I briefly mentioned the ruling from the Department of Transportation (DoT) last week with regards to the British Airways sale/mistake fare to India. The story has picked up a bit more coverage over the weekend and is now being reported somewhat widely. That’s great news for calling attention to the despicable behavior that British Airways has displayed on this issue. The bad news is that most folks are congratulating the DoT and claiming that this ruling should serve as a deterrent against future similar actions. Oh how wrong they are.
I was somewhat reserved in my judgment last week when I read the initial ruling. It looks like there was good reason for me to be concerned. As currently written it seems that the ruling does shockingly little for the vast majority of customers who were affected by BA’s actions. In fact, only folks who immediately booked other tickets, hotels or other tours right after the initial booking are really eligible to get reimbursed. And then the reimbursement will be in the form of covering those expenses, not in the form of BA actually agreeing to fly the customer to India as initially contracted.
I am quite happy to see Nicholas Kralev’s column this week covering the issue and pointing out these holes in the agreement. Sure, it may be too little too late, but it is nice to see others stepping up and acknowledging that the idea of “making [consumers] whole” isn’t really being adhered to by British Airways.
I’ve contacted the DoT again and asked for further clarification on the ruling. And I’m still going to court on Thursday. Maybe not everyone will be made whole but I am going to do everything in my power so that I am.
Probably the only reason that this story is even a story at all is that the protagonist already has a regular column in the New York Times. Otherwise it would be a random rant written on the internet somewhere and disappear with no one giving it a second thought. Come to think of it, that might have happened in this case as well but a buddy pointed it out to me and I cannot resist the opportunity to comment. It is just too easy.
The main complaint is that jetBlue doesn’t have its gates labeled particularly well at Newark Airport. That is actually a reasonable claim – there isn’t any signage over the security entrance to the A2 pier that indicates the jetBlue gates are there though there are plenty of signs for the other carrier on that pier, Continental. So the guy arrives in the terminal 30 minutes prior to the flight’s scheduled departure and has no idea where he’s supposed to be going. But still his missing the flight is somehow sortof the fault of the airline.
I arrived at the terminal with my teenage son and daughter about 30 minutes before flight time, then spent about 10 minutes searching for the right concourse and maybe 10 minutes waiting in the security line. We made it to the gate about 10 minutes before the departure, but passengers are required to be at the gate 15 minutes before. The plane was still there, but its door had just closed, and that was that.
He seems to get over that pretty quickly and moves on to trying to get on the next flight out – about 4 hours later. He’s stymied by the fact that now his tickets have no real value. He’s able to buy replacement tickets and use a trivial amount of the residual value from the rather discounted tickets he originally purchased, but he’s still on the hook for an extra $180/person and needs three tickets in total. Ouch. I do think that jetBlue could have offered a “flat tire rule” option and let him go standby on the next flight for free. I don’t know that such an offer wasn’t made since he was actually trying to buy/confirm the seats right then based on the version of the story he tells.
So after the whole thing is all done he sends a letter to jetBlue asking for a refund or other compensation. OF course, rather than dealing with the customer service side of the organization he simply goes straight to the top. Suffice it to say that the letter sent to the CEO gets lost somewhere, despite it having been sent certified mail. Since there was likely nothing actionable in the letter (guy rants, big deal) it isn’t clear that it was definitely lost versus just ignored but let’s play along with the lost theory. At that point he decides to sue the carrier. It isn’t entirely clear what he’s suing them for. Perhaps is it for operating their flights on time and perhaps it is for requiring that one arrive for their ticketed flight, not just whenever they want to show up at the airport. Either way the guy decides that he’s been wronged and files a lawsuit. Eventually he gets a call from the airline’s legal department. Here’s my favorite part of his idiocy.
The paralegal’s position, repeated again and again, was that my boarding pass had the gate number printed on it. I had printed the boarding passes at home, and each computer and printer configures online documents differently, so who knows.
Here’s a hint, Charles. EVERY boarding pass printed at home has gate information of some sort on it. EVERY single one. Yours wasn’t some magical strange pass that was different than all those. In some cases the airlines won’t know the specific gate and there will be a note to that effect on the pass. Otherwise the gate info is there. It is readily visible, regardless of the printer and computer you use. jetBlue actually goes a bit overboard on this front in my opinion, issuing all the boarding passes as PDF documents. This helps to ensure that the information is always printed in full every time. So I am rather confident that the gate information was on your boarding pass.
Oh, and you were clearly at least partially at fault for arriving at the airport so late.
