Strategies and tactics: September 2008 Archives
Air Canada masked the fare hike by adding that it will be the first major North American carrier to drop its extra fee for a second piece of checked baggage in response to the recent drop in fuel prices. The fee ends September 23.
The airline says that by year-end it will have developed a way for customers to pay baggage fees at united.com when they check in on-line. Chicago-based United estimates that its merchandising efforts including its bag fees will raise as much as $700 million in 2009. The United fees begin on November 19.
The Air Canada development - a deal with Farelogix - puts the carrier's a-la-carte fares and other products as well as Air Canada flight passes into travel agents' desktops. It follows other links and interfaces through competing middlemen as well as a product on Galileo, the Travelport GDS, dubbed Agencia, says the airline's John Reber.
Could he be right? We hope so, because Ray Neidl, the hard-working Calyon Securities analyst, thinks that "the worst is past for US airlines." This would be a very good thing, because we have just learned that the US airline industry paid out $4.1 billion for jet fuel in July, up 72% from the same month last year. Consumption was relatively flat at 1.11 billion gallons. The cost for a gallon of jet fuel rose 77% to $3.69 from $2.09 last year, the Bureau of Transportation Statistics said. BTS, a part of the Transportation Department, said that, including international carriers, fuel consumption fell 1% to 1.61 billion gallons with a global-wide fuel bill of $6.16 billion, up nearly 80%, year on year.
Good money, bad money. Midwest Airlines, which used to be Midwest Express and is sometimes dubbed the bottomless money pit of Milwaukee, has saved itself from bankruptcy with yet another investment by TPG, the Texas Pacific Group. It's about $30 million. What's different this time is that it's lured another airline, Republic Airways, into putting money into its future, even though the last airline it won over, Northwest Airlines, had to write off all of its $213-million investment in Midwest (for a 47% stake). Republic puts in $15 million in a one-year loan, and agrees to another $10 million if Midwest meets some performance criteria. But Republic also gets a home for the dozen 76-seat Embraers it has been trying to place since it had to take them back from Frontier (which hasn't avoided bankruptcy) in late June.
EasyJet, Ryanair's largest low-fare rival in the European skies, has taken a decidedly different tack on screen-scraping and indeed on reservations as whole than its hard-line competitor. Within weeks of Ryanair's move to cancel the bookings of travellers who bought through unauthorised sites or screen-scrapers, EasyJet cut its fee for making a booking though a Global Distribution System (GDS) from a sliding scale that went up to 5 pounds sterling (that's 7.50 Euros, or about $312 in US money) to lower fixed rate of 3.30 sterling. The move is intended as a sharp contrast to the actions taken by Ryanair, says EasyJet distribution manager Jerry Dunn. The cut applies to bookings made through GDSs and other "approved third-party distribution channels" that are connected to EasyJet's API (Application Programming Interface).