Posted by Seth on September 21, 2010 under frequent flyer, News, points | 
So, just how much extra can you expect to pay on top of your fare to travel? While it depends on the airline you’re flying the number is about 6% on average. Sortof.
Tracking the reality of airline pricing is, at best, a gray magic sort of scenario. There are quarterly reports, annual reports and a myriad of different acronyms and categories of statistics reported. Some of the reports are required by the Department of Transportation and then aggregated and distributed by the Bureau of Transportation Statistics. Even those numbers are incomplete, however, because the reporting requirements simply have not kept pace with the flood of fees that the airlines are coming up with. So all the numbers are soft. The BTS states it rather clearly:
Revenue from seating assignments and on-board sales of food, drink, pillows, blankets, entertainment, or any other ancillary items are reported as Transport Related Revenue and cannot be identified separately.
So they cannot identify all those details but that doesn’t mean that the details are trivial. The Q2 2010 report was just released and the numbers it documents are rather impressive. The industry realize $2.1 billion in “ancillary revenue” in Q2 2010. Of that nearly $900MM of the revenue came from checked baggage fees. Another $600MM came from reservation change fees with the balance attributed to standby fees, pet carriage charges and sales of frequent flyer miles to business partners.
Putting the number in context, the total industry profits from the reporting carriers during the time period was a hair over $3 billion. If there was any doubt about just how important these fees are to the profitability of the airlines this report (along with the past few that have told similar stories) should put said doubt to rest.
As for which airlines are seeing the bulk of the profit from these fees, the usual suspects are pretty well represented. As the largest carrier in the world (for a couple more weeks) Delta is atop the list for total ancillary revenue. The soon to be largest carriers, a combined United Airlines/Continental at about half the total revenue that Delta realized in the quarter ($681MM v. $340MM combined). US Airways is holding strong in its position near the top of the list which is quite impressive, especially considering how much smaller than the other airlines it is.
There’s Southwest, coming in at $200MM in ancillary fees collected in the quarter. Sure, the may not charge for checked bags (and they love to publicize that in their commercials) but their customers are still paying plenty of fees, enough to see them above the industry average in terms of revenue from fees compared to total operating revenue (6.4% to the industry average of 6%).
And, just to make sure that they’re on the top of some list, there’s Spirit Air. The carrier realized 24.2% of its revenue in the quarter from ancillary charges. Ouch.
Of course, if the total cost is the same then no big deal but the numbers generally are not well published or particularly clear for customers meaning that the total travel cost is often not known by passengers until the trip is over, after it is too late to make a fair fare comparison. There are a few folks out there trying to help level the playing field (check out TruPrice for a pretty solid example) but it is still nearly impossible for customers effectively compare prices in advance.
Lots more numbers in the report, including fuel costs (figure ~$3.5 cents per seat mile flown, so that 2500 mile trip from New York City to Los Angeles costs the airline about $85 in fuel for your seat. Kindof hard to believe that they still sell the seats for not much more than that so often.
Tags: Continental, Delta, DoT, fees, frequent flyer, merger, points, Southwest Airline, Spirit Air, United, US Air
Posted by Seth on September 14, 2010 under News |
The Aviation Interiors Expo-US may be a smaller version of the Hamburg version held each year, but that doesn’t mean it is without interesting news. This year the buzz is all about the SkyRider seats from Avioninteriors. Why? Because they offer a nearly upright “seat” with only 23 inches of pitch. When the seats take up 25% less space that means room for a lot more passengers (and revenue) for the airlines.
But will folks actually be willing to sit in the seats? And can they even fit? Important questions and ones that the company hopes to answer for interested parties throughout the show. The booth was heavily trafficked, with media outlets conducting interviews and interested observers hoping to give the seats a try. After watching others take their turn for about an hour and watching their reactions I finally settled in myself to give the seats a ride.
Take a couple employees and seat them on the “saddle” that acts as the seat and things don’t look all that terrible. They actually seem pretty happy there, though they are also in the “bulkhead” row with nothing in front of them so they can stretch out their legs a bit.
But try to get a reasonably small cameraman in there (seriously, guy, a pager??) and the camera simply will not make it.
