Business and financeGulliver

Are airlines' new "last class" fares just a bait-and-switch?

THIS week, United Airlines rolled out the change that no flyers were eagerly awaiting: the introduction of “basic economy” class. You might think that some budget-conscious travellers would welcome the arrival of the new no-frills designation, which offers the lowest fares but strips away flyers’ ability to select their seats, bring full-size carry-on bags onto the plane and earn elite qualifying miles. They might, but basic economy doesn’t actually bring lower fares than the ones already available.

Ben Schlappig was the first to note this on his popular “One Mile at a Time” blog. Mr Schlappig looked at fares on a Minneapolis-Denver route before and after the introduction of basic economy. (On February 22nd United began offering basic economy only between its seven American hubs and Minneapolis; other routes in the United States, Latin America, and the Caribbean will follow.) Prior to the rollout, he found that standard economy fares on this route started at $173. When the “new” fares became available, the basic economy seats began at…Continue reading

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After 70 years, AIG sells its ski resort

FOR most people, the only reason to associate skiing and insurance is in the context of accident cover. Few are aware that AIG, a large American insurer, has owned and operated Stowe, a famed ski resort in Vermont, for nearly 70 years. But on February 21st, it announced a $50m deal to sell it to Vail Resorts, owner of ten skiing spots in the American and Canadian Rockies. The insurer is, however, keeping most of the property in Spruce Peak, the ski village at the base of Stowe’s slopes, including rights to future development. After AIG had owned Stowe for so long, the news of the sale has come as a surprise.

Its involvement with the resort dates back to 1943, when Cornelius Starr, AIG’s chairman at the time, visited Stowe and got frustrated at having to queue for the only chairlift. He offered to help finance a second one. AIG took ownership in 1949, so Stowe had the distinction of having the same owner longer than any other ski resort in North America.

Owning and operating property assets is usual practice for AIG and many of its fellow insurers. Real estate can provide an important and diversifying source of investment income to…Continue reading

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