Airline Mistake Offers $0 Tickets, Will Honor If ‘Appropriate’

airline mistake
JamesZ_/Flickr

It was an airline mistake and the number of tickets sold is unknown, but a glitch on the United Airlines booking site offered some really good deals yesterday. Only the automatic airport fees and other surcharges added to flights by airports around the country were included, not the price of the flight. The flash sale-like offerings were caused due to an error loading fares into the United computer system.

This is not the first time this has happened. A similar mistake happened in May 2002 when a fare sale accidentally appeared as a $5 round-trip ticket for about 45 minutes. In 2008, United accidentally stopped charging a fuel surcharge that was as much as $130. In that case, the airline honored the price of tickets sold without the surcharge.

But what about those unbelievably low fares? Will United honor the obviously incorrect pricing?
“As always, we will do what is appropriate,” United Continental Holdings Inc. spokeswoman Megan McCarthy told the Huffiington Post.

Which BIG airline just pulled out of three booking sites?

american airlines orbitzAs you’ve read here on Gadling, the battle between airlines and online travel agencies is poised to heat up. For the past few years, a dismal economy has sent many bargain-hunters to online travel sites with the hopes of finding fantastic deals and minimizing the pain in their wallets. Yet, with the travel market and the broader economy showing signs of recovery, airlines‘ brand power will gain momentum, and customers with more cash at their disposal will favor convenience and recognition over saving a couple of dollars. A battle for your money and your loyalty is brewing.

And, it’s just intensified.

Last month, American Airlines and Orbitz tangled over fees and the booking process, with the airline threatening to yank its inventory from the travel site, a threat on which it made good. After a temporary restraining order was issued, a judge ruled yesterday that American could pull its inventory from the online travel agency and ordered Orbitz to stop selling American Airlines tickets and displaying its fares.

Now, Delta‘s getting in on the action.

The airline has yanked its inventory from a handful of smaller online travel agencies, Aviation Week reports, including CheapOair, OneTravel and Bookit as of last Friday. So, if you’re hunting for cheap tickets on these sites, you won’t run into Delta any more. Aviation Week observes that it appears to be “part of a partial shift in its distribution strategy,” and notes that it seems different from American’s move with Orbitz.For Delta, the decision looks like it’s part of an effort to consolidate around larger online travel agencies, while American is targeting agencies directly, rather than using an intermediary to reach another intermediary.

While the means may be different, the objective appears to be the same. With a shift in the economy, airlines have a bolstered position in the marketplace, and this is likely to give them a bit more weight in dealing with online travel agencies and in reaching consumers directly. For American, it seems like a play to reduce costs and increase efficiency – as it is for Delta (though through different means). Ultimately, however, Delta wants more direct action from consumers, which reduces its sales costs and increases profits, which is what differentiates its decision from that of American.

According to a statement by Delta in Aviation Week, “Delta is being more selective in our use of online travel sites in the future as we continually work to improve our online distribution strategy.” The company adds, “We continue to make significant investments in delta.com to make it an industry-leading travel site, and we believe that delta.com will become the preferred online site to book travel on Delta.”

A representative from CheapOair was not available for comment.

I asked Douglas Quinby, Sr. Director, Research, at travel industry research firm PhoCusWright, his thoughts on Delta’s decision, and his reply was pretty striaghtforward: “The only surprising thing about this move is that it has taken this long.” He explained, “U.S. airlines have impressively restrained their appetite for growth (i.e. capacity) on the back of a (more or less) recovering economy. With clear control of their inventory, airlines have already started rationalizing distribution, and the weakest links are first to get snipped. American may have jumped the gun a bit with Orbitz, but believe me – we ain’t see nothin’ yet!”

So, what’s the net effect of all this? Do the actions of Delta and American suggest that we’ll be paying higher fares in the future because of behavior that doesn’t benefit the consumer? My bet is that the average fare buyer won’t see a whole lot of difference, especially given the share of sales already owned by the airlines via their own websites. The infrequent leisure traveler, especially, is losing an alternative … though it’s one that won’t be as important in a recovering economy.

[photo by boeingdreamscape]

Extra airline fees could mean better service! This is the FUTURE

airline feesSoon, airlines could make all their profits on the extra fees you pay. Seriously. Yesterday, the Department of Transportation revealed that airlines have had their most profitable year since it started tracking the data back in 2002. And, a good chunk of revenue came from baggage fees, reservation change fees and ancillary fees. In the third quarter alone, it was good for more than $2 billion. So, the foundation is in place. All the airlines need to do is build on it.

And, it looks like some are trying to do that.

According to MSNBC, US Airways President Scott Kirby said that baggage fees and ancillary fees could add up to 100 percent of the airlines profits this year. We’re not talking about some future development, here. This is now. We’ve been talking for a while about how airlines are coming to rely on these fees. Last year, it was an issue of surviving the recession; this year, it’s been about driving profits. Regardless of prevailing economic conditions, it’s clear these fees aren’t going anywhere. It would stand to reason, therefore, that they’d become a larger part of airlines’ profits over time.

