In other airline, hotel and travel industry news this week…
- United Airlines has signed with Next IT to create a virtual assistant on United.com, similar to Continental’s “Ask Alex.” “Next IT will provide a natural, or every-day, language solution to create an exceptional customer experience for travelers using the website.” If you’re unfamiliar with “Ask Alex,” it’s basically an interactive help tool where you ask a question and receive an audible and text answer back.
- Today, the first Continental Airlines aircraft equipped with Economy Plus is flying. The Boeing 767-400 also features the new flatbed BusinessFirst seats, on-demand touchscreen seat-back monitors in coach and United’s popular Channel 9 featuring live air traffic control communications.
- American Eagle Airlines was fined $900,000 by the Department of Transportation this week for exceeding the three-hour tarmac rule. 15 flights were impacted at Chicago O’Hare on May 29th with a total of 608 passengers. The carrier has 30 days to pay $650,000 and the remaining $250,000 will be credited to those customers affected in the form of refunds, vouchers and frequent flyer bonus miles. If there’s money leftover, it will be used for future tarmac delays exceeding three hours.
- A Congressional report blasted the TSA this week calling the agency “bloated” and “plagued by significant problems.” Today marks the 10th anniversary of its creation and I like to call it the Thousands Standing Around agency. Among the report’s findings: too many employees, 25,000 security breaches and expensive & inadequate technology.
- Hawaiian Airlines is pushing further East here in the contiguous 48-States and will begin daily service between Honolulu and New York’s Kennedy airport on June 4, 2012. CEO Mark Dunkerley said, “New York is an important part of our growth strategy. Adding service to the largest market in the Eastern U.S., Hawaii’s second largest tourism market, was a logical step.”
- Boeing received the largest-ever commercial airplane order from Indonesian carrier Lion Air for 230 aircraft. This tops the manufacturer’s previous record from just a week ago at the Dubai Airshow when Emirates placed an order for 50 Boeing 777 jets.
- Google is reported to soon bring international destinations to its underwhelming Flight Search tool. I haven’t been back to play around with the tool since my review of it, nor do I really have any desire to return until I hear reports of “something amazing.”
- Online Travel Agency Travelocity has changed the game of hotel reviews with a new Q&A-type function. Specific, heavily moderated questions appear, such as, “Is there a parking charge?” A previous guest replied, “No.” From the article, “Travelocity hopes the new question and answer formal will help hotel bookers in their trip-planning activities and improve the user experience.”
- A recent J.D. Power and Associates car rental study heralds ACE Rent-A-Car as taking the top spot for customer service. I’ve never heard of them, but they beat out the common ones down the list in order of Enterprise, National, Hertz, Alamo, Budget, Dollar and Avis. ACE has about 200 rental facilities worldwide, all independently owned and operated.
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.
Several smaller stories in the airline, hotel & travel industry caught my attention this week and I’ve summarized them below:
- A Canadian couple sued Air Canada and won an award of C$12,000 (plus an apology) from the airline failing to serve them “in French” aboard their flights to the United States. Records show the passenger, Mr. Thibodeau, a Canadian federal government employee, is fluently bilingual and critics claim him to be the “equivalent of a compulsive coupon clipper” demanding the Canadian law of providing airline services in both French and English be upheld at all times. (Hmm, would this equate to a Skykit on United?)
- Attention all Priority Club members, Crown Plaza London-The City now offers a “snore-absorbing” room for those pesky people with an obnoxiously loud issue upon falling asleep. The room features soundproof material on the walls and headboards, plus a white-noise machine and “anti-snoring bed wedge” to assist guests to fall into a calm REM rest while encouraging them to sleep on their sides or upright.
- The FAA is investigating a report where an ATC controller in the Denver Center tested positive for alcohol while on duty. The center in Longmount, Colorado immediately removed him/her upon failing the random testing and forwarded the results to the FAA. Air Traffic Controllers are also held to the same strict standards as pilots where anything at or above a 0.02 is against FAA guidelines.
- Identity theft has been rampant in the past decade and now thieves are targeting your hard-earned frequent flyer miles. The research firm Kaspersky Lab identified phishing scams targeting Brazilian nationals where one customer lost approximately $7,600 worth of airline miles. As is common with all such scams, these came in the form of emails that offered bonuses or other prizes after logging into a fake website with their frequent flyer data.
- Alaska Airlines announced this week new service between San Diego and Honolulu beginning November 17, 2011. The single daily nonstop in each direction will be operated with a Boeing 737 and offers direct competition with an existing Hawaiian Airlines flight between the city pairs. I’m all for a fare war to Hawaii, so my hope is this will bring down fares from (sort-of) nearby Los Angeles. That’s a lie. Having worked in United’s Revenue Management department, I know they’d only tinker with the direct SAN-HNL fare structure and leave LAX out of it.
- United Airlines (and Continental Airlines by default) signed a new multi-year agreement with Travelocity to continue their existing relationship with the Online Travel Agency (OTA). Largely a PR release by both companies, it basically means United will continue to offer its fares & schedules as usual via a Global Distribution System (GDS) to the OTA. Not really surprising in my mind as OTAs still generate a significant amount of revenue for airlines, but I still think all airlines are keen on American’s initial undertaking to challenge the distribution model. My prediction is we’ll see dramatic changes in the next 5-10 years in that model.
- And finally, while on the subject of United Airlines, they posted a second quarter 2011 profit of $538 million yesterday beating analyst expectations. Even with the revenue hit due to the Japanese earthquake & tsunami, a 30% rise in fuel costs from the same period a year ago, and $39 million in merger-related costs, United shined in the second quarter. Congrats to my preferred carrier… keep it going please!
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.