basic economy

Jun 06 2016

American is announcing several changes to their elite program today that go into effect next year. And they’ve announced the date on which American will start awarding miles based on the cost of a ticket rather than distance flown.

There will be minimum spend required for elite status, a new 75,000 mile elite tier, a new upgrade priority order, and upgrades on domestic award tickets for Executive Platinums. I spoke with AAdvantage’s Bridget Blaise-Shamai this morning about the changes they’re making.

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May 26 2016

American Airlines President Scott Kirby spoke yesterday at the Wolfe Research 9th Annual Global Transportation Conference offering mostly extemporaneous comments in response to investment analyst questions.

The theme that analysts are interested in is the revenue environment that airlines, and especially American, are facing — they’ve seen declines in passenger revenue per available seat mile (PRASM) despite huge declines in fuel costs that have driven profitability. And they want to know when that will turn around, and what American is doing to accelerate that.

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May 21 2016

United is promising to “reimagine the way United customers fly” in a big reveal June 2nd presented by airline CEO Oscar Munoz in New York.

I was invited to the event, dubbed an ‘interactive experience’ which could mean a great many things. Here are some possibilities.

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May 19 2016

American Airlines President Scott Kirby spoke at the Bank of America Merrill Lynch 2016 Transportation Conference this morning.

The single biggest area of interest among institutional investors, and naturally the very first question Kirby got, was about revenue per available seat mile. Ticket prices are falling. The airline is hugely profitable thanks to low fuel prices, but profits have gone up even as revenue has fallen. Interestingly many of the items he focuses on to drive revenue are about the AAdvantage program.

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May 16 2016

Delta sees the end of first class upgrades in 2018. That’s because they’re going to be upselling coach passengers into nearly all of their first class seats instead.

With first class seats mostly upsold, Delta wants their extra legroom seats to be the upgrade. And they want elites to even buy those. Starting with today’s flights new rules ‘upgrades’ to extra legroom seats become tougher for elites.

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Mar 04 2016

Incoming Delta President Glen Hauenstein, the key architect of the airline’s revenue-based this-and-that over the past decade (hint: Jeff Robertson was always a great cheerleader for the efforts, but not their driver), has declared the end of awards.

He told Bloomberg‘s Justin Bachman, “We want people to be able to use those miles not to fly for free but to control your experience,” says Glen Hauenstein, Delta’s incoming president and architect of the airline’s revenue plans.”

Instead of free flights he wants SkyMiles used at a penny apiece towards more spending on Delta products. And that’s the value many internally wanted to place on miles in a revenue-based redemption program.

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Feb 18 2016

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.

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Jan 29 2016

The things that were most interesting to me about American’s earnings call weren’t falling airfares and weakness in South America market; the Zika virus; or American’s record profits, whether it’s fair to say that they had the most profits of any airline in history (or whether Delta ‘excluding employee profit sharing’ is higher, since of course those are wages and as Doug Parker pointed out the difference in profits between the airlines is Delta’s big losses on fuel hedging, something American doesn’t do).

The audience for the earnings call was mostly financial analysts. American was getting beaten up on, despite its profits and margins, for low fares. The critique was, why don’t they do more, actively manage to find ways to keep more of the cost savings from lower fuel? However there’s always some important tidbits that matter from a customer perspective, and to understand the direction the airline is going and what matters to its leadership. So here’s what was most interesting to me, that will be a different emphasis from mainstream financial reports on the call:

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Jan 25 2016

Delta, United, and American have been called “legacy” airlines (since they pre-date airline deregulation) and also “full service” airlines even though they charge most passengers now for things like checked bags and change fees in my professional lifetime have gone up eight-fold. But even as they’re finding themselves more profitable than ever, they’re working to shift their business model to provide less value to the customer at the same price point.

The airline industry is such a strange beast. In most businesses, competition forces companies to deliver more and more value to the customer.

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Nov 24 2015

Rick Hasen, a law school contracts professor who runs an election law blog, writes about an Alice in Wonderland experience with Expedia.

He purchased non-changeable tickets that Expedia said had a change fee. The tickets didn’t permit advance seat assignments which Expedia failed to disclose. And Expedia says he should have called them during the purchase process to find out if there were any hidden restrictions — a phone call that likely would have taken hours.

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