Don’t get me wrong – jetBlue wasn’t perfect by any stretch – but you’re a lot more at fault than they are. But you’ve got a column in the New York Times, so I guess you’re going to try to show them how stupid they were for not accommodating you. Maybe it worked to some extent, but you still come off as an idiot from my perspective.
And I’m glad to see that most of the other folks commenting on the NYTimes site seem to agree with me. Maybe there is hope for the future of the traveling public yet.
It is hard to tell if this is a negotiations ploy or a serious move, but Aer Lingus appears to be making overtures towards moving their base of operations out of the Republic of Ireland. The Irish carrier has applied to the CAA in the United Kingdom for an operating license. Should the license be granted it would be possible for planes that are currently operating under an Irish license to be transferred to a newly established company in either Belfast or London to operate from there. Even more importantly, however, is that the “new” company would need to hire a whole bunch of new employees and the old company would have no planes and would simply dismiss all their employees. Folks who want to continue working for Aer Lingus would then reapply for their existing jobs at the new company.
Obviously the move would be a huge blow against the labor unions, the same groups that Aer Lingus is currently locked in rather contentious negotiations with. So maybe this is posturing and maybe it is for real. But reading this bit in the article was particularly interesting:
Aer Lingus has a huge issue with it long-haul pilots, who make up to $500,000 a year on the Atlantic route and have golden pension plans as well. Ryanair pilots, by comparison, are only paid half that amount.
Making half a million a year is a quite posh salary level. Of course the implication that the Ryanair pilots are making a quarter million annually seems high so I’m not sure that the other numbers are really legit. But that’s an awfully large salary base to handle with the current financial woes that many airlines are facing. Even in good times I’m not sure how it was profitable to fly while paying out salaries at that level.
Supposedly there is a deadline in the coming week for negotiations with the unions to be successful in identifying cuts or there will be layoffs and route cuts. And there is no timeline on the application for the new operating certificate. Lots of fun in the Isles with plenty more on the horizon. Still, having the flying shamrock actually being a British company baase would be just plain strange.
It seems that the US Department of Transportation has been busy lately looking out for their constituents – the travelling public. Yesterday they announced record fines against Continental and Mesaba (aka Delta) for their roles in the fiasco in Rochester, MN over the summer. And today they’ve issued a rather scathing ruling against British Airways.
The topic of the BA rebuke was the unilateral revocation of tickets that the carrier sold in early October for travel from the United States to India. British Airways claimed that the fare was a mistake, not just a good sale, and 72 hours after selling customers the flights simply cancelled all the tickets that had been issued. It turns out that the DoT decided that wasn’t really kosher. Here’s what they had to say in an email just sent to all the folks who filed a complaint (the bolding is mine):
On behalf of the Aviation Consumer Protection Division of the U.S. Department of Transportation, I would like to thank you for contacting us regarding British Airways’ $40 base fare advertisement. We view this matter very seriously and have conducted a full investigation over the cause, magnitude, and consequences of this incident. From the information we have obtained, it is clear that British Airways’ unilateral cancellation of all the reservations made in response to its mistaken fare offer on October 2, 2009, has caused financial harm to a large number of consumers. We believe that all airlines should accept some responsibility for even the erroneous fares they publish. Thus, we believe that British Airways should compensate affected consumers to make them whole. In response to our investigation and after consultation with my office, British Airways has posted guidelines for reimbursing passengers for expenses that they incurred in reliance on the erroneous fare offer, including fees for canceling a hotel or rental car reservation and restoring a previously cancelled flight reservation. For details on who may qualify for compensation and how to file a claim with British Airways, please refer to the following webpage on British Airways’ website under "Travel News" link:
We appreciate the opportunity to assist you in resolving this matter. If you have any question or concern, please don’t hesitate to contact us.
So even if BA chooses to push forward with the theory that is was a mistake they’re still on the hook for making customers whole. This is great news for passengers. It sets a very strong precedent that prevents airlines from abusing the system and simply deciding to change their mind after the fact once tickets have been issued.
Here – in part – is what British Airways is saying on their site:
British Airways is prepared to reimburse you for penalties imposed by an airline or ground service provider as a result of your cancellation of air or ground arrangements in reliance on your cancelled British Airways booking. British Airways will also reimburse those passengers who necessarily incurred added air fare costs in restoring a pre-existing booking or reservation from the United States to India if that booking or reservation was abandoned as a result of making the cancelled booking on British Airways. Further, if you have incurred any other out-of-pocket expense, British Airways Customer Relations will make appropriate reimbursement to you in circumstances where the losses were caused by reasonable reliance on a British Airways flight booked between the U.S. and India on October 2, 2009 and its subsequent cancellation.
