Airline cancellation fees worse than baggage fees

by Tom Johansmeyer on

Airlines rely on you to have minor and major personal crises. Everything from changed meeting dates to family emergencies generate around $2 billion in change and cancellation fees a year, according to the Department of Transportation. That’s pretty much twice the amount the airlines pull in from extra bag fees – a measure that’s already been lauded by the Wall Street set for its impact on the airlines’ finances. For American Airlines parent AMR, for example, change and cancellation penalties came to $116 million for the first quarter of the year, while baggage fees amounted to $108 million.

These penalties, lamented almost universally by passengers, upped airline passenger revenue by 3.2 percent in the United States. As usual, business travelers get screwed most (probably because they travel most. They paid the bulk of $527.6 million in first quarter change fees.

Even with fewer people climbing onto planes this year, increases in penalty amounts have led to a net gain in revenue for airlines from this type of fee. A number of the larger airlines upped their change fees from $100 to $150. JetBlue moved it from $40 to $100 – and saw first quarter fees surge 29 percent, from $25 million to $32.2 million, relative to the first quarter of 2008.

These change fees are actually pretty important. With the money they bring in, airlines can offer discounts elsewhere, financed by the extra income. And, they make it more attractive for passengers to buy full-fare tickets, that way they have a bit more flexibility. The more expensive tickets benefit the passenger … and of course, the airline.

Need help? If you’re flying Delta, look for the red coats.

by Jamie Rhein on

As much as I’m displeased about Delta’s new policy to charge $5 more for bags checked at the airport , I do have to say I was pleased with how friendly the gate people were on each leg of our flights to New Mexico and back this month.

I think the people I came across are naturally pleasant, but Delta is making extra efforts to ensure passengers feel as if they can get great service from a real person. The airlines have brought the Red Coats back. Red Coats are the customer service personnel of Delta’s yesteryear who are not tied behind a counter but are accessible to passengers in need. They walk around Delta’s service areas to offer assistance. Delta cut those positions years ago, but has decided that having people trained to be extra friendly and on hand may smooth over travel woes and keep customers flying Delta.

The people wearing Delta’s red coats have the ability to rebook tickets, hand out hotel vouchers and any other task that may make travel easier on the passenger. If it’s easier on passengers, it’s easier on everyone.

Delta has moved up a few notches in my book, not that the airline is keeping track of what I think, but having personnel available to smooth over upset is good for business in my opinion. For now, it sounds like the Red Coats are only at major airports. [USA Today]

Airlines run out of services to cut, eye flights

by Tom Johansmeyer on

Cuts aren’t limited to airline employees and passenger amenities. In the next few months, capacity – the number of asses that can be accommodated – will be sliced. Having fewer flights will lower costs and boost the all-important revenue per available seat-mile (RASM) metric. For passengers, the drop in supply is likely to push fares higher and convenience lower (if you’re looking for non-stop flights, you’ll have to look harder).

It’s earnings season – and what happens down on Wall Street will ripple through every airport in the country. Six of the nine top airlines in the United States posted profits for the year – fun! – but they did it on falling sales. What’s that mean for the average traveler? It means airlines have had to cut their way to profits, because they aren’t growing. If passengers aren’t spending as much, all the airlines can do is take away services that cost money. And, with RASM down 19 percent year-over-year for seven U.S. airlines, they have little choice.

If you’ve been on a flight recently, you’ve seen there isn’t much left to cut, which is why airlines are going to be cutting the flights themselves. For the fourth quarter of 2009, total available seat-miles (one person flying one mile on one flight) is expected to fall to 12.4 billion – which is close to post-9/11 levels. Two years earlier (Q4 2007), it was 14.2 billion.

I hope you believe that “getting there is half the fun.” If you do, the decline in non-stop flights won’t bother you as much. Prepare for layovers – lots of ’em. This will help airlines consolidate flights, fill vacancies and boost RASM. But, it also means that you’ll spend a bit more cash at Auntie Anne’s (get some cheese with those pretzels!).

Cutting costs could actually lead to higher prices, which the airlines desperately need – but it means a smaller base of seat-miles on which to make money. Competition will fall on some routes, and overall supply drops – both of which give airlines the power to increase fares. Of course, these really are minor forces compared to broader economic conditions. The ability of customers to pay is ultimately what drives the cost of a ticket, and absent an economic recovery, fares will stay low, as will airline earnings.

Ten things that can (and will) spoil your vacation

by Scott Carmichael on

Vacation is meant to be a fun time – a chance to get away from it all and enjoy yourself. But things happen in life that can really mess up those plans.

In this gallery, we’ve collected ten of the worst things that can happen on a trip that will really screw up your vacation.

If you are lucky, you’ll only run into one of them, but the really unlucky traveler may be thrown a combination of problems, turning a fun vacation into a horror vacation from hell.

Check out our lineup of ten things that can spoil your vacation here.

On-time airline improvements continue, third month in a row

by Tom Johansmeyer on

Airlines in the United States posted an improved on-time performance rate in April relative to the same month the year prior – stretching their streak to three. The 19 largest airlines were on time 79.1 percent of the time in April 2009, compared to 77.7 percent in April 2008. The industry also performed better than it did in March 2009, showing a month-to-month improvement from 78.4 percent. An on-time arrival is defined as being within 15 minutes of the scheduled time … which has already been buffered comfortably by the airlines.

According to the U.S. Department of Transportation, 7.4 percent of April delays resulted from aviation system issues. Late-arriving aircraft caused 6.2 percent, and factors within the airline’s control (e.g., maintenance or crew problems) accounted for 4.8 percent. Extreme weather and security together didn’t even account for 1 percent of delays. The most delayed flight was Northwest Airlines Flight 803 from Atlanta to Honolulu. It was late 97 percent of the time.

The DOT also found that:

  • Cancellation rates improved to 1.5 percent in April 2009 – from 1.7 percent in April 2008 and 2.1 percent in 2009.
  • Nearly 50 flights had taxi-time waits of greater than three hours
  • Mishandled baggage rates improved to 3.79 per 1,000 from 4.99 in April 2008 and 4.12 in March 2009

Customers complained to the DOT 781 times about airline service, compared to 1,112 in April 2008. But, it was up from the 705 the previous month.

So, the airlines are generally posting some positive numbers – Fight 803 notwithstanding. Why? Are we looking at a vast improvement across an entire industry … an industry that clearly can’t afford to invest in doing a better job?

Let’s not go crazy, here.

The airlines are doing a better job because they don’t have to deal with as many people. Fewer asses are occupying seats, which eases the burden of boarding passengers, pushing back on time and keeping track of their luggage. Ironically, success is the path to failure, as selling more seats would give airlines an operational burden they’ve proved they’re ill-equipped to handle.