Archive for the ‘Airlines’ Category

Please stop coughing on the back of my neck.

August 30, 2017

News flash: The way that airlines board planes spreads diseases.

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This spring, on a long flight from Cabo to DC, I had a prime aisle seat in the 2nd last row of the plane.

There was a guy in the last row who coughed a few times before take-off.

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Once in the air, it was 5 solid hours of coughing, wheezing and sneezing. Some of the sneezes literally landed on the back of my neck..

I thought my relatively dependable immune system would protect me.

Not so, lucky.

For more than 2 weeks, I had one of my worst colds in decades.

I was hacked at the guy for flying sick.

And, I wondered if the airlines could do more to protect passengers (like me) from disease-spreaders.

Well, a research team at Arizona State has partially answered that question to the affirmative.

(more…)

Are airlines ruthless profiteers?

April 18, 2017

A short course in airline economics

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First. let’s establish that I’m no fan of of traveling … especially commercial air travel … via cattle-herding airlines.

That said, I scratch my head when folks characterize airlines as ruthless profiteers.

They may be ruthless but, I think, to be a profiteer a company has to make money, right?

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Below is a chart that’s a bit dated, but makes a directional point.

The graph shows cumulative net income of US air carriers since 1938.

What is says:

Since that fateful day when Orville & Wilbur took off, U.S.  airline companies have — as a group — LOST money.

There has been some recouping in the past decade — due mostly to consolidation  — but not enough to get the industry back above the birth-to-date Mendoza line.

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What’s going on?

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Trip Notes: Seniors’ Week in Cabo …

March 13, 2017

Let’s get personal today…

We just got back from a rare out-of-country trip …

Friends and students oft-hear from me that I hate to travel.

I usually put it: “After 2 tours-of-duty as a consultant, I’ve had my fill of French restaurants and airports”.

That said, some friends nudged me to take a trip to Cabo.

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Even though it was my spring break, it didn’t dawn on me that it was every college’s spring break.

The obvious become evident to me when I realized that my wife & I brought our flight’s average age up by about a year or two (think about the math of that calculation for for a second).

A college girl boarded with an appropriate t-shirt: “The few.  The proud. The privileged” … ah, to be an American college kid again.

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For the record, here are a couple of takeaways from my trip…

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Buying your airplane seat “by the inch”…

April 8, 2016

Loyal readers know that I’ve been a long-standing fan of airlines charging by the pound rather than having a flat fare that is applied to all passengers – small, big and supersized.

Here are some ‘greatest hits’ posts on the topic.

Prices: Why don’t airlines charge more for these bags?

Norwegian economics professor jumps on the scale … endorses “pay what you weigh”

Air fares: Public weighs in …

Tipping the scales: Airline starts weighing all passengers …

Airlines weigh-in on cost-cutting ……

Let’s continue the dialogue.

According to The Economist ….

The average American man bulked up from from 166lb in 1960 to 190lb today, while the average woman jumped from 140lb to 166lb.

Note: That today’s average woman weighs about the same as an average man in the 1960s.  Whoa, Nellie!

While Americans were ballooning, airline seats’ widths were constricting —   from 18 inches in 1960 to 16.5 inches today.

To address the obvious issue, Congressman Steve Cohen proposed a law  mandating a minimum amount of seat space for air passengers.

The measure failed.

 

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Very clever cartoon from The Economist

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Not to worry, airlines are on the case.

We’ve previously reported on airline programs to charge passengers by-the-pound.

Now, there’s a new tactic being pursued …

(more…)

In the air: Why are the cabin attendants smiling?

March 11, 2016

Let me give you a couple of choices:

(a) Smiling is dictated by employer

(b) Fundamentally happy with job & pay

(c) Something else

According to a survey of 718 British cabin attendants by UK The Telegraph, the answer is (c) – something else.

The survey asked the cabin attendants if they had ever broken any of the airlines’ rules.

9 out of 10 answered to the affirmative.

 

 

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Most of the violations were relatively minor – e.g. accepting tips.

But, some were doozies.

(more…)

Airlines weigh-in on cost-cutting ……

December 23, 2015

Let’s end this week on a lighter note (<= pun intended).

Loyal readers know that I’ve been a long-standing of airlines charging by the pound rather than having a flat fare that is applied to all passengers – small, big and supersized.

Here are some ‘greatest hits’ posts on the topic.

Prices: Why don’t airlines charge more for these bags?

Norwegian economics professor jumps on the scale … endorses “pay what you weigh”

Air fares: Public weighs in …

Tipping the scales: Airline starts weighing all passengers …

Applying the principle, GoAir, an Indian low-cost carrier, now only hires female flight attendants because they are on average 10-15 kg lighter than men. Less weight means less fuel-burn, lower costs, more profit.

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According to The Economist, it’s just one of the ways that airlines are shaving costs these days.

(more…)

Tipping the scales: Airline starts weighing all passengers …

August 17, 2015

You read that right …

Uzbekistan Airways is going to start weighing passengers before flight

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Here’s what’s going on …

(more…)

Air fares: Public weighs in …

May 28, 2015

According to a YouGov.com survey reported by  NBC News  …

Survey says: 4 in 10 Americans  wouldn’t mind being publicly weighed at the airport.

image
Source

The results suggest that a once-unthinkable concept of differential fares based on size could become a fact of life for fliers.

Here are some verbatims:

(more…)

Norwegian economics professor jumps on the scale … endorses “pay what you weigh”

May 27, 2015

Over the weekend, a  friend got squeezed on a flight from BWI to LAX.

Not “bumped” … “squeezed” … by a plump plus-sizer overflowing the adjacent seat.

My trim, yoga-inclined friend suggested that I reprise my posts about airlines’ pricing … hoping that the airlines would get the message this time around.

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It started awhile back when I posted  Why don’t airlines charge more for these bags?