Of course, there are still many outstanding questions that need to be answered. Most notably, it does not appear that there is a clear-cut means to claim for the additional cost of booking a replacement ticket for the one that BA killed. They will reimburse to restore one that was previously booked and then canceled out because of the sale, but it doesn’t seem that they are willing to simply pay the difference for customers to be able to fly if they didn’t have a ticket previously purchased that they chose to cancel as part of this sale.
Lots of open questions to say the least. I will certainly be following through on the claim process that they’ve made available in an effort to be made whole on my purchase. But this isn’t going to stop me from showing up at Small Claims Court next Thursday morning to make my case, unless, of course, they have paid me a settlement by then. And now I’ve got some backing in the form of a finding by the DoT. That should help my claim quite a bit.
There was a somewhat surprising announcement out of London this morning from regional airline bmi: they’re making some rather significant cuts to their fleet, destinations and staffing levels. There will be a loss of nine aircraft in total – over 25% of the fleet. Two of the planes beign removed from the fleet are A330s. This essentially kills any chance of longhaul service coming back to the bmi fold.
Destinations being cut include Kiev, Ukraine; Tel Aviv, Israel, Brussels, Belgium and Amsterdam, Netherlands. The Brussels route will be picked up by Star Alliance and Lufthansa Group partner Brussels Airlines. There is no indication that the other destinations will see service restored via a partner or other means. Most of these cuts take effect in the second week of January 2010.
And then there are the job cuts. The carrier expects to trim about 600 employees from their ranks and did not rule out additional cuts in the future. Not good at all for those affected by these cuts.
Looking past the cuts there is a rather glaring question out there: What is left of bmi? Sadly, the answer seems to be not all that much. They still hold a ton of slots at London’s Heathrow airport but even the value of those is dropping lately. Still, with the carrier now quickly rolling into the fold of the Lufthansa group (the new CEO either just started or is starting very soon) it makes a decent amount of sense to shift what few viable assets there are around in the organization to places where they make the most sense. Sure, bmi still offers a reasonably competitive regional network around the British Isles and Ireland, and they also have some decent coverage into the Middle East and former Soviet states. And they’ve got pretty decent connections from Heathrow to other Star Alliance partners. But they’re still a small fish in a big pond and having trouble remaining competitive.
Could the carrier remain as a holding company for the slots, slowly doling them out to other airlines in the Lufthansa group (or selling them for real money)? Few to zero direct operations but most of the routes would still be covered and customers would still have options within the alliance.
Things aren’t looking particularly great over at Donnington Hall. They haven’t been for a while now and it doesn’t seem that they’ll be turning a corner anytime soon. Not good at all.
I’m not panicking about my stash of points in their program. Yet. But I am looking at cashing in a couple redemptions sooner than not just to hedge my bets on their rather advantageous reward chart. The points won’t just disappear but the Miles+More scheme isn’t as rewarding for me.
Apparently it is $100,000 for the operator of the flight, with an additional $75,000 for the company handling ground operations at the airport. Those are the amounts of the fines handed out by the US Department of Transportation following the diversion of Continental Express flight 2816 to Rochester, MN where it sat on the ground with the passengers still on the plane overnight (previous bits here).
This is the first time ever that an airline has been fined for such an event and the amounts involved are not trivial. Even more interesting is that both the operating carrier and the ground handler were hit, essentially spreading the blame. Such a sharing makes a lot of sense – way more sense than anyone was making that night based on the audio transcripts that came out.
Here are the juicy bits from the DoT Press Release:
Continental and ExpressJet, in separate orders, were found to have violated the prohibition against unfair and deceptive practices in air transportation because ExpressJet failed to carry out a provision of Continental’s customer service commitment requiring that, if a ground delay is approaching three hours, its operations center will determine if departure is expected within a reasonable time, and if not the carrier will take action as soon as possible to deplane passengers. ExpressJet also failed to take timely actions required by its procedures, including notifying senior ExpressJet officials and providing appropriate Continental officials with notice of the delay. Continental was found to have engaged in an unfair and deceptive practice since, as the carrier marketing the flight 2816, Continental ultimately is responsible to its passengers on that flight.
The consent order covering Mesaba finds that the carrier engaged in an unfair and deceptive practice when it provided inaccurate information to ExpressJet about deplaning passengers from flight 2816.