But, 100 percent? How would that work? Let’s take a look.First, think about the trend in reduced amenities, putting aside the weird stuff you read about this morning. Food isn’t free, and you’re paying for bags and premium coach seating (think exit row and bulkhead). This lowers airline costs on an available seat mile basis.

Now, what does it mean to lower costs? Well, it provides the elbow room to compete more effectively on fares – translation: cheaper tickets. So, in theory at least, this puts more butts in seats. The lower cost, however, erodes profit per available seat mile, because there isn’t as much revenue assigned to it.

This is where the fees come in.

If all you buy is a seat, you score! You’ll have the chance to get it for less than you would have paid otherwise. If you’re the kind of person who goes to the movies and sneaks in your own snacks, you’re all set. But, the minute you need something else, you’re going to have to pay. This is where the airlines can make their profits. Essentially, getting you into a seat becomes a marketing opportunity for everything you sell. Going back to the movie theater example, it’s equivalent to the previews you see that implore you to go out to the lobby and grab some popcorn. And, they can pump up the prices on food, liquor, bag-checking and so on to make up what they’re effectively giving away on a break-even seat.

Of course, this is a bit oversimplified, but you get the idea. The future of airlines may be to turn a cheap seat into an opportunity to up-sell you on everything else. Frankly, it isn’t a bad idea. In addition to making tickets cheaper, the flight attendants will need to sell in order to help the airline turn a profit. Sales without service is usually a fool’s errand, so a shift in strategy of this sort will lead to better passenger treatment. Maybe we’ll actually be treated like customers!

All these extra fees may not be such a bad idea after all. The airlines don’t realize this, but if they make all their money on the amenities, they’ll actually have to deliver an enjoyable experience.

Let’s pay less to pay extra and be treated like human beings in the process.

[photo by Augapfel via Flickr]

Delta says customer service isn’t dependent upon costs

It looks like Delta has some strong thoughts on airfare and customer service. The airline identified as the worst in the United States is now saying that customer service shouldn’t be related to operating expenses – well, at least that’s the implication of the new ad the airline is running on New York City subways: “Customer service shouldn’t fluctuate with the price of oil.”

The fact that airlines generally aren’t famous for customer service is well-established, and many excuses reasons are given, ranging from regulatory constraints to a lack of cooperation from passengers. Of course, cost always comes into the equation, too. Despite a strong year for air carriers in 2010, history shows that this is a volatile industry, and it’s always necessary to keep an eye on expenses.

It isn’t unusual to see airline industry employees cite cheap flights as a reason for the decline in customer service: what else do passengers expect, right?
This is what makes Delta’s move so interesting. A direct statement that service shouldn’t be constrained by underlying expenses (and thus profit margins), the ad I saw on the 3 train yesterday morning takes a bold stand. Delta is taking conventional wisdom head-on (well, airline industry conventional wisdom) in a very public way.

It should be interesting to see if this leads to a change in the airline industry employee population’s position on the relationship between cheap tickets and passenger expectations. For Delta employees, leaning on the traditional rationale results in a direct contradiction with the company’s stated message. Though the sentiment may not trickle down to employees of other carriers, their being vocal about the informal “expense-to-service” ratio inherently puts them at a disadvantage relative to Delta’s claim. The subtlety may not reach the average consumer (especially those who don’t come into contact with Delta’s ads), but the implication is clear.

Doubtless, it makes sense to draw distinctions between advertisements and expectations, and any change at Delta based on this messaging will take time to implement (let’s be realistic – big companies do tend to move slowly). Nonetheless, it will be interesting to see how this situation unfolds.

So, tell us what you think: do you think customer service expectations in the airline business should be linked to the price you pay for a seat? Leave a comment below!

Megabus to sell 50,000 $1 fares

Megabus, the big blue bus that could, has become synonymous with dirt-cheap fares in the Midwest and on the East Coast. While not always on time, the company has a reputation for offering a better experience than competitors like Greyhound, as there is an assumption that you are more likely to be seated next to a budget traveler or college student than you are, say, a knife-wielding psychopath.

As Megabus’ popularity has grown, it has become harder to snag those elusive $1 fares, which are offered for the first few seats sold on each trip. When I first started taking the bus from Chicago to Detroit back in 2007, I rarely paid more than $10 round-trip, and paying $1 (and once, just 50 cents) each way wasn’t uncommon. But my more recent trips have been as high as $70 round-trip(though still cheaper than flying and faster than taking the train).

But this fall, getting a $1 fare might be easier. Megabus just announced that it will be selling an additional 50,000 fares for the low, low price of $1 each way. Passengers will need to travel between September 14 and November 19 and use the promo code HOTDEAL when booking. The $1 fares do tend to sell out quickly, so book your travel now to get the best price.