Specifically, I suggested that airlines charge passengers by weight: a base ticket price for the first 175 pounds and then $75 for each 50 pounds (or portion thereof) over the limit.

I  thought I was on safe ground since a  survey done for the travel website Skyscanner reported that 76% of travelers said airlines should charge overweight passengers more if they didn’t fit in a seat.

But, the idea went over like a lead-butted balloon.

Turns out that, as usual,  we were just a bit ahead of the times.

Later, we reported that Samoa Air became the first airline to start charging by the pound.

For details, see Samoa Air: Pricing by weight is the ‘concept of the future’

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Now, even politically correcct academicians are hopping on the scale.  A Norwegian economist has suggested — in a prestigious academic journal —  a “pay what you weigh” pricing plan that “would bring health, financial and environmental dividends.”

Here’s the skinny on his program …

(more…)

MH370: Remember my favorite conspiracy theories?

May 18, 2015

At least one of them —  which I tagged “hack & Done” — probably doesn’t sound as far-fetched today as they did a year ago. (The original post is reprised below)

Why?

Because sources have reported that:

Hacker controls plane

Here’s the scoop …

(more…)

MH370: My favorite conspiracy theories ….

March 31, 2014

Below is an interesting infographic from Engineering and Technology Magazine listing the array of likely causes:

  • Catastrophic structural failure
  • Bad weather
  • Engine failure
  • Hijack
  • Terror attack
  • Pilot suicide

 

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Guess what?

The list doesn’t include either of my 2 favorites ….

(more…)

Re: MH370 … as Hillary would say “What difference does it make?”

March 24, 2014

We’re going into our 3rd week of of wall-to-wall news coverage of the the disappearance of the Malaysian 777.

Yesterday, I saw a “news alert” announcing that the cabin radio transcripts revealed nothing … English translation: no news to report.

And, I got a peak of a Chinese satellite photo of a “possible object” floating around  in the Indian Ocean.

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Question: Any idea how much garbage is floating around in the oceans?

Answer: Tons.

I understand that news outlets are keeping the real-time stream of newsless news up because there’s a market for it — their audiences are eating it up

Except for the passengers friends and families, I don’t get it.

Here’s what has me most perplexed ….

(more…)

Air fares: Public weighs in …

February 24, 2014

According to a YouGov.com survey reported by  NBC News  …

Survey says: 4 in 10 Americans  wouldn’t mind being publicly weighed at the airport.

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Source

The results suggest that a once-unthinkable concept of differential fares based on size could become a fact of life for fliers.

Here are some verbatims:

(more…)

Flashback: Only thin ladies need apply …

July 1, 2013

We’ve previously posted about Samoa Airlines novel pricing programs – charging heavier than average passengers higher fares than average girthed passengers – to offset higher fuel costs to haul them and protect other passengers from “seat encroachment”.

Suffice it to say that readers’ scale tilted away from the idea.

For background, see:

Samoa Air: Pricing by weight is the ‘concept of the future’

Why don’t airlines charge more for these bags?

 

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Well, now GoAir – an Indian airline – has initiated a weight-based program that rolls back the clock to the 50s and 60s.

(more…)

Fugetaboutit: “Turn off all electronic equipment”

June 21, 2013

According to the WSJ

The FAA is going to relax rules for electronic “gadgets” used in flight … allowing them to be used at low altitudes … sometimes even during take-off and landing.

Unfortunately, the change won’t apply to cellphones which will still restricted to high altitudes use.

 

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 Here are some details …

(more…)

Air fares: Public weighs in …

April 30, 2013

According to a YouGov.com survey reported by  NBC News  …

Survey says: 4 in 10 Americans  wouldn’t mind being publicly weighed at the airport.

image
Source

The results suggest that a once-unthinkable concept of differential fares based on size could become a fact of life for fliers.

Here are some verbatims:

(more…)

Debunk: Air traffic controllers, sequestration and delays …

April 24, 2013

Flight delays at major airports because of Sequestration.

Say, what?

Here’s a smoking gun chart right from an official FAA report.

According to the FAA, the number of controlled flights (i.e. “systemwide traffic”) has dropped  23% since 2000.

During that same period, the number of air traffic controllers has remained essentially constant.

Said differently, each controller is handling 23% fewer flights than in 2000 … when, to the best of my recollection, the skies were pretty darn safe.

Note that since 2005, the number of flights has gone down 14% and the number of controllers had increased 7.5%.

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FAA: A Plan for the Future – 10-Year Strategy for the Air Traffic Control Workforce 2012 – 2021

Here are some verbatims from the FAA report and an out-of-box idea …

(more…)

Norwegian economics professor jumps on the scale … endorses “pay what you weigh”

April 5, 2013

OK, I think this case is now officially done.

It started a couple of weeks ago when Iposted  Why don’t airlines charge more for these bags?

Specifically, I suggested that airlines charge passengers by weight: a base ticket price for the first 175 pounds and then $75 for each 50 pounds (or portion thereof) over the limit.

I  thought I was on safe ground since a  survey done for the travel website Skyscanner reported that 76% of travelers said airlines should charge overweight passengers more if they didn’t fit in a seat.

But, the idea went over like a lead-butted balloon.

Turns out that, as usual,  we were just a bit ahead of the times.

Yesterday, we reported that Samoa Air became the first airline to start charging by the pound.

For details, see Samoa Air: Pricing by weight is the ‘concept of the future’

image

Now, even politically correcct academicians are hopping on the scale.  A Norwegian economist has suggested — in a prestigious academic journal —  a “pay what you weigh” pricing plan that “would bring health, financial and environmental dividends.”

Here’s the skinny on his program …

(more…)

Samoa Air: Pricing by weight is the ‘concept of the future’

April 3, 2013

A couple of weeks ago – reacting to SWA charging for an overweight bag – I asked the question:

If airlines charge for overweight bags, why don’t they charge fore for overweight passengers?  After all, a pound is a pound is a pound.

