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.
I’m often intrigued by the information I can glean from Twitter chats. I tend to avoid them more than participate in them but a chat this past Friday hosted by @JohnnyJet and @CJMcGinnis piqued my curiosity so I tuned in. The chat was about summer travel and used the #TravelSkills tag for tracking the conversation. The two hosts didn’t waste any time getting in to what is often a touchy subject: How much is a reasonable price for airfare?
My answer was actually easy to come up with. For summer travel I’ll spend up to 100,000 points for a business class trip to Europe. And I’ve been quite successful in finding those when and where I want them over the years. But that’s just me. What was interesting to me were some of the other responses I saw to the inquiry. Seems that a lot of people think that $1000 is an reasonable upper limit, with many believing that even lower fares are "fair" for such a trip.
Some responses based the price on where they’d end up:
And some considered where in the USA they were starting as part of the thought process:
Every single one of the numbers tossed out as being "fair" was actually below the average cost to operate the flight which would carry the passenger on the trip (based on published average cost data from the airlines). So, with the exception of some bargain fares on oneworld carriers to Dusseldorf (and even those are ~$900 from the east coast), it seems that many of the chat participants are going to be disappointed. Chris points out that average fares are in the $1200-1500 range already and there are no signs of those dropping much anytime soon.
Fares are higher on average than they have been the past few years; there is no doubt about that. Even off-season fares are higher. That mostly comes from less competition, less capacity and a desire by the airlines to actually make some money. Absolute fares are at or near all-time highs, while inflation-adjusted fares are still quite reasonable according to DoT analysis (note that the DoT data is for domestic, not international, but the trends are similar):
Not adjusted for inflation, the $367 third-quarter 2012 average fare is the fifth-highest average fare for any quarter since BTS began collecting air fare records in 1995. The highest was $385 in the second quarter of 2012. The previous third-quarter high was $361 in 2011. Third-quarter 2012 fares were $243 in 1995 dollars, down 18.1 percent from the average fare of $297 in 2000, the inflation-adjusted high for any third quarter (Tables 1 and 2).
Here’s another bit of analysis from Airlines for America, the industry trade group in the USA. It uses DoT data to track overall international fares since 1990 (a subset shown here).
These are overall averages for all international travel, not just peak season transatlantic. Still, the numbers make it hard to believe that getting peak season airfares at below average rates is going to work out well very often.
There was one slightly off-topic aside in the conversation which was also rather entertaining:
Apparently relatively normal airfares are, in some cases, shocking.
Don’t get me wrong – I don’t like paying very much for airfare and when the fare is too high I either don’t travel or I go somewhere else. But I also go in to the transaction knowing what to expect and being able to tell if I got a good deal or not rather than just expecting that fares are always so low. At the end of the day I guess I’m just surprised how low some people think airfare should be to be considered reasonable.
No wonder the airlines are struggling to eke out profits. For too long passengers have become used to the cheap fares offered as a result of excess capacity and increased competition. Mergers and ATI deals have cut almost all of that out of the system. And with the impending US Airways/American Airlines merger and Delta/Virgin Atlantic ATI request working their way through the regulators the competition is going to decrease. It is good for consumers that the airlines are able to remain in business. But that will mean higher fares, more crowded planes and fewer choices, all of which make for not-so-happy passengers.
We are another step closer to the merger of US Airways and American Airlines today following a hearing in the bankruptcy court in New York City. The planned merger was approved by the judge overseeing the bankruptcy reorganization of AMR, American’s parent company. The approval was expected and allows the two carriers to move forward with their efforts, though it is also far from the last approval needed.
But it was not all smooth sailing during the hearing. Tom Horton, the current CEO of American, is due to receive a severance payout of $19.9 million in cash and stock as part of his stepping down for Doug Parker to lead the combined company. That part of the deal was blocked by the judge who stated, "Approving it today is just not appropriate." It seems that there are issues with the way the bankruptcy code is written and the fact that the merger was consummated in bankruptcy rather than after AMR emerged from the court’s protection. The judge noted that he doesn’t object in principle to the payout but that the law simply didn’t allow him to approve it at this time.
