Posted by Seth on December 8, 2009 under News | 
Back when Delta acquired Northwest Airlines one of the interesting discussions was about their fleet. Specifically they had very little fleet commonality. On the plus side, such an arrangement allowed them to integrate their pilots pretty easily since no one was too much at risk of losing a job to someone from the other side. On the down side, however, it raised all sorts of questions about the future of the fleet, which planes would be retired and which new planes would be joining the fleet.
Northwest was to be the North American launch customer for the 787 Dreamliner. I even saw one on the assembly line back in March with the Northwest logo on the bit of the tail that was already painted. And officially they still are such. But since the acquisition closed earlier this summer those plans have been put into a bit of limbo.
That was magnified this week when the carrier’s CFO, Hank Halter, suggested that the carrier is not interested in adding any more new aircraft orders to their fleet plans. That might not be huge news or even count the 18 pending 787 deliveries out, but there are some other bits that suggest the Dreamliner may not fly anytime soon with a widget on the tail.
In a recent regulatory filing Delta didn’t include the 787s in their fleet plan through 2012. Even the most pessimistic folks I know don’t think that the 787 delays will stretch that long. Executives have also repeatedly stated that the current 777 fleet can meet the carrier’s needs and also that they have not allocated capital for the acquisition of the Dreamliners previously ordered by Northwest.
Those orders supposedly can be converted to 777 orders so maybe that’s the way Delta will go. With all the delays and then the consolidation it isn’t too surprising that Delta is willing to walk away from those aircraft right now. What will Boeing do with the delivery slots? Hard to say. I’m sure there are some customers who are quite anxious to get a few now planes in their fleet sooner than not so they’ll most likely find a home. But not with Delta. At least that doesn’t seem likely right now.
Posted by Seth on November 17, 2009 under points |
Since the original partnership announcement between Continental and United Airlines almost 18 months ago there has been plenty of speculation about the exact details and which elites would see which benefits. When United announced the wholesale changes to their elite upgrade upgrade scheme the writing was on the wall rather clearly. And now the writing is on the Internet in the form of multiple press releases (and here) and other announcements.
So now that most of the details are out, what does it all mean? For starters, all elites from both are eligible for upgrades on flights operated by either carrier. There are some notable exceptions (p.s. service is still not eligible, for example) and some notable inclusions (Continental elites can now get free upgrades to Hawaii on United service). The hierarchy for the upgrades depends on which carrier you are flying on – each is pretty much taking care of their own elites first for the most part – and it breaks down like this:
| On Continental Metal |
On United Metal |
- Continental Platinum Elite
- United Global Services
- United 1K
- Continental Gold Elite
- United Premier Executive
- Continental Silver Elite
- United Premier
|
- United Global Services
- United 1K
- United Premier Executive
- Continental Platinum Elite
- Continental Gold Elite
- United Premier
- Continental Silver Elite
|
One of the biggest quirks is that United’s second tier – for folks who fly 50,000-99,999 miles – get prioritized over Continental’s 75,000+ customers on United metal. But on Continental metal they’re below the comparable tier so not all that crazy.
Probably the most significant change is that all Continental elites will have access to United’s Economy Plus seating. United’s customers get access to Continental’s “premium” seats which are the exact same seats and pitch, just at the front of the plane. That is definitely a rather lopsided win in favor of Continental’s elites. Of course, Continental might decide to implement E+ at some point and even things out, but I’m not holding my breath.
Instant upgrades will also be available for all elites. Elites on Y or B fares (and CO Platinum, UA 1K and UA GS on M fares) will access to the front cabin (B and M fares are capacity-controlled; Y has last-seat availability) on Continental flights. And access to the exit row seats on Continental will be extended to United’s 1K and GS customers.
So that’s the bulk of the details…but what does it all mean? At the end of the day the arrangement is remarkably similar to what Continental and Northwest Airlines had prior to Delta buying out NW. It is pretty much full reciprocity as much as there can be given the minor differences in the two carriers’ products. There are some cases where Continental elites will do better (mostly in E+ seating) and some where they will not (upgrade hierarchy on UA metal). Similarly, United’s customers get access to upgrades and, for the top tiers, exit row seats. I don’t really see the new policy causing a sudden swing in the number of folks choosing to fly on the partner’s metal or otherwise skewing the upgrade ratios all that badly. Yes, there will be some CO elites now flying on UA, but there will also be the same in reverse.
In the end, this is what partnerships and alliances are for. The provide the customer with a reasonably consistent experience and benefits across multiple carriers. More options and more destinations and better connections while not sacrificing the benefits of elite status earned on the home carrier. It makes a ton of sense and the CO/UA version of such a deal isn’t such a bad one at all.