Most interesting of all that to me is that they got hit for deceptive trade practices. That term has a rather broad-reaching scope and it seems like a lot of potential to get the airlines in trouble if they don’t behave well. Continental and ExpressJet clearly violated their customer service commitment – not part of the Contract of Carriage or any other legal document that I can figure, but still something that they claim to adhere to – and they were punished for it. Mesaba, on the other hand, was apparently simply punished for being a bunch of idiots when the plane finally arrived at the airport. That is certainly an interesting precedent for the DoT to be setting. I wonder if they will consider applying the same reasoning against airlines which arbitrarily decide to renege on tickets after they’ve been issued.
The only real concern that comes out of this is that the enforcement is so very arbitrary. That and the fact that the customers don’t see any of that cash.
Yeah, it seems that beating up on Aircell and the adoption of their gogo in-flight internet service seems to be a recurring theme in the industry. But that doesn’t mean that it isn’t possibly deserved. There are a ton of questions out there about just how bad their cash flow situation is. And the answers and information coming out of Aircell doesn’t seem to be helping their cause.
Runway Girl, as always, has some great information on this issue in a recent post: Does Aircell get an average six users per flight? – Runway Girl. Here’s the gist of it. Aircell is claiming 100,000 users per month, which sounds like a big number. But when you divide that out by the over 600 planes in the air with Aircell service and an average of 4 flights per plane per day the numbers are much more worrisome. The math works out to six users per flight. Just six. Considering that they are likely eating the whole cost of the installs and potentially also sharing revenue with the airlines that number just isn’t sufficient to sustain the service.
Sure, things are looking up right now with the expectation of much higher adoption this holiday season. That is due, in large part to the fact that it is free on many carriers. American Airlines, Delta and Virgin America have all struck deals of various sorts for free access (the Virgin America one is, by far, the most broad). And users definitely seem to be enjoying the service. On my recent Virgin America flight there were definitely more than 6 users online but the overall user experience suffered for it.
If the company cannot get sufficient demand at the appropriate price point such that they are going to be profitable then they are in big trouble. If they get that demand but the performance stinks they’re in an even worse position. It is hard enough to attract customers to such a service. Keeping them after a bad experience or three where the costs are not trivial is going to be pretty difficult. I fully admit that one experience does not make a trend, but I’m still worried for them.
No matter which way you look at it the future of in-flight internet is, at best, a hazy proposition. And Aircell is the fuzziest of them all since they’ve got the most exposure right now.
Wow…as if I couldn’t come up with another reason to hate the Senior Senator from New York any more (he was a strong proponent of the ETSA visitor tax, too), he has decided to wade into more travel-related policy and, again, he’s headed the wrong direction. This past weekend his office noted that the Senator is considering holding hearings regarding airline frequent flier programs and their policies towards mileage expiration and redemption.
Schumer says he suspects consumers are actually paying for frequent frier programs through air fare and fees. If so, he said rules are needed to protect consumers. He’s asking the Department of Transportation to review the complaints.
"As the holiday travel season approaches, we cannot let airlines and credit card companies continue to fly off with hard-earned frequent flier miles," Schumer said in an announcement scheduled for Sunday. "When a consumer accumulates valuable frequent flier miles, they should not have to constantly worry that they are going to expire with little or no notification from the airline."
There are so many things that are wrong with this approach that it is hard to know where to begin. Most worrisome is the implication that the points have some explicit value ascribed to them. Historically the points have not held and specific value – after all the redemption value varies based on what type of reward the consumer chooses – and having no value has been of critical significance with the earning of those points. Why? Because a gift or reward of zero value cannot be taxed. The IRS has stated that points are not taxable right now. But if the Senator manages to define a specific value that they carry the earning and redemption of those points may soon incur a tax burden as well. So much for helping the customer there, Chuck.
Don’t get me wrong – I agree that there are plenty of people out there who have no idea how the programs really work nor how to maximize their value from those programs – but that doesn’t mean that they need help from the federal government to figure it out. How would the Senator treat the programs that were established from the very beginning with an expiration policy on their points (Virgin America’s eleVAte and jetBlue’s TrueBlue were both set up that way from inception)? Are they misleading and confusing as well? Or is it just the legacy programs which have changed their rules over the 25 years they’ve been in existence? Does he really expect that the programs wouldn’t change over more than two decades? Of course they will adapt to the changing industry.
