Marketing and pricing: November 2008 Archives

They may be turkeys, but they're not that dumb. They get to ride up in first class while you have to go to the blackboard and write 100 times over, "I will not make bad jokes about United." On the other hand, they are turkeys. Two of 'em.
And they have the whole front section of a United flight to LAX from Washington tomorrow, Thanksgiving Day. And they're not just any turkeys. In Washington, these noble beasts, once championed by Benjamin Franklin to be the national symbol of the United States rather than the bald eagle, will be pardoned by the president (Bush, no jokes please) at a White House ceremony.
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First you build a hanger, then you rebuild the plane. And that's what Luftie is doing up in the snowy wilds of the great state of Maine with its newly built hangar at the Auburn-Lewiston airport. There, it's officially commenced restoration of the Lockheed 'Super Star,' the first long-haul aircraft operated by Lufthansa capable of non-stop trans-Atlantic flights. Over the next three years, the aircraft will be brought back into flying condition so that by 2011 it can take to the air again from its new base in Germany once it has been newly registered and repainted in Lufthansa's historic colours.

 

Vox populi: the voice of the people has spoken, and it has told airline guys to think again. So they did, and in response to protest by their frequent flyers, some major carriers have reversed recently announced changes to their loyalty plans
The latest is US Airways, which reversed a widely unpopular move and said it would reinstate bonus miles and a 500-mile minimum benefit for members with Preferred status in its Dividend Miles plan. The carrier had rescinded the minimum award and the bonus points earlier in the year, and said it would give the elites only as many points as the actual miles flown. For travellers in the top tier of its Dividend Miles program, Preferred flyers who schlep 100,000 miles a year or more, the change had the effect of cutting their mileage balance in half. Randy Petersen, the frequent-flyer expert behind FlyerTalk and InsideFlyer magazine, began an on-line campaign he called 'Save Dividend Miles' to bring attention to the decision and he was overwhelmed with postings. So in response the carrier will reinstate the awards retroactively to August 6 for members of the four preferred status levels.

 

 

De-mand. It's like the cheering crowds at a football game yelling de-fense. Only now it's a weaker refrain. And getting fainter. Travel agent sales reported through the airline industry clearing house, ARC, show their first monthly double-digit decline in volume - almost 12% - in years and the most dramatic drop in October sales since October 2001, the month that followed 9/11. And these transactions tend to be advance purchases.
So the airlines have begun their sales, and even though they're from a higher base price than just a few months ago, they're out there. Southwest Airlines, the low-fare leader of the entire world (sort of), just announced its third short-term sale for travel right around the holidays as well as in the slow shank of the New Year. It launched a sale a week or so ago - its first pricing promotion in five months and quickly followed with two more. Others have come in with sales of their own. Fare watcher Rick Seaney of farecompare.com says, "I can't recall three airfare sales from Southwest in a quarter, let alone a week."

Planes, trains and busses. Everyone knows that the Pittsburgh airport has taken a serious blow since US Airways downgraded it from a hub to a focus city to a spot on its route map. Even with word that Delta will fly between the city and Paris, the region's suffering. Comes now word that at least one city in the region has new service from Pitt. Sort of. It's not a flight but a bus, a very nice bus, which will fly, er drive directly between Pittsburgh's downtown and the state's capital city, Harrisburg. Dubbed the Steel City Flyer, the bus is to be operated by a company called Railroad Development Corp. This company owns rail lines in Iowa, Chile, Argentina, and Guatemala. 

Farelogix, which likes to call itself "the last GNE standing," says it is taking a tack toward the open source community with a new application it will be offering travel agents for free, starting next March. Dubbing its open source application Hawkeye, the company's chief, Jim Davidson, tells us that agents can use Hawkeye with or without tying into the main Farelogix products, the FLX platform; agencies can also built the open source front-end package into a custom application. Farelogix, which will be the community coordinator and manager, may be taking a risk in making the source code available for free, but, he says, "a certain number of people will take the source code and come back to us for our black box," which is the FLX middleware.

The leaves are turning, the air is crisp, the sun goes down early...it must be time for a story on holiday airfares. Left Field, for one, is glad of this because some of the self-proclaimed airfare experts have been marking the rounds out there about how there really are still a lot of bargains to be found. Our point is this: airlines will always have sales and promotions and the big print will always say 30% or 50% off. The important point is how much that percentage is off, and in this year's travel environment, it's off a much higher base. We were pleased when the Public Radio show Marketplace called the other day and asked us to discuss this (even though their headline was sort of the opposite of our point.) Also on the show was our friend Richard Aboulafia. You can listen here. 

