Category Archives for Airlines.
Last night United Airlines President Scott Kirby gave an extended airline economics lecture to investors, explaining how they make more money by building up their hubs. As a result they’re projecting to grow capacity 4% – 6% in 2018 — and continue growing at a similar clip through 2020.
This morning we learned that Delta and American re-started their interline agreement allowing each airline to book seats on the other carrier in the event of irregular operations. It’s limited to this re-accommodation function, but that’s what customers primarily care about and it’s the key item Delta refused to allow in September 2015.
Here’s how that happened.
Two years ago Delta and American eliminated their interline agreement the most basic level of airline cooperation. That’s the agreement necessary to allow flights on the two airlines to exist on the same time, and that’s necessary for one airline to put its distressed passengers on the other carrier — without literally walking over with a credit card to buy a passenger a ticket.
As a general matter I think any airline whose operations are being run by Scott Kirby is going to get worse not better for customers in terms of passenger experience. At the same time there’s no one in the industry I’d rather listen to because he’s earnest and thoughtful and lays out more clearly than anyone else his belief about how his business, and the broader industry, works.
He walked through airline economics, United’s positioning, and marginal analysis with a primary goal of convincing investors it is okay for United to grow.
The point of ‘Basic Economy’ fares — which don’t let you assign seats in advance, upgrade, or make changes for a fee, and at United and American don’t allow you to bring a full-sized carry on onto the plane — is to make the travel experience so unpleasant you don’t want the fare, and will spend more to avoid the restrictions.
The risk is that customers don’t spend more with the airline offering the inferior Basic Economy product, but instead book a different airline instead (or even just decide not to travel). That’s what happened when United launched their basic economy product. They lost business. And they lost about a hundred million dollars.
In the middle of last year American started flying its first plane with high speed satellite internet. I lucked into flying the aircraft at the beginning of November, and internet worked though I was surprised it wasn’t faster. I know what Gogo’s 2ku service can do unthrottled and I wasn’t getting anything like those speeds.
I flew American’s inaugural 737 MAX flight at the end of November and the ViaSat satellite internet didn’t work well.
NIKI was driven into insolvency with the collapse of air berlin and withdrawl of support from Etihad. It was expected that the Austrian carrier would go to Lufthansa (specifically their low cost subsidiary Eurowings), but European competition regulators shut down that possibility.
Ultimately British Airways parent IAG was left as the lone remaining company seeking to negotiate a purchase of assets.
Years ago there was a story about former American Airlines CEO Bob Crandall having olives removed from first class salads, saving $40,000 a year. Small savings add up across all an airline’s flights and passengers. So carriers are often very careful about their pennies in catering.
In the spring of 2001 United replaced steak at lunch with gourmet cheeseburgers. Today’s inflight burgers on domestic airlines are much smaller and I find with lower quality meal. They keep figuring out ways to push the savings envelope farther.
A roundup of the most important stories of the day. I keep you up to date on the most interesting writings I find on other sites – the latest news and tips.
I’ve gotten amazing deals on British Airways premium cabin travel. I’m not a huge fan of the BA product but they run sales frequently and when those sale prices could be reduced by the AARP discount (AARP tells me there’s no minimum age to join, so I did) and the Chase discount — I made out very well.
Gary Leff is one of the foremost experts in the field of miles, points, and frequent business travel -- a topic he has covered since 2002.
Co-founder of frequent flyer community InsideFlyer.com, emcee of the Freddie Awards, and named one of the "World's Top Travel Experts" by Conde' Nast Traveler (2010-Present) Gary has been a guest on most major news media, profiled in several top print publications, and published broadly on the topic of consumer loyalty. More About Gary »
