Posted by Seth on May 14, 2012 under frequent flyer, News | 
When the announcement came out that the PeoplExpress brand was looking to get back into the skies it also included an announcement about a loyalty program, Club Travelati. Customers could sign up as a lifetime member for only $19. In addition to other benefits (including a souvenir pin), the Club promised access to super discounted sales and deals from the carrier once they actually started flying. It turns out that the DoT isn’t so keen on such a marketing approach; the carrier agreed to a $10,000 fine based on the effort.
The company settled with the DoT, admitting no fault, and pulled all content relating to the Club off their website. At issue is whether selling access to discounts is permissible given that the airline cannot actually legally operate flights yet. By enticing customers with discounts for fares that they cannot actually sell the DoT felt that the company violated a couple CFRs. The company has stated they disagree with that position but that they are choosing to avoid litigation in an effort to not derail their pending operational certificate application.
The company has pulled the offer to buy in to the Club from their web site, showing only this now:
Club Travelati is an exciting new club by PEOPLExpress™ for people just like you! We can’t tell you all the details just yet, since we are not yet a certificated airline. But we can tell you it will be fun! Stay tuned here for more details.
Oh, and they apparently only sold about 130 of the $19 memberships since they launched the product per the DoT claim.
Related Posts:
Posted by Seth on May 12, 2012 under frequent flyer, media coverage, News, points |
I’ve never been above a bit of shameless self-promotion and I see no need to start now. Fozz, Stephen and I have started up a new podcast, Points Hoarder. The goal is pretty simple: we take the obsession we have with points and miles and try to help everyone better understand how we collect them, how we value them and how we redeem them. In short, how to make travel better through points.
We’re just starting out with the concept and we’ve got one episode live right now and a second just recorded. You can check out Episode 1 here; Most of the discussion is about awesome redemptions we’ve all recently had. After all, earning the miles can be fun but redeeming them is where the excitement really comes out, at least for me.
I’ll be sure to announce a link to episode 2 and the iTunes feed once those are available. In the mean time, give it a listen and let me know what you think.
Posted by Seth on May 10, 2012 under Flying, News |
Odds are you don’t know the answer to this question. I know that I have no certain answer to it. But I do know that the most recent revisions to it carry tremendous potential impact on passengers, travel agents and airlines. The most recent rules took effect only earlier this year, meaning there haven’t been many opportunities for test cases. It looks like a pretty significant test case has just shown up. The above referenced cite is the rule the DoT uses to handle unfair and deceptive advertising practices. While it is focused on truly misleading or bait-and-switch actions where one price is advertised and then the fare changes after a ticket is purchased, it also appears to have potential impact on mistake fares.
Here’s the text of 49 U.S.C. 41712 § 399.88(a) :
It is an unfair and deceptive practice within the meaning of 49 U.S.C. 41712 for any seller of scheduled air transportation within, to or from the United States, or of a tour (i.e., a combination of air transportation and ground or cruise accommodations), or tour component (e.g., a hotel stay) that includes scheduled air transportation within, to or from the United States, to increase the price of that air transportation, tour or tour component to a consumer, including but not limited to an increase in the price of the seat, an increase in the price for the carriage of passenger baggage, or an increase in an applicable fuel surcharge, after the air transportation has been purchased by the consumer, except in the case of an increase in a government-imposed tax or fee. A purchase is deemed to have occurred when the full amount agreed upon has been paid by the consumer.
Airlines have, with some frequency, cited clauses in their Contract of Carriage when they load mistake fares into the GDSes and sell them. Korean Air canceled a whole bunch of flights to Palau last year and British Airways did the same to customers who were ticketed to India (self included) prior to that. In each case the airline claimed that the fares were simple and obvious errors and therefore they could absolve themselves of their obligations simply by refunding the charge.
The DoT seems to feel otherwise these days. In fact, this specific type of case is directly addressed in their Second Final Rule on Enhancing Airline Passenger Protections FAQ:
Does the prohibition on post-purchase price increases in section 399.88(a) apply in the situation where a carrier mistakenly offers an airfare due to a computer problem or human error and a consumer purchases the ticket at that fare before the carrier is able to fix the mistake?
Section 399.88(a) states that it is an unfair and deceptive practice for any seller of scheduled air transportation within, to, or from the United States, or of a tour or tour component that includes scheduled air transportation within, to, or from the United States, to increase the price of that air transportation to a consumer after the air transportation has been purchased by the consumer, except in the case of a government-imposed tax or fee and only if the passenger is advised of a possible increase before purchasing a ticket. A purchase occurs when the full amount agreed upon has been paid by the consumer. Therefore, if a consumer purchases a fare and that consumer receives confirmation (such as a confirmation email and/or the purchase appears on their credit card statement or online account summary) of their purchase, then the seller of air transportation cannot increase the price of that air transportation to that consumer, even when the fare is a “mistake.”
