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.
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.
It was just over two years ago that Southwest decided to forcibly expire old drink chits. It was not long after the policy change that a lawsuit was filed seeking to stay the enforcement, at least on the vouchers issued as part of the purchase of a Business Select ticket. And this week that suit was settled, with the airline agreeing to issue a new drink chit – with a one year expiry – to passengers who claim they purchased a Business Select fare and didn’t redeem the chit at that time.
There are several interesting bits of data which come from the suit and the settlement. On the settlement side, passengers will not be required to produce the unused chit to get the new one. The airline will set up a website which allows customers to enter the appropriate information and have the replacement issued. This is a very customer-friendly move and, in the words of the attorney responsible for the case, "a grand-slam result for the class."
The other interesting bit is the number of tickets sold and number of chits redeemed, as released through the case details. The suit suggests that about half of the eligible chits were never redeemed and that there are 5.8 million outstanding. That suggests about 11.6 million Business Select fares sold over the 35 month period the suit covers. I didn’t do all the analysis but that seems like a data point that competitors would be interesting to the industry and competitors and also a data point which isn’t generally publicly shared.
Most press coverage of the settlement is multiplying the 5.8 million outstanding vouchers by the $5 in-flight price, suggesting that the settlement will cost the carrier $29 million, plus a separate fund to pay legal fees of $1.5-7 million. The actual cost to Southwest, at least in fulfilling the settlement claim, is likely a tenth of that number or less; the mark-up rates on in-flight booze are ridiculous. Still the ~$10 million charge for handling this case is something the company will have to account for and every penny counts these days.
This isn’t the only time passengers have sued airlines over loss of benefits in some form or another. One interesting aspect of this class is that it explicitly excludes passengers who earned their drink chits via the company’s Rapid Reward frequent flyer program. Several recent suits have been tied to the loyalty programs rather than benefits offered explicitly related to the purchase of a specific ticket. That difference may ultimately be significant as the other suits wind their way through the legal process.
United Airlines has joined the ranks of companies trying to limit their customers ability to track loyalty program data through third party aggregation sites. They are the 4th major carrier in the USA to pursue such a policy, joining Southwest, Delta and American Airlines in blocking such access. While United has not yet issued a public statement TripIt, the travel plans and points aggregation site has sent a notice to their members indicating that access to the data will be cut off as of 11 December 2012.
Dear TripIt Pro member,
We are writing because our records show that you are tracking your United MileagePlus account with TripIt Pro’s point-tracker feature.
United no longer allows third-party services to access MileagePlus accounts. Starting tomorrow, TripIt Pro can no longer track your United MileagePlus miles, but we’ll continue to store your account number for you.
Why is this happening?
There are differing opinions in the travel industry about whether your reward-program accounts should be accessible to third parties to whom you’ve given permission. Some travel providers have decided not to allow this access.
A member of the United Public Relations group responded to my request for more information with the following:
United issued cease and desist letters to certain mileage management companies that market to MileagePlus members. We encourage each of these organizations seeking to extract data from united.com on behalf of our customers to enter into a formal agreement with United in order to ensure compliance with the Terms, Conditions, and Legal Notices contained on united.com. United is happy to explore these formal partnerships. In fact, we already have a relationship with one such organization – UsingMiles.
For the airlines it is partly a matter of controlling the data and the customer interaction. It is also a matter of controlling the access to their systems. They have no motivation to build an interface that these companies can integrate with if the companies aren’t licensing the data and the other option is paying for the increased loads on their systems from the repeated queries. Neither seems particularly enticing for the airlines, though that doesn’t necessarily justify cutting off the access. American Airlines eventually came out and admitted that they would reconsider if the websites agreed to a licensing deal for the data but they aren’t interested in providing it for free.
This isn’t the first time United has taken such actions in the face of 3rd party harvesting sites using their data. Remember when "expert mode" went away? Data scraping was one of the justifications used then, too. That said, the option is back and all the same sites/tools which were scraping the data are still doing so; apparently it didn’t matter all that much.
At the end of the day, the airlines may be within their rights to cut access to these tools. Their website terms of service are quite broad and seem to cover the actions of TripIt and other, similar companies:
This Web site is for the User’s personal, noncommercial use only. User agrees not to modify, copy, alter, distribute, transmit, display, perform, reproduce, publish, license, create derivative works from, transfer, or sell any information, software, products or services obtained from this Web site without United Airlines’ prior written permission. User agrees not to use any robot, spider, other automatic device, or manual process to monitor or copy this Web site or the content contained therein or for any other unauthorized purpose without United Airlines’ prior written permission.
