A few days ago, I was asked to help someone put together a multi-stop itinerary from Portland, OR to Chicago to NYC to Portland.  A quick check of travel sites revealed a pretty good price of $525 all in from Delta.  The problem was multiple stops at Delta hubs in Minneapolis, Detroit and/or Atlanta.  Each segment had a stop and each stop was a not too short layover, too.

So I started looking for alternatives.  Now, this person wanted to fly into Newark’s airport for the NYC part for convenience and that makes alternatives a bit more difficult.  But they were traveling into NYC on a Saturday night or Sunday morning and that makes La Guardia go from “ugh” to possible.

After a few minutes, I found flights on Southwest Airlines for PDX to Chicago Midway (MDW) that were more than reasonable.  Then I found very reasonable flights from MDW to NYC (La Guardia) on Southwest too.  Finally, Continental offered a nice one-stop to Portland via Seattle for an extremely reasonable price.  All in, those tickets added up to about $530.  Best of all, only one connection was necessary and it was an easy one in Seattle. 

The traveler would also be able to take advantage of SWA’s no bag fee policy saving them about $50 as well.  In fact, by that accounting, suddenly the fare difference was $575 plus taxes for Delta and a bunch of bad flights on bad aircraft vs $530 on SWA and Continental on good flights with nice aircraft.  Their overall travel time was shortened by hours and their convenience and price went up.  It’s good to look for alternatives and it’s very wise to remember Southwest Airlines when you’re planning your trips.

One odd note:  I discovered that Delta really dominated flights from MDW to other destinations such as NYC-LGA and NYC-EWR but only as connections to their hub cities in Minneapolis, Detroit or Atlanta.  At least by price they did.  But the connections ranged from barely OK to “what the hell are they thinking”.  And suddenly it dawned on me why ContiUnited decided to give up those slots at EWR to Southwest. 

ContiUnited doesn’t fly from EWR to MDW non-stop.  In fact, I couldn’t find a connection on either airline to that airport.  They do, however, have a strong schedule to Chicago’s O’Hare airport.  By giving those slots up, they virtually assured that SWA would fly in competition with Delta to Chicago rather than ContiUnited and do it very competitively.  In other words, they got the attack dog to go after their biggest competitor in the NYC area. 

Is there some potential for competition on ContiUnited routes?  Sure but it is pretty limited since SWA flies to secondary airports where they (ContiUnited) are (mostly) strongest.  They’ve already seen that SWA has a limited effect on their pricing under those circumstances.  And, as I’ve already said in an earlier post, they already know how to compete with SWA in the circumstances where they might directly compete.  Best of all, they made the DoT very happy to offering a big chunk of slots to SWA instead of trying to pull a Delta and parcel them out to tiny players.

And that makes me wonder why Airtran never used its EWR slots to fly to Chicago where they already had a presence.  Their business class product would have fit nicely with the value oriented, entrepreneur flier between those two cities and offered great convenience between downtown Chicago and Manhattan.

Filed under: Airline Fees, Airline Service, Airports by ajax
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British air traffic control is warning pilots of a vulture that can apparently fly at heights of 30,000 feet or more.  This bird has a 10 foot wing span and supposedly one was encountered by a commercial aircraft at 37,000 feet back in 1974.  The bird is an escapee from a breeding program in Britain. 

Airtran has decided to be another kind of vulture and raise their bag fees.  The increase is $5 more and while it’s cheaper than their home airport rival (or just about any other airline with a bag fee), boo to them.  This just strikes me as greedy more than anything else.

Still another kind of vulture has been operating in the airline world as well.  The Thief Vulture.  Last week, an American Airlines employee was arrested for stealing personal items on aircraft as well as for stealing AA property too.  The man was tracked down when police decided to track a stolen cell phone (Palm Pre) which lead them to his house.  They then discovered so many stolen items, they filled 3 pallets. 

In addition, a TSA screener from Seattle has pled guilty to stealing more than $20,000 worth of items from luggage he was supposed to be screening. 

The irritant about these last two vultures is this is exactly what airlines and the TSA deny happening all the time.  It does happen and it happens, I think, far more frequently than is ever admitted.  I’ve had my own bad encounter with TSA screeners trying to get me to hand over my wallet and then turn away from them.  Another friend recently had a few items stolen from his bag without response from the TSA despite the fact that the suitcase in question HAD A TSA APPROVED LOCK ON IT!  

These are some of the worst vultures around.

Filed under: Airline News by ajax
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Southwest Airlines’ CEO, Gary Kelly, claims they have managed to shift $1billion in revenue away from the rest of the industry as a result of their bag fee policy, often from leisure travelers.  Their Q2 results show revenue up by $1billion compared to the previous year and while not all of that is from a shift in choice by customers, that’s a powerful number. 

It does prove that people are paying attention to those fees and I think over time people will become more and more sophisticated in making a choice based on those fees.  It really offers SWA three advantages.  First, it makes them more competitive against legacy carriers in many instances.  Second, SWA doesn’t incur the ill will of customers by charging those fees.  Third, it is getting people to try Southwest and discover that it really isn’t the “bus” it used to be when it comes to air travel.

Even my own mother had certain long standing prejudices against them based on experiences more than two decades old.  Recently, she’s tried them again and discovered that not only is the service product pleasant, Southwest has some of the most generous economy seating available today.  That discovery has found her searching out SWA fares to destinations more and more instead of her general choice (Delta Airlines.)  How many other people are making that discovery and changing buying habits?

Yes, people remain angry over these charges but they’re also becoming smarter about their choices and that doesn’t bode well for legacy airlines.

