volatile if the economy tanks.

The newspaper El Pais reported Monday that the government is preparing a decree that would lower severance pay to 33 days per year worked for people with full contracts, although it would not affect existing contracts. Sebastian, speaking in Brussels, declined to confirm this.

The paper said the two sides are nearing agreement on measures to fight a youth unemployment rate of a staggering 40 percent and allow businesses to have workers put in fewer hours during economic downturns, as a way to avoid layoffs.

But they are far apart on the severance pay issue and other rules about firing staff, El Pais said.

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