See: Why don’t airlines charge more for these bags?

Specifically, I opined:

There’s a societal cost to somebody’s ample butt hanging over onto somebody else’s seat.

Here’s a novel plan: how about a base ticket price for the first 175 pounds and then $75 for each 50 pounds (or portion thereof) over the limit.

Price the human  heavyweights,well, just like the overweight bags.

Then, rent the seat belt extenders for say $20.

Profit improvement for the airlines and major step forward in the war on obesity.

As President Obama likes to say: “It’s common sense.”

I took some heat for the idea but at least one airline thinks we’re onto something.

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According to The Guardian, Samoa Airlines the first-mover to tilt the scales in favor of fit & trim passengers.

Here’s the skinny on the Samoa Air plan …

(more…)

Prices: Why don’t airlines charge more for these bags?

March 11, 2013

On the road this week …  savoring the joys of air travel.

Stop #1: Southwest’s curbside check-in.

Guy in front of us had one of those “c’mon man” moments.

His bag weighed in at a couple of pounds over the 50# limit.

The skycap – a very nice guy – explained that he’d have to take a few things out of his bag to sneak under the weight limit or shell out 75 bucks – roughly $25 per pound – for the excess.

The guy started rifling through his bag and made weight.

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Of course, the incident got me thinking …

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Gotcha: Now, even Southwest is charging for “luv”

January 4, 2013

I used to be a big Southwest fan.

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I used to perversely enjoy watching the clock tick so I could get in the “A” boarding group by hitting the enter button exactly 24 hours before flight time.

Then the jabrones at SWA  took the fun out of the process by letting online slackers buy their way into the A group for 10 bucks … an “early bird” check-in.

Worse still, when my friends would flaunt their AMEX black cards, I’d charge everything to my SWA-Visa … earning a free flight for only a gazillion “flight legs”.

Then, the SWA  jabrones changed their credit card program … making it less lucrative and way more confusing.

(more…)

Ever since Wilbur and Orville’s first flight …

June 19, 2012

The airlines industry — in aggregate — hasn’t made money.

Think about that for a second.

There have been some brief periods of prosperity, but longer stretches of losses … some  pretty deep.

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Makes sense when you think about the number of airlines that that have consolidated, gone through bankruptcy or fallen off the radar screen (think, Pan Am, Eastern, TWA)

The irony is that we feel gouged by airlines … especially when they start charging us for bags and peanuts.

Side note: “ancillary revenue” supplements the flight by another $18 per person on a 100-passenger flight.

That includes fees for checked baggage, seat assignments, ticket penalties and revenue from cargo.

According to the Bureau of Labor Statistics, baggage fees for the U.S. airline industry last year totaled a hefty $3.4 billion, or roughly $5 for every passenger boarded.

Cancellation and change fees totaled $2.4 billion, or more than $3 for every passenger.

Source: WSJ

What’s the problem?

First, there are pricing pressures.

In the past 15 years, fares haven’t come close to matching inflation.

In other words, “real” prices in the industry have stayed flat or declined.

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That makes sense …

In the airlines, there’s a huge amount of capacity … something close to a commodity product … with high fixed costs and virtually no marginal costs.

Since one more  passenger.doesn’t cost you anything except, maybe a cup of coffee, there’s great  temptation to sell seats at rock bottom prices — just to fill them.

Further, there’s the Southwest factor.  Legacy airlines (think United or American) have big infrastructures, huge hub-and-spoke networks, old fuel – inefficient planes, and high cost, unionized employees.  Southwest’s cost-effective operations — point-to-point network, fuel-efficient 737s,  happy employees — changed the pricing game.

Then, think about fuel costs — generally high, and subject to wide, unpredictable swings.

According to the WSJ, “fuel now is by far the biggest cost for airlines. , the tickets and fees of 29% of passengers pay just for the fuel to make the trip.

Airline gas mileage has improved over the years, the result of filling more seats on each flight, replacing multiple trips on small planes with fewer trips on larger aircraft and replacing older planes with newer, more fuel-efficient jets.

In 2000, U.S. airlines burned 28.6 gallons of jet fuel per passenger. Last year, that improved to 22.5 gallons per passenger. “

Add on maintenance that keeps the planes safe and government fees and taxes (think TSA) and the bottom line is that there is very little wiggle room on the plane for profit.

Put it all together, and airlines — the well run ones — are only able to convert  less than 1% of revenues into profits.

Decoding a Flight
Source: WSJ

Probably not what Wilbur & Orville had in mind …

>> Latest Posts

Remember when Southwest was the ‘no frills’ airline?

March 16, 2012

Just back from vacation … nice trip if you ignore the travel to and from Punta Cana.

Friends know that I’ve been a SWA loyalist for years.  I liked their cut-rate prices, was willing to forego some frills, and perversely enjoyed the fight to get a pass to board in the prized “Group A” and rush to get a prime seat.

My vacation flights were on United.  Ouch.

Base ticket price was ok … but, then the add-ons.

$25 for the 1st bag … $35 for the 2nd … 50 pound limit — strictly enforced.  C’mon, man.

Good news: United and Continental were converting to their new combined computer systems the morning I was flying … the agents weren’t able to collect the baggage fee because of a systems glitch.  Bank error, my favor

Then, the seat pricing scam.

Of course, I booked at the lowest available fare … with seats in the back.

Going — no problem. Got 2 pre-assigned seats close to the lavs in the back.

Got a couple of emails inviting me to shell out $59.99 each for seats closer to the pilot.  No thanks.

Returning — not so easy.

Initially told: no seats available at this time.  See agent when checking in for the return flight.  Huh?

Kept checking for seat availability.  Kept getting told: None, except for the $59.99 upgrades.  Hmmm.

During online check-in, a miracle.  UAL found 2 seats for us and took the liberty of pre-assigning them.

You guessed it … a couple of $59.99 special upgrades.

May we have you credit card number?  NO !!!