Yes, Southwest may be capturing more of the least profitable passengers to fill their aircraft.  In fact, one look at Southwest’s load factors tells us they’re doing just that.  Given a choice between retaining a business class traveler and a leisure traveler, most legacy airlines are going to try to preserve the former.  However, when their load factors begin to drop and SWA’s doesn’t, there will be yet another new signal for these carriers that the bag fees may be doing more long term damage than is worth the near term gain.

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I know that these days it seems as if I’m at war with American Airlines but the truth is, they just keep running into walls.

ABC News has THIS story about a woman named Danielle Covarrubias who became pretty angry at American Airlines losing her bag.  However, when they also refused to refund her bag fee, she decided to sue American Airlines for $5 million.  The class action lawsuit was filed in Washington state, where Ms. Covarrubias lives.

But after a few days, it’s come to light that, according to American, Ms. Covarrubias wasn’t on the AA flight.  It was cancelled and she was re-booked onto another airline which lost her bag.  That was from Grand Rapids to Chicago.  No one disputes the bag was lost but it appears it was returned to her the following day.

AA says that they do allow a refund claim in these events as a part of a lost bag claim and it is unclear if Ms. Covarrubias filed such a claim.  Regardless, it points up what I’ve been saying for more than a year.  If you’re going to charge a bag fee, be prepared to deliver or refund that fee when you don’t deliver it on time or at all. 

Travelers are enraged and there is enough traction for a class action lawsuit such as this.  Even if this one doesn’t end up in court, I do believe there will be another that does.  When it does, the issue will be over whether or not an airline is entering into a contract to carry that bag with guarantees and I don’t think their fine print will save them.  There is plenty of law to show that there is an implied contract and that breaking the contract means you owe a refund of some sort.

Revenue from ancillary fees such as this looks great to airlines but they haven’t yet really felt the pain of what those fees imply.  To be honest, I’m a bit surprised that it has taken this long to see something like this. 

More important, it’s another case of airlines shooting themselves in the foot.  This problem was easy to solve and even easier to avoid.  Give a refund instantly when you lose or misplace a bag for which a customer has paid a fee. 

That much is a no-brainer.  It isn’t hard to empower an employee to do so.  You only have to ask 2 questions to arrive at an appropriate action:  1) Did the customer pay a checked bag fee and actually check a bag?  2) Did the bag arrive with the customer?   If the answers are Yes and No respectively, make that refund immediately.  Credit it back in exactly the same manner for which it was paid and do it instantly and with sincere regrets over the trouble caused. 

Denying that refund automatically is not only a bad PR strategy, it’s just simply wrong.  In this country, we do not expect people to pay for things they didn’t get.  Airlines are styling these fees as “services” and, in this case, service is exactly what the customer didn’t receive.

Filed under: Airline Fees, Airline News, Airline Service by ajax
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One thing coming out of the 2nd Quarter financials from several airlines is, once again, just how much baggage fees are adding to revenues and, more importantly, profit.  United President John Tague is expecting that this kind of ancillary fee could soon be adding a billion dollars more to revenue and that is from its current levels of $350 to $400 million.

Like them or not, those numbers are hard to ignore. 

It does make me wonder how Southwest Airlines will continue to defend its no baggage fees approach going forward.  Load factors on airlines are at astonishingly high levels and that means that Southwest isn’t necessarily siphoning off customers from airlines with those fees.

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Adding further shame to American Airlines, look who has revamped their website for full disclosure of fares and fees.

Spirit Airlines. Read the story HERE.

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I’ve written on the subject of baggage fees a number of times before.  I feel that for any legacy carrier, indeed any carrier other than, perhaps, an Ultra Low Cost Carrier such as Spirit, to charge a fee for the first bag checked is wrong. 

WRONG, WRONG, WRONG.

When you are flying to a destination, that is called travel.  Travel is universally accepted to include the need to take along some belongings such as clothes, toothpaste and maybe a jacket, too.  Taking these items for a trip longer than an overnight or, perhaps, a casual 2 day trip, generally requires a bag that is larger than what airlines accept as carry-on baggage.   I can accept charging for a 2nd (or more) bag, but I refuse to go silently along with charging fees for a 1st bag and especially when an airline like Southwest Airlines refuses to charge for such a bag. 

Almost all airlines operating in the United States charge to check a bag now.  In fact, off the top of my head, Southwest is the only that doesn’t.   There was a rush to charge for this when we entered the Great Oil Crisis and the ancillary revenue has titillated both airline executives and financial analysts all over the country.  These fees were implemented and then they were even raised in many cases as the Great Oil Crisis eased off. 

My extreme chagrin originates in the fact that while everyone in The Business blesses these fees and likes to angle these new fees as “services”, they aren’t services.  This isn’t a charging for a Coca Cola, this is charging for a basic requirement (for most) when traveling.  A Coke is a much more optional item.   Furthermore, these fees subsidize giving these “services” to business class and/or frequent fliers for free. 

Regardless, they are here in our system.  So, if they’re going to be in our system, it would be nice to at least have some transparency both on the price of the fees as well as the requirements and restrictions governing these things.  In other words,  we should be able to see an “all in” price for our trip when we’re making the purchase and, by the way, that should be *before* we actually hand over our credit card number for this purchase.   This industry is somewhat unique in that there are “fees” being charged after the purchase that while styled as “optional”, really aren’t.  And the baggage fee is the epitome of that.