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Posted by Seth on May 12, 2009 under Uncategorized |
What do $15 here and $25 there add up to in the US airline industry? Over one BILLION dollars in 2008. That’s right. A billion. With a B. The carriers do not break out the revenue from checked baggage in their individual annual reports, but the Department of Transportation does require that they report it so we finally got a glimpse into the real numbers there with the release of the Fourth-Quarter 2008 System Airline Financial Data report yesterday.
The numbers overall are rather depressing. The carriers mostly lost money. A lot of it. But in that sea of data there were some bright spots for the carriers. Like the fact that they collected, as a whole, $498.6MM dollars in baggage fees in Q4 2008. Because the fees didn’t really start to show up until Q2 2008 we don’t know what the full year impact will really be year over year, but it isn’t too far fetched to think that the $1.1 Billion that we saw in 2008 is soft. Then again, the whole industry is soft right now so maybe not.
And so, thanks to the fine folks at the Bureau of Transportation Statistics, the numbers are available for our perusal. The data are available to be broken down by just about any variable out there. Want to know which carrier had the highest excess baggage revenue in Q3 2008 in the Pacific region? That data is available (Northwest, by far). Here’s the summary for the full year system wide:
| Airline |
Excess Baggage Fees ($000) |
| American Airlines Inc. |
$ 277,991.00 |
| US Airways Inc. |
$ 187,081.94 |
| Delta Air Lines Inc. |
$ 177,063.00 |
| United Air Lines Inc. |
$ 132,994.00 |
| Northwest Airlines Inc. |
$ 121,599.00 |
| Continental Air Lines Inc. |
$ 99,315.00 |
| JetBlue Airways |
$ 35,307.65 |
| AirTran Airways Corporation |
$ 29,400.96 |
| Southwest Airlines Co. |
$ 25,226.00 |
| Alaska Airlines Inc. |
$ 24,773.00 |
| Frontier Airlines Inc. |
$ 15,155.82 |
| Hawaiian Airlines Inc. |
$ 11,627.18 |
| Midwest Airline, Inc. |
$ 3,977.84 |
| Virgin America |
$ 2,568.56 |
| Sun Country Airlines |
$ 1,304.90 |
Those numbers are in thousands of dollars so American Airlines’s number represents almost $278 Million that they realized all on their own, about 25% of the total in the nation. If you combine Delta and Northwest’s numbers they actually represent a slightly larger piece of the pie (~$298.6MM) than AA does. Southwest Airlines, famous for their “no fees” approach to fares managed to pull in about $25MM in fees, thanks to folks paying for overweight or additional bags beyond the first two. jetBlue seems to be pulling in more money for their Even More Legroom seat up-charges than they are for their baggage fees (first bag is still free on jetBlue), but combined the two do make a pretty reasonable contribution (~$70MM) to the carrier’s bottom line.
For an industry that lost billions of dollars last year these revenue numbers are a bit of silver lining. The money being taken in is very real and, for some carriers, quite substantial.
Posted by Seth on January 26, 2009 under Uncategorized |
Delta has rarely tried to hide the fact that they are fleecing their SkyMiles members these days. Reward requirements are going up, benefits are going down, and SkyMiles members are going crazy.
The latest changes that Delta tried to implement were reducing the number of miles earned on the most expensive coach tickets and removing the best benefit that top-tier elites get – free changes on reward tickets. There was much outrage amongst the frequent fliers, and now it seems that Delta is going to relent on some of those changes.
They’ve backed off the change on the miles credit for the expensive tickets completely. They just walked away from that change. And they’ve “compromised” on the Platinum’s change fee rule. They’re going to offer each platinum medallion two free changes each year, and then only charge half price for the rest of the changes.
That’s not too bad, but it is still a huge hit against their top members. They still claim that they are making the change because of the significant number (10%) of seats that are booked and never flown and not canceled until after the trip. Simply make changes free until the time of departure and that problem would go away. But then Delta would have to admit that they aren’t just doing this as a cash grab, and I doubt they would be willing to do that.
Here’s a copy of the email sent to some Delta elites tonight about the givebacks:
We’re working hard to bring together the frequent flyer programs of Delta and Northwest Airlines®. As a part of this effort, we are aligning the SkyMiles® and WorldPerks® programs with the goal of creating a single, best-in-class loyalty program for our combined members by the end of 2009.
What does this mean for our Gold Medallion® members in 2009?
