‘Tis the season for changes to flight change fees, it would seem, and JetBlue got in on the action this week. Yes, the change fees went up 50% ($50->$75 for cheap fares and $100->$150 for more expensive tickets) but the news isn’t all bad. There is now a tiered fee schedule for flight changes which is arguably more fair than most airlines (short of not charging any fees). And, for their Mosaic members the new rules are even more generous – no more fees.
For regular customers there is now a 60 day cut-off point where the fees change in price. Here’s what the schedule looks like now:
For customers who fly JetBlue enough to rate the Mosaic badge elite status, the changes are even better. No fees at all. Ever. Even if you cancel the ticket for a full
Beginning with bookings made on May 17, 2013, Members with a valid TrueBlue Mosaic badge will not pay the applicable JetBlue change/cancellation fee when they change or cancel their JetBlue flight or JetBlue Getaways vacation reservation by calling JetBlue. The change/cancel fee will also be waived for any traveler on the same reservation as the Mosaic member…. Mosaic members must call JetBlue to change or cancel their reservation in order to receive the fee waiver benefit; any change or cancellation made online will not qualify for this benefit.
This new policy
is a step up from matches that of Alaska Airlines, the other carrier with a published policy of fee waivers for top elites. In the Alaska Airlines case it is only a waiver of change fees, not for canceling a trip, too. Even Southwest won’t refund tickets (just no change fee). JetBlue has essentially made every ticket fully refundable for their top elites. That’s huge.
JetBlue continues to respect that change fees more than the fare itself are silly, so that’s a good thing. And the 60-day split is likely a more accurate reflection of the resale challenges of that same space, made a bit more challenging because JetBlue doesn’t overbook as a matter of policy. But the biggest winners here – by far – are the Mosaic members. No more fees ever makes it incredibly easy to justify buying more of their tickets on JetBlue more often.
Also, there is still the free repricing of the same flight for a credit if the fare goes down which is available to all customers.
Not that it should come as a surprise to anyone, but Delta has joined United Airlines and US Airways in charging $200 for changes on non-refundable domestic US tickets. The change was published on their website today:
It isn’t only customers who are kvetching about the ever increasing focus on ancillary fees. Bob Crandall, former CEO of American Airlines (which hasn’t matched the increase, yet) and generally outspoken commentator on the industry pulled no punches when the topic came up last week at the Executive Travel Summit. Among the choice bits he offered up:
I think the airline industry is making a fundamental mistake when they rely as heavily as they are now on ancillary revenues. The industry cannot have a long future if they are focused on hosing their customers.
I don’t think anyone in the airline industry enjoys nickel & diming customers.
They may not enjoy it, but they’re getting pretty darn good at it.
Hooray, ancillary fees!
Most airlines are big on them these days as a way to raise more revenue and United Airlines has apparently decided that the change fee on restricted fares was too low at $150 per change. The new fee is $200.
Ouch. Oh, and United remains out in front with their policy of charging new money for the change rather than taking it out of the fare difference if the fare went down. Not exceptionally customer-friendly.
It does not appear that American Airlines, US Airways or Delta have matched. Yet.
h/t to EEM for spotting this one.
This week Southwest announced a rather significant milestone related to their integration with subsidiary AirTran. All flights on both carriers can now be booked as a single itinerary. There are a few limitations – most notably that international routes cannot be booked on the Southwest site – but overall the change means great news for AirTran passengers who don’t like bag fees.
Despite the merger there are a few policies where Southwest is rather more customer friendly which have not migrated to the AirTran side of the operations. Things like bag fees, for example, still exist on AirTran and they were recently raised. Similarly, change fees and re-fare policies on AirTran aren’t nearly as generous to the customer as they are on the Southwest side of things. Up until this past Monday you had to book on the AirTran site to get access to many AirTran routes and destinations. And that meant you had to accept the less customer-friendly policies. Today, however, other than the 8 international destinations served by AirTran, that is no longer the case.
As an example, take a trip from New York to Pensacola. Service into Pensacola is only offered on AirTran flights but they can now be booked using the Southwest site and the prices are identical.
Mixed carrier itineraries look similar on the systems:
Booking these itineraries on the AirTran site means you’re stuck with the AirTran policies. The press release states that any booking which includes a Southwest-operated segment should be exempt from bag fees but the other restrictive rules will still apply:
…[A]ny itinerary with a Southwest segment or that is purchased through a Southwest point-of-sale channel will not have bag fees for the first or second checked bag (weight and size restrictions apply.)
Also worth noting that points earning is dictated by the booking channel. If you book through AirTran you earn A+ rewards, regardless of who operates the segments. There are scenarios where that might be beneficial to the passenger to switch the booking channel depending on whether you want A+ credits or RapidRewards points.
Customers will continue to earn and redeem currency through the frequent flyer loyalty programs of their Marketing Carrier, regardless of the Operating Carrier they travel on. Customers should be enrolled in both Southwest Airlines Rapid Rewards and AirTran Airways A+ Rewards programs in order to earn currency from whichever airline they purchase a ticket.
