What the Southwest/AirTran merger means for consumers

Southwest Airlines announced yesterday that it will acquire AirTran in a cash plus stock deal.

Here’s what to expect:

1.) Good news for AirTran passengers and travel to/from/through Atlanta in general. Southwest has better service than AirTran, and lower fees (assuming that Southwest keeps the low/no-fee model, see number 4, below). Southwest is not keeping the AirTran brand.

2.) Southwest and AirTran don’t have much route overlap, so the merger in and of itself won’t lead to higher fares. But both airlines offer aggressive airfare sales almost weekly. We’ll see fewer of these, and fares will inch up. Remember, though, that fares can only go so high before consumers stay home, drive, take the BoltBus, or Amtrak. One route that does overlap is Boston to Baltimore, which both airlines fly nonstop for $78 round-trip; but JetBlue flies the route at the same fare, so as long as there are two airlines flying nonstop on the route, prices will stay reasonable. (In fact, Baltimore probably has the most overlapping routes, so we expect fares to go up there.)

3.) More fare pressure if other airlines continue the merger dance. American and US Air must be in panic mode as Southwest continues to grow. What next? An American/US Air marriage? Frontier/Midwest combine with USAir? JetBlue+American? The Southwest/AirTran merger came out of the blue, so anything and everything could be on the table.

4.) This impacts Delta, at least at first, the most. Will Delta eliminate checked bag and ticket change fees on competing routes to/from/through Atlanta to compete with Southwest’s fee model? Or will Southwest add fees? AirTran was a minor thorn in Delta’s side, but Southwest is going be a major thorn. AirTran was not a particularly healthy airline financially, and Southwest is.

5.) Southwest now becomes an international airline, if it keeps AirTran’s routes to Aruba, the Bahamas, etc. It also becomes a multi-aircraft airline, if it keeps AirTran’s Boeing 717’s along with Southwest’s 737 fleet.6.) Silver lining: as with all mergers of this kind, a plus is that if your flight is delayed or canceled you can now be re-routed over a much bigger route structure.

7.) It’s doubtful that Southwest will keep AirTran’s business class cabins, instead moving the airline to Southwest’s one-cabin model. Same for advance seat selection, which AirTran currently offers.

8.) The merger should win speedy Justice Department and DOT approval, since there is virtually no route overlap between the two airlines.

George Hobica is the founder of Airfarewatchdog™, the most inclusive source of airfare deals that have been researched and verified by experts. Airfarewatchdog compares fares from all airlines and includes the increasing number of airline-site-only and promo code fares.

[Flickr photo via gTarded]

How to avoid a $100,000 airfare

Emergency medical evacuation is a product most people probably don’t think they need. It sounds almost exotic, as if one’s trip would need to be inherently dangerous to justify the purchase.

Well, think again. Emergency medical evacuation is far from necessary for every vacation, but travelers concerned about potential health problems or accidents, or who are traveling to relatively remote destinations or even just taking a cruise, may feel a bit more comfortable knowing they can easily and affordably get to a health care center in the case of a medical emergency. And speaking of affordability, consider that a domestic medical evacuation can cost tens of thousands of dollars, and it can be over a $100,000 for international evacuations.

There are three main players in the emergency medical evaluation business: MedJet Assist, AirMed, and a newcomer, On Call International, which previously only sold coverage to travel insurance companies as a wholesaler. Each program offers annual subscriptions and individual trip coverage options, but the products differ somewhat, as you’ll see in this chart.

Still, you can expect a similar set of benefits, not just medical evacuation, but also “family reunion” transportation (when a spouse or other relative needs to join or travel with an ill or injured family member), medical monitoring/consultation, and travel assistance services such as cash advances and legal consultation.

There are a few things to look for when purchasing this kind of service. First, you probably want a program that will bring you to your hospital of choice-anything else sort of defeats the purpose. You’ll also want to make sure there are no restrictions on pre-existing conditions, lest you risk being denied transport when injury or illness befalls you. If there are any such restrictions, it should go without saying that you read them thoroughly. Keep in mind that none of the big three evacuation providers provide transport for conditions or hospitalizations already in effect when a customer enrolls in their program. So no breaking your leg before your trip and then signing up for an airlift!

Lastly, make sure you completely understand how the evacuation procedure works. Who decides when an evacuation is necessary? What circumstances qualifies a person for evacuation? Can customers literally be evacuated from anywhere on the globe to any medical facility they choose? One distinction between On Call and its competitors is that it provides coverage starting at 50 miles from home, versus 150 miles for the other two firms. That might not sound like a big difference, unless you’re, say, a Manhattan resident who becomes suddenly ill late at night on Fire Island, a barrier island which is just 60 miles from the New York City.

Remember, also, that none of these companies’ offerings should be confused with medical insurance, and in virtually all cases, your medical insurance provider does not cover emergency evacuation needs. The two will work in tandem to cover the transportation and medical expenses incurred should you end up in the hospital while traveling.

So again, while medical evacuation coverage is not something most people really need, some travelers may appreciate having in their back pocket.