We will continue to offer several core benefits that you have told us are important to you including:
- Unlimited Elite Complimentary Upgrades on all Delta and Northwest operated flights – Delta continues to be the only top three carrier to offer complimentary upgrades for all elite customers
- Preferred security access, priority boarding, preferred seating and select baggage fee waivers
- Same day confirmed fee waivers and the ability to stand by for alternate flights
- A 50% Medallion Qualification Mileage and base mileage bonus in Y, B and M booking classes – you may have noticed in your credentials packages a change to this policy – however we can confirm this bonus will remain
Remember, you can now re-qualify for Gold Medallion status by earning 50,000 Medallion Qualification Miles or 60 Medallion Qualification Segments. And coming soon:
- Platinum and Gold members will receive Elite Complimentary Upgrades on Award Tickets
- You will be able to link and transfer your miles between your SkyMiles and WorldPerks accounts in early February
Thank you for your loyalty and this summer we will share more details of our 2010 Medallion program, which will offer more choices, benefits and access.
You’re the reason we fly,
J. W. Robertson
Vice President – Loyalty Programs
It is certainly a roller coaster ride for the folks collecting SkyMiles (and Northwest’s WorldPerks members, as they are subject to the same rules changes now, too) these days. Good luck out there.
Posted by Seth on January 10, 2009 under Uncategorized |
For those of you at home asking when the gutting of the airline loyalty programs is going to end, don’t look to Delta for any short term relief. They have announced that as of March 1, 2009 they are removing the free reward change benefit for all elites.
The ability to freely change and redeposit reward reservations is one of my absolute favorites that the airlines offer. I was pretty annoyed when Continental announced that they were jacking the fee up for such changes to $150 for everyone but their platinum elites. But Delta has upped the challenge, choosing to remove the benefit for ALL their customers, including their elites. Even worse, this will affect all the NorthWest elites, too, as their program is now pretty much run by the same rules that govern the Delta program.
Delta’s justification? Well it isn’t particularly a good one, but at least it is grammatically correct:
Thank you for contacting Delta Air Lines.
Industry-wide capacity reductions have resulted in fewer seats available for award travel. In an effort to preserve award seat availability for the entire SkyMiles membership, we made the difficult decision to no longer allow free-of-charge redeposits and reissues of award tickets by Platinum members effective March 1, 2009. While we recognize this benefit is important to our Platinum members, we have found that many of these award seat bookings were being held to the last minute and in some cases never flown. Many members including our most-valued Platinum Medallions, were deprived of the opportunity to use those seats. Please also note that Platinum Medallion members are not charged the Award Ticket Fee for reservations ticketed less than three weeks before travel.
Your selection of Delta is appreciated, and we will always do our best to merit your confidence and support.
Sorry, Delta, but I’m not buying the excuse. See, reward inventory is made available when the airlines don’t think that they can sell the seats. Plus, if the seats are not occupied at the time of departure someone gets the upgrade instead. I’m just not buying that Delta is really losing money with the existing policy. Of course, they’ll make a lot more money as they start charging all their customers more to use their miles, but it isn’t like they were really losing much prior to this.
I’m actually pretty shocked that they are going this far against their top tier elites. I think that the fallout is going to be pretty ugly. Sure, they have some markets where they are too dominant, but even the folks in Atlanta have options (Airtran) for a lot of routes, and Minneapolis will in March, with Southwest coming to town. It is early enough in the year that there is still time to jump ship and start qualifying for elite status in a different program. I’d strongly consider it were I a Delta customer.
Posted by Seth on November 6, 2008 under Uncategorized |
With the distractions of their merger with Northwest behind them, Delta is now moving forward in actually operating the airline. They are announcing two new routes from Paris planned to start next spring. Service will run between Paris and Pittsburgh and Raleigh-Durham, operating on 757 aircraft. The flight to Raleigh-Durham is pretty much at the edge of the operating range of a 757-200, so that will be interesting to watch over the winter to see if they are forced to block seats to reduce weight or divert for fuel stops.
Happy flying!
Posted by Seth on November 5, 2008 under Uncategorized |
They cut a very significant one, in fact – the fuel surcharge on many reward flights.
As part of aligning the various policies between Northwest and Delta changes to a variety of fees have been announced. Some have gone down (calling to book a ticket costs $20 now) or been removed completely (no more paying $3 for each bag checked with a skycap). Checked baggage fees have come down for Delta customers, going to $15 for the first and $50 for the second across the board for the carrier. Some fees have gone up or been added, with Delta adopting the “SkyChoice” program that charges an incremental ($5-25) amount for the “good seats” on a flight.
And then there is the fuel surcharge on reward flights.
Effective immediately, Delta will eliminate the $25-$100 fuel surcharges assessed for SkyMiles and WorldPerks award ticket travel originating from the U.S. and Canada. The surcharges were instituted earlier this year by both airlines in response to unprecedented fuel costs.
This fuel surcharge was also causing taxes to be applied to tickets, so this change will likely save passengers much, much more than the $25-100 that they were seeing. This is a HUGE improvement for the SkyMiles program. Kudos to Delta for taking this step.