OK, Mr. Cheapskate … here are 2 seats back by the lavs.  Enjoy your trip.

Reminded me of an old restaurant tactic.  Servers were getting spiffed for wine sales.  So, they’d ask “would you like wine with your meal?”.  If the answer was “no”, they’d come back in a few minutes and query: “Excuse me, did you say red or white wine?”.  If the answer was “none”, they’d bring a glass of wine anyway to see if the customer had the nads to send it back.  Folklore had it that wine sales soared.

Hoped my bag would fly free again, but no luck. Got charged $29 (note- not $25) and had to carry on stuff to stay under the weight limit.  Bummer.

In flight, noticed there weren’t many takers for the relatively high priced (and presumed low quality) airplane food.

But, did see a dude walk-in with an extra large pizza.  Not the mini Papa John’s you get at the Verizon Center …. a full 16 inchers.  Thought the guy was going to get mugged.

What an experience.

As a friend observed: Southwest is suddenly the frills airline …

Go figure.

>> Latest Posts

Buffett says: “The airline business is unusually treacherous” … no bleep, Warren.

December 1, 2011

With American Airlines filing for bankruptcy, seem like a good time to dust off a slide I use in my class re: airlines revenue management practices.

My students hear often that I think airlines are pricing masters.

Which begs a question: why is their profitability so low?

Warren Buffett’s answer:

“A great management in that business will not necessarily get a great result …

In the airlines, you have a huge amount of capacity … something close to a commodity product with high fixed costs and no marginal costs

Since that extra seat doesn’t cost you anything, the temptation to sell it at a terrible price is overwhelming.”

As a result, inflation-adjusted air fares have been essentially flat for decades.

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Even extra baggage fees can’t save the day …

>> Latest Posts

JetBlue’s all-you-can-fly promotion …

August 3, 2011

Punch line: To “hook” business folks traveling in & out of Boston. JetBlue is offering BluePass – a 3 month  all-you-can-fly promotional price.

From The Economist …

JetBlue selling “BluePass” allowing unlimited travel

JetBlue announced a promotion called “BluePass” that will allow travellers unlimited flights in a three-month span for one fixed price.

The three-month promotional period runs from August 22nd to November 22nd.

Travellers have three plans to choose from:

  1. Three months of unlimited travel between JetBlue’s Boston hub and any JetBlue city, all for $1,999.
  2. Three months of unlimited travel between JetBlue’s Boston hub and any of 13 selected JetBlue cities (non west of Chicago), this time for $1,499.
  3. Three months of unlimited travel between JetBlue’s Long Beach, California hub and any of nine selected JetBlue cities (non east of Chicago) for $1,299.

BluePass is targeted squarely at frequent business travellers, which seems likely given the pricing and the “Get Down to Business” promotional tagline

* * * * *

Right now, most airline pricing schemes are the kind that annoy travelers, not the kind that offer greater flexibility and customization.

It would be great if JetBlue’s offer starts to alter that dynamic. ZipCar, the popular American car-sharing firm, does a much better job than the airlines do of offering pricing plans to fit every need.

Ken’s Take: “All-you-can eat-plans” often push suppliers up against their capacity constraints and end up disappointing customers – think AOL’s unlimited monthly dial-up program.

At least JetBlue is time-limiting, and location-restricting the offer so they’re not stuck with it if it blows up on them.

Thanks to Tags for feeding the lead

>> Latest Posts

What do Houston, Newark, and Dallas have in common?

April 12, 2011

Answer: high air fares.

Great analysis in one of the New York Times blogs

The writer wanted to figure out why, say, an average passenger flying out of Newark Liberty Airport pays about 25 percent more than someone flying out of John F. Kennedy International for an equivalent seat on an equivalent flight.

So, he cranked some nums re: airline pricing, and sorted airports as ‘relatively overpriced’ or ‘competitively priced’.

He modeled airport prices based on distance to destinations,  size of market (how much ‘traffic’),  and competitive structure – i.e. the market share at the origin and destination airports held collectively by the five “legacy carriers” (United, American, Delta, Continental and US Air); the market share held by Southwest Airlines; and the market share held by the largest single carrier at that airport (for instance, Delta and its affiliates are responsible for about 66 percent of all traffic at Atlanta).

He concluded that prices are higher where:

  • Legacy airlines dominate an airport
  • Southwest has a large share as opposed to other low-cost carriers like AirTran and JetBlue.
  • One airline dominates an airport, regardless of whether it is a legacy carrier or a low-cost one.

Here are overpriced airports:

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For ‘competitively priced’ airports, the “unifying theme”  is that many are warm-weather vacation destinations, like Las Vegas and pretty much anywhere in Florida.

Why?

Leisure travelers are more price-sensitive than business travelers since they, not their company, are paying for the ticket. To keep them flying, prices have to be relatively low,

Here are the bargains:

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A very clever analysis … Worth reading the details:
http://fivethirtyeight.blogs.nytimes.com/2011/04/06/which-airports-have-the-most-unfair-fares/

Thanks to BM for feeding the lead.

When was the last time you got bumped from an overbooked flight ?

June 11, 2010

Answer: Probably a long, long time ago.

About 1 in every 5,000 passengers … about 100,000 people each year.

Doesn’t sound like a lot to me.

Still, the Feds are up in arms about it.

* * * * *

WSJ: Auctions for Overbooking, June 8, 2010

The Department of Transportation has announced new rules for airlines to compensate passengers who are involuntarily bumped from an oversold flight.

The feds want to raise payments for those involuntarily bumped to $600 from $400 for short delays and to as high as $1,300 from $800 for lengthy delays.

We have a better idea — or, more precisely, the late economist Julian Simon had one 30 years ago.

In the 1970s, Simon proposed an auction system in which airlines would offer passengers on overbooked flights a gradually rising reward for giving up their seat.