Perhaps this is why Horton was so adamant for so long about wanting to emerge from bankruptcy before agreeing to merge with US Airways. Odds are that he’ll get paid anyways eventually so maybe this is more of a delay than denied. Still, it is always interesting to watch these processes play out.
Another lawsuit has fallen in the lap of United Airlines and their MileagePlus frequent flyer program. This time around it is not based on elite benefits but on claims that passengers are not begin credited with the proper number of points per their contract with the company. And, I must admit, what I saw when I actually read the filing surprised me quite a bit, mostly because the claimant missed the opportunity to go after what is likely a legitimate data set and instead went with one of the more ridiculous claims I’ve heard in a while.
Hongbo Han has filed a class action claim in Illinois suggesting that the airline is shorting customers because they are credited only with the nominal point-to-point distances between two cities rather than with the actual miles flown on any given flight. Han claims that this approach violates the terms of the contract with Mileage Plus because:
Nowhere in the MileagePlus Program Rules does United state that mileage or miles credited are not actual miles flown by the member. Clause 18.1 of the MileagePlus Program Rules merely states that "[i]n the case of air travel, mileage will only be credited for flights actually flown by the member."
The filing includes a number of Beijing – Dulles flight details, noting that United routinely awards 6,920 miles for that routing despite the actual flight routing being more than that. Han’s complaint details the actual miles flown on his travel dates and suggests that United owes him those miles, plus the 25% bonus on those extra miles due to his "Premier status."
Han does acknowledge that the awarded flight miles are determined by the "purchased ticket routing" which does not necessarily match the flown aircraft routing, so it is not entirely clear that there is much of a case here, but I suppose we’ll see. The part where Han cites a USA Today "article" about points as supporting his claim through selectively quoting the content out of context also probably isn’t going to help the case.
What is most surprising to me is that Han took the rather less certain claim in filing the case, ignoring that the number of miles credited often is actually less than the distance between the airports even on the most ideal routing. The IAD-PEK flight he mentions several times in the claim only earns 6,920 points. But the distance between the two airports is actually 6,921 according to the most commonly accepted formula for calculating the distance between two points on a spheroid of the earth’s dimensions. Newark to Hong Kong is 8,065 miles. United even knows that:
And yet they routinely only ever award 8,060 miles for the trip.
There was some outrage a year ago when the points credited for each city pair changed, mostly to lower numbers. United at the time claimed that the issue was related to differing data sets and calculation methods. Ultimately they simply backed off the changes. But that seems a much more likely case of being able to actually win a claim against the company than the suggestion that actual flight miles should be used.
To be fair, I was pretty drunk on a flight back in October 2007 and during the time we spent circling over Virginia and Pennsylvania waiting to land in Newark I wrote an open letter to Continental asking to earn the points actually flown rather than just the point-to-point distance. But I also was joking. This guy filed a class-action lawsuit over basically the same thing.
We’ll see where this one ends up, but I have a feeling it won’t be in Han’s favor.
A copy of the filing can be found here.
UPDATE: It seems that United isn’t the only carrier facing this challenge. US Airways and Delta were served with nearly identical suits (citing the same USA Today story and basically just search/replace on the other salient details) as well.
Seems to me that, in the interest of being able to more easily find awards, having a listing of all the long-haul routes, by alliance and region, would be useful. And I haven’t ever found a good collection of them so I decided to start building one. Shocking, right??
I’m sure you’ll also be shocked to learn that I started with Star Alliance and the transatlantic (TATL) routes. I’m defining TATL in this context as between North America and Europe. I know there are more flights than just these but I’m going to have a series of posts in the coming days breaking it down and adding to the collection. And I had to start somewhere. So here it is.
There are, by my count,
172 173 route/carrier combinations across the North Atlantic Ocean operated by one of the thirteen Star Alliance members with at least one flight in the regions. Some are seasonal but, if you’re looking for seats, this is probably a good place to start.