A contract of carriage provision that reserves the right to cancel such ticketed purchases or reserves the right to raise the fare cannot legalize the practice described above. The Enforcement Office would consider any contract of carriage provision that attempts to relieve a carrier of the prohibition against post-purchase price increase to be an unfair and deceptive practice in violation of 49 U.S.C. § 41712.
Seems like good news for consumers, right? Well, that depends on whether the airlines are actually held to the rule. Both Korean Air and ANA, among others, are now facing just such a question after a “mistake” fare for travel from Burma/Myanmar to pretty much anywhere in the world was available last week. The “mistake” came about due to a currency devaluation, essentially causing a few zeroes to disappear from fares. When just a few were being purchased here and there it was no big deal. Once the deal was widely publicized, however, hundreds were purchased and the airlines realized they had a problem.
They managed to pull most of the fares pretty quickly though some were still available several days later. But what to do about the hundreds of tickets already issued? For obvious reasons the airlines want to cancel them; in many cases the costs to cater for the passengers, much less carry them, are greater than the fare paid. The airlines are going to lose money on these fares. But does that give them the right to unilaterally cancel the flights?
At least for now, the carriers seem to be erring on the side of “Yes” for that question. Both Korean and ANA have contacted the booking agents and most tickets booked at the mistake rate have been canceled. But that doesn’t mean the DoT actually approves of such an approach. Korean seems to be taking the approach that since they never changed the fare and instead simply canceled the tickets they are not in violation of the rule. ANA has similarly responded that the “genuinely regret the circumstances that prompted [a complaint]” and that they are “now in contact with the appropriate agencies and departments.” Vayama, one of the booking agents which was party to many of the tickets issued has claimed, in part,
The DOT Ruling was set up in part to prevent unfair and unethical business practices associated with pricing on the part of airlines… [T]he cause of the dramatic decrease in fares out of Rangoon was not the result of unfair or unethical business practices on the part of the airlines.
… Although we have no way of knowing at this time how the DOT will rule on this case, we are confident that the actions taken were NOT in an effort to unfairly or unethically impact any customers.
All three seem to be of the opinion that, because it was truly an accident that they should be excused from the rule. I can certainly understand the position of the airlines in this case. Maybe they shouldn’t be held responsible for a country devaluing its currency by a few decimal points. Then again, they’re the ones who publish the fares and they’re the ones who have control over such things, so maybe they should be held accountable. After all, what is the threshold for really an accident versus not?
One thing is certain: the DoT has quite a doozy of a first test for their revised rule. They’ve shown little sympathy with respect to fines handed out relative to the 3-hour tarmac rule since that went into force so perhaps that is a hint as to their consumer-friendly leanings these days.
Related Posts:
Posted by Seth on May 10, 2012 under Flying, Internet, News |
American Airlines announced that they are moving forward with a retrofit of their long-haul fleet, updating the cabin interiors to improve the premium cabin experience. Mostly. The upgrades will expand the deployment of the new business class product, previously announced for the 777-300s which the company will begin receiving later this year. It will also mean the removal of the first class cabin on those aircraft, continuing a trend in both the global and the US markets to limit the long-haul premium cabin offerings to select markets with demonstrated demand. The retrofits are slated to begin in 2014.
The new business class seats will be retrofit into the carrier’s 777-200ER aircraft and into a portion of their 767-300ER aircraft. The 767-300s which are not reconfigured will be retired from the fleet.
The carrier has also indicated that their Main Cabin Extra configuration, offering an additional 4-6″ of legroom, will be part of the redesign on the 763s and 772s. On the 772s there will be 5 rows of these seats, 45 of the 215 total economy seats. On the 763s there will be only two rows of Main Cabin Extra, 14 of the 181 total economy seats. Customers holding elite status in the AAdvantage program, as well as with oneworld partners, will have access to the MCE seats.
The new cabin configuration will also include major upgrades to the in-flight entertainment systems and in-flight connectivity options. The IFE system for the 772s has impressive spec’s. It will have roughly 700 hours of audio and video available, up to 120 movies, 180 TV programs, 350 audio selections and 30 games. In business class the screens will be 15.4″ while economy will have quite generous 9″ screens. All seats on the 772s will have 110V outlets and USB plugs as well.