For example, if 115 passengers showed up for a flight with 100 seats, the airline would start to offer, say, a $300 voucher to passengers who agreed to take a later flight. If there weren’t enough takers at $300, the airline would increase the offer to $400, then $500, a free round trip ticket, etc., until 15 passengers volunteered.

Auctions like this are highly efficient ways of allocating a scarce resource.

Starting with American Airlines in the late 1970s, a version of the proposal was widely adopted. Studies demonstrated that airlines saved money and the rate of bumping was reduced by more than 80%.

So why are there still so many involuntary bumpings?

Because many airlines offer one take-it-or-leave-it deal — say, a $500 voucher — and if there are not enough takers, the random bumping begins.

A real auction would prevent this and optimize the welfare of all parties. Those who take the payment for a later flight are better off because they have freely chosen this option. Passengers who cannot afford at nearly any price to miss the scheduled flight are guaranteed a seat.

The airlines also benefit because an auction may save them money over a set price or a government penalty.

Full article:
http://online.wsj.com/article/SB10001424052748703303904575293011757655060.html?mod=WSJ_Opinion_LEADTop

Will marketing tactics save NYC airlines from the tyranny of 100

April 1, 2010

TakeAway:  The airline game just got a little more interesting. 

The coveted shuttle routes from Washington to NYC, which were previously dominated by Delta and U.S. Air, are now home to three players – Delta, U.S. Air, and JetBlue. 

Does this mean that the previous unspoken rules about pricing are going to go out the window? 

And, the game gets even better because American is going to aggressively challenge Delta on many more routes. 

Will clever marketing tactics be able to save the day for Delta?  Or is the tyranny of 100 going to result in the slow death of a player?

Excerpted from WSJ, “American Airlines, JetBlue Swap Landing Rights at JFK, Reagan,” By Nathan Becker, March 31, 2010

American Airlines it will enhance service at New York City airports and also agreed to partner with JetBlue to offer connections to some of its East Coast flights, setting up a two-way battle for New York business travel.

American’s plan to bolster New York service will add seven new destinations served by 23 additional flights to and from New York City’s two airports …

The JetBlue agreement … should create a battle for control of the fragmented New York business travel market, which Delta has set out to “own” through route expansion and marketing deals such as those with the city’s Major League Baseball teams.

However, Delta is limited by aging facilities at JFK Airport and efforts by regulators to limit its expansion plans at LaGuardia Airport.

JetBlue will begin flying to Reagan National Airport as it obtained gate rights from AMR in return for rights at JFK airport. JetBlue is tied to the Star Alliance through Deutsche Lufthansa’s stake in the U.S. airline, while American is part of the rival oneworld alliance.

American also said it plans to expand its marketing efforts to New York travelers and designated a new executive position that will have responsibility for airport operations and “broad oversight” over the company’s New York operations.

The agreement with JetBlue will allow JetBlue customers “simple connections to American’s international flights and new convenient domestic flight options on JetBlue for American’s customers in and out of New York and Boston.” The partnership will focus on routes into and out of JFK and Boston that “extend and complement each others’ networks.”

Full Article
http://online.wsj.com/article/SB10001424052702304252704575155601088251666.html?mod=WSJ_hpp_LEFTWhatsNewsCollection&mg=com-wsj 
Edit by TJS

Take a bus, Tubby … so says Southwest.

February 16, 2010

Entertainer Kevin Smith was thrown off a Southwest Airlines flight for being too fat to fly.

Flight attendants determined he was too big to lower the armrest comfortably and tossed him from the flight.

The airline said that he was infringing on the “safety and comfort” of other passengers.

According to Southwest Airlines an overweight passenger can block the emergency exits from other passengers trying to quickly exit the plane.

The airline also says that passengers seated next to overweight people will be uncomfortable.

* * * * *

Note that Google embeds a Southwest ad with this article.  Oops.

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http://www.associatedcontent.com/article/2701833/southwest_airlines_says_kevin_smith.html?cat=51

$25 times a lot of bags equals … well, a lot of money.

October 15, 2009

TakeAway: From baggage to blankets, à la carte charges are becoming significant revenue sources for airlines

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Excerpted from Business Week, For Airlines, Fees Become Lifelines, October 12, 2009

Just a few years ago air travel was simple: Buy a ticket, fly. But as airlines hunt for new revenues to help them weather the recession, their goal is to make fares just one piece of the travel experience. Whether it’s a fleece-blanket-and-travel-pillow set or a can of soda, the airline cabin has become a bazaar, and the selling has only just begun.

Ancillary revenues—products and services airlines can sell à la carte—are becoming a vital financial lifeline for airline balance sheets amid weak travel demand. For some airlines, more than 20% of 2008 revenue come from ancillary sources. 

Airlines argue that they have little choice: Low fares do not cover their costs, and charging for products and services represents one of their few options for survival. “The airlines have been in negative returns since the days of Orville and Wilbur [Wright].” 

Passengers could be forgiven for wondering where the new charges might end. Is air travel destined to be dominated by ultra-spartan flights, such as those pioneered in Europe by Ryanair ?  Ryanair has even proposed installing credit-card-operated toilets.

Carriers are learning that some fees are more palatable to travelers than others. Checked luggage is one of the most successful new revenue sources—the top 10 U.S. airlines collected $670 million in bag fees in the second quarter. American led the way in June 2008 with a $15 fee to check a first bag, and nearly every other U.S. carrier has matched that.

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While it may take time to adjust to the new reality, consumers could ultimately benefit. With an à la carte approach, fliers will no longer be subsidizing products or services they don’t use.

Full article:
http://www.businessweek.com/magazine/content/09_41/b4150064773617.htm

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Hey, Southwest … what happened to free luv?

September 3, 2009

Warning: Ken is hacked !  Really hacked!

Last week, SWA got nailed for using uncertified maintenance parts on its 737s. Bad news, but I can live with that … you gotta take some risks, right?

