Airline fees are worth more than Facebook

by Tom Johansmeyer on

Outside the travel world, everyone’s marveling at the prospect of a Facebook IPO, which could be valued at as much as $100 billion. So, what are we missing while we fawn over Mark Zuckerberg’s creation? How about the slow, stodgy, ugly airline industry. Known for a painful user experience and a steady decline of free features, the likes of Delta and American Airlines are outdoing the hottest online property in the world simply by annoying their customers.

According to data from the U.S. Department of Transportation‘s Bureau of Transportation Statistics, baggage and reservation change fees brought the U.S. airline industry a whopping $5.7 billion last year. Delta picked up close to a billion dollars on baggage fees alone, which doesn’t include what they yanked from the wallets of soldiers returning home from combat. The largest airline in the country also brought in approximately $700 million from reservation change fees.

American Airlines, the fourth largest airline in the United States, came in second in both categories, with $580.7 million in baggage fees and $471.4 million in reservation change fees.The particular beauty of these fees is that they are basically found money. Some passengers need to check bags, and the airlines have to invest in the overhead required to meet this demand. It’s an expense that can’t be avoided. With this fee, they monetized what they’d have to pay anyway. The same is the case for reservation change fees.

The top five earners of baggage fees in 2010 are:

1. Delta: $952.3 million

2. American: $580.7 million

3. US Airways: $513.6 million

4. Continental: $341.6 million

5. United: $313.2 million

Unsurprisingly, the top five earners of reservation change fees don’t look much different:

1. Delta: $698.6 million

2. American: $471.4 million

3. United: $321.5 million

4. US Airways: $253.1 million

5. Continental: $237.4 million

No doubt, activist groups will be up in arms shortly. And airline employees will lament the fact that their executives are so richly compensated while they have endured round after round of pay cuts and layoffs for years upon years.

Frankly, I offer my congratulations to the airline industry. Yes, they are soaking us. Passengers are a captive audience, particularly on routes with limited coverage, and we sometimes have no choice but to pay. The airlines are using this to generate profitable growth for their shareholders, which is their primary responsibility.

So, what about Facebook? The company is estimated to pull in revenues of somewhere above $4 billion this year, most of it from advertising. It is pretty interesting that the popular social network is annoying its customers as a way to generate revenue, just like the airlines!

Who knew that pissing off your target market was an awesome business model?

[photo by Tobin Black via Flickr]

Airline industry best and worst of April 2011

by Tom Johansmeyer on

The most recent U.S. Department of Transportation data is out, and it’s time for the airlines to brace themselves. The good, the bad and the ugly can be discerned from the data, and numbers are notoriously poor at showing excuses (I mean, “underlying reasons”).

So, let’s start with what looks good. Hawaiian Airlines is most likely to get you to your destination on time, leading U.S. carriers with a 94.1 percent arrival rate. It’s followed by Alaska Airlines at 89.5 percent and AirTran Airways at 82 percent.

At the bottom of the barrel, for on-time arrivals, are ExpressJet Airlines (68 percent), JetBlue (68.4 percent) and Atlantic Southeast Airlines (68.5 percent). Think about it, a third of the time, these airlines won’t arrive on time.

Overall, the airline industry posted an average on-time arrival rate of 75.5 percent. This means that a quarter of the time, they miss the mark. It’s almost as easy as being a weather man!The dubious distinction of having the longest tarmac delay was United Airlines flight 19 from JFK to San Francisco. On April 24, 2011, it sat on the tarmac for a whopping 202 minutes. It was tied by Delta flight 1076 from Atlanta to Salt Lake City only three days later. On the same day that flight 1076’s passengers grew restless, Delta flight 1714 (Atlanta to Ontario, CA), sat on the tarmac for 200 minutes. Twins!

Delta owned three of the four longest tarmac delays of the month – and only four flights had delays of longer than three hours. The remaining flight was Delta flight 823 from Atlanta to Ft Lauderdale, also on April 27. It sat on the tarmac for 185 minutes.

According to Google Maps, it takes 10 hours to drive from Atlanta to Fort Lauderdale. Just sayin’.

If you flew American Eagle, your flight was most likely to get canceled: it posted a cancelation rate of 5.1 percent. Following were ExpressJet (3.8 percent) and Atlantic Southeast (3.7 percent). You were better off flying Hawaiian Airlines, which posted a tiny cancelation rate of 0.1 percent. Frontier (0.2 percent) and Continental (0.5 percent) also posted solid stats on this metric.

[photo by Brett L. via Flickr]

United Airlines celebrates 85 years of flying with a retro livery Airbus A320

by Scott Carmichael on

At a special event at Chicago’s O’Hare airport, United Airlines took to a stage to unveil a special Airbus A320 repainted with a retro livery.

During the event, CEO Jeff Smisek also honored some of his colleagues with the longest history of representing United. The 12 staff members represented a combined 450 years of service. One of the longest serving employees is Captain Jack Lampe, who has been flying with United since 1961.