Putting them all on a single map is actually pretty useless, other than just to show how massive the coverage footprint is:
To make it slightly more useful here’s a collection of maps split up by carrier. Still sortof sloppy in some cases, but better.
And, if you prefer the data in a less graphical format, it is also available in a table format here.
If you can see any I’ve missed let me know and I’ll update the tables.
Unique North American Gateways:
Unique European Gateways:
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.
It would seem that at some point in the past 10 days or so the US Airways award chart has seen a change for the worse. The 60,000 point business class award between North America an Europe has disappeared. This was one of the gems of the Dividend Miles program and losing it will be quite unfortunate for their members. Here’s what the chart looks like now:
And here’s what it looked like on January 27, 2013, the last date there is a copy in the archive.org system:
US Airways has also split out Alaska as a separate destination zone for flights from the continental US, raising the rates at the medium and high levels. And low-level first class awards between North America and Hawaii are now 80K rather than 70K.
High level business class between North America/Hawaii and Europe are up to 350K from 325K. High level business class between North America/Hawaii and Europe/South America are actually going down to 325K from 35oK. Finally, the middle and high tier rates between North America/Hawaii and the Middle East have spiked dramatically; at the top end a first class award goes from 240K to 350K.
Did you catch the latest episode of the PointsHoarder podcast? If not you missed Stephan, Fozz and me talking about a bunch of changes to hotel loyalty programs for 2013, mostly regarding it becoming harder to qualify for elite status. And, believe it or not, one of the three actually thinks it is a good thing. We also talked a bit about American Airlines getting their pilots on board with a contract and the potential that leads to with respect to the theoretical merger with US Airways somewhere down the line. You can listen to the episode here.
In addition to the podcast there have been a few useful posts over there including:
Give it a listen (or read) and let me know what you think. There’s some pretty good stuff over there these days…
JetBlue is continuing to grow their operations in Boston, focusing on business markets in a big way. The carrier announced today that they will offer service between Boston and Philadelphia with five daily flights beginning May 23, 2013. This is not a small entry into a market, testing the waters to see if there will be resistance. This is a major move with the expectation that they have to show up with a solid offering or be beaten out of the market by US Airways.
Speaking of getting beaten out of the market, Southwest tried to attack US Air on this route recently. The carrier added service in June 2010 and competed with US Airways for 20 months before throwing in the towel. As of February 2012 Southwest killed the route, leaving US Airways once again as the only carrier on the route. JetBlue is no stranger to competing with an incumbent on a major business Boston route. The New York-based carrier has previously established similar service at Washington’s National airport and Newark.
The route schedule offers reasonably good timings for business travelers:
It would be nice to see one early morning flight out of Philadelphia and a later flight out of Boston – as it stands a "day trip" out of Philly is really only about half a day – but the schedule has potential. That said, JetBlue will be competing with 15-17 daily departures on US Airways. The shuttle-type service will be tough to match. JetBlue faced a similar schedule discrepancy in Washington, DC and eventually grew their operation to 10 daily flights to keep pace. The Philadelphia operation may need to grow to succeed, though it is not clear that demand exists for both JetBlue and US Airways to run "shuttle" operations on the route.
Also worth noting is that, despite the reputation of Philadelphia as a massive US Airways fortress hub, the carrier isn’t nearly as dominant there as some other airline hubs around the country. Not that the JetBlue service appears to be focusing on connecting traffic, but there could be an opportunity here. If nothing else it should help bring fares down for passengers. Currently a one-way fare in the nonstop market is $404 while return trips can be had for as low as $260 return. Even aside from the introductory $17.76 fare sale there is the opportunity for the lower one-way fares to make a big difference for both leisure and business travelers. And to cut at US Airways’ bottom line.
It is not surprising that, eventually, younger airlines have to compete on major business routes to try to win customers. JetBlue has taken a relatively conservative approach lately on this front. They’ve been somewhat selective and limited in their moves but they seem to be working as the carrier has maintained loads and yields as they’ve expanded. Still, this is a market where such an effort has been staged before and the challenger lost. It will be interesting to see if JetBlue can succeed.