UPDATE: AA has confirmed that the regular main cabin seats will be 3-4-3 on both the 777-200 and 777-300ERs, and without any extra pitch. That’s going to be quite tight.
The satellite-based WiFi service will allow for global connectivity for customers. That said, no vendor has been chosen for the implementation yet so there is plenty of time for the company to see how the various options in the market shake out in the coming months, particularly as others add similar service, to pick the correct product for their fleet.
The 763 refits will not include the new IFE systems; the company will continue to rely on personal tablets for business class passengers on those aircraft for the IFE systems. The 763s will also not receive the WiFi connectivity. Combine that with the very limited MCE seating and those might just become the aircraft to avoid in the American long-haul fleet.
I’ve read through the release now a few times, looking for some hint of a magic paragraph previously missed which makes the planned upgrades tremendous. I still cannot find it. The release has many exciting phrases like “among the first in the industry” and “Business Class suite.” These plans, unfortunately, seem to be mostly playing catch-up to the rest of the industry. The “new” business class seats are based on the same product that US Airways just completed deployment of on their A330 fleet. The IFE upgrades are great, assuming you’re on the 77s; the 763s, not so much. And the seating density of the new seats raises a few red flags.
Type for type, United will offer more premium cabin seats (admittedly not all with direct aisle access) and more economy seats with increased legroom., along with a comparable IFE and connectivity scheme. And United is rolling out the seating and IFE config this year, not starting in 18 months. Delta is similarly ahead of American in the offering, both in terms of timing and product.
I have to give AA credit for trying to build a buzz about the announcements. The press conference included a number of bloggers and other social media folks, trying to tap in to the newer venues for sharing such announcements. And the bit I managed to catch on Twitter suggests that it has worked in come circles. Still, the implementation of these changes are 20 months off. It is going to be hard to keep the buzz alive that long.
There is no doubt that it is increasingly difficult to both offer a top-notch product and to do so in a manner that allows a company to remain competitive in the ever-changing market. In this case, however, it seems that American is barely even able to play catch-up, much less leap ahead. And if this is supposed to revitalize the company, inspiring creditors to ride out the bankruptcy and see a strong future for the carrier I’m very concerned about their strategy. The phrase “too little, too late” comes to mind.
For a different, and somewhat more positive, take on the new seats check out Gary’s post here; he was at the event where they were unveiled.
Related Posts
Tags: American Airlines, bankruptcy, Delta, Flying, IFE, in flight, internet, OneWorld, PaxEx, United, United Airlines, upgrade, US Air
Posted by Seth on May 8, 2012 under Internet, News |
In-flight internet provider Gogo has announced a deal to purchase a 1 Mhz slice of spectrum from competitor LiveTV in order to increase the amount of bandwidth available to their product. The deal is subject to approval by the FCC and is expected to close later in the year. LiveTV had previously designated the spectrum for their Kiteline product, a system that never really took flight and which was formally terminated two years ago.
“In many ways, Gogo has continued to expand its Air-to-Ground network and will soon launch ATG-4, which is expected to significantly improve capacity,” said Gogo’s president and CEO Michael Small. “Acquiring the 1 MHz spectrum license from LiveTV will play an integral role in our continued expansion activities and help us deliver a performance boost for end users.”
Even though this will essentially consolidate the entirety of the spectrum used for Air-to-Ground services into a single company, it seems that allowing this to proceed is still the best option for consumers. There are other competitors – via satellite – also in the space so the theoretical monopoly doesn’t really exist. And that is the only justifiable explanation I can see for the FCC to consider blocking the move.
The biggest surprise, in many ways, is that the deal took this long to reach. LiveTV is still supporting the old Airfone network and customers in a limited manner so there is some income associated with that network. Still, the JetBlue subsidiary has long ago given up expanding the use of that spectrum. In other words, it is sitting largely idle and adding minimal value to the company and to the traveling public. Then again, with only one suitable customer for the spectrum purchase, I can understand taking a bit of time to negotiate a good deal.
Related Posts
Posted by Seth on May 7, 2012 under News |
Ever since airport officials in Houston proposed to start international service from the city’s Hobby airport the debate has been quite strong as to the value of adding such service. I weighed in on the topic a few weeks back and figured it was worth circling back to take a look at some of the things which have transpired in the intervening weeks.
There have been editorials on both sides of the issue and both United Airlines (strongly opposed) and Southwest (strongly in favor) are putting their best face forward, claiming benefits to the local community assuming their version is pursued. I’ve now reviewed both reports and it is reasonable to claim that both are horribly biased and filled with unreasonable and unlikely expectations, drawing conclusions which are almost certain to not come to fruition.
