In other hotel, aviation and travel industry news last week…
- Last year, Chicago took the top spot as being the city that charges the most taxes to travelers in the country and effective January 1, 2012, they’ve raised hotel taxes another percentage point. It brings the hotel portion on par now with New York and Las Vegas. Another article, however, states they don’t see “any move to raise taxes on the travel industry.”
- Checks are beginning to arrive in mailboxes across the country with refunds of fees charged for using credit cards overseas. A class-action lawsuit that required filing a claim back in 2008 is finally being settled and people are getting surprises in the mail ranging from $18.04 to thousands of dollars. I quite honestly don’t remember if I filed a claim. I hope so, because the travel period was from February 1, 1996 through November 8, 2006 and I was overseas quite a bit during those 10 years. Were you?
- The Department of Transportation extended the deadline for airlines to advertise fares inclusive of taxes and fees by two days. Now effective January 26th, American Airlines requested the delay since they claimed Tuesdays are the busiest day of the week for their website and the previous January 24th requirement would have been too burdensome. No other airlines objected.
- Boeing orders are up 52% this year compared to last, in part due to a record-setting year for the 777. The manufacturer delivered 477 aircraft in 2011, but has a backlog of 3,771 unfilled orders. President and CEO Jim Albaugh stated, “As our current commitments become firm orders and we add even more customers, I have no doubt that 2012 will be the ‘Year of the 737 MAX’.”
- A subsidiary of Delta Air Lines, MLT Vacations, is now the travel wholesaler selling Air France Holidays and Alitalia Vacations. They also run the Delta Vacations brand. Vacation packagers receive bulk fare contracts from airlines, hotels and other travel providers and then combine them to sell complete vacations at a price cheaper than what you’d be able to book individually with each unit. I worked for a couple of these outfits in the 1990s and really enjoyed a unique side of the industry not known by many.
- Online retailer Overstock.com launched a travel page on their popular website. Powered by Priceline, you can book complete vacation packages or individual air, car and hotel reservations. It really acts like a portal, though, because as soon as you enter any type of search criteria, it redirects you to Priceline.
- On January 1st, the former Las Vegas Hilton rebranded as The Las Vegas Hotel & Casino, ending its more than 40 years as a chain hotel. This past Tuesday, workers removed the Hilton logo from the side of the building.
- GDS firm Travelport modified their planned re-pricing of certain functionality within Apollo, Galileo and Worldspan that would have cost travel agencies approximately $35 per month per terminal. Not unlike airlines, the company unbundled several integral features of the systems that were once free and wanted to start charging for those services. After backlash from agency groups, they relented and modified their planned changes.
- Finally, a proposal for a third runway at Hong Kong’s airport has been submitted to the government for consideration. Cathay Pacific and Dragonair, as well as the Association of Asia Pacific Airlines, backed a study supporting the expansion to keep Hong Kong as “the regional and international leading aviation center.”
In other airline, hotel & travel industry news last week…
- An airline analyst predicts American Airlines could file bankruptcy in 2012. He points to the fact that American is “on track to lose $1.2 – $1.4 billion in 2011 and $1 – $1.3 billion in 2012.” The carrier’s cash position is also less than ideal and while I had a fantastic experience flying with them this year, I will not continue flying AA in part because of their financial situation and otherwise because I’m so close to million-miler status with United Airlines.
- Delta Air Lines is accelerating their addition of coach seats with extra pitch and revealed this week they will install their “Economy Comfort” seats on more than 800 aircraft by the summer of 2012. As is common in the industry today, those seats will be available for purchase to non-elite passengers for an additional fee between $19 and $99 depending on the flight distance.
- United Airlines has elected a new Air Line Pilots Association chairman as the carrier’s union representative. Jay Heppner will replace Wendy Morse in the position in January and he has been with United for 26 years & currently captains Boeing 777s. He states, “This election is not about our new contract (United & Continental).” He continues, “There are assuredly other issues that need to be resolved in parallel, but none so critical” as a joint contract.
- I previously reviewed Google’s Hotel Finder tool and they have now expanded it to include European cities. It’s a unique feature and allows you to search for hotels with the power of Google’s map capabilities. It still refers you to Online Travel Agencies (OTAs) to complete a hotel purchase with the option to visit the hotel’s own website. I’ll be monitoring how Google proceeds with this tool and their currently underwhelming Flight Search feature.
- Orbitz, another OTA, has been fined $60,000 for “failing to adequately disclose taxes and fees in certain airfare advertisements in early 2011.” The fine comes from the U.S. Department of Transportation who claims Orbitz had ads on their homepage that would only reveal full tax & fee information after clicking into an alternate page. Orbitz claims they have rectified the error and are currently in compliance.
- Looking for a job in the travel industry? Priceline is reportedly adding more than 500 call center positions in the U.S over the next five years. The new hires will work in the OTA’s call center in Michigan and primarily focus on Priceline’s Booking.com branch. Priceline currently employs 750 people in the U.S. and 2,650 overseas.