George Hobica is the founder of Airfarewatchdog™, the most inclusive source of airfare deals that have been researched and verified by experts. Airfarewatchdog compares fares from all airlines and includes the increasing number of airline-site-only and promo code fares.

[Flickr photo via moaksey]

So google is buying ITA Software. What does it mean for you, air traveler?

First of all, what is ITA Software? Briefly, it’s a technology company based in Cambridge, MA that provides the airfare search software behind such sites as Orbitz, Kayak and many airline web sites. Its claim to fame is that it digs deeper into airline reservation systems than some other technologies, and usually finds fares that are only available via the airlines’ own websites. And it allows users to do an easy flexible date search over any 30-day period.

But: It does not provide searches on Southwest AIrlines, Allegiant Airlines, Ryanair, and a few other smaller carriers. Similarly, low-cost leader Spirit Airlines keeps its best fares for Spiritair.com.

Nor can ITA calculate promo code or some other special airfares that the airlines reserve for their own web sites.

Recently, for example, US Airways tweeted fares from Philadelphia to Tel Aviv for $99 each way plus tax, summer travel. JetBlue tweets frequently as well, with $10 fares. United recently tweeted 20% off discount codes. These deals were not picked up by ITA Software. If airlines increasingly market their best deals through narrow channels, and keep them from ITA, it will further change the fare finding game. My thinking is that if airlines can figure out how to eliminate all third parties, such as profitable Southwest has done, they’ll do it.ITA also doesn’t include the “name your own price” fares you can find on sites like Priceline.com, which are often quite good if you don’t have a sufficiently large advance purchase window. And it doesn’t include consolidator airfares. In fact, no airfare search site includes all of these things.

So will the Google acquisition change airfare search for the better? Online airfare search “is ultimately not a very good user experience,” Google CEO Eric Schmidt said on a conference call. “There’s clearly room for more competition there.”

That’s an interesting statement. More competition? Compared to other categories, airfare search is anything but devoid of competition. Recently, TripAdvisor got into the game, as did Travelzoo with its fly.com site. That’s in addition to sites like Expedia, Travelocity, Orbitz, Cheaptickets, Hotwire, Booking Buddy, Farecompare, Yapta, Cheapair, and about a dozen others. ITA Software powers many of these sites already.

ITA does not sell airfares directly. It only shows what it believes the lowest fare to be on any given route, and then you need to conduct a separate search on the site of your choice to find the fare. Most people go directly to airline web sites to complete purchases, although sometimes the cheapest fare will be outbound on one airline and a return on a second airline, which is where the online travel agencies (OTAs such as Travelocity and Expedia) have an advantage, since they show fares on more than one airline. Will Google turn ITA into a fare-selling engine, in competition with its paying customers? Who can say?

Of course, Google is already in the fare search business. If you Google a term like “Boston to New York depart Dec 13 return Dec 15 2010” (try it), the top unadvertised search result will be a google-generated search box allowing you to click on many major OTA’s and meta-search sites.

But it will not actually return fares without further clicking. Perhaps at some point an ITA-generated fare result will pop up, showing the lowest price your Google search, instead of sending you to an OTA’s link.

Airfare search is such a crowded, ever-changing business, fraught with uncertainty and risks that it’s interesting that Google wants in. But I’ll have to assume they know what they’re doing.

George Hobica is the founder of Airfarewatchdog™, the most inclusive source of airfare deals that have been researched and verified by experts. Airfarewatchdog compares fares from all airlines and includes the increasing number of airline-site-only and promo code fares.

[Flickr image: tortuga767]

British Airways’ re-launched First is worth every mile

Recently, I spent $75 to get a seat in British Airways‘ new and improved first class cabin from New York to London, and although my original flight was ash-canned, I did eventually get there. And to paraphrase the Beatles, man, I did not have a dreadful flight.

To quickly explain: I signed up for a British Airways-branded Chase Visa Card ($75 annual fee) and was awarded 100,000 bonus frequent flyer miles, enough to cover the 75,000 (one-way) required for a ride way in BA’s newly-refreshed premier cabin. Heck, I don’t fly much these days, and my 56-year-old posterior isn’t as padded as it used to be, nor are my joints quite as supple, so $75 for a little comfort is just what the chiropractor ordered.

Had I actually bought that seat? Well, honestly, on my salary and at my pay grade, that would have been unlikely. It would have cost several thousand dollars-more if I paid full freight, less if I had bought a heavily discounted fare.

As it turned out, that Iceland volcano had other plans for me, and my flight was canceled. My hopes of attending a reunion at my Oxford college, where I was a graduate student 30 years earlier, were vaporized.

But last week, I was invited as a guest of BA, in my capacity as an airfare/airline pundit, to give First Class another shot.

Most air travel these days, whether to the former USSR or to Bangor, can be pretty dreadful. But not in seat 3K on a BA 777.