When the chief of Volaris told us a few weeks back that they have word soon about how they plan to enter the US market, we figured that there'd be word about a few routes into Texas or the like. Nope. This is a big deal: Volaris signed a deal with Southwest Airlines to set up a code-sharing pact that starts in 2010. You know that Southwest already has a code-share deal with Canada's WestJet, set to begin next year, and that it has been looking southward as well. It does not give many details.

At United, they're doing some interesting things like announcing the first sale on an ancillary charge that we've seen. United is running a promotion that gives a 20% discount if travellers pay their first-bag fee on line by February 1 of next year. And the airline pulled back on its plans to raise the fee to check a second bag. The increase, set for Monday, from $25 to $50, followed moves by others, but instead it will stay at $25. The new chief marketing and customer officer, Dennis Cary, says "we are listening to our customers." Cary said this before when he took back United's plan to charge for food on international flights and to rescind its long-standing policy of giving a 500-mile minimum credit to its frequent flyers. 
The carrier has done a few more interesting things: it has rejigged united.com so that passengers can go on-line and pay fees for checked bags, which should save time at the airport, or they can purchase United's Award Accelerator, which lets members of its Mileage Plus frequent-flyer plan multiply the number of points they earn per trip.

Neither of these rivers is the Seine: Those guys down there in Atlanta have a lot to celebrate, what with the merger and the stock options and all, but we think they should stop drinking the left-over champagne. They just announced two new routes to Paris that have left us puzzled: Delta (yes, Delta, which includes Northwest) is going to fly from Pittsburgh, where it now has almost zero flights, and from Raleigh/Durham NC, where it has even fewer flights, starting next March. We are perplexed.

 

Over at Delta, they're using the takeover last week of Northwest Airlines to justify "an alignment and harmonization" of policies. This means that Delta, the last big holdout among network carriers on charging a fee for a first bag, will begin doing so, starting in December. It will charge $15 for the first bag and $25 for a second bag. This isn't all bad because it's half off the current second bag fee of $50; the usual elites are exempted. Steve Gorman, Delta's chief operating officer, says customers aren't making a differentiation between the airline and its fee-charging rivals. Delta also cut some other fees, like buying a ticket over the phone, which drops from $25 to $20, so it's REALLY not all bad.

New from the small change department, bureau of nickels and dimes. Left Field was on the NPR (National Public Radio) show Morning Edition, blabbing about airline fees and charges and the prospect for change. (as it were.) Click on this link to listen, but here are a few more things for the complainers to complain about, including the US Airways plan to start selling pillows and blankets on board and a move by United to show you that they may be skin-flints charging you for your checked bag - but it's still a better deal than the famed overnight purple machine.
US Airways tells its employees in their most recent newsletter that that it doesn't yet have a date for selling the blankies and pillows, but they'll costs about $7, while United says that if you don't trust it to carry your bag and you don't want to pay them, that's okay. You can check it into FedEx when you check in at United, but it will cost: $149 for a flight under 1,000 miles, and $179 for longer flights. This is only avaible on domestic flights. Before you start complaining, this is less than some of the existing bag-schlepping services: $325 to $375 was the quote for an overnight bag delivery from one of the companies that specialises in carrying unaccompanied bags.

AmEx Business Travel took BTX, its on-line community for cor porate travel out of beta testing, and started it live. In the year or so since the concept was launched, the site, dubbed BTX, or Business Travel ConneXion.com, has been intended as a free membership site to share best practices, build relationships, and do all the other things that social networking sites are supposed to do. But BTX will rely on members to supply just 60% of the content. The other 40%, a mix of editorial content and 'advertorials', will be supplied by the site. Over 950 industry members have joined the community, says Charles Petruccelli, president, Global Travel Services for American Express. Content providers include the National Business Travel Association, Executive Travel, PhoCusWright, Rearden Commerce, in which AmEx has invested heavily, and freelance industry writers. Some parts of BTX are intended for American Express Business Travel clients; for instance, the site's 'Product Lab' will allow feedback on new and existing products, but only from AmEx clients. Initially, it will seek feedback related to the design of the latest release of its Axis information solution. Petruccelli will run a live chat with members on November 20th.