- Finally, there’s a bunch of articles from the past week about Lufthansa and Frankfurt Airport. Lufthansa will adopt the full-fare advertising requirement here in the U.S. on November 1st, earlier than the required January 24, 2012 date. The carrier also claims the recent court ruling disallowing night flights at FRAport will cost the carrier “double digit million of euros.” The new rule bans flights at the airport from 11:00pm to 5:00am. On a more positive note for FRA, they’ve opened a new $1.05 billion fourth runway last Friday. Before Friday, the airport had two parallel main runways that couldn’t be used simultaneously given their proximity, so the new runway will ease congestion and delays.
A web usability surveyor based in Amsterdam named Usabilla just published results detailing user experiences on airline, hotel and Online Travel Agency websites. Participants were asked to perform simple tasks, such as “where would you click to get your boarding pass,” and leave additional comments about layout and other site features or functions. The full report can be downloaded here, but I’ll sum up some of the findings below.
A total of 800 people took part in the study that specifically looked at the following websites:
Airlines: Many participants specifically called out they hated advertisements on airline websites and several remarked they’d prefer to see all-in pricing instead of “from” rates that often exclude taxes and fees. Delta won the best score for speed and accuracy for the “where would you click to get your boarding pass” question with KLM coming in last. Maybe because I’m so used to it, but one person said United has too much different info on the homepage and it should be simplified. I actually think United’s landing page is just about ideal.
Online Travel Agencies: For the OTAs, users were asked to click on things they liked and those that they would remove. Most popular of the likes was the search functionality, telephone contact numbers and popular destinations. Expedia’s ‘deals and offers’ were well received, but the similar category on other OTAs failed for whatever reason. It seems absolutely everyone hated the Facebook ‘Like’ & connection and find it a ridiculous thing to include. Also not well received were areas or ads promoting site functionality and “buttons” that are really advertisements. There’s also a love-hate relationship with Priceline’s William Shatner (30% clicked him for a thing they like, 23% for dislike) and Travelocity’s gnome (29% like, 19% dislike).
This study was rather limited in scope with just a couple of questions asked per website, but it was still interesting to read over and I’d be more keen to take this type of hands-on visual survey method over the “on a scale of 1 to 10” type.
American Airlines is holding firm in their commitment to further the evolution of how and where the carrier’s tickets are shopped and sold. As I previously blogged, American is seeking to reduce distribution costs by steering away from the legacy global distribution system (GDS) model used by most online travel agencies (OTAs). New signs are emerging that show American is beginning to make headway in this battle.
Earlier this week, Priceline signed an agreement with American stating they will use the Direct Connect technology in the near future. The negotiations for this contract have likely been going on for some time given American’s ads directing traffic to Priceline (and Kayak). Also this week, American outted Vegas.com as being contracted to use the direct link, and it is being reported they’ve been using it for about five months already. Separately, US Airways and Expedia signed a good faith type of agreement whereby the carrier’s flights and ancillary services will continue to be offered exclusively through GDSs.
This led me to look at just how much traffic is steered to the OTAs, and I was able to find a recent summary revealing the most popular travel shopping websites in the United States for the week of January 15, 2011.
While the actual number of visits isn’t revealed by website, it is still interesting to see how the “big four” (Expedia, Priceline, Travelocity, and Orbitz) compare against each other. The spread between number one Expedia and number two Priceline is significant, and allows the former to maintain its majority share consistently week to week. Also, the previous period’s results showed Orbitz & Travelocity switched in positions, so I bet that is a constant week-to-week occurrence.
I’ll be keeping my eye on these figures in the coming months, and likely post any major moves I notice.
Travel agents and other third parties who supply and sell airline tickets were winners and losers this week.
United Airlines reversed its policy that restricted some U.S. travel agencies from using the carrier’s merchant service account when processing airline ticket payments with credit cards. These fees, which generally represent between 1 and 3% of the total transaction, were being passed along to select agencies since the middle of 2009, thereby further eroding any possibility of a profit for simple airline ticket sales. Commission rates for travel agencies have been slashed over the years, so any type of new fee is simply reducing the dime or quarter they might make to a penny or nickel. The Business Travel Coalition this week credited the combined United-Continental management team for the change.
Meanwhile, American Airlines is giving out coal this holiday season to Orbitz and flyers in general. The behind-the-scenes-until-yesterday battle between American and Orbitz has been focused on American’s demand to use its Direct Connect technology. It basically bypasses the Global Distribution Systems (GDS) like Galileo and Sabre used by just about all large third-parties to book airline reservations, and thereby saves American per segment fees in those systems. Orbitz refused to comply, so American followed through with its threat to pull their flight availability and fares. While I can’t blame American for trying to cut costs, they really took it to the next level by totally eliminating a revenue stream worth a reported $800 million annually. (I wonder how Expedia, Priceline and Travelocity currently connect to American?)
Critics of American’s decision are claiming the airline is trying to limit transparency to the lowest fares, and while that may be a side benefit for the carrier, I have to imagine the root of the matter is the cost savings. My prediction, though, is that we will again see American flights on Orbitz in the near future after both sides come to some sort of agreement.
Ho Ho Ho.