But just because they can do something doesn’t mean they should. There are many situations where the airlines behave in a manner which may have a cost associated with it based on the ability to attract and retain customers. That’s what marketing is all about, after all. And this is a pretty terrible marketing move.
More cuts are coming to Delta‘s service at Memphis, a hub for Northwest Airlines prior to the merger of the two companies in 2008. Twenty-one flights will be cut as of January 2013, bringing the total number of daily operations below 100. Prior to the merger the two carriers operated a combined 238 average daily flights. The most recent cuts will include terminating service to Jacksonville, Florida and Birmingham, Alabama. Service to Amsterdam, the last long-haul service Delta currently operates from the hub, will also be ending per an announcement last month.
The status of Memphis as a hub for the Atlanta-based carrier is in doubt more now than ever. Delta’s PR staff is still noting the value of the operation to the overall operation, noting that there are still 47 destinations which will be served from Memphis. Still, as the service frequencies are cut and the focus shifts from connecting passengers to local traffic it seems likely that further cuts will happen; there isn’t sufficient local demand to support many of the routes.
The Memphis airport on the whole is seeing reduced service, down to fewer than 200 daily frequencies. The airport authority is working to attract Southwest to the airport, hoping that they will increase their service from the levels currently available via their AirTran subsidiary.
Slowly but surely Southwest is moving to phase out the AirTran brand following the merger of the two companies. And, slowly has definitely been the key to the integration. The company has previously tried to move some flights from the AirTran brand to the Southwest side of operations only to be forced back on certain routes due to technology limitations. But now, with their pilot and flight attendant unions on board, the company is ready to grow the route map for the Southwest brand. And that growth is headed to Puerto Rico.
As of April 14, 2013 the company will operate four daily flights to San Juan under the Southwest brand. Three will be from Orlando and the other from Tampa. These flights will replace service currently operated by AirTran. The AirTran brand will continue to serve San Juan from Baltimore, Ft. Lauderdale and Atlanta. Eventually all the operations will migrate to the Southwest brand but that appears to still be a ways off, pending significant technology upgrades, among other things.
Still, this is a significant milestone for the merged company.
Southwest is taking over some Key West routes from AirTran this week, also from Tampa and Orlando. Those are easier to change than the over-water routes.
Following an announcement from their CEO that Virgin America will be cutting roughly 3% of its capacity in Q1 2013 and also that the company is offering employees voluntary short-term leave to reduce costs at least one analyst says the outlook is grim for the carrier. The company had a reported $82mm on hand as of the end of Q2 ’12 following a loss of nearly $32mm in that quarter. The capacity cuts will be focused on redeye transcons and mid-week flights, the operations which tend to not fill up very well in periods of lower demand.
As to why the carrier is struggling, analyst Hunter Keay is suggesting that the company has made some critical errors in their growth plans. Their attempts to fight with legacy carriers on routes where the latter are firmly entrenched has left the upstart with a limited foundation on which they can stabilize their efforts. Or, as Keay said in the Bloomberg interview:
They had an assumption that consumers would choose product quality over price and convenience and network carriers responded with force.
Also of interest is that one of the main reasons cited for cutting the capacity is uncertainty in the market and the expected softening of demand. That softening is based on recent PRASM results from United Airlines and Southwest. Both carriers reported 2-3% drops in the most recent month versus the prior year. Other carries reported growth in their PRASM numbers so it isn’t entirely clear if these two are somehow more representative than the others or more important for some reason, but they are the reference Cush cited in breaking the news to Virgin America employees.
Just competing on product quality is very, very hard to do in the US aviation market; the pressure to compete on fare is incredibly strong. Companies like RouteHappy are doing yeoman’s work in helping customers to identify the more comfortable or more enjoyable travel experience. Seems most customers either don’t know or aren’t willing to pay for those experiences. And just competing on price is a good way to go out of business, especially as costs grow over time.