However, these fees have been around for 2+ years now and I don’t think they’re going away.  Because of my history with airlines and certainly because of this blog, I know about these fees and I just “handle it” when I’m traveling.  My own preferences towards airlines today lean towards LCC carriers such as Southwest and Airtran and on Airtran, I just pay my baggage fee online when doing my online check in and simmer down from my annoyance (which isn’t as great with Airtran since they charge a paltry $15 / bag instead of $25 like most legacy carriers.)

Consider this an open letter to American Airlines.

My daughter went to visit her uncle and grandparents yesterday.  Her grandparents paid for her ticket and they chose American Airlines.  Now, I should note that I haven’t flown AA since they instituted their bag fees primarily because I find American’s service product to be poor when compared to my other options.  In short, I fly other carriers now and I’ll point out that I live in the DFW area, location of AA’s biggest hub. 

Guess what I discovered?   American Airlines wouldn’t allow me to pre-pay my daughter’s checked bag fee(s) online.  There is absolutely no option for that anywhere on AA’s website.  None.  Zero. Nada. 

Really American Airlines?  Is that the best you’ve got?

After 2 years, you haven’t made a single accomodation on your website for the change in your business model?  And, yet, Airtran made it almost in real time. 

I get that you, as an airline, are a leviathan and that it’s difficult to change th direction of such a big ship.  I really do.  That means I’d have given you about 180 days to get that problem solved.  All I can conclude from your inability to implement this kind of stuff is that, as a company, you’re just damn lazy.

But if you had to change your ticket pricing model and accomodate that on your website, you would have that done in 30 days, wouldn’t you?  Sorry but a $24 Billion company should be able to get its act together a lot better than that.  In fact, I know it’s been pointed out that your website is outmoded already but it is remarkable that as somebody who has visited it regularly since it was in existence, it really hasn’t changed much at all. 

By the way, that means it still is a relatively large pain in the ass to get answers to my questions.

What’s more, when I discovered your egregious lack of accomodation for the inconveniences you inflict upon your customers, I phoned your company to see if this could be done on the phone.   After your voice recognition mangled my requests 4 or 5 times, I retreated to asking for “Agent” and “Operator”.  Imagine how aggravating it was for your system to actually say to me “I understand you want an agent but let me find out more about your needs before I connect you.”  Or words to that effect. 

Let me clue you in:  I’m an English speaking, native born US citizen who is actually known for not having an accent despite living in Texas for 40 years.  If your system can’t understand me, that’s *your* problem.  Not mine.  In fact, it wouldn’t be anyone’s problem because this is a prime example of why I find it distasteful to fly on your airline in the first place and it’s why I book myself away from your airline and have done so successfully now for over 2 years. 

It’s worth the extra time to connect in a different city on a different airline.  It just is a whole lot stressful than dealing with you, American Airlines.

Second, should I really be on the phone waiting to finally speak to an agent on this issue (which, by the way, isn’t addressed in your phone tree options as nearly as I can tell but I never did get far for all the voice recognition mistakes) for over 18 minutes on a Monday night?   In 2010, I should be waiting that long?  By the way, AA, I never did get through to an agent.  I mashed the “end” button my phone and got in my car and drove to my bank to withdraw extra money to give to my daughter so she could pay for your infuriating baggage fee when she got to the airport the next morning.   All because you, American, can’t answer your phone nor be bothered to update your website.

So, like everyone else, I’ll ask one more time:  Really?  Is that the best you’ve got?

Filed under: Airline Service by ajax
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The DoT has proposed new consumer protections on Wednesday and most aren’t unreasonable.  First, they’re proposing to require airlines to post complete information on baggage fees and offer refunds and/or reimbursement(s) for delayed baggage.  I couldn’t agree more.  When airlines began charging these fees, their attitude was the fee was for “transporting” the luggage and I believed that no matter what their stance, if you charge a fee for it, then you should also be prepared to offer minimum guarantees for that fee.  Alaska Airlines sort of did this.  No one else has and that’s wrong.  In fact, the stories of people trying to get refunds of their baggage fees when their baggage went missing or became delayed are just horrid. 

If you charge a fee for it, be prepared to be held to a standard.  The argument that it is a free market out there isn’t true anyway. 

Second, the Feds want better and more fair fare advertising.  Again, I couldn’t agree more.  One of the best things that happened for airlines in the past 3 years was a la carte pricing.  Except those a la carte prices never showed you your “all in” price until you were inputting your credit card for payment.  Customers should be able to see what they’re buying up front and they should know their options *before* their purchase is complete. 

Third, they want to ban price increases after a ticket is purchased.  Now, I’m not sure what they mean about this.  If they mean once you buy a ticket, it should cost more to change that ticket to another date, I’m not sure I agree.  I’ll be working to learn more about the intent here before I pass final judgement. 

Fourth, they want to require timely notice of flight status.  Mmmm, I’m not sure what their standard is but in my experience, this isn’t an area that airlines are doing a bad job in.  Yes, sometimes status is a bit tardy but I wouldn’t say it is impossible to get information on flight status or even see it updated regularly.  Again, I want to learn more about the intent here but I suspect this isn’t an area where we need much protection.

Fifth, they want to require special notice of bag fee increases and notification of baggage fees when a consumer purchases a ticket.  Again, I agree.  If the airlines want to charge these fees, then there should be prominent disclosure of these fees and they should be disclosed well in advance of the final purchase. 

Sixth, they want to increase the limits to be paid for being bumped.  Again, I agree with this.  The existing limits were created in an era when a hundred dollars was real money.  Bumping is at an all time high with the increased load factors on various airlines.  The consequences for overbooking and then inconveniencing a traveler should rise with the times. 

