Marketing and pricing: March 2009 Archives

Fees fracas: there's been a lot of chatter about fees that the airlines charge and how to calculate them. But that kafuffle overlooks the fact that some on-line travel sites charge you fees to make a booking, fees that get you the right to pay more fees to the airline. So with the slump in on-line bookings as the sagging economy takes its toll, does anyone online care? Well, yes. Expedia, the on-line travel agency, eliminated its booking fee for airline tickets sold by May 31, while Travelocity waited a few days and then matched them. They must be very nice people there...or perhaps this is just a recognition of the reality that most people use these sites as a reference, cruising through to find out what an airline is charging and then going to the airline website itself to save the booking fees. Tom Botts, a travel industry veteran who blogs at Hudson Crossing, says, "This is a seismic change for the on-line travel agency industry."

 

Oneworld, the global alliance that's led by BA and AA, is pressing US officials hard to get antitrust immunity for their transatlantic operations; they've included Finnair and Royal Jordanian as well as Iberia, and they insist that their plan is to offer 'metal-neutrality.' That's alliance-speak for it doesn't really matter which member of the alliance you fly on, because the pricing and benefits will be interchangeable. But then again, they say, the on-board service won't be exactly identical: "What has not been decided as this point is the extent to which the parties will continue to offer different products across the different brands in the long run."

You would think the nation has a limited supply of really underserved airport markets, but Allegiant Air has demonstrated that the states have plenty of Grand Forks and Billings. Now comes Air Azul, a tiny turboprop operator, and its very big plans to mimic Allegiant - up to a point.
It has arranged with Sun Country Airlines, the Minneapolis-based carrier that's trying to get out of bankruptcy, to operate public charter flights between big cities on the East Coast and a scattering of service-hungry cities in the Midwest. The carrier, which will use a Sun Country Boeing 737-800, "sees the how the Allegiant model worked. We're slightly different because we're linking underserved markets like Toledo or South Bend, Indiana, with major metropolitan areas, rather than with leisure resorts, but we're clearly inspired by the success that Allegiant has had," says Brian Burling, the vice president of Air Azul. The company announced this week that it will serve South Bend linking it with Newark Liberty, near New York, three days a week. It also announced service between Toledo, Ohio and Rockford, Ill., and Newark, three days a week, and plans thrice weekly service between Newark, and Lansing, Michigan.

 

We didn't believe him when Michael O'Leary came out and began moving his lips. He was yakking about how Ryanair was going to start charging people to use its on-board lavatories (oh the headlines!) and then said while it was improving customer comfort this way, his airline would get rid of airport check-in counters. Everybody would have to check in on line, O'Leary said.
Well, he was serious, at least about the airport part. Ryanair now officially plans to eliminate its airport check-in by October. You will have to check in from home, and the airport will only offer a drop desk where you can check your bags (for a fee).

 

Southwest began its service to Minneapolis/St. Paul, which may be big but is old news. What is new news is that the airline wasn't just welcomed by mayors, airport officials and others. One of Southwest's largest unions, the Transport Workers Union, ran radio advertisements taking note of the fact that Southwest is both the nation's most unionized and its most profitable airline. TWU represents flight attendants and ground workers on the Dallas-based airline. To listen to the radio spot, click on this link: Transport Workers Union. Also glad to see Southwest in the Twin Cities: folks with sore backs. The airline was giving out free backrubs as a promotion.Gary Kelly, Southwest's chief, was pretty chuffed, as the Brits say, in explaining the new service (above).

Kerry wins! John Kerry, that is. The 2004 presidential nominee may have lost that race by seems to have won his campaign to shame US companies into cancelling their cruises and meetings. Outraged by reports that companies taking US bailout funds were still having nice meetings, sometimes very nice ones, the Massachusetts senator wants to ban luxury travel for any of the 400 or so bailees, and he has led congressional attacks on fancy forums, on those rich, uncaring SOBs with their private beaches and massages, at places they flew to on private jets, all paid for by either taxpayers or shareholders. It's a catchy theme and, as they say in Washington, one with legs.

This post is as much a personal note as it is professional one: we take note of the passage of Fred Krum, the man who ran the Akron/Canton airport and more or less single-handedly made CAK, as the airport's known, into a center for low fares that competed, and competed successfully, with its giant neighbor some 38 miles to the west, Cleveland Hopkins. Krum was director of the northeastern Ohio airport for 28 of his 33 years of service there. He was able to lure AirTran, which has thrived there, as well as Frontier, providing a balance to the presence of Southwest at Hopkins. Fred retired last September when medical conditions had slowed him down; he was only 57 when the brain tumor that had slowed him finally was to claim him.

American Airlines moved to protect its position at Boston's Logan International Airport, announcing it will give its frequent flyers three times as many miles when they fly nonstop between Logan and the West Coast. So any two roundtrip flights between the Hub of the Universe and San Francisco, Los Angeles, or San Diego by May 31 will get a flight free; three paid roundtrip flights will earn enough miles for a free roundtrip ticket between Boston and Europe. But this offer, along with a sale on fares (on all routes), is only good on Logan routes. So does America just like those friendly Bostonians or what?

So, is he kidding? Or, who (m) does he think he is kidding? He is Michael O'Leary, the head of Ryanair, Europe's largest really cheap carrier. O'Leary went onto BBC to tell a morning 'chat show' that maybe Ryanair would perhaps possibly begin charging its passengers to use the lavatories on board its Boeing 737s. O'Leary had a more or les straight face as he chatted with the a.m. show, but then again he usually does.
While few are taking his potty talk seriously, O'Leary also said the other day that Ryanair would be doing away with check-in counters at all of its airports, a statement that he is still standing by - and which he repeated in the course of the BBC interview. We spoke to a few US and Asian carriers that adhere to the same really low-cost philosophy that Ryanair champions, and we found one that did not outright dismiss the O'Leary counter-culture concept. At Spirit Airlines, the 'ultra low-cost carrier' based near Miami, "we're not laughing at them," says chief marketing officer Barry Biffle.