The Flight Attendants from Southwest agreed last week to changes in their contract which will allow them to work flights to international destinations or routes which require flying over water. The agreement, known as Side Letter 10, was approved by a narrow 53%-47% margin with ~57% of eligible employees voting. This vote was the second taken on the topic; the first failed with fewer members voting. The deal only covers “near international” destinations, basically the Americas north of Ecuador/Venezuela/Colombia/Peru. Should the company choose to expand to destinations further afield (e.g. Europe) there would need to be further negotiations on the contract. With this approval the company can move forward with planning their integration with the AirTran international service as well as expansion of that service.
The agreement is significant for Southwest and their flight attendants as it opens up several long-standing policies at the carrier to be changed. Redeye flights can now be added to the schedule, for example. There’s the potential for meal service, too; more than just a pack of peanuts. And certain flights will require FAs to be proficient in a foreign language. Big changes, indeed.
Flight attendants working redeye flights will receive a bump in their hourly rate. FAs who are language-proficient and working on a flight which requires such will be paid the foreign language speaker kicker even if there are more speakers on the flight than the minimum required. And all international flights will have a $0.50 bump in hourly per diem which will apply to the entire pairing, not just the flights which are international.
Also, flight attendants will now be required to carry passports at all times. The company will reimburse the expenses for acquisition but the FAs are on their own if they lose the passport.
Don’t expect huge expansion of international service in the immediate future, despite the contract approval. The company still also must upgrade their reservations systems to handle international travel. That is expected to occur at some point in 2013. Until then the AirTran service will remain separate from Southwest’s.
If you want to read more details on the arrangement the Transit Workers Union local 556 which represents the flight attendants produced a couple documents which are an interesting read: Tentative Agreement; FAQ.
Believe it or not, this is the spin that United Airlines is trying to put on their decision to start cutting routes out of Houston in the face of Southwest‘s plans to start international flights from Hobby in 2015. United suggested that the City approving the plan would lead to direct and immediate route cuts and they’re holding to that plan, with several route cuts announced in recent weeks. Comments offered on one of the most recent announcements – the cessation of service on Houston – Paris in October – leads to some interesting conclusions.
Speaking with the Houston Chronicle about the most recently announced cuts, United spokeswoman Mary Clark indicated that the routes being cut are generally money-losing operations. By choosing to cut them now, in the face of potential competition in three years’ time, United plans to stem their losses.
Clark said United had continued to offer service to the unprofitable locations, hoping they would turn around as Bush Intercontinental grows, but was prompted to nix them after the Houston City Council’s approval of Southwest’s Hobby proposal.
As part of that deal, Southwest agreed to pay for a customs facility and five-gate expansion at Hobby so it could begin flying in 2015 to the Caribbean and Latin America.
Clark said the Paris route hadn’t been profitable for more than two years.
"With Hobby operating internationally, we don’t feel we have the same growth prospects at IAH we had in the past," she said. "So we don’t expect these flights to become profitable.
"Our most prudent path is to eliminate the unprofitable flying now rather than continue to lose money."
Apparently, had Hobby remained closed to international flights, the most prudent path would have been to continue operating the money-losing routes for two years just to see if things shifted in the market. At least that’s how I’m reading this quote. Never mind that the airline will still offer at least four daily flights to Paris on their own aircraft and that from North America they can also offer connectivity via partners Air Canada, Swiss and Lufthansa as part of the A++ anti-trust immune joint venture which allows for collusion on pricing and revenue/cost sharing on the route.
The massive route network which United now has, one of the factors it routinely cites as a key value differentiator for its customers, is impressive. It also means that it is possible for man customers to be better routed through other hubs than only via Houston. It might suck for the folks living in Houston or Paris and trying to get to the other city, but there are a lot more passengers than just the O/D crowd.The number of folks who are losing a single connect routing to Paris is surprisingly low. And the company has to consider all its customers.
Honestly, it is a shame that they’re using the Hobby decision as an excuse here. The cuts were almost certainly going to happen anyways. But now they’ve got someone to blame for the actions they were likely going to make either way.
On the subject of cache-timeout alteration, the company maintains that they are absolutely not altering those settings for pages which are loaded through the service. Moreover, when there is content being loaded which they serve directly they are setting the cache option to a "no-cache; must-revalidate" setting which should force all modern browsers to pull a fresh copy of the data every time. Because the claims about the cache alteration came from a 3rd party which they haven’t been able to validate there isn’t a lot more to go on here as to what actually happened. We are left with something of a he said, she said sort of situation. Still, knowing that the service shouldn’t be altering the cache setting is somewhat reassuring.