There are plenty of opinions out there right now about the future of the aviation market in the USA in light of this week’s announcement about US Airways and American Airlines finally coming to terms on their merger this past week. I’m only slightly dismayed – though not at all surprised – to see so many bloggers announcing that they know what the loyalty program is going to look like and what to do about points right now (here’s a hint: they’re all guessing). I’m not at all surprised, however, to se so many pundits speaking to what the net effect will be for the traveling public. Anyone on the industry side is lauding the stability and efficiencies of the larger route network and more flexible fleet. From the consumer side, however, the views are a little less positive. In some cases, VERY much so.
Here are two headlines which made the rounds a few days ago shortly after the announcement came out. One is from The Onion, a satire site which plays on real news. The other is from Salon.com, something more akin to a real news site. Though from reading the headlines it isn’t entirely clear which is which:
American Airlines, US Airways Merge To Form World’s Largest Inconvenience
U.S. Airways and American Airlines, two crappy airlines, are merging to form one mega airline — the biggest in the world — with a $11 billion deal agreed Thursday.
American, U.S. merge to form biggest, crappiest airline
American Airlines and US Airways stunned the aviation industry Thursday upon announcing the two air travel titans have combined in an $11 billion merger that sources say will unite the industry powerhouses into the world’s largest and most complete pain in the ass.
Even with the first line of the story included it is not clear which one is satire. If you keep reading it becomes clear reasonably quickly, mostly because the Onion article includes some rather entertaining "quotes" attributed to American’s current CEO. But that would require actually reading past the headline.
It does raise the interesting question, however, of just how challenging the merger will be over the coming years for consumers. Higher fares are almost a certainty; that’s what happens when competition is reduced. And while the two carriers were quick to point out that only a tiny number of their routes overlap they skipped the part where they serve many of the same markets, just via different hubs. The combined carrier will still have woefully limited coverage to Asia and the Middle East (odds of the TLV route sticking around given the open TWA-related judgment against AA??) and Europe isn’t all that much better. Africa and Australia are complete black holes on the map. Their domestic route map is pretty good, except on the west coast where they’d still need Alaska Airlines to fill in the north-south shuttle service and provide coverage to a number of markets. The combined carrier will be a beast in the Caribbean and Latin America, but that’s another situation where the benefits to consumers are questionable; the two were, in many cases, the main competition for each other and that’s disappearing.
There is no doubt in my mind that the stability of the industry will improve from this merger and that is, in general, a good thing. That doesn’t mean I’m not just a bit worried about how it will impact my personal travel patterns. After all, I’m on a pretty tight budget and I cannot get enough time in the air.
If you’re surprised about the impending announcement expected Thursday morning of a merger between US Airways and American Airlines then perhaps you should get out more. It has been the talk of the industry pretty much since American filed for Chapter 11 bankruptcy protection over a year ago. And now the speculation about when they will merge can end, replaced with even better speculation about what will happen to the merged carrier.
We know a few things, or at least we’re pretty sure. Doug Parker will be in charge; Tom Horton will be a non-executive Chairman and will be paid handsomely for bringing the company almost out of bankruptcy. The carrier will keep the American Airlines name, brand and Texas headquarters. They will remain in the oneworld alliance and keep AAdvantage as their loyalty program. No surprises there.
But what about the things we don’t know?
- What happens to the Alaska Airlines partnership, for example? Especially considering the recent announcement of an even tighter partnership.
- When will Dividend Miles be rolled in to the AAdvantage program and which program rules will they keep. The two are plenty different and there are plenty of reasons both sides will lobby to keep theirs.
- Which hubs get shut down?
- Will they ever figure out how to expand into Asia and Europe in a sizable way without depending on partners?
- Which PSS will they choose? American has been looking to get a new one for some time now; will they use the merger as the impetus to replace both systems with something brand new?
- How long until the extensive short-haul network US Airways operates on the east coast can be redeemed for tiny amounts of Avios?
- Just how badly will consumers get screwed with less competition and higher fares?
Oh, and perhaps the biggest question of them all: Will Doug’s plan to use the AA unions to out-vote the US and HP unions and end their integration woes actually work?
In the meantime, make sure you look at a status match to Alaska Airlines Mileage Plan program, just in case. And now is probably a good time to pick up a US Airways credit card if you haven’t lately. Getting an extra 40,000 points in the combined program isn’t a bad thing.
Definitely going to be fun to watch over the coming months, more so than watching the speculation about when the merger was going to happen.
Alaska Airlines has announced they will be severing ties with partner Icelandair effective June 1, 2013. The two will have a "phased" winding down of relations following that date per an email sent to Mileage Plan members this week:
Alaska Airlines is announcing a change in its Mileage Plan airline partnership with Icelandair, which is scheduled to conclude June 1, 2013. In an effort to minimize impact on our customers, we will phase the relationship out over eleven months. To learn the details of this phased approach, please visit alaskaair.com. We know many customers have found value in our partnership with Icelandair and apologize for any inconvenience that this change may cause.
