Marketing and pricing: February 2008 Archives

United was the first, but when only Spirit and Skybus match, that’s hardly an industry-wide trend. But now US Airways has responded to the new second checked bag fee that United announced a week or so back. And like United, it said more such ancillary charges are likely as oil keeps climbing. You can hear someone you know talk about these extra charges on National Public Radio's Morning Edition here, and you can read US Airways’ own explanation of the policy on the next page where the airline’s president, Scott Kirby (below), talks about the change.

What’s the best place to find out about British Airways’ plans for its new Open Skies operation? Why, Washington of course. BA has had to tell US regulators about its plans so it can win the formal permission to fly it will need, and the filing it made with the US Transportation Department shows that it plans its first flight from Paris – a city on its short list – and New York’s JFK. Open Skies, once dubbed Project Lauren, says that it would later link JFK with other European points such as Amsterdam, Brussels, Frankfurt and Milan. The carrier had not specified airports earlier, and still has not detailed if it would use the older Paris Orly or the city’s newer Charles deGaulle airport. L’Avion, the French entry into the North Atlantic all-premium contest, uses Orly. Open Skies says it has won tentative IATA approval to use 'EC' as its code, but it will also operate as a code share for BA itself as BA*. To buttress its plans for premium level on-board service in its three-class Boeing 757s, Open Skies says that it will have a crew ratio of about one crewmember to 17 passengers. It’s asking for a May 1 approval from DoT so it can start up in June, in time for the summer's high season. But the DoT dockets (this one is OST-2008-0064) aren't the only place that Open Skies is talking: it's set up its own website and blog.

We’re virtually certain that Second Life, that sort of Internet world where people play with animated figurines called avatars, makes little sense. It always seemed like grown-ups playing with dolls. Well, Alaska Airlines has finally found a useful use. They’ve rolled out a virtual assistant they call Jenn, an Internet denizen who takes questions on the Alaska and Horizon website. She’s sort of an aviator avatar. With her own voice and personality, Jenn answers hundreds of common questions and helps customers book travel. People go to the ‘Ask Jenn’ link on alaskaair.com's main toolbar (righthand side), rather than trying to ‘intuit’ (or guess) where to go or struggling with a site ‘map’. Jenn is a middle ground between the internet and talking to a ‘real’ person after several real minutes on hold. Browsers type a question in Jenn's chat window and she answers verbally, asks follow-up questions if she doesn't understand, or, if she does, gives a written response and related links, and shows relevant pages.

They call the northwest corner of South Carolina ‘The Upstate’, and that is true in more ways than one. The region’s main airport, the Greenville/Spartanburg airport, a facility with about a million-and-a-half boardings a year, has some of the highest fares in the country. The city is typical of many smaller of US cities: too small for a lot of main-line service, but enough of a business centre that people want and need to travel to and from it. Spartanburg happens to be a centre for the US chemicals industry, and BMW, a truck-maker, and Michelin all have factories in the area; it’s a banking centre as well. The Bureau of Transportation Statistics (yes, there is such a thing, and they work hard) said the other day that the GSP airport had the third-highest average fare prices for domestic service during the third quarter of 2007. The average fare was $465, and only Cincinnati, a Delta-dominated fortress hub, and Anchorage, Alaska, were higher. Well, some airlines do pay attention. US Airways says on the GSP airport website (and indeed in local advertising in The Upstate), “There’s no need to drive to another airport because we brought new low fares to Greenville-Spartanburg, SC. We've lowered fares to lots of your favorite destinations, so there’s no reason to travel to another city to get a great low fare" What airport might Upstaters drive to?

When people are used to coming into your store, you don’t have to offer as many lures, and that rule of retail is certainly the case when it comes to airline websites. Used to be, the carriers would give people extra frequent-flyer points just for booking on the airline’s own website instead of taking their business to a walk-in agency or an online travel agency or ‘OTA’. That is ending. United ended its policy of giving miles to united.com bookers the other week, and Continental and US Airways both ended their online bonuses late last year, following Delta and Northwest. Now American is the last of the network carriers to offer a bundle of bonus miles for booking at .com. Well, not exactly a bundle. Used to be, American would give 1,000 miles for booking on line, but that largess has dwindled to 250 miles.

Much like darkness after sunset or rain after clouds, the reaction was predictable and the mention of two small denomination coins - nickels and dimes – was inevitable after United Airlines said the other say that it would start charging people in the cheap seats to check a second bag. Some were alienated, and one flyer told a discussion group that the policy would doubtless hurt those who could least afford it and that it was “kind of like the rich getting richer and poor getting poorer.” She did not suggest a federal baggage-fee subsidy, however. Someone you know and (we hope) like, can be heard discussing the reaction here. United revenue officers think that this sort of 'unbundling' of airline services is the wave of the future, but, they say, in the words of airline official Kevin Knight, “We don’t really know what to sell to our customers” when it comes to ancillary charges. Food on board may be a no-brainer, but, Knight mused, what more?
United isn’t the first to try this approach: Ryanair started this a la carte pricing, Air Canada made it central to their pricing policy and here in the US of A, Spirit Airlines, Allegiant and Skybus have picked up on the theme. With fuel prices refusing to behave themselves, even Southwest Airlines has gotten a little less generous with free space in the bellies of its planes; the other week, the discounter began charging for a third checked bag.