There are even tray tables and what looked like a simulated 7”-ish IFE screen in the demo set. With your face only 7” away from a 7” screen it would be incredibly large, probably actually too big for most folks’ range of vision. I cannot imagine that working out well. With the fisheye lens the seats actually don’t look so horrible.
The saddle styling of the seat is interesting. One person mentioned that it was like riding a horse, without all the space normally associated with equestrian activities. Indeed, for folks who are outside the normal height range that the seats are designed for the saddle could prove to be rather uncomfortable. A 6’ 4” reporter from one of the news outlets tried to get into the second row and was rather unsuccessful. Similarly, I would imagine that the saddle would be rather uncomfortable for folks shorter than around 5’ 2” tall. I really have no idea how it would work for most kids.
So, how did I fare in the seat? Here’s the photo. I got in and sat there for about 5 minutes. I even moved into the middle when another guy showed up and wanted to experience it as well. The good news is that the middle seat didn’t feel particularly cramped relative to the aisle seat. The bad news is that all the seats are a pretty tight squeeze. I figured that, much like riding the subway, anything would be fine for 30-45 minutes if needed. The problem is that there is no such thing as a 30-45 minute flight. My trip from Las Vegas to Long Beach this morning was only 45 minutes in the air but I was on the aircraft for nearly double that with boarding, taxi and deplaning time. And I’m not so sure that there is actually a price point at which the airlines can sell this product that would make me comfortable enough flying it. Maybe it is just a function of getting used to the experience, but I’m not particularly convinced. It isn’t a seat and you’re not quite standing. Limited head clearance (the seats are taller to make up the missing pitch) and no under-seat space would mean less capacity on the planes for carry-on bags. Plus it just feels cramped. Way more than traditional seats and even more than the rather tight space in the back of a Spirit Air plane.
Actually maybe not on that last one. Just maybe the SkyRider would be better than the tight squeeze that some carriers offer in a traditional layout today. I certainly wouldn’t fly Spirit again based on just how awful the seats were in the back on a 150 mile flight I took with them so perhaps they have nothing to lose by giving something like this a try. Maybe there is a market for these after all. That’s a rather scary thing to consider.
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Posted by Seth on June 12, 2010 under News |
As of 5am this morning Spirit Air pilots walked off the job, executing a strike against management that has been threatened for several months and one which has been delayed at least twice during negotiations with the company. The airline’s fleet was grounded and all flights for today and Sunday, June 13 are cancelled as a result. No word yet on future cancellations as there is no announced schedule for a renewal of negotiations between the two sides.
Read more of this article »
Posted by Seth on April 28, 2010 under News |
Just announced on the quarterly earnings conference call:
- 7x daily DCA-BOS
- 1x daily DCA-FLL
- 1x daily DCA-MCO
That makes a lot more sense than trying to get Charlotte or JFK on the schedule. There is competition on all these routes, most notably from US Airways on all three routes, but also from Delta, American Airlines, Spirit Air and AirTran.
The new flights put JetBlue in the drivers seat on traffic between Boston and the DC area, with 18 daily departures amongst the three airports. The fight for Boston is going to be fun to watch…
The new flights are bookable now at jetblue.com, with some good sales out there for travel prior to December 15, 2010.
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Posted by Seth on April 6, 2010 under News |
Spirit Air, always on the cutting edge of ancillary fees and revenue enhancement, has come up with a new plan for pricing their flights. Everything will be “a la carte” from the fuel to taxes to a booking fee to a soda on board. And, now, they’ll also be charging to reserve space in the overhead bins. From their press release:
In order to continue reducing fares even further and offering customers the option of paying only for the services they want and use rather than subsidizing the choices of others, the low fare industry innovator is also progressing to the next phase of unbundling with the introduction of a charge to carry on a bag and be boarded first onto the airplane.
This move is the first foray into what is probably the last unbundled service that airlines offer which was previously considered part of the services included in the fare purchase. Lavatory usage is still free – for now, RyanAir is still working on that – but no longer can one assume that carry-on baggage is part of flying. The carry-on baggage fee also includes access to early boarding of the plane, something else that the airline has routinely charged for. Yes, Spirit will still permit under-seat bags for free, but overhead space will require payment. And with the quite limited pitch that Spirit offers on their planes losing space to put your feet is a painful decision to make.