The other statistic cited in Schumer’s claim is that 20% of the estimated 10 trillion points out there right now may never be redeemed. That’s actually a very reasonable level of breakage. What’s the level for mail-in rebate programs or other schemes that actually have defined value? I’m guessing it is comparable, if not higher.
Finally, it is worth considering that the frequent flier programs seem to be the only way that the airlines consistently can generate revenue. It may prove to be a bit of the “goose laying the golden egg” problem should the airlines have to dramatically change the way the programs are handled. So instead of minting miles and selling them to credit card companies to help fund operations the airlines will no longer be able to do that and we’ll see a carrier or two likely fail. Great work, Senator!
Seriously, there are many other more significant things that our government can be doing to help its citizens. Meddling in the airline frequent flier programs simply isn’t one of them. Find something better to do with your time and our money, Senator. Please.
What else is new?
But seriously folks, this time they seem to have a focus for this anger: the new upgrade policy that United announced a couple weeks back and the cooperation with Continental on that policy that was announced earlier this week. In this week’s AFA bulletin the union included this juicy nugget:
As a result of the Antitrust Immunity granted to United and Continental, the airlines are allowed to coordinate products, services, schedules and other business related practices. Today, United and Continental announced that members of each carrier’s frequent flyer program who have earned elite status will receive unlimited, complimentary domestic upgrades and preferred economy class seating on either airline when space is available. United had previously announced their intention to implement this program last month to United’s elite customers, and is just another kick in the teeth to Flight Attendants and other loyal employees. These upgrades will be handled by the customer service representatives on the ground before the flight takes off, and Flight Attendants are not responsible or required to implement this new policy once the plane leaves the gate. The upgrade program becomes effective in March, 2010 and applies only to domestic flights on a space available basis.
On the plus side they make it clear to their members that the responsibilities for managing the upgrades rest solely with the agents in the terminal, the same as Continental runs the system. That is useful information.
But there is also the one line that doesn’t make any sense to me at all:
United had previously announced their intention to implement this program last month to United’s elite customers, and [it] is just another kick in the teeth to Flight Attendants and other loyal employees.
Where is the kick in the teeth? Certainly not in the typo that left the word “it” out of the statement. Of course it is that the customers might actually get to sit in the premium seats when flying rather than having them available primarily for employees to use. Don’t get me wrong – I know that being a flight attendant isn’t the best paying job out there and that the flight benefits are getting harder to use as capacity cuts drive up load factors. But a “kick in the teeth” that the airline is actually trying to do something to attract and retain customers who are willing to fly 25,000 or more miles annually? Yeah, the job would be a whole lot easier without the pesky customers I guess.
Tip of the cap to Gary for posting about this earlier.
The dance of buyouts and other aid offers surrounding Japan’s JAL sped up a bit overnight with Delta leading the effort from SkyTeam to offer over USD$1Bn in cash and loans to the beleaguered carrier should they be willing to defect from the OneWorld alliance. American Airlines offered back a similar amount, though without the need for $300MM in alliance-switch penalty guaranties. Yes, things are truly interesting over in Japan these days.
But with the two airlines in question hemorrhaging cash these days there is a rather important question that needs to be answered: Where are they getting the money to make such offers?
The answer, it would seem, has a lot to do with frequent flyer points. Lately the only way the airlines seem to be raising any cash is by selling their points to credit card companies. Both American and Delta have recently signed deals to raise funds from Citibank and American Express, respectively. So the airlines are selling a ton of points to third parties and then turning around to use that cash in an attempt to buy JAL. Yup, they’re trying to buy an airline with points. Not quite as crazy as getting a boob job using points though almost certainly a better value on a dollars/point ratio.
As for the actual effects of the loans/merger/buyout/bailout/whatever we’re calling it, that isn’t particularly clear. JAL holds the largest share of takeoff and landing slots at Tokyo’s Haneda airport and they are definitely worth a fair amount of money. Of course, that value depends on having a Japanese economy that is functional and able to push passengers onto the flights.
Perhaps Delta is looking to recreate the Pan American route network buy purchasing 5th freedom rights around the world. Then again, that didn’t work out so well for Pan Am.
And maybe they’re actually trying to drag SkyTeam out of its current position of the “we got picked last” alliance, though I’m not really sure that picking up an almost bankrupt carrier really helps on that front. Still, having the JAL route network would be a huge boon for SkyTeam, though perhaps not quite as significant as the hit OneWorld will take from losing their only representation in that region.
It doesn’t seem likely that anything will actually be decided in the immediate future so there will be plenty of time to watch this one play out. And it should be a rather entertaining dance to watch.