Also present were current flight attendants dressed in United Airlines outfits from the past. The 1970’s era jet livery was selected by airline employees as their favorite paint job. The plane will fly around the country, making its way to employee celebrations.

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2011 Airline Quality Ratings – AirTran at number one

by Justin Delaney on

The 2011 Airline Quality Ratings (AQR) were just released, and AirTran topped the list at number one. The Atlanta based air line got top marks in the study that accounts for on time arrivals, mishandled baggage, complaints, and other metrics. The study only includes airlines in the United States and provides interesting statistics about the overall quality of domestic air travel.

The main form of complaint involved flight problems, followed by baggage. While overall complaints went up about 30% from 2009 to 2010, overall quality rating also went up marginally. This could be due to the communication channel widening to include new forms of customer feedback. AirTran handled baggage the best with only 1.63 bags mishandled per 1000 passengers. American Eagle was at the other end of the spectrum with 7.15 bags mishandled per 1000 passengers. Of all the airlines listed, Hawaiian Airlines topped the list in on time arrival. Over 92% of their flights landed on time. The full report can be viewed here.

AQR Rankings – Domestic Airlines
16. American Eagle
15. Atlantic Southeast
14. Comair
13. Mesa Air
12. United
11. American Airlines
10. Skywest9. Frontier
8. Continental
7. Delta
6. U.S. Airways
5. Southwest
4. Alaska
3. Jet Blue
2. Hawaiian
1. AirTran

flickr image via Bob B. Brown

United Continental to expand Economy Plus seating to Continental aircraft

by Scott Carmichael on

Compared to some other carriers, inflight services on United Airways have always been a little lacking. They don’t have a neat touch-screen entertainment system, limited inflight WiFi and no live TV or radio. Thankfully, they do have two perks you don’t find on any of the other domestic carriers – increased legroom in part of the cabin and the ability to listen in on cockpit communications.

As part of their merger with Continental, the new airline plans to introduce their Economy Plus seating to Continental aircraft.

Economy Plus is by no means a replacement for a business class cabin, but the 5 extra inches of leg room are usually quite welcome. What was once a perk reserved for their frequent fliers, has quickly become a new way for the airline to make money – charging up to $425 a year for unlimited access to the extra legroom. Individual flight upgrades to Economy Plus start at just $9 (for short flights).

Still, the airline has to be applauded for committing to this decent perk. The full press release is after the jump.

UNITED AIRLINES TO RETAIN ECONOMY PLUS,
EXPANd TO CONTINENTAL AIRCRAFT BEGINning IN 2012

Multi-year conversion brings Economy Plus to the new United

CHICAGO, Feb. 17, 2011–United Continental Holdings, Inc. (NYSE: UAL) today announced that it will retain United’s popular Economy Plus® seating on United flights and expand the option to Continental aircraft beginning in 2012, providing more opportunities for customers to enjoy additional legroom and comfort.

“Our customers value Economy Plus and the additional personal space that it provides,” said Jim Compton, chief revenue officer of United Continental Holdings. “Customers who sit in Economy Plus are significantly more satisfied with their travel experience, as are travelers who choose other options that enable them to tailor their travel to their liking.”

The decision to maintain and expand Economy Plus across the combined fleet marks a significant milestone in the product integration of United and Continental. It also demonstrates the company’s commitment to provide innovative options to customers that enable them to customize their travel experience with superior products they value.

Today, United offers Economy Plus on all 359 mainline aircraft and more than 150 larger regional jets operated by United Express® carriers. When the multi-year conversion process is complete, the company plans to offer Economy Plus on more than 700 mainline aircraft, including all Continental mainline aircraft, as well as larger regional aircraft. When fully deployed, the new United’s fleet will include more than 40,000 Economy Plus seats, providing more than 122,000 Economy Plus seats each day, the largest amount of extra legroom economy seating available to customers of any airline in the world.

United introduced Economy Plus in 1999, offering up to five inches of additional legroom to customers seated in the forward section of United Economy®. Customers with elite status in United’s Mileage Plus and Continental’s OnePass frequent-flyer programs may confirm seat assignments in Economy Plus, when available. Customers may also purchase seat assignments in Economy Plus when making reservations via united.com and continental.com, through a reservation agent, or during the check-in process at home or at the airport.

Continental currently offers extra legroom seats and will continue to offer that option to travelers until those aircraft are reconfigured with Economy Plus seating. OnePass and Mileage Plus elite members may confirm extra legroom seats at no charge, and other customers may purchase seat assignments for extra legroom seats.
The expansion of Economy Plus reflects United’s focus on its product and customers. The airline continues to reconfigure United and Continental aircraft with new lie-flat seats in first and business class – with the new lie-flat product already on 112 aircraft in the combined fleet, more than any other U.S.-based carrier. In addition, more than 160 Continental aircraft feature DIRECTV®.