Lots of decisions to make depending on which earns you the best points and has the best policies.
This past week saw perhaps one of the most significant announcements in the evolution of loyalty programs in recent years: Crossover Rewards from Delta and Starwood. The two have teamed up to change the way hotels and airlines work together to reward their most loyal customers, and the implications could be quite far-reaching across the industry. Airline and hotel programs have partnered before, but none to this depth of integration.
Crossover Rewards is focused on the elite members in each program, the type of customers which the programs work hard to attract. From time to time hotels have offered trial elite status promos to airline elites. That can build a short-term bump in customer base but it doesn’t seem to have the long-term effects that the hotels are looking for. The new Crossover Rewards program is built to be a long-term solution, not a flash-in-the-pan change to the numbers.
For elite members in either program the main bonus is getting to earn both hotel and airline points for activity on either of the partners. The only thing close to this historically was Hilton‘s Double Dip program and that meant earning airline points in lieu of extra hotel points, though it is also available to everyone rather than just to elites. Crossover Rewards allow for elites to earn points in both programs without sacrificing earning on either side; that’s a pretty significant step forward.
For top elites in both programs – Platinum elite on the SPG side and Platinum and Diamond Medallion on the Delta side – the benefits are even more significant. Rather than a one-time status gift which the customer must maintain through "natural" qualification activity the Crossover Reward program will be granting an elite-light level of benefits. For Delta Platinum and Diamond Medallion members Starwood will offer many of the same benefits as the SPG gold tier, including priority check-in, complimentary room upgrades (no suites) and free internet. For SPG Platinum members Delta will offer many of the same benefits available to Silver Medallions, including one free checked bag, priority check-in and priority boarding. It is not a full elite status – no bonus elite points or priority service other than on the day of travel – but it is definitely more than what everyone else gets. And, more significantly, the benefits are valid so long as the partnership survives, not just for a trial period.
Finally, it is worth noting that the earning rates for points on the Crossover Rewards partner are based on spend. While this is normal in the hotel loyalty world it is decidedly not in the legacy airline loyalty programs. For SPG elites the earning will be one Starpoint per dollar spend on the base fare, excluding taxes, fees and surcharges. It is not much of a surprise that Delta has the ability to track this data; they recently announced intentions to put similar metrics on elite qualification in coming years. For Delta Medallions the earning will be based on room rate only at Starwood hotels; ancillary spend will not earn SkyMiles. While not groundbreaking overall, this approach is definitely another move in the direction of tying elite benefits to revenue. No surprise that Delta is on board with that given their recent announcements regarding similar plans for 2015 Medallion qualification.
Perhaps the most impressive thing to come from this change is that there doesn’t actually appear to be anyone who will lose with the changes. Starwood has committed to prioritizing their own elites over the Delta Medallions for room upgrades and there will be no competition for Delta upgrades as that isn’t one of the benefits. Earning crossover points doesn’t cost customers earning opportunities in the main program; it is purely additive. And the other benefits – waived fees for various services and priority access – doesn’t really cost anyone else anything.
The two companies would seem to have almost nothing but upside from the changes, too. Yes, they will forgo some revenue on the ancillary fees side of the ledger. And there will be some costs to handle the points earning. But the partnership opens up a strong marketing avenue to top travelers without significantly diluting the benefits for their existing elite customer base.
This may prove to be an enhancement which is actually beneficial to both customers and companies. There are far too few of those happening these days.
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.
It is no secret that Southwest wants to aggressively pursue ancillary revenue opportunities as they look to remain profitable. They’ve already announced things like restricting the value of canceled tickets; this week they added the option to board first for $40 to their schedule of add-ons. The "A" boarding slots will only be available starting 45 minutes prior to departure and only on an "as available" basis, meaning only if the company hasn’t already sold them via their Business Select fares.
Southwest Airlines Customers LUV the coveted "A" boarding group, and now they have one more way to be among the first to board. Beginning today, Southwest Airlines will offer Customers the opportunity to purchase one of the earliest boarding positions at the gate for $40 per flight, when available.
Up to 15 Boarding Upgrades will be available for purchase on any given flight. Passengers will have to purchase them from an agent at the gate via a credit card; agents will be announcing if they are available prior to the flight. The company says that testing of this program last month in San Diego was successful.
Essentially the $40 fee is a second chance at getting towards the top of the boarding process. Many airlines are selling similar options at varying price points but not all allow passengers to move all the way to the front of the line for boarding as Southwest will be providing. In this case paying $40 – on a space-available basis – allows a customer to jump ahead of A-List customers, Southwest’s version of elite status. Yes, there is a limit to how many will be sold (plus the logistics of selling them in the ~15 minute window makes me question how many will ever sell) and more often than not it will still be passengers on high fares at the front of the line. Still, it is a bit of a slap in the face to the A-List folks to learn that their long-term loyalty is supplanted by $40 on an ad hoc basis.