The cost for space in an overhead bin will be $20 for members of Spirit’s $9 club, $30 for everyone else if purchased before arriving at the gate and $45 at the gate. The $45 price is the same as it would cost to check the bag in the hold at the gate. The $30 at the counter is actually more than the $25 it would cost to check a first bag on a domestic flight and the same as the price for checking a second bag or a first bag internationally.
So the (many multi-)million dollar question is will this idea gain traction? Will other carriers follow? For now, the answer is no, but it is entirely to soon to know for sure. JetBlue has already released a post on their BlueTales blog mocking the idea a bit. No other airlines have commented on it publicly. For most customers the process of buying a plane ticket is split into two very distinct cost areas: the initial purchase and the day-of-travel expenses.
Over the past two years, since the charges for checked baggage started growing rapidly in the US, the carriers have not been able to drive significant differentiation of their products based on whether they charge for those checked bags; customers are still generally willing to pay $10 less for a ticket where they’ll have to pay $25 at the airport for baggage. Will this next step of unbundling be enough to make consumers actually look at the total price picture more closely before buying? I’m guessing no, at least not for the folks who are willing to pay the cheapest fares that Spirit offers. And that might just be enough for other carriers to consider a similar charge. Probably not, but there is a small opening there.
Some additional coverage on the story can be found at:
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Posted by Seth on March 23, 2010 under News |
When last we met, Delta and US Airways were in the middle of negotiations on one of the largest airline operations reallocations in recent memory. The two carriers were going to be trading over 150 slot pairs at New York City’s La Guardia and Washington, DC’s National airports. But that was seven months ago and since then both the US Air pilots’ union and the FAA have had some comments about the proposed move. The FAA was insistent that some of the slots be given over to limited incumbent carriers or to new entrants at the two airports. As of yesterday it appears that some agreements have been reached to make the swaps happen.
Delta will be giving up 15 of its 125 new slot pairs at LaGuardia, selling five each to AirTran, Spirit Air and WestJet. WestJet would be a new entrant at LaGuardia while AirTran and Spirit are considered limited incumbents based on their relatively minimal operations there. Spirit currently operates 11 daily departures, mostly to their hub in Ft. Lauderdale; AirTrain operates 18 daily flights to five destinations, 9 of them are to their Atlanta Hub. WestJet currently serves the New York City area with service to Newark airport and it is not clear whether they intend to move that service to LaGuardia or operate to both facilities going forward.
In Washington, US Airways will receive 42 new slot pairs, of which five will be ceded to jetBlue as a new entrant to the market. jetBlue currently has significant operations at Dulles airport but no service into National and has previously expressed interest in starting service there should slots become available. That opportunity appears to be on the horizon for them.
This deal is still subject to approval from the FAA and such approval should not be assumed. Previously the FAA suggested that 20 of the LaGuardia slots and 14 of the National slots would need to be shed. The proposal from the airlines doesn’t quite meet those targets. Still, with the number of other carriers involved it does seem likely that the deal will be approved. Of course, the pilots might still find a way to interfere.
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Posted by Seth on April 28, 2009 under Trip Reports |
I’m not quite sure what “spirit” they are hoping one catches when flying with them, but if my trip this past weekend is any indication I think it is something akin to misery and self-hatred. I’d heard the stories and the warnings from my friends, but I hadn’t ever flown with Spirit Air and wanted to experience it for myself. I think I should have just trusted them and saved myself the pain.
The flight booking process was not particularly bad. Sure, there were up-sell options all over the web page and they default to including the travel insurance in the ticket so you have to know to uncheck that box, but otherwise it isn’t so horrible. They even showed the options for upgrade to the “Big Front Seat” during the regular booking process so I had the choice right then to see how much extra it would cost and make that decision right there (no, it wasn’t worth it to me at the time, though I probably should have in retrospect). I got the nice reminder email 24 hours prior to my flight offering online check-in and that worked quite well. Up until this point the process was actually rather similar to any other flight I have booked and flown in the past several years.
The airline’s main operations are from their hub in Ft. Lauderdale. Most carriers go to some effort to ensure that their hub operations are as good as possible, both in customer service and amenities available at the airport. If the terminal at Ft. Lauderdale is any indication of the quality of other facilities I would be very, very scared. There was a Nathan’s and a tiny, dark bar with decent (airport) prices on beer. Otherwise the terminal was overcrowded with passengers waiting for delayed flights and generally not much space to move around. I’m sure that part of that is based on the facilities that they have available to them from the airport authority, but I just felt dirty sitting there. Not particularly pleasant. At least the view of sunset was nice (photo above).