But, this SWA policy change is personal since (a) I’m cheap and (b) I’ve gotten the “fast-trigger online check in” down to a science. 

I just may cancel my SWA Freq Flyer credit card …

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What has Ken so upset ?

Southwest Airlines will begin charging $10 to some passengers looking to board its aircraft before others.

For the extra $10 fee each way, passengers can reserve their boarding spot while buying their ticket.

Under the Dallas-based low-fare carrier’s current policy, passengers can begin to check in 24 hours prior to their flight. Passengers who check in the earliest get to board first.

A Southwest  spokeswoman  said the new option allows passengers to not have to worry about checking themselves in.

While many airlines have been charging passengers fees for beverages and baggage, Southwest has aggressively marketed its “no frills” consumer policies to set itself apart. What sets this option apart?  Southwest’s passengers have a choice of paying the $10 fee.

“These are opportunities that customers can have the option of taking advantage of, instead of being forced to pay the additional fee,” she added.

Washington Business Journal, Southwest Airlines adds $10 fee to reserve boarding spot, September 2, 2009
http://washington.bizjournals.com/washington/stories/2009/08/31/daily56.html?ed=2009-09-02&ana=e_du_pub

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Old Airlines Struggle To Close the Cost Gap

April 23, 2009

Excerpted from WSJ, “Costs of Old Age Trip Up Airlines” By Scott McCartney, Apr 7, 2009

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Bankruptcies, restructurings, pay cuts and radical changes in airplane fleets and schedules were supposed to lower costs at older airlines so they could afford to match the cheap fares offered by upstart low-cost carriers. It hasn’t turned out that way. The “cost gap” between so-called legacy airlines that have been around for decades and younger low-fare carriers has remained …

[L]ow-cost carriers have been able to reduce their costs even more as their rivals tried to catch up. They maintained an advantage over bigger airlines in productivity, allowing them to fly seats at lower cost than rivals … For consumers, the aggressive cost-cutting at airlines has produced a prolonged period of very low fares. By slashing costs and improving efficiency, airlines have positioned themselves to better weather the recession … Layering on fees for everything from checking bags to redeeming frequent-flier tickets has helped, too.

That could change because of the persistent cost gap … For the past several years, strong business travel and demand for premium tickets on international routes gave higher-cost airlines enough revenue to overcome the cost gap. But the recession has drained high-dollar business travel, leaving higher-cost airlines to compete more directly with discounters for cheap-fare passengers …

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Airlines measure unit costs and revenue by spreading it over seat miles — each seat flown one mile … last year, when fuel prices were still high, revenue generated by American, Delta, Continental, Northwest, United and US Airways averaged 12.46 cents per seat mile … while costs were 14.68 cents per seat mile on average. On each seat mile, those airlines were losing money.

The average for AirTran Holdings Inc., JetBlue Airways Corp. and Southwest Airlines Co. showed how the low-cost airlines fared better. Average revenue per seat mile was 10.92 cents, just above average costs of 10.87 cents per seat mile.

Average costs of the legacy airlines last year were 35% higher than average unit costs of the low-cost carriers Some of the cost gap is unavoidable. Big international operations bring with them higher costs (but also higher revenue). Big hub operations are labor- and equipment-intensive and not nearly as efficient … Low-cost airlines typically avoid connecting scads of customers through big hubs and often empty and refill airplanes on the ground much faster.

The payoff for higher-cost airlines is supposed to be higher revenue. Lots of international flights attract high-dollar corporate fliers, for example, and extensive networks create more opportunity to connect more passengers. That has worked well for airlines when the economy is strong and business travelers are paying top-dollar for tickets.

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David Barger, chief executive of JetBlue Airways, says high oil prices last year overwhelmed airlines and made all carriers high-cost carriers … The key to keep costs low, he says, is growth — another area where the low-cost carriers have an edge. Airlines that grow add new airplanes that don’t yet have lots of maintenance costs or reliability issues … Conversely, airlines that are shrinking have a harder time reducing unit costs …

Low-cost carriers have been steadily capturing a bigger percentage of domestic air travel, carrying 26% of domestic passengers in 2003 and 31% by 2007 … Legacy airlines dropped from 56% of passengers in 2003 to 48% in 2007.

Edit by SAC

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Full Article:
http://online.wsj.com/article/SB123905461687894541.html

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Airlines’ Battle a Boon for Travelers

March 27, 2009

Excerpted from Washington Post, “Downturn Puts Air Travelers on Cloud Nine”, by Sholnn Freeman, March 14, 2009

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Airlines have rushed out coast-to-coast travel deals for as little as $99 each way for the spring and summer as the economic downturn has taken hold. Continental Airlines and United Airlines, fighting it out on routes between Washington and Los Angeles, have priced round-trip tickets under $200. Airlines in recent weeks have cut ticket prices as much as 50 percent from a year ago.

The fare war comes as American companies scale back business travel and skittish consumers put off vacation plans, putting new pressure on airlines that only a year ago were fighting high fuel costs.

Yet some travel analysts are skeptical that travelers will buy, even at those prices. “With 600,000 or 700,000 people losing their jobs every month, they are asking themselves, ‘Can I really afford this?’ “

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Airlines began the year thinking the passenger market wouldn’t be so bad. Many had spent 2008 cutting less profitable routes and scaling back the number of flights, giving them more room to boost prices on the seats that remained.

Operationally, flight cutbacks mean fewer planes stacking up at airports, alleviating congestion. The government has reported that airline on-time rates are at their best level in years, even at busy New York airports.

Airlines began offering discounted fares in October after Wall Street banks began to buckle, grounding bankers and other financial executives who paid top dollar for transatlantic tickets. The steady stream of price cuts continued over the winter holidays. Now the discounting is spreading into the spring and summer — historically the strongest profit period for airlines as travelers take vacations.

“This is a major war,” said Tom Parsons, chief executive of BestFares.com, a discount travel Web site. “We never expected airfares like this in June or July of last year. We would have expected air fares double this.”