Like many program updates this one likely won’t drive any behavioral changes on the part of members. But death by a thousand cuts is always a bit awkward to watch from the outside looking in.
Airlines and online travel agencies (OTAs) continue in their fight over distribution costs and, once again, customers are stuck in the middle. The most recent battle is being waged by Frontier Airlines. They announced this week that they will charge higher fees and reduce benefits for customers who book via OTAs.
Customers flying on Frontier who book through an OTA will receive only 50% credit in the EarlyReturns frequent flyer program. They will also face a $50 premium on fees for flight changes, standby travel and bringing pets on board, among other things. Customers who do not book directly will also not be able to assign seats on the flights until check-in. This move is unlikely to win the carrier many friends, especially given recent overtures from politicians railing against assigned seating fees when it comes to families being split up on planes. Naturally, Frontier recognizes the value of assigned seats. Daniel Shurz, Frontier’s senior vice president, commercial sums it up quite well:
Particularly for families, it provides an incentive to book directly. There is no logical reason for our customers to want to book anywhere else.
And while customers who are committed to flying with Frontier will see benefits from booking directly, there are plenty of logical reasons for starting a search elsewhere. Comparing prices and flight times with other airlines is not something Frontier offers on its site. Nor does it help passengers compare other benefits associated with flights such as legroom, entertainment or in-flight internet service. Naturally the online travel agents are reminding customers of the benefits they offer, including comparing multiple airlines and the ability to mix carriers on itineraries.
Airlines and OTAs have been fighting for a while now over distribution costs. It is no surprise that the airlines balk at paying the $20-ish it costs for an OTA booking when they can handle the same transaction internally for just a couple dollars. Plus most OTAs don’t have the ability to sell ancillary products (extra legroom, upgrades, etc.) which further reduces the revenue for the airlines. Where those features have been incorporated into the process the sales have been impressive, but it requires a significant change in technology infrastructure to support the option, something the OTAs are not inclined to invest in.
This isn’t the first time that an airline has changed the benefits available to customers based on the booking channels; Continental previously offered 50% elite credit on 3rd party discount fares booked through 3rd party sites. And the fight between American and OTAs got so bad recently that American Airlines pulled inventory from Orbitz for a while. It is back now, but there are still legal battles being fought on that front.
Whether through legal challenges or just variable customer service levels, expect the battle to continue. That’s bad news for customers but it is what the market demands these days.
Allegiant is second only to Spirit Air in the United States in their focus on ancillary fees as a source of revenue. Both now charge for carry-on bags and most other things you can think of as part of the purchase process. While Spirit has a "usage fee" for booking on its website Allegiant is choosing a different tack, adding a fee to use credit cards as a payment method.
Technically this is a discount for using a debit card, a transaction type which is cheaper for them to process, and not a fee. Because of that it isn’t details on their fee schedule. But it is very much a requirement for customers who want to pay with a credit card, running $4-6 per passenger per segment. With 1.7mm passengers quarterly that adds up in a hurry to a lot of revenue.
The carrier, of course, maintains that customers are getting the lowest base fares possible and then choosing the "extra" benefits they need. In the case of buying with a debit versus credit card, however, there are some very real reasons customers should be cautious about using a debit card to save a few dollars. Purchases made with a credit card come with certain consumer protections which are not available via other means. Historically this has meant a free version of insurance against the company failing to deliver. Now Allegiant is going to have customers pay for that insurance. At least the company recognizes this shortcoming when a customer clicks for the details on the debit card discount:
The move also raises an interesting question with respect to the DoT rules regarding full-fare advertising. Is the fare displayed on the search results really the all-in price if only certain customers using a specific payment method can actually realize that price? It will certainly be interesting to watch.
At the end of the day this move makes it harder for customers to easily compare total trip costs across carriers. That’s bad for passengers.
Just how important is it to the airlines to have ancillary sales available through online travel agencies? Very, it would seem, based on the initial stats released this week from the Airlines Reporting Company (ARC). ARC is the group established in the United States to handle transaction reconciliation between airlines and travel agencies and they’ve shared some interesting numbers from the first couple weeks of work between American Airlines and Priceline.
The two started working together through American’s Direct Connect platform at the end of July and this initial report from them indicates that the ancillary transactions are happening at a pretty decent clip. More than 2000 Electronic Miscellaneous Document (EMD) transactions have been processed by ARC since July 31st, more than 100 per day on average. These EMDs represent payments for assigned seats on AA flights at the time of the initial ticket purchase rather than after the fact through the AA website.
The connection between Priceline and American is the first integration of the carrier’s Direct Connect platform with a major online travel agent booking site and the initial data suggests that these sorts of transactions can mean millions to the airlines annually; no real surprise then that they are pushing hard to get travel agents to shift to this sort of arrangement. It is a bit of a surprise that they are willing to forego some sales channels and pursue lawsuits on the topic, but when millions of dollars are at stake I suppose nothing should be too surprising.