They do not assign seats in advance unless you’re willing to pay somewhere between $7-20 for that luxury. Since the website said that I’d be able to choose a seat at check-in for free I decided to save my money. Of course, at the time of check in I still was only offered paid options for seat bookings so that wasn’t so useful. I did end up with an aisle seat, but it was in row 24, one of the many rows on their planes that have even less legroom than normal a knee and soul-crushing 30”. I actually felt badly for the woman in the seat in front of me who had to suffer with my knees in her back for the hour or so we were on the plane. I spent most of the in-flight time with my legs turned out into the aisle so that I had a chance of still feeling them at the end of the flight. It was not fun.
Fortunately for me my flight was only 37 minutes long. The short duration meant that there was no beverage or snack service on the flight. Sure, one could ring the call button and ask the flight attendant for a drink or snack, but since everything on board is for sale I wasn’t really all that motivated to try that aspect of the service.
Despite the short scheduled flight duration there was some extra time spent waiting for customers on a connecting flight so that added to the time on the plane, but overall it was short enough that it was survivable. But I also know that the discounted price was not worth it to me for the cramped and dirty seats and somewhat uncertain reliability of the carrier (lots of delayed flights that night with no particularly apparent reason). The flights would pretty much have to be free to get me back on one of their planes, and I’m not 100% certain that would be enough. But at least I tried it once and now I know what not to do next time.
Posted by Seth on July 25, 2008 under Uncategorized |
For the past several years the airlines have been pushing passengers away from their call centers, ticket offices and airport facilities for purchasing tickets, preferring to handle the transactions online to save money. After all, programmers and servers are cheaper than call center employees on a per booking basis.
But when the airlines start charging for bookings online something is just plain wrong in my opinion. American Airlines led the charge, initiating a $5 online booking fee for reward tickets effective back in June. And then Spirit Air, a carrier known for charging money for just about everything, actually introduced a $10 “web convenience fee” for the “convenience” of booking a flight online. Of course they didn’t just increase their fares by $10. That would make way too much sense and they wouldn’t be able to hide the booking fee in the fine print at the end of the booking process. Of course, I think that such a practice is actually prohibited by the US federal government and it doesn’t matter anyways because they pulled the fee out of their systems. But it is ridiculous that they even tried. Allegient Air does have a web-based convenience fee, but they sell the ticket with no surcharge at the airport. I’m convinced that they just know that no one will do that and so they pocket the extra $11.50 for each passenger.
I know why the carriers don’t just bundle everything into the fare and call it a day, but these practices are really nasty in many cases. It just reeks of slimebag tactics and certainly makes me want to have nothing to do with any of the carriers involved.
Posted by Seth on June 26, 2008 under Uncategorized |
Like most domestic carriers United Airlines is looking to cut service this fall/winter in hopes that they can avoid bankruptcy and/or liquidation. The latest salvo in this battle was the announcement yesterday that they will be pulling out of Ft. Lauderdale and Palm Beach completely, shifting all that traffic to their Miami operations.
These cuts would seem to be a part of the previously announced intent to shed the Ted brand. The traffic in those markets is predominantly leisure passengers who are more price sensitive and competition from other carriers (Spirit, JetBlue, etc.) seems to keep the fares low, reducing yields. And United wasn’t offering a first class cabin, which actually does sell pretty well into PBI and into FLL to a slightly lesser extent.
I guess I shouldn’t be surprised as I see markets close up. The other airlines are doing it too. But it is always sad to see knowing that the options for people to travel keep shrinking.
Posted by Seth on January 30, 2008 under News |
Let’s just say you’re a geek and you have access to an airline pricing system. Your boss tells you they need a new gimmick for pricing the next sale. If you’re working at Spirit Airlines, this is what you’d come up with: a collection of seats on sale for $1, $2, $3, $5, $8, $13, $21, $34 and $55 per seat. Recognize the pattern? They call it the “Fibonacci Sale” for obvious reasons.
Sale expires tonight at midnight Eastern, but it sure was fun while it lasted.