Southwest is suggesting ridiculous economic growth based on fare levels that are simply not going to happen in the current cost structure. At the same time, however, United seems to be ignoring that a decent chunk of the Southwest operation is actually connecting traffic, making it reasonable to push some of that feed onward to international destinations.
United suggests repeatedly that opening up Hobby to international competition may force them to reduce their capacity to the LatAm region, the areas that Southwest is proposing adding service to. This ignores, of course, that Houston is a huge gateway and that they are making money on those routes (continually high yielding according to SEC filings). More importantly, however, the carrier has no other gateways from which to reasonably serve those markets. Maybe a couple of them can be handled from Los Angeles, but not many and certainly not without similar competition issues.
The United report also offers up dramatic charts like this one:
Apparently allowing international service at Hobby will see dozens of other routes canceled, reduced or never started. Most entertaining about the graphic is that they seem to be "naming names" of cities they would expect to be affected, but doing so with destinations that don’t make much sense. Or maybe it is all symbolic and the IAH-SJC route really isn’t doomed.
The editorial in the Chronicle has some similarly absurd presumptions in it, like the claim that all the affected customers are going to be locals, not connecting passengers (Southwest has a lot of connections at Hobby) and that Southwest showing up is going to cut prices so much as to create demand in the market. The days of $30/bbl are over; Southwest simply cannot afford to actually cut fares that much and have the routes be profitable.
Finally, it is worth noting that the construction being proposed for Hobby is about more than just the FIS facilities. There are upgrades to the check-in lobby and security facilities also on the drawing board. These are improvements that the airport needs badly and they seem to have become tied up with the FIS issue for a variety of reasons, some good and some bad.
At the end of the day, however, more competition is nearly always better for customers. Even the cases where United has suggested that capacity has fallen in similar historical situations (and in these they do not necessarily consider all the factors in play) the results for consumers are nearly all better. Even where the total number of seats in the market may have decreased, the decreases in the new competition markets have been lower than the national average. In other words, the new competition kept things better than average in those markets, even with decreases in frequencies.
In the game of "Lies, damn lies and statistics" both sides are playing hard and doing their best to present the numbers in a way that supports their case. I still say it eventually gets approved and that the benefits to the city of Houston will be real, though not nearly as great as Southwest suggests they can gain.
A bit more coverage on the topic can be seen at the following:
Related Posts:
Posted by Seth on May 7, 2012 under News |
With an extra half hour to spare at the San Juan airport on Friday afternoon before my flight back to New York I took the opportunity to wander over to the new Terminal A and check it out. The terminal is opening very soon and will house JetBlue‘s operations at the airport; it is a MAJOR upgrade from the existing facilities from what I could see.
OK, to be fair, I didn’t actually get inside and there wasn’t a ton to see. Still, the bits that I did catch were quite nice.
High ceilings, big windows and plenty of gates. It is everything a growing airline could want from a new terminal. Of course, it remains to be seen what facilities are available inside the terminal, and it seemed that the gates were split into at least two groups (I am not sure if they connect behind security or not; I would assume so). But from the bits I did see, it looks like quite an improvement from the current facilities.
Posted by Seth on May 6, 2012 under News |
Several months ago United Airlines announced that they would be changing the configuration of the 757-200 aircraft they have running in their "premium service" routes between New York City‘s JFK airport and both Los Angeles and San Francisco. The changes include removing the first class cabin and replacing the business class seats with the flat-bed models used on their transatlantic 757 service. It also means adding in more economy seats and changing from an all Economy Plus layout to both regular economy and Economy Plus. The target date for the conversions to begin was sometime in the second half of 2012 but nothing more specific was ever announced. Looking at the timetables today, however, it appears that a bit of information about a possible start date for the conversion has been sighted.
Flight number 161 is operated by a sCO 757-200 with lie-flat seats.
The change appears to start on September 1, 2012. In many cases I’d discount changes such as this one which show up on weekends, particularly with all the schedule changes that United is running on weekends still. This one, however, changes the operating carrier of the flight on that route making it seem much more likely to be legit.
The change makes sense for a number of reasons. The company will need to pull at least one aircraft out of service at a time to fit them with the new configuration. This move comes after the peak summer season for trans-Atlantic trips, allowing the company to shift a properly configured 752 over to the route and to provide the new premium service to customers. It isn’t enough seats – 10 fewer than the new config will eventually have – to offer it to everyone, but it is definitely better than putting a non-flat bed config on the route.