Finally, it’s my understanding that they want to tighten up and/or close loop-holes in the 3 hour rule.  Personally, I would wait 12 months before going any further down this road.  I’m in agreement with the 3 hour rule but I also think that it’s wise to make sure there are no severe unintended consequences as a result of the current rule.  One area I do think could be improved is preventing airlines from acting punitively towards passengers who do want to disembark from an aircraft.  The Feds should have required re-booking on another flight with no additional fees in the original rule or, at the least, set a maximum change fee for re-booking. 

All in all, airlines asked for this, in my opinion.  They’ve often abused customers in ways that we don’t see in virtually any other industry.  In fact, their ability to abuse customers points out that the airline industry is not a free market place.  It really is more of an oligopoly and one that even many LCC airlines happily participate in.  I look forward to reading more comments from others on these proposals and when I have more firm information on the exact nature of these changes, I’ll be commenting again.

Filed under: Airline Fees, Airline News by ajax
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Southwest Airlines reports that it flew slightly less passengers than this time last year but managed to earn 18 to 19% more in revenue for each mile a passenger flew.  In other words, Southwest is doing better due to higher fares and fees. 

But wait, Southwest doesn’t charge bag fees, right?  Well, it charges $50 for the third bag and it does have additional fees for extra services such as priority boarding. 

Southwest saw just a 0.6% decrease in the number of passengers which is way less than most airlines.  It saw a considerably higher amount of revenue which is way better than most airlines.   It would appear that their strategy of no bag fees may in fact be working very well for them.  It’s time for legacy airlines to quit saying they see no evidence that their passenger counts are eroding.

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Senator Charles Schumer has obtained “commitments” to not charge fees for carry-on luggage from several major legacy airlines.  Read HERE for the entire story.

There are a couple of things I notice.  First and foremost is that each airline making the commitment (American Airlines, jetBlue, Delta Airlines, United Airlines and US Airways) each have significant operations at La Guardia or JFK Airports (or both.)  Airports in the state of New York and both of which are within Senator Schumer’s power base. 

Also notable is that Continental has been quiet.  Continental’s operations for NYC are concentrated at Newark Airport located in New Jersey.  Well, I also suspect that new Continental CEO Jeff Smisek is sensible enough to ignore the Senator. 

Of course they made the commitment.  It doesn’t fit within their business model and is impractical for them to try.  It costs them nothing to make the commitment and get their name in the news much as Spirit has had theirs in the news since making the announcement that they would charge carry-on fees. 

The only people benefitting from Senator Schumer’s diatribes is Spirit Airlines.  I leave Senator Schumer out of that equation because the more he speaks, the more it becomes clear that he doesn’t know what he is talking about and that this is more about his name in the press that advocating something for his constituents. 

Imagine the good that could be done if he shouted as loudly for redefining NYC’s air traffic area and getting better air traffic control systems in place. 

Instead he leads the charge against an airline who has no New York bases and who flies just 14 flights from NYC (La Guardia) to destinations such as Detroit (2 flights), Fort Lauderdale (7 flights), Myrtle Beach (4 flights) and Atlanta (1 flight). 

Hard to view them as a threat to NYC area consumers particularly since they offer flights on the NYC – FLL route as low as $60 each way with a checked bag fee of $19 and who *still* allows personal items free on board if they fit under the seat in front of them.  

Let me point out that several airlines who he received commitments from charge *more* for checked baggage. 

So much for reality.

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I read THIS about Transportation Secretary Ray LaHood being outraged at Spirit Airlines’ newly announced carry-on bag fees.  It would appear that he thinks this should be stopped or mitigated by the government and says the FAA is looking into what it can do.

Well, those who know me know I am *not* a fan of bag fees in general and I’m certainly not anti-government either.  In this case, Secretary LaHood is way off base.  It is not the job of the FAA or the government in general to prevent these kinds of fees from being implemented.  If these fees are as bad as some think (and I don’t think they are for this particular airline), the market should respond accordingly. 

What is the government’s job is making sure that these de-bundled fee based services on various airlines is transparent and currently it is not.  When a consumer is attempting to shop various options on traveling to a destination whether by most airlines’ websites or by an online agency (Orbitz, Travelocity, etc), they really only get to see the base fare plus taxes and fees.  This is a lack of transparency in pricing because the various fees are being implemented in conjunction with other desired services and some, although not all, are not advertised in the price.  

For instance, one does not see the convenience charge for using a credit card or the online booking fee that some charge.  Others don’t see how much it costs to transport a checked bag or, now, a carry-on bag.  If we’re going to have de-bundled fees for various “services” on airlines, I think it’s time we also be able to see the “all in” price of making that trip.  In other words:

• How much is that base airline fare?
• How much are the taxes?
• How much are the airport fees?
• How much is the fuel surcharge (if any)?
• How much does it cost to pay a checked bag fee at the time of ticket purchase?
• How much does it cost to pay a checked bag fee at the gate?
• What limits does this airline impose on both carry-on and checked baggage?
• Can one pre-purchase a meal and, if so, how much is that?

There are many more questions that should be answered in advertising those fares so that there is transparency instead of “gotchas”.  That is what should be imposed by the government.  Mind you, when the government does begin to impose such rules, the airlines will scream, holler and stamp their feet that they can’t afford the infrastructure to do this.   Sorry but if you’re going to have fees, you need to have the infrastructure to support a fair and transparent communication of what those fees are.  That’s the job of the government. 

Airlines would abhor such a thing because the very next development in online airline shopping will be websites that present the “all in” price for making a trip and that will make things hypercompetitive among airlines at present.  All I can say is that life is hard in the big city. 