No one is quite sure who (Flaubert? Einstein?) first said that “God is in the details” (it’s also been said that the devil is in them too), but first class on most international airlines is already pretty fine, so the only way an airline can improve its premier product is by concentrating on the fine points.

And this, clearly, BA has done. The padding on the seats is plumper. The seats are 60 percent wider at the shoulders. The video screens are bigger. The cabin lighting is softer and prettier. The reading lights are brighter. The window shades are electronic. Each seat now comes with its own closet. The pillows are bigger. The bedsheets of a finer Egyptian cotton. The armrests disappear as the bed reclines to its fully-flat, fully-horizontal position, giving you even more room. The dedicated check-in areas are more exclusive-note the comfy easy chairs. The arrival and departure lounges are more luxurious. I particularly liked the terrace overlooking the bustle at Heathrow’s Terminal 5.

BA was in strike mode when I flew, so catering was a bit handicapped; thus I can’t say if they have improved the in-flight cuisine. I suspect they have, however (actually the substituted chicken tikka was quite good). I’ll have to wait for my next first class adventure to try the amuse bouche, and to find out if the 2004 Tattinger Champagne, normally served in First, is better chilled, or the caviar fresher.

After all, I still have those 100,000 miles burning a hole in my Executive Club account, and maybe I’ll be around for my 40th college reunion. By then that volcano will be extinct. I hope.

A modest proposal: Let’s ban large carry-ons altogether

A bill introduced in the U.S. Senate last week would ban airlines from charging for carry-on luggage, according to Reuters. Two senators rightly point out that carry-ons often contain items that are “important for the safety and health” of travelers, including medication and eyewear.

But can we please keep in mind that Spirit Airlines’ now infamous decision to charge for carry-on luggage only applies to items too large to fit in the seat in front of the passenger? You can still carry on personal items for free, and that would include a large purse, brief case, or backpack into which you can stuff whatever essentials or valuables you desire. Coats, strollers, cameras, and certain other items are also carried in-cabin for free.

Let’s get real here. To avoid looking disingenuous, Spirit should simply ban carry on bags altogether rather than making them a profit center. And the US Congress should let airlines conduct business as they see fit, and if it really cares about airline passengers, instead legislate a solution to the real safety risks of carry-on luggage.

Spirit’s CEO, Ben Baldanza, with some justification, claims that the overhead bin fee will discourage carry-on overcrowding and lead to safer air travel, both for flight attendants and passengers, who are sometimes injured when lifting heavy bags into the bins and by bags falling out of the bins, despite the airlines’ constant “bags do tend to shift in flight” PA announcements.

But most likely, safety isn’t the real issue here, at least not for an airline CEO. Baldanza also suggests that the airline will be able to board and deplane their aircraft faster, which implies that Spirit will profit by faster airport turnarounds, and thus be able to complete more flights per day and earn more revenue per plane (or fly more passengers with fewer multi-million dollar jets).

Is safety the real issue here?But if safety is really the issue, then the airline should ban large carry-ons altogether, rather than charging for them. Is a carry-on that is charged $45 any safer than one riding for free? Of course not. Indeed, in the infancy of commercial aviation, there were no overhead bins at all, just hat racks into which it was forbidden to place even the smallest flight bag or other hard object. Everything else went under the seat. (OK, OK, the seats were spaced farther apart, granted.)

In any case, the US Congress should back off. If Spirit or any other airline decides to ban larger-sized carry-ons for safety reasons or to charge for them for revenue-enhanhcement reasons or to discourage passengers from using the overhead bins altogether, then that’s their business. If the government were really consumer focused, they should recognize the health hazards of large carry-on luggage and encourage airlines to ban the practice altogether, following Spirit’s model of only permitting smaller carry-ons that fit under the seat.

And there are about a thousand other things Congress should focus on when it comes to air travel, such as fixing the air traffic control system.

Then we could go back to the old model of free checked baggage, or not. But that should be the airlines’ decision. Or maybe passengers will finally “get it” that the airlines don’t want to be carrying their luggage in the first place, and they’d learn the pleasures of 5-day FedEx Ground delivery service, at least on domestic flights.

Airlines could save millions, and offer free checked baggage once again.

Although putting an end to large carry-on bags, whether free or paid, would require the airlines to hire more baggage handlers and check in staff, who are paid relatively modest wages, most likely the carriers would come out ahead by boarding and deplaning planes far faster than currently possible. It doesn’t take an airline CEO with an MBA to figure out that if every one of the thousands of flights flown in the US each day could shave 30 or 45 minutes off of their schedules by turning around quicker at the airport, then the airlines would save millions in equipment, fuel and the more expensive salaries paid to pilots, who often sit around doing nothing while passengers attempt to stuff bags in the overhead bins, blocking other passengers from reaching their seats.

With the money they save, airlines could once again offer free checked bags, just like in the good old days, when flying was fun.

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George Hobica is the founder of Airfarewatchdog™, the most inclusive source of airfare deals that have been researched and verified by experts. Airfarewatchdog compares fares from all airlines and includes the increasing number of airline-site-only and promo code fares.