The sCO 752 also has the new AVOD IFE system and Economy Plus seating, but it does not have gogo wifi, unlike all the other p.s. aircraft. It remains to be seen which in-flight connectivity solution the p.s. planes end up with after their conversion but I’d bet on them ultimately having the Panasonic-supported satellite-based system. They might have to go with gogo in the interim if the new system isn’t ready yet, but I would expect them to end up there eventually.
The overall conversion timeline is still somewhat in question, but this is a pretty good indication that things are finally getting started.
Related Posts:
Posted by Seth on May 6, 2012 under News |
As United Airlines moves to unify the service offerings between their two legacy operations there are only a few bits left to reconcile. One of those is the catering setup for long-haul flights, where the current service varies depending on which legacy carrier the route is operated by. Starting June 1 the new catering plans go into effect, with the goal of harmonizing the service across all premium cabins, regardless of whether it is operated by a legacy United or Continental aircraft. Alas, even the new plan isn’t quite so harmonized.
Business Class
On the plus side, the company appears to be migrating the legacy Continental BusinessFirst concept towards the legacy United side of things. This means expansion of the ice cream sundae cart and four entrée choices coming to all business class offerings (legacy United was only 3).
Still, depending on whether it is a 2-cabin or 3-cabin aircraft the service will differ. On a 2-cabin plane there will be a choice of appetizers offered and they will be served from a cart in the aisle per passenger request, separate from the salad course. On 3-cabin aircraft there will be only one appetizer and it is served on a tray along with the salad. In both cases the appetizers will only be cold offerings now in BusinessFirst.
At dessert time the 2-cabin aircraft will continue to serve the cheese course from the cart in the aisle while the 3-cabin aircraft will have the cheese pre-plated and served from the galley, and possibly fewer choices of cheese on the plate. Additionally, the petit fours are disappearing from BusinessFirst on 2-cabin aircraft for the dessert course.
Also of note is that the actual entrée choices being offered will be transitioning to those from the legacy Continental operation, at least in the European markets.
First Class
The new United Global First meal service is seeing a few tweaks as well. The overall six-course meal service will otherwise generally remain the same. Appetizers, however, will now be served from a cart in the aisle and there will be two hot choices for passengers to select from.
On 3-cabin flights it also appears that the actual entrée selections will be the same in Global First and BusinessFirst, further blurring the the lines between the two offerings. Dessert will still have more choices in Global First (petit fours along with the sundae) and the appetizers will be hot rather than cold. Plus there is a soup course. Definitely not an identical meal service but still very similar. For service to/from China the Global First cabin also gets cookies during the mid-flight snack while the BusinessFirst cabin does not.
Other bits
The company has decided to retire all of their patterned china; the new service will be from plain white dishes. Hard to know if that actually matters or not, but it is part of the update. Also, the company will be moving towards the legacy Continental glassware in the business class cabins. This includes the water, wine and cordial services. Also, and apparently this is a big deal. the company is shifting to using tongs rather than spoons for some portions of the service. Amazing, huh?
There are a number of matrices describing which routes and aircraft get which meal service, based on number of cabins, destination region and departure time. The charts are filled with tiny print over many pages. Needless to say figuring out what the meal is supposed to be isn’t a particularly trivial process.
Overall the idea of harmonizing the services is a good one. I probably would have taken a different tack in some of the choices, but I understand that there are limitations, both financial and practical, which preclude that in some cases. Making things more consistent for customers helps improve the ability to deliver the product. Alas, there are still going to be differences for the passengers depending on which type of aircraft they are on, among other things. Such is life, I suppose.
Posted by Seth on May 1, 2012 under News |
Believe it or not, Boeing has agreed to purchase a handful of Airbus A340-600 aircraft. Even more surprising? This actually isn’t a particularly uncommon move in general, though it is less common in the aviation world. The story comes out of China, where China Eastern has indicated that they are going to purchase 20 Boeing 777 aircraft. At the same time, Boeing will purchase five A346s that China Eastern is currently operating, allowing the carrier to shift their operations to the Boeing aircraft.
So, is this really all that shocking? Actually not. It isn’t particularly uncommon for one vendor to buy out the legacy equipment of another vendor to close a deal. I used to be involved in such negotiations on a somewhat frequent basis. Whether the legacy gear is scrapped or re-sold varies from vendor to vendor and industry to industry, but the general premise is pretty sound.
So, yes, the headline makes for very entertaining reading, but the actual news behind it isn’t all that crazy.