Edit by DAF

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Full article:
http://www.washingtonpost.com/wp-dyn/content/article/2009/03/13/AR2009031303564_pf.html

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Charities Lose As Airlines Grasp For Profits From Unused Tickets

March 11, 2009

Excerpted from WSJ “Why Fliers Can’t Donate Unused Tickets” By Scott McCartney, Feb 10, 2009

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“I was absolutely flabbergasted” by Delta’s response, said Mr. Zizzo … He had the unused tickets after canceling a trip because he and his wife suddenly had to care for an elderly relative.

Delta, like other airlines, says it doesn’t allow name changes on tickets …  Most airlines make their tickets “nontransferable” to protect their fare structures and maintain control of their inventory. Otherwise, entrepreneurs might hoard cheap tickets and then resell them at higher prices closer to departure …

Travelers can fly later on their unused tickets by applying the value of the ticket to another trip to any destination after deducting change fees. But most airlines require the new ticket to be in the original passenger’s name … The restriction means that when plans change, consumers are often left holding nonrefundable tickets they can’t use … many end up getting thrown away.

How many? Airlines won’t say. Airlines don’t break out revenue from “spoiled” tickets and won’t publicly estimate how many tickets are never used … One thing is clear: Spoilage is big enough to allow overbooking of flights — selling more tickets than there are seats on a plane because some customers typically don’t show up.

Industry insiders … suggested that about 2% of all tickets expire unused. One official put the figure as high as 3% of an airline’s revenue … Based on 2007 passenger revenue …  $1.8 billion to $2.7 billion worth of tickets are thrown away each year. Even after change fees, that’s enough to make a major difference for charities.

Organizations such as Make-A-Wish say they would be thrilled to make use of some of those tickets … Airline customers donated millions of frequent-flier miles to Make-A-Wish, resulting in about $3.6 million worth of tickets for 880 families. But the organization had to purchase tickets for 7,790 other wishes granted …

Carriers say they won’t make exceptions for charities, and don’t have any mechanism to convert donated tickets to miles, gift cards or airline vouchers that could be transferred to approved charities … Some carriers said they didn’t have the technology to allow donations; others said that even though they charge change fees, the cost of allowing donations is the main hurdle …

Making airline tickets transferable isn’t a security issue. The TSA says the airline simply has to check passenger manifests against extra-security screening criteria and no-fly watch lists before departure. “TSA does not have a rule directly forbidding the transfer of airline tickets,” a spokesman said …

To Mr. Zizzo, the airline policy doesn’t make sense. “If I don’t use the tickets, they get to put $700 in their pocket,” he said. “With the economy the way it is, it makes sense to use everything available, especially for someone in need.”

Edit by SAC

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Full Article:
http://online.wsj.com/article/SB123422727266065699.html

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Airlines Fight For First Class With Food … Umm, umm, good

March 10, 2009

Excerpted from WSJ, “Cooking Up Ways to Improve Steaks on a Plane” By Scott McCartney, Jan 20, 2009

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Competition for first-class passengers is more heated than ever in the global recession, and sometimes it boils down to whether the soup is hot enough. International airlines are beefing up food spending as a differentiating draw for premium customers — even U.S. airline spending on food has increased recently

U.S. airlines that fly internationally increased their spending on food by 8.5% — the biggest increase in any category besides fuel … The same airlines cut labor expenses and maintenance expenses in the same period and slashed advertising more than 22%.

Many airlines, domestic and international, hire famous chefs to help create in-flight menus and lend cachet to airline food … Profitability for long international flights hinges on selling business-class and first-class tickets for thousands of dollars … Food is a crucial variable.

“Nobody complains about what kind of fuel you buy, but food does get a disproportionate share of comments … Airlines fly the same kind of planes — either a Boeing tube or an Airbus tube. What’s different is the service and the food, and that’s where we try to excel.”

The focus on food may seem a bit bizarre for travelers who usually travel domestically — and in coach. Food service on airlines has soured for many travelers after years of cost-cutting …  Even in first class, meals on many domestic flights are skimpier: Drinks and nuts are the typical offering on shorter trips …

It turns out you can serve a high-quality meal on an airplane, if you know how to overcome the huge obstacles. Because the dry air of a jet cabin dries mouths, taste is diminished in flight. So Singapore and other carriers exaggerate flavors in meals … High-quality airline food is prepared so that it can be reheated hours after its initial cooking …

Today, passengers want flexibility in meal service so they can work, watch fancy entertainment systems and sleep. And just as culinary arts have been raised on the ground, so, too, do passengers expect more from airline food …

Edit by SAC

Full Article:
http://online.wsj.com/article/SB123241509322796411.html

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Revenue Management: Dark Skies Ahead for Airlines

February 23, 2009

Excerpted from WSJ, “After Rough Year, Airlines Bet on More Fees, Lower Fuel Costs” By Susan Carey, January 30, 2009

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Four more U.S. airlines reported fourth-quarter losses, capping a tough year, but the industry is hoping that new fees, higher ticket prices and lower fuel bills will bring improved results in 2009.

Airlines have begun boosting revenue by raising their fees for incidental services and charging for perks that were once included in the price of a ticket … US Airways Group hopes to generate as much as $500 million of such ancillary revenue this year.

So far, the industry’s capacity reductions have enabled carriers to raise prices and report fairly healthy gains in unit revenue, or the amount taken in for each seat flown a mile.

But gyrating oil prices and the recession continue to cloud the industry’s outlook. Volatile crude prices gave airlines fits last year as oil’s descent in the second half led to losses on hedging contracts they had entered to guard against rising jet-fuel costs …

 

The industry faces headwinds, including the challenge of holding down unit costs as capacity is cut and previously profitable international routes turn weaker. The International Air Transport Association … said passenger demand fell 4.6% in December and international cargo traffic dropped more than 22%.  Continental said it is concerned about a deterioration in its premium international business, its business bookings and even some leisure markets.