The phased approach is actually reasonably generous, based on the purchase date of the ticket as defining the earning rules. Here’s what their website shows:
Effective June 1, 2013, Icelandair will no longer be a Mileage Plan™ partner.Tickets purchased on or after June 1, 2013, will not earn Mileage Plan™ Miles. Tickets purchased on or before May 31, 2013, will continue to earn miles for travel through February 28, 2014.
Existing award travel, and award travel booked by May 31, 2013, will be honored for travel through February 28, 2014. Award travel on Icelandair cannot be booked or changed after May 31, 2013.
That said, the inability to change an award after the cutoff date isn’t so great.
It is not entirely clear why this change came about, though the launch of service by Icelandair from Anchorage to Iceland is one possible reason. Ditto the rather crazed flood of award bookings a few months back when Icelandair was selling miles cheap and they could be used to book first class awards to Hawaii at bargain rates. Whatever the reasons, the relationship is ending and that’s a shame. Fewer partners is rarely a good thing.
Partnerships between hotel and airline loyalty programs are not particularly rare, but they are mostly focused on earning airline points for stays at hotels, and then generally in lieu of earning with the hotel directly. Starwood and Delta have launched a new Crossover Rewards program, allowing SPG elites to earn points towards their Starpoints balance for flights taken on Delta. The SPG elite status will also translate into elite benefits on the day of travel, including free bags and priority boarding.
On the points earning front, SPG members with linked accounts will earn one Starpoint for each dollar spent on Delta base fares. This correlates with the recently announced idea of MQDs and Delta’s ability to track spending on a per ticket basis. It seems that they are quite happy to leverage that new technology both for internal bits and for partnerships.
On the day of travel front, the benefits are limited only to SPG Platinum members; gold elites are excluded. The benefits include one free checked bag (up to four passengers on the reservation), Zone 1 boarding (up to nine passengers on the reservation) and SkyPriority access
and day of departure upgrades on routes where complimentary upgrades are offered (Platinum elite only).
The benefits for SPG Platinum elites rest somewhere between Delta AmEx cardholders and Silver Medallion status. That’s not to shabby at all, especially for basically no additional effort on the part of the SPG member. The only real drawback I can see is that it requires crediting the points to Delta rather than Alaska Airlines, which is how I normally roll with my Delta flights. Then again, I’m not SPG Platinum so the extra point/dollar isn’t really all that valuable to me anyways.
A couple months ago Virgin America‘s Elevate program officially launched Silver and Gold status tiers within the program. This week the carrier announced a challenge/match program as they look to attract elites from both United Airlines and American Airlines to their operation. The match is free and will last through April 30, 2013. Here’s how the legacy tiers will map to the Elevate program:
It is somewhat interesting to see that US Airways, Delta and especially Alaska Airlines are absent from the list. It is also interesting that Virgin America sees their Gold status as more valuable than the second tier levels from the other two.
This status match offer is more of a challenge than an outright match; in order to keep the status after April 30, 2013 members will have to reach certain earning thresholds in the program:
Based on the 5 points/dollar earn rate that means a $2400 spend in the next 5.5 months to keep Gold status through the rest of the 2013 year. That’s not cheap, though also not completely unreasonable. And it is quite a discount off the normal $10,000 annual spend required.
Overall, I think that this move will open up access to the Virgin America program to some customers who wouldn’t have otherwise considered it. I’m not sure how many given the high spend thresholds, but I’m sure there will be a few.
As a general rule I hate the idea of buying points directly for cash. Even with the occasional US Airways 100% bonus I’m not completely convinced that it is the right move, at least for me. I’m not entirely sure why (or even if) I’m broken that way, but it just doesn’t seem the same. Still, every now and then a deal comes along which screams out to be at least tried. It seems like today is one of those days.
I see this whole obsession as a game of arbitrage, acquiring the points at a discount and redeeming at a higher value. Sometimes that’s not entirely possible. At least not directly. So when an opportunity to play the game in multiple steps comes along I get even more interested, particularly as the associated challenges make it more fun to me. In today’s example it seems that a two step process can yield rather impressive results.
The Icelandic economy collapsed a couple years ago thanks to unfortunate arbitrage plays so maybe their airline is just trying to catch up on the fun. It seems that they’ve got quite the deal available for redemptions on Alaska Airlines flights. Reading OnlineTravelReview this afternoon I came across the details of this deal. Very interesting, indeed. Not only is the current exchange rate from Icelandic Krona to USD or EUR rather favorable right now to folks not in Iceland (arbitrage #1), but the redemption rates of Saga Club points on their partner Alaska Airlines is also quite favorable (arbitrage #2). A glorious deal in the making.
