Airline passengers want more self-service options

by Tom Johansmeyer on

Hey, airlines: passengers don’t want your help. Seriously. We’d rather take control of our fates. Let us make our own choices and pay for what we consume.

Well, that’s what a new survey reveals. The fifth annual SITA/Air Transport World Passenger Self-Service Survey finds that air travelers would like a bit more independence. Seventy percent, this year, want automatic boarding gates – where scanning a boarding pass opens a turnstile – up