Posted by Seth on October 29, 2008 under Uncategorized |
The planned Delta buyout of Northwest cleared a significant hurdle this afternoon, with the US Department of Justice announcing that they had approved the plans. The government has found that the merger “is likely to produce substantial and credible efficiencies that will benefit U.S. consumers and is not likely to substantially lessen competition,” according to the statement issued on the topic. I think that they’re crazy if they really think that this is going to be a great thing for either consumers or the airlines’ employees, but this was the expected result from them so no major surprises.
The carriers still have to overcome a lawsuit filed by passengers who feel that the merger will stifle competition and violate antitrust law, but today’s ruling suggests that the suit has very very slim chances of going much of anywhere. Still, it will be heard in San Francisco starting next week. Shareholders have already approved the deal so at this point the lawsuit is the last hurdle to the carriers closing the deal.
Once that happens there will be a domino effect of moves in the industry. First off, Continental will be able to start their nine month countdown clock on their planned move out of SkyTeam and into Star Alliance. In addition Delta and Northwest will immediately begin shifting their fleets and routes around to maximize profit while taking advantage of their new status as the largest carrier in the world by passenger volume. They also expect to be operating on a single certificate, which will further streamline their operations, in 12-18 months. They already have a general agreement from their pilot unions to make that move which is a good thing. And they’ve already started aligning their frequent flyer programs, so that’s moving along pretty well, too.
This was inevitable and I’m actually glad it has finally happened. Now we can move on with all the various other things that come out of this move. Let’s get rolling…
Update: Apparently the lawsuit in California has settled, though no details have been released. If so that puts the two even closer to finally closing the deal.
Posted by Seth on October 28, 2008 under Uncategorized |
Delta and Northwest took a pretty big step forward in the integration of the carriers’ frequent flyer programs today, offering upgrades to elites traveling on the other carrier’s flights. The program works very similar to the current system that Northwest and Continental have, where being a Continental elite on a Northwest flight effectively give you the same status in their system as a Northwest elite of the same tier would have.
Delta has posted a few details about the new plan on their website. I can’t find anything authoritative on the NWA site yet. And the implementation seems to be a bit kludgey on the customer-facing systems, but it does seem that the systems are processing the upgrades correctly.
With Northwest elites getting upgrades on three carriers now it seems to be the best program in the USA, though it will very soon be subsumed into Delta’s SkyMiles program, which should do a pretty good job of knocking that claim down a couple rungs.
Posted by Seth on October 1, 2008 under Uncategorized |
Southwest has announced plans to start service to Minneapolis – St. Paul International Airport (MSP) in March ‘09. The only route that has been announced so far is to Chicago Midway, but this is clearly an attack on Northwest and a pretty big bet on Delta scaling back MSP service in the coming months after the Delta/Northwest merger closes.
Considering the success Southwest has had in Denver going after United and Frontier, I am going to bet on them succeeding rather well on this bet. The biggest risk they face is Northwest/Delta getting into a pricing war and trying to undercut the fares and beat them out of the market. Prior to the merger Northwest would have never let it happen without a serious fight. But with Delta taking over this will just be a good excuse to show “lower demand for flights” and make “appropriate adjustments in the service frequencies” in Minneapolis.
This will be great for passengers there as long as Southwest ramps up service commensurate with demand, which I think they will do. They certainly have the fleet and route network available to do so.
Posted by Seth on July 22, 2008 under Uncategorized |
Love it or hate it, overbooking of flights is a staple of the airline revenue management scheme. And when the airline bets wrong and has too many folks for their flight, someone isn’t going to actually fly on their preferred flight. If there are no volunteers the rules for compensation are actually pretty clear, as they are defined by the federal government (and recently the values all increased).
But when the airline goes looking for volunteers the rules are rather flexible. The airline can offer anything they want, and if they get a taker, that’s what the price is. For some folks it might be a meal voucher and an upgrade on the next flight out. For others, a “free” ticket. Still others go for a travel voucher as their preferred compensation (this is the only one I’ll take, for many reasons). Northwest has recently taken the bump compensation process to another level, soliciting bids from passengers for how much it would take for them to not fly. Passengers are reporting that they are being prompted during the check-in process if they are interested in a bump and how much it would cost for them to fly at a later time. And instead of going with the first volunteers the airline can go with the cheapest option. The reverse auction style approach is likely to save the carrier a few dollars over time, and every little bit helps these days. It also means that it’ll be harder to fund travel habits with the “bump” game.
As an aside, my best sequence of bumps was one ticket that got me to Alaska, Ireland and half-way to India on a sequence of consecutive bumps. Very nice for us.