The gist of it is that 30,000 Saga Club points is enough for a first class return ticket on Alaska Airlines metal. Anywhere they fly. And from now until September 28th you can purchase points in the Saga Club program and get a 20% bonus. The cost to purchase 25,000 points – netting 30,000 with the 20% bonus – is only about USD $328. That’s a tremendous bargain. Assuming availability (I’m a bit less inclined to book from the East coast because of that) a trip to Hawaii in first class is going to run you roughly $370. That’s not bad at all.
More details and the original math can be found here.
Folks flying between Hawaii and the mainland can look forward to new meal choices on Hawaiian Airlines, including more island flavors and free drinks. The airline announced a revised Mea Ho’okipa’ (translation: I am host) inflight service philosophy. The current focus is mostly on the dining options.
We’re bringing back the ‘good old days of flying’ by making inflight dining a pleasant part of the travel experience, while showcasing the products and promoting the ambiance that makes Hawai’i so special.
Apparently one of the key factors in the the "good old days of flying" was free drinks. Passengers will now receive a complimentary glass of wine to go with their lunch or dinner meals. There will also be a free rum-based signature cocktail offered during the snack/beverage service 2 hours out from landing in both directions. This is comparable to the mai tais offered by Alaska Airlines on their Island service. Hawaiian was already the only carrier offering free food in economy on all flights to Hawaii; now they’ve got free drinks, too. Not too shabby.
The updates will also see flight attendants assigned to specific zones, allowing for more personal interactions with passengers and changes to the buy-on-board menus to feature more island flavors in the selections. The cheeseburger will be disappearing in favor of a Kalua pork sandwich, for example.
I rather enjoyed the service on the JFK-HNL flight I took back in June. The food was decent and the flight was reasonably comfortable. Upgrading the meals and adding free drinks certainly isn’t going to hurt that opinion.
Read more about the new service announcements at Fodors.com, too.
Aloha NYC: On board the inaugural flight JFK-HNL
Alaska Airlines and in-flight internet provider gogo have announced a promotion for passengers to receive 15 minutes of free connectivity in-flight on most of the carrier’s routes. The promotion is valid throughout August 2012 and covers flights on the west coast and in Alaska.
The promotion covers all flights operating wholly within or between the Pacific and Alaska time zones. That’s the lion’s share of the Alaska Airlines route network which means plenty of opportunities for passengers to enjoy the connectivity, at least for a few minutes.
UPDATE: Thanks to the folks pointing out that it is through August, not only in August. In other words, valid now, too. Dunno how I missed it before.
I have been reasonably convinced in recent months that United Airlines has just decided to focus on other efforts rather than building up their social media presence. I figured they decided to focus their marketing on other areas and that they didn’t mind falling behind other US carriers who have successfully leveraged various social media platforms. JetBlue, Delta, American Airlines and Us Airways have all made notable efforts in this area. Even smaller players Alaska Airlines and Hawaiian Airlines have a reasonable presence. But, like I said, I figured that United was happy to be somewhat behind, waiting for other things to clear up before focusing some efforts in the social media space.
Apparently not so much.
At the Associate of Travel Marketing Executives conference in Chicago today United’s SVP Marketing, Mark Bergsurd was talking about various branding efforts when he apparently launched two doozies on the crowd, as reported by some of the attendees:
Maybe he’s proud because he doesn’t really get it and the people inside are telling him it is OK? But, seriously, shouldn’t someone at the top know to look outside for validation? And to look at what others are doing and compare? If I had to guess I’d say that Bergsrud not only "doesn’t always get it," but that he also doesn’t really seem to care all that much. Maybe that’s ok, but it certainly doesn’t say much for vision or foresight. And that’s probably not the image I’d want to be presenting at an industry conference.
Bergsrud did share some good insight on other issues, noting that the company has a trust issue with customers and that the website still needs some work. But making statements like these is, if anything, mostly proof that the second comment really is true.
Blah, blah, blah bag fees, blah, blah incremental revenue. Quite frankly, most of these reports reads the same over and over again. It is happening and it isn’t necessarily pretty (nor cheap – $100 for second bag now on United Airlines or Delta between USA and Europe). It is, however, a trend in the industry and one which doesn’t seem to be slowing down any time soon. There have always been some exceptions to the rules which have made things more palatable, especially for folks flying more frequently or in first class. Alaska Airlines has changed that.
The carrier announced this past week that they will begin to charge some first class customers for checked bags, assuming the seat up front came via an upgrade. Those passengers will now be charged $20 for each of their first two checked bags:
Most upgrades will still go to passengers with elite status, passengers who are still exempt from the fees. But this is definitely something of a watershed moment in the chipping away of benefits for first class passengers. Then again, United used to deny upgraders lounge access on some routes but give access to paid customers so maybe it isn’t so new, just a different view of the same old game. Either way, definitely a downgrade in the service on offer.