Airlines

Category Archives for Airlines.

Facts about miles

by Gary Leff

airplane
Jan 16 2005

Colloquy summarizes the current state of frequent flyer miles: By the end of 2004, almost 14 trillion frequent flyer miles had been accumulated worldwide. According to a new analysis by The Economist magazine, the global stock is worth more than $700 billion, more than all the US dollar bills in circulation. More than 130 airlines issue them, handing out more than 14-million free flights annually. So many different types of frequent flyer miles are in circulation that consultancies have sprung up in Europe and America devoted solely to helping people get the most of their portfolio. Ravindra Bhagwanani, founder of Frankfurt-based Global Flight Management, said: “[Frequent flyer] miles are a game you have to play. If you want to play a game successfully, you need to know the rules.” …More than 120 million people belong…

Continue Reading »

Free Upgrades on ATA

by Gary Leff

american trans air
Jan 06 2005

Bankrupt American Trans Air, working on recovery via cost and schedule cutting, cash from Southwest, and codesharing, is trying to entice bookings by promoting its business class cabin. If you book online at ATA.com by January 10 for travel by February 3, you’ll earn a day of departure business class upgrade certificate (to be mailed after February 3).

Continue Reading »

Are Delta’s Frequent Flyer Changes Their Death Knell?

by Gary Leff

delta-airline-plane
Dec 24 2004

Joel Widzer (whose book I reviewed over the summer) doesn’t like the changes to the Delta Skymiles program that I reported on last week. He sees Delta as [c]aving to the protests of its stingiest customers and believes that the changes will “accelerat[e] Delta’s path toward bankruptcy.” I usually start by giving an airline, or any company, the benefit of the doubt – concluding that they know a lot more about their business than I do as a simple armchair observer. Certainly they have more data at their disposal and knowledge of their specific circumstances. It’s hard to do that in the case of a company on the verge of bankruptcy with losses in the 10 figures. But I could have made that same negative assumption about Delta before the announced changes so the simple…

Continue Reading »

Independence Air to Operate as United Express again?

by Gary Leff

independence air
Dec 24 2004

It’s still a long-shot, but United requested a bid from Independence Air to operate as a United Express carrier. This is precisely the move being pushed for by Independence Air’s largest shareholder. The Washington Dulles-based low fare carrier has been losing buckets of money and warnings have been issued about a possible bankruptcy filing in January, a mere seven months after starting service as an independent carrier. FlyI used to operate as Atlantic Coast Airlines with most of their flying as the United Express carrier at Dulles and additional activity as a regional carrier for United at Chicago and for Delta at Boston (if I recall correctly, in this last case). The problems they face are several-fold. They decided to sell tickets directly to consumers, bypassing Global Distribution Systems. The model works well for an…

Continue Reading »

Accounting and Frequent Flyer Programs

by Gary Leff

alaska airlines
Dec 24 2004

Alaska Air made a $5.2 million accounting error in the third quarter related to its frequent flyer program. They sold a bunch of bonus miles to their partners and booked the revenue. That turns out to have been the problem — because their accounting practices require them to book revenue when the miles are redeemed rather than sold. That simple item may offer a window into the behavior of airlines offering award sales and alternative redemption options. In the case of award sales, customers are encouraged to book award flights they otherwise wouldn’t — allowing the airline to recognize revenue. In the case of alternative redemption options (such as magazines for miles or even points exchanges), the airline gets to book revenue even though it also has a cash cost. In this latter case the…

Continue Reading »

Swiss Service Fee

by Gary Leff

swiss airlines
Dec 22 2004

Starting January 3rd, SWISS will begin charging a “Swiss Service Fee” for booking tickets in its home Swiss market – including tickets purchased online. SWISS unveiled its new and more transparent 2005 Distribution Model to the travel sector back in June 2004. Under the new model, the price paid for any SWISS ticket will consist of two components, which will be shown separately on the ticket. The first of these will consist of the fare, all airport user fees and any other flight-related surcharges. The second will be the SWISS Service Fee. The new approach will enable customers to distinguish clearly between the price they pay for their journey by air and the service fee they are charged for the advisory, booking and ticket-issuing services provided by SWISS. Maybe they should charge a higher fare…

Continue Reading »

Lufthansa Introduces New Top Tier

by Gary Leff

lufthansa
Dec 16 2004

Lufthansa has announced a new top tier elite level for their frequent flyer program, HON Circle. Link to details are on the airlines homepage. There’s a nice summary in the current MilesLink newsletter. Members who earn at least 600,000 status miles in two consecutive years on Lufthansa, Lufthansa Regional, Austrian, LOT, Air One, Air Dolomiti or United will achieve the status, represented by a sexy new black membership card (up to 100,000 miles earned by rail travel will count toward the status, as well). …Members will enjoy use of the new first-class terminal and two new first class lounges at Frankfurt, which offer gourmet meals and limousine service to departing flights. A personal assistant will be available at both departure and arrival for each member. Members will also receive free subscriptions to Stern, Financial Times,…

Continue Reading »

Save Skymiles: Total Victory

by Gary Leff

delta-airline-plane
Dec 15 2004

The latest NotiFlyer brings news of total victory for the Save Skymiles movement. The threshold for Platinum Medallion qualification reduces from 100,000 miles to 75,000 miles – in line with partners Continental and Northwest. All discount fares will earn a full qualifying mile for each mile flown. First and business class as well as Y, B, and M coach fares will earn 1.5 qualifying miles per mile flown. The minimum miles per segment will be reduced from 750 to 500. Full information on the changes, which go into effect January 1, can be found here.I’m really glad to see all fares earning a full qualifying mile per mile flown. That’s good business and it’s a much simpler system than the craziness that had been spreading across some parts of the airline industry. My one concern…

Continue Reading »

Why Some Passengers Wait for Planes and Why Planes Wait for Some Passengers

by Gary Leff

airplane
Dec 06 2004

Tyler Cowen offers several explanations for why wait times vary across stores. Some stores put impulse purchase items near the checkout counter, and need long lines to make sales. Some stores have more conflict at checkout than others, rental transactions take longer than cash transactions, and long lines can substitute for raising prices by adding a cost to the consumer (waiting) which substitutes for a cost to the seller (adding staff). The explanation that most interested me in the context of aviation is Long lines may serve the cause of price discrimination. Perhaps the store offers personalized shopper services, free home delivery, or other services at a premium. These ancillary benefits might be more profitable if shopping takes just a bit of time. Low-income demanders won’t mind so much, high-income demanders may be pushed to…

Continue Reading »