Many airlines, especially in the U.S., are moving to a two-class configuration for their international flights. Whether dubbed BusinessFirst, World Business Class, or BusinessElite, the idea is to meld the business and first class cabins into one premium product. International first isn’t being purchased as much as it once was, so the airlines are trying to concentrate on a competitive business class product. This post by Alex Tabarrok on consumer behavior got me thinking about whether it may be individually rational for an airline to pursue this strategy, but collectively damaging if all airlines pursued this strategy because the existence of first class might make it easier to sell business class. When there are only two product qualities consumers are torn between two “extremes,” either of which makes them uneasy. Add a third quality and…
Soros entering the competition for Air Canada
George Soros, the major backing behind the launch of JetBlue, may throw his hat into the ring for bankrupt Air Canada. It is believed Soros’s main rivals are Texas Pacific Group LP, a firm that specializes in investing in distressed airlines, and Cerberus Capital Management Inc., a player in the world of high-yield distressed debt. In recent days, both have advanced to Air Canada’s shortlist of prospective investors. It’s been speculated Cerberus and Texas Pacific, both U.S.-based, might try to circumvent Canadian laws capping foreign ownership of airlines at 25 per cent by partnering with the likes of Onex Corp. of Toronto, or perhaps Quebec’s public-pension-management agency, la Caisse de d
The temporary ticket tax returns
The September 11 airline security tax was temporarily lifted on June 1, but it’s coming back October 1. Much of the analysis of the tax focuses on the ‘failure’ of airlines to pass the savings on to consumers, missing the point that consumers are willing to pay a certain price (and as anyone who studies airline pricing knows, that price varies under lots of conditions) for their travel. Adding a tax doesn’t make them willing to pay more, and removing a tax doesn’t mean travel is worth less to them. So no one should be surprised that prices don’t move in lock step with taxation. But one should always be skeptical of articles that talk about average ticket prices, or even worse ones that make a claim (as the previously linked article does) that when…
Moving on from Delta
Delta flyers, unhappy with changes to the Skymiles frequent flyer program, formed a coalition called Save Skymiles. Their logo is a business traveler with a parachute, and the dubbed Delta (D)riving (E)very (L)oyal (T)raveler (A)way. This group rented a mobile billboard which they sent out to various airports and parked in front of the Delta shareholders meeting. Photos are available here. Today they ran an ad (Adobe Acrobat) in the Atlanta edition of USA Today. While Delta representatives met with the Save Skymiles group, and Delta made some cosmetic improvements to the program, in the end only lip service was paid. So this group has decided to stop trying to save Delta from itself, and send its lucrative business to other airlines.A condensed version of the text of the ad:We are Delta Medallion Flyers. Just…
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Is coach unbearable on purpose?
Tyler Cowen’s recent post on price gouging referenced a common misconception about airline pricing: It is sometimes argued that airlines keep coach quality low deliberately, to raise the demand for business and first class tickets. I don’t know if this is true.. In fact, it isn’t true. Or at least it doesn’t seem to fit the current evidence for domestic flights at all. Airlines only sell about 10% of their first class seats domestically. 90% of first class seats are occupied by frequent flyer awards, upgrades given to frequent travelers, and airline employees. Coach quality has, in general, been rising. American made a fleetwide decision to add 2″ of legroom at every seat by removing a row of seats (They’ve retrenched a bit on some very low yield routes, but this enhancement is still true…
500 free Alaska Airlines miles
Sign up for the Alaska Airlines e-mail newsletter and receive 500 Alaska Mileage Plan miles instantly. They really do post right away!
$25 off British Airways transatlantic flights
British Airways is offering $25 off online bookings. The offer is valid for flights booked through December 7, 2003. Travel must be completed by March 31, 2003.
Alaska Airlines new ad campaign
Alaska Airlines has a new add campaign where they compare themselves to the fictional Sky High Airlines. The message is that Alaska cares, and its competitors like “Sky High” do not.Sky High’s take on lost luggage is especially good. For example, At SkyHigh, we don’t like to think of your missing luggage as being “lost.” Rather, that it has embarked on an exciting journey all its own. And Some people call it “lost luggage.” But we like to say, “if you love something, set it free. If it comes back, well, that’s pretty good.”
Cheap Hawaii flights
Hawaiian Airlines is offering a $299 roundtrip from Los Angeles and Ontario to Honolulu through December 14th. Pretty good fare, but there’s not a ton of availability at the price.