While Continental, the fourth-largest U.S. airline by traffic, figures its annual fuel bill will drop $2 billion this year, it said it is anybody’s guess whether oil will climb to $150 a barrel or decline to $20 a barrel …

US Airways, the No. 6 U.S. carrier by traffic, reported a net loss of $541 million … with $234 million in losses reflecting adjustments to its fuel hedges. The company expects it will pay $1.7 billion less this year on fuel than in 2008. US Airways plans to reduce its mainline capacity by nearly 6% in the current quarter …

Edit by SAC

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Full Article:
http://online.wsj.com/article/SB123315725894024393.html

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Loyalty programs lose their umph … at least for airlines

January 28, 2009

Excerpted from WSJ, “Plunging Value of Fliers’ Miles Saps Loyalty” By Scott McCartney, Dec 9, 2008

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The plunge isn’t as severe as your 401(k) or home appraisal, but the value of frequent-flier miles has dropped so far that airline programs no longer drive customer loyalty as strongly as they used to … But now, a handful of airlines … are launching tweaked programs they hope will rebuild ties with fliers.

The percentage of online buyers who say they are loyal to particular travel companies fell to 25% this year from 31% in 2006 … Customer loyalty for airlines … are worse than for hotels and cruise lines. And travelers buy tickets based on price and schedule more than ever instead of choosing to fly a particular airline.

“Airlines are shooting themselves in the foot…Their loyalty programs are just not worth what they once were to consumers.”

The biggest force driving the erosion of loyalty is the loss in value of frequent-flier miles … Airlines have raised the price of awards and tightened availability of the cheapest award levels, forcing travelers to jump to more-expensive mileage levels to claim seats…

To be sure, frequent-flier programs still drive loyalty for some road warriors… And they still make lots of money for airlines … The programs have grown more profitable as airlines have made it more difficult to cash in miles and added fees and surcharges to awards…

Not surprisingly, research …s hows growing dissatisfaction with mileage programs…Some airlines are addressing these flier gripes and revamping their programs …

Industry watchers say it may be risky to continue to degrade frequent-flier programs … airlines need to re-examine if they have squeezed frequent-flier programs too tightly. He says airlines have ignored trends in other industries where loyalty programs are stronger, and made their rewards more expensive and more difficult to redeem than other loyalty programs.

“Airline passengers get whacked by a lot of sticks, but there are not a lot of carrots out there for them” … airlines need to reinvigorate their customer-service efforts across the board, improving service at the airport and on board aircraft … frequent-flier programs could be more valuable to airlines as stronger drivers of loyalty if carriers revamped their confusing and frustrating redemption schedules, and gave consumers better benefits for purchasing loyalty.

“The idea of trying to reward people for loyalty is good … but it has become too complex and frustrating in the airline industry.”

Edit by SAC

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Declining customer loyalty adds pressure to the airlines already heavy financial woes.  Passengers no longer see the value in the customer loyalty programs that were originally created to increase customer loyalty.  As such, frequent-flyer programs may be profitable for the airlines in the short-term, but in the long-term customer lifetime value is likely to decline having a great impact on the airlines’ bottom line.

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Full Article:
http://online.wsj.com/article/SB122877921525689525.html

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Uncertainty Fuels Airline Price Cuts

January 14, 2009

Excerpted from the Miami Herald, “Airlines cutting prices to stay aloft during recession, ” By Harry Weber, Jan 7, 2009


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A wave of fare sales has spread across the airline industry…as the weak economy continues to put pressure on carriers to fill seats even after they drastically reduced capacity and some expressed willingness to cut more.

Many experts and even executives at some airlines had expected that after deep capacity cuts went into effect starting in September, the number of fare sales going forward would be fewer and farther between. But fuel prices have come down significantly, and the weak economy has eroded demand for air travel…

It’s not unusual for airlines to announce fare sales in January…but what’s different for several carriers this year is that the discounts are for travel extending as late as April, May or June..The sales last January were typically for travel through March, he said.

Seaney said he believes uncertainty in the economy is the reason for the change…A handful of major carriers and discount carriers have launched fare sales since Dec. 31. Others are expected to follow with sales of their own, or to at least match discounts offered by rivals on competitive routes…

Discount carrier AirTran Airways said Tuesday it was offering a nationwide sale with one-way fares starting as low as $39…”We are uncertain about the economy and we are trying to build business on the books for the winter and spring,’

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Full Article:
http://www.miamiherald.com/business/nation/story/840842.html
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Losing Altitude – Airlines down $5.2 Billion

September 9, 2008

Excerpted from Wired Blog Network “Airlines to Lose $5.2 Billion Worldwide This Year” September 8, 2008

Things keep going from bad to worse for the global airline industry, which has taken such a beating from rising fuel prices that it expects to lose a staggering $5.2 billion dollars this year — with U.S. carriers accounting for almost all of the red ink.

That bit of cheery news comes from the International Air Transit Association, which says “a toxic combination” of sky-high fuel prices and plummeting demand “continues to poison the industry’s profitability.” More than 25 airlines have gone under this year…It’s a stunning turnaround for an industry that saw a $5.6 billion profit in 2007.

The industry attributes its free-fall to the price of oil…fuel bills have jumped $50 billion this year to an estimated $186 billion. Jet fuel now accounts for 36 percent of the industry’s costs, up from 13 percent just six years ago…

The recent drop in fuel prices have brought a measure of relief to the beleaguered industry, but it might be a double-edged sword…

U.S. carriers took the biggest hit, accounting for $5 billion of the projected losses…Don’t expect next year to be any better. Fuel could account for 40 percent of the airlines’ costs next year, and the IATA predicts the industry will lose $4.1 billion in 2009. 

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Full article:
http://blog.wired.com/cars/2008/09/airline-haters.html

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