There are other areas where transparency could and shood be better.  Codeshares are one area of that.  I don’t object to codeshares at all but I do object to the lack of transparency in how those codeshares are presented currently.   What is presently being done is the equivalent of offering one brand of flavored rice at a price and then giving the consumer another brand of flavored rice after the purchase.  Both brands may be great brands but what if you *really* wanted Rice-A-Roni instead of Lipton’s?   An airline isn’t going to let you change your ticket upon discovering that you really aren’t flying on their airline for particular flight.

There has been a lot of laxness in allowing airlines to operate for 2 decades or  more with this lack of transparency.  The argument that it would take time and money to present this in a fashion much like we expect virtually every other retailer or service provider to do is cost prohibitive just doesn’t fly.  Shame of the government for ignoring this for so long but shame on the airlines for doing it too.  The FAA has long been under the influence of exceptionally airline friendly forces for an very long time and they, more than anyone else, permitted this to happen.  I’m glad that Secretary LaHood wants to stop some of this abuse but I would suggest that he needs to be a little less media friendly in his words and a little more active in promoting fair for both airlines and consumers.  This is one part of the house that is long overdue to be put back into order. 

I”m a very experienced shopper for air fares and I’m exceptionally well acquainted with strategies to find a good fare and even I am finding it exceptionally difficult to do this in a manner that allows me to compare the cost of a trip in an apples to apples manner.  It takes an exceptional amount of time to make an informed purchase for air travel and if it is that hard for me, how hard is it for just the average consumer? 

I never want to let an airline have its cake and eat it too.

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Spirit Airlines has announced new fees for carry-on luggage.  Yes, carry-on luggage.  If you want to know who the *real* Ryanair Airlines is in the US, it is Spirit.  If you’re a member of their $9 Fare Club and pay for your carry on online, you’ll pay $20 for a carry-on bag.  If you don’t book your bag online but pay for it up to the ticket counter, you’ll pay $30.  If you don’t belong to the Fare Club and have to pay at the gate, it’s $45. 

Mind you, Spirit also charges $19.00 for 1st bag *checked* too. 

In general, I disapprove of baggage fees for any 1st bag but in Sprit’s case, I’m OK with it.  Why?  Look at their air fares.  If you play their game, you still save an incredible amount of money on their flights.  Only fools pay additional fees on their airfares that make the total cost approach other airlines. 

In a twisted way, Spirit’s fees kind of make more sense to me.  They’re unabashedly charging for the right conveniences and with scaled levels.  It is hard to argue against that approach. 

Will other US airlines adopt this approach?  Maybe.  Frankly, it may well be the more sensible approach to fees but if you do see an airline adopt this, you’ll see them lower or eliminate their 1st checked bag fee I suspect.  Airtran could be a good candidate for this approach perhaps.  I suspect the legacy airlines may avoid it as it targets their favorite customers:  the business traveler.  I definitely see Ryanair taking this challenge on in the near future.  It fits perfectly within their strategy.

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I’ve come to accept that we’re going to see lots of fees and a “de-bundling” of services in the travel world and, most particularly, the airline world.  I’m even willing to accept it with good humour at this point.  Indeed, I see advantages to a more “a la carte” system of pricing in the airline world.

I still have an objection, however.  These increased fees for checking bags, changing flights, food and drink and even booking online should also come with some new guarantees.  A checked bag should come with an arrival guarantee that is money back if your luggage doesn’t arrive with you.  A fee for changing flights should come with a money back guarantee if, say, you’re bumped from a flight you changed to.  If you’re going to charge a fee for booking online or accepting a credit card, then you should also make a “prompt refund” guarantee if the flight gets cancelled and unable to travel on a different flight.

The thing is, passengers haven’t really shown much interest in trying to hold an airline’s feet to the fire and I think I know why.  Frequent flier programs.  You see, the airlines *know* that you’ll stick with them in order to earn points that, by any account are worth at most about a penny a point. 

Let’s say you are taking a 2 hour flight to someplace.  Just to be generous, let’s say the mileage is 900 miles earned (and on a 2 hour flight, I would say that is way generous) for each way.  1800 miles or point are earned for completing the trip.  You just earned yourself a reward that at most is worth about $18.00. 

Let me ask you something.  Is that $18.00 worth the abuse?  I’d wager that on any one flight where you had trouble with a lost bag, bad food, a changed flight or anything else that we’re now seeing fees charged on, you would happily pay $18 to see that go away.   Would you change airlines for a flight if another airline made a value promise to handle your luggage responsibly or get your money refunded if they don’t if you weren’t earning $18.00 of credit for that flight?  I’ll bet you would change in no time flat. 

Indeed, I would argue that legacy airlines are punishing fliers dramatically for trying to earn those points.  This is why Southwest Airlines is getting traction with its “no fees” policies for changing flights or checking luggage.  People are starting to figure out it isn’t worth $0.01 / point to earn “free” trips or “free” upgrades particularly in light of the new fee based systems being implemented. 

Sure, an elite frequent flier program participant doesn’t pay many of those fees.  Only, they do.  They pay it in the form of exorbitant prices for fully refundable tickets purchased with a short lead time.  It’s just not necessarily coming directly from their pocket.  It comes from their employer’s pocket.  But there is still a price.

Until passengers start choosing airlines based on the real value being provided, airlines aren’t going to change their behaviours particularly with these fees.

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According to the Wall Street Journal Middle Seat blog, American Airlines has decided to match the bag fees recently implemented by Delta and Continental.  You can read more HERE.

So, at present, Delta (including Northwest), American Airlines, Continental, United and US Airways are now all charging $25 for the first bag and $35 for the second bag with some of the airlines offering “discounts” if you perform your “bag fee purchase” online.   That would imply that they each see this price for checked bags being a bit more elastic than one would have thought.    Or, at the least, they see it as elastic as long as they all go for the same increases much as the case is with air fare increases. 

So far, no low cost carrier has adopted this pricing model or even raised their checked bag fees.  I suspect they won’t either as it gives them an opportunity to show themselves as the good guy while gaining some incremental revenue. 

If this rise in fees sticks for the next 1 or 2 quarters, I do think it will put tremendous pressure on Southwest Airlines to institute their own version of bag fees, at least by institutional investors and analysts.  So far, Southwest and its CEO Gary Kelly have resisted these calls to add checked bag fees and, so far, they believe it is resulting in incremental revenue from passengers switching to Southwest to avoid fees.  Since CEO Kelly (and Southwest as a whole) is not one to shade the truth, I’ll continue to believe these claims. 

However, with other LCC carriers such as Airtran and Virgin America and even jetBlue (on the 2nd bag) have added fees and do report significantly improved revenues from that, I would imagine that the call for Southwest to add these fees will be defeaning particularly when Southwest could implement a jetBlue or Airtran style program and see improvements to their quarterly results which haven’t been too impressive in the last year. 

It is sad but I don’t believe we’ve seen the last of these increases.  I do think that some airline will probe the upper limits of these fees just a bit more yet.  I do think that Southwest will resist the call to add these fees for at least another 6 months but if there hasn’t been some kind of collapse in the price of these fees by then, I would not be surprised to learn that Southwest has begun to make changes to their infrastucture to implement them.   I think the first sign will be the withdrawal of their “no fees for checked bags” advertising.

Filed under: Airline Fees, Airline News by ajax
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Delta Airlines chose to announce they are increasing their checked baggage fees.  If you pay online, your fee goes from $15 for the first bag to $23 for the first bag.  The second bag checked rises from $25 to $32 (paid online).   Continental matched those fees almost immediately.  While it seems exorbitant to me, I wonder if anyone will really notice right now.

I suspect Delta did this simply because they have pricing power at most of their hubs (ATL, MSP, DTW, SLC, CVG, MEM) and because they don’t think it is going to affect the consumer’s decision about which airline to fly in most cases.  Delta doesn’t get a lot of LCC competition at its hubs except for ATL and there seems to be a unspoken agreement with Airtran not to get too ugly there.  Besides, Airtran has checked baggage fees too. 

The thing is, most online sites that offer booking for airlines in the US do not mention baggage fees when displaying prices for routes.  Delta will continue to appear to be very competitive on routes while likely adding additional incremental revenue through the “gotcha” approach.   Quite honestly, I suspect they’ll get away with it.  At least until there is a healthy recovery in the airline industry and that is likely 18 to 24 months away still.  Maybe more.

Will others match it?  I suspect that American Airlines might.   There is no precise harmony among airlines on these fees, not yet anyway.  Continental already had pretty high fees at $18 and $27 for online checked fees (with a $2 and $3 surcharge at the airport).  AA is at $20 and $30 respectively whether you check online or at the airport.  US Airways is at $20 / $30 for online (with a $5 surcharge for checking at the airport.)  United is $15 and $25 for online checking.

By contrast, Southwest Airlines has no fees up to the 3rd bag, jetBlue offers the first bag free and $30 fee for the second while Airtran charges $15 for the first and $25 for the second.  In other words, these fees are all over the place.  The truth is, as competitive as airfares are on many routes, these fees can change the equation pretty dramatically in some cases since those fees are for each way on a round trip flight. 

These fees have added dramatic amounts of revenue to airlines’ bottom line and I don’t see them going away at all.   I don’t think the fees among legacy airlines will harmonize much at all until and if online travel sites begin showing an “all in” pricing when comparing fares.  Even with such comparisons, I don’t think the fees go away so much as they just begin to merge together among the airlines. 

Will anyone else raise their fees?  Well, maybe.  I’m sure it will be tempting to do so among all the legacy airlines.  One or two may even try to raise the ante some.  I kind of  think both United and American Airlines will try some kind of new mix in the future.   I don’t see the LCC carriers playing around with their fees much if at all.  They have the revenue and now this may be their chance to follow Southwest’s strategy in a modified form by advertising lower checked baggage fees. 

I don’t think Southwest will change its attitude on these fees based on this new development.  Their strategy appears to be working for them and they don’t have a history of following the pack when something works.   That said, I’m sure it is something they’ll re-examine from time to time and it doesn’t mean they won’t add fees at some point in the future.  Right now, they appear to be capturing customers with their ‘no fees” approach and their aggressive advertising seems to have caught some attention. 

As much as I hate these fees for the 1st bag checked, I hate that airlines and travel websites  have done really little to truly show the “all in” price for these trips.  It makes things just that much more murky for the consumer and that is a bad thing.   However, the best thing you can do is learn the fees for the airlines you may be shopping for a trip and do the math yourself.  You’ll be frustrated by it and no doubt resent it but there isn’t a ready made solution at this time. 

Frankly, these developments are just one more reason why I wonder about Southwest re-joining the travel agency world.   The world has changed since they left it and, quite honestly, I think they could re-structure their IT infrastructure and re-join those agencies with little incremental costs involved.  At that point, they become the no brainer for many consumers from my view.  Even as aware as I am of airline options and even being located in the DFW area, even I tend to forget about Southwest as an option sometimes. 

One strategy for learning these fees is to visit LuggageLimits.Com (also linked in my sidebar).

Filed under: Airline Fees, Airline News, Travel Hints by ajax
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From time to time, people send travel and airline related websites to me and inevitably I’ve already seen them.  Well, for the first time in a long time, someone surprised me. 

http://www.luggagelimits.com/

It looks helpful, particularly to the infrequent traveler.

Filed under: Travel Hints by ajax
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Well, actually, the one thing that is certain about Southwest Airlines is that it continues to surprise everyone on a regular basis.  Almost always in a positive way. 

It wasn’t that long ago that quite a few people were very critical of Southwest and its CEO, Gary Kelly, for not being a lemming and following industry trends such as charging checked luggage, changing a ticket or even beverages.   Indeed, I’ve seen a number of posts on various airline websites offering glum predictions for both Southwest and Mr. Kelly.   It has grown a bit quiet in the past month, though.

Bucking trends and doing it their way is Southwest’s model.  It’s worked for them throughout the history of the company and while, yes, it is true that they’ve made a few mistakes here and there, they’ve also seen great success year in and year out.   By sticking to their plan for attracting customers on the basis of offering their base product at a great value and with no extra charges, they seem to be gaining quite a bit of steam.   The Associated Press is reporting that Southwest has announced a significant uptick in traffic and revenues for the last month.  Again.

Throughout the first part of the year and even through the summer, pundits and financial analysts have hammered Southwest for sticking to its strategy and Mr. Kelly has steadfastly reaffirmed that they’ll be sticking to their plan and that they are starting to see positive results from that plan.  I think those results are in and this is good for Southwest for a few reasons.

First and foremost, that uptick in traffic has to contain quite a few new customers for Southwest.  Customers that have either never tried Southwest or who tried it so long ago that they are, for all intents, new customers.  And I suspect people are discovering that it isn’t your father’s Southwest Airlines from the 70’s and 80’s and it is a great value for all kinds of travelers.   For the customer looking for a reliable airline with a good record of both safety and on-time arrivals a swell as a convenient schedule, Southwest is an excellent answer.  They’ve got good, new aircraft with comfortable seats (still some of the most comfortable in my opinion) with friendly staff.  That’s what people want. 

It’s good for Gary Kelly too.  He’s coming into his own as the leader of Southwest and, to his credit, he has shown little inclination to engage in change for change’s sake and he’s demonstrated quiet confidence both in himself and the direction of his company.  I have no doubt that he’s earning even greater respect from his employees as well as his shareholders.

Sure, Southwest has made a few mistakes.  Most notably their fuel hedges have been a liability a few times in the past 18 months and, of course, there was that little Frontier Airlines fiasco last summer.  One thing that bothered me about their attempt to win Frontier Airlines was that it was *too* much of an amateur performance for the Southwest executive team.   That team is not a bunch of huckleberries.  They are a very saavy group of managers that would be an enormous credit to any airline in the world.  In hindsight, I wonder if the Frontier purchase attempt wasn’t just an attempt to get a great bargain with the approach of “it isn’t a deal if it isn’t a deal”.   Certainly you didn’t see Southwest walking away hurt or pouting.  Instead, they continued on with their business and never looked back.

One minor prediction:  I would be wholly unsurprised to learn that Southwest either adjusts or deletes their new priority boarding option.  Overwhelming conclusions to date are that it doesn’t really net you all that much advantage with the way it is presently structured.   I suspect a fee change (lower) or a rules change may come along after another 6 to 12 months of it being deployed.

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There is a push to get more and more people to bring carry-on baggage only on most airlines here in the US.  The trend actually started in Europe with airlines such as Ryanair leading the charge but what works there doesn’t necessarily work here.  And the best reasons for it over there are not necessarily the best reasons over here.

The duration of trips and even the habits of dressing in Europe are very different from the US / North American markets and lend themselves much more readily to using a carry-on only strategy.   For the LCC carriers of Europe, infrastructure is very different as well.  The secondary airports they often serve have far inferior baggage handling capability than our secondary airports do.  In fact, our secondary airports are often just as busy (proportionately) as they international/hub airports in the same area.  Our secondary airports have to have handling facilities that are commensurate with the traffic. 

Boarding and disembarkation is also very different between the two countries.  In Europe, LCC carriers frequently use both entrances to the aircraft (front and back) to disembark passengers while at the same time boarding new ones.  Or they use both entryways to the aircraft at the same time for each function.  Either way, it helps with their turnaround and it’s a model Europeans are accustomed to cooperating with.

Not so here.  We board people via one jetway and disembark via one jetway.  Our airport infrastructure was designed and implemented decades ago and is poorly designed to handle thousands of people carrying their life’s possessions.  Our check-in desks are “owned” by airlines and not shared assets.  Our baggage handling is done (primarily) by airline employees instead of shared services provided by ground handling companies.   Our security apparatus wasn’t provided for in the design of airport terminals and, as a result, find us dealing with huge lines that are often bogged down by travelers carrying all their luggage.  Our aircraft fleets are equipped with overhead bins that were really placed there as purse/coat/hat/briefcase storage rather than for heavy carry-on luggage. 

And then there is the passenger.   The frequent US traveler is often found carrying more “stuff” such as 2 suits where 1 would do.   This person is often traveling for a longer duration too, requiring more “stuff” as well.  The inexperienced travelers are trying hard to avoid those bag fees but don’t know how to quite do it properly because they learned how to travel in a different time.   How many times have we been behind someone in security who had their cosmetics/shampoo/toothpaste wrongly packaged and packed and holding up the line?  Very few airports have room enough to establish multiple lanes for security and that means we all bottleneck at the least disruption.

My own pet peeve is the established frequent flier.  They’ve learned a lot in their time on the road but also engage in practices that inhibit anyone but them.   I’m speaking of the guy in the dark grey suit on my last Airtran flight who boarded, loaded his carry-on into a bin at the front and then walked to the back half of the aircraft to his seat.  Jerk.  He took up space that  others sitting in that area could have used and forced *those* people to put their bags farther back than desired.   This meant that when the plane landed, 4 people attempted to get down the aisle against the flow to gather their own luggage holding the vast majority of people up.  In addition, I had to watch no less than 4 Airtran staff find locations for those bags before we could close the aircraft and depart resulting in a nearly 20 minute delay.

My own anecdotal observation is that aircraft aren’t leaving quicker.  The airlines aren’t using fewer people and the flight crew is now taxed with another duty:  policing baggage.   There may be some savings in fuel as a function of less baggage but that could be achieved with stricter checked baggage limits.  Want to bring the weight down?  Set a 30lbs limit per bag instead of 50 lbs.  That will improve things quickly.   Still want a fee for checked baggage and those incremental revenues?  Set that limit at 30lbs for the 1st bag checked and make it free (Set a size limit too!).  Charge $20 for the next bag up to 50lbs.  You’ll still get your incremental revenue but your flows on and off the airplane and inside your own terminal will improve greatly.  Your aircraft turnaround will improve slightly and you should still see some savings on fuel costs as a function of reduced weight. 

If you are one of the people that are convinced that airlines lose baggage all the time and for every flight, get over it.  It is an apocryphal story that few have ever experienced.  I’ve been flying for over 20 years and had my luggage “lost” once and twice more it was delayed 2 hours (came in on the next flight.)  I’m not luckier than anyone else.  Does it happen?  Sure.  In most cases, people are reunited with their luggage hours after their arrival in their destination city.  In a few more extreme cases, they see it the next day.  The number of people left after that are so small as a function of the number of flights each day that they aren’t even statistically significant.

You can’t add fees without looking to also increase or improve service or you will get extreme backlash in the form of complaints that result mostly from higher expectations.  You can add fees if you change those expectations with reasonable limits and improve the overall perceived service value. 

Just because everyone hates most every airline presently doesn’t mean that will always be the case.  Some airlines are already discovering that improving the perceived value is as important as any incremental revenue from fees.  Those are the airlines that will continue to thrive.

Filed under: Airline Fleets, Airline Service, Airports by ajax
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USA Today’s Today in the Sky Blog is reporting that Alaska Airlines has announced that it will begin charging a 1st bag checked fee on July 7th.  This announcement comes after reporting more losses for this past quarter. 

I remain adamantly against the 1st bag checked fees being charged but must admit that if an airline was going to do one, it should do one in the manner of Alaska Airlines.  Alaska Airlines is going to offer a guarantee that your bag will be at the carousel within 25 minutes of arrival or you receive $25 or 2500 frequent flier points. 

This allows Alaska Airlines to compete better against legacy airlines by bringing their bag fees inline with the rest of them but offer greater value in the process.  This is a guarantee that I suspect will net a real response for Alaska.   No other bag check fee offers such a guarantee at present.  To the contrary, all other airlines charging such fees continue to do so in light of rather severe delays and losses for baggage. 

This addition also finds Southwest Airlines, last of the real majors and borderline legacy airline, the lone standout for baggage fees.  Gary Kelly, CEO of SWA, was even badgered by financial analysts during a recent conference call to discuss the most recent quarterly reports to consider adding such fees.  Kelly has steadfastly refused so far claiming that Southwest sees this move as being a strong negative among its customer base.  I actually agree since their customers remain some of the most price sensitive in the market.

It also stands in contrast to Delta Airlines’ recent announcement of a $50 first bag checked fee for international flights.   A move that I predict will ultimately be rescinded due to competition from both US and foreign based international carriers.

The question is whether or not other airlines currently charging such fees will be willing to offer similar guarantees.  Since so few compete with Alaska Airlines right now, I suspect it will be resisted as competition.  However, I also believe that one or more legacy airlines in the US will now begin considering the introduction of such a guarantee in order to bolster their position against their competitors.  My pick?  Delta Airlines or Continental Airlines.

Delta has an executive team that is  well aware that the a la carte pricing model is successful but they are also the most cognizant of presenting real value for their product.  Continental Airlines could steal a lot of press and thunder by making such a guarantee and it would also align them more close to Alaska Airlines, an existing Continental code share partner.

Filed under: Airline News, Airline Service by ajax
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The Today in the Sky Blog is reporting that Frontier has rolled out a new pricing model on their website today.   The airline is an all coach service but now they are differentiating that service with the designations “Economy” (primarily a Southwest Airlines emulation but you pay for your luggage), Classic ( a reserved seat and DirecTV and no luggage fees) and Classic Plus (Classic with a snack).  There are other benefits and restrictions with each class.

While I do believe that product differentiation is the way to go for airlines in the future, I’m not sure this is differentiated enough to offer a customer a choice.  Yes, service and amenities grow as you pay more and that’s good but look at the Today in the Sky’s story and examine the pricing.  I’m not sure you are getting enough differentiation for the price differences charged. 

A coach passenger is buying on price, primarily and to make the product differentiated enough to entice the passenger into a higher price requires something substantive.  Is it DirecTV and a snack?  I suspect not.  I suspect that DirecTV is worth about $10 to the passenger and a snack is worth maybe $8.00.   Free checked baggage?  Well, for Frontier that might be a mistake since Southwest, their major competitor, already offers free checked baggage.  They don’t offer more legroom but their other major competitor, United Airlines, does and for a price differentiation that really might be a better deal.

Filed under: Airline News, Airline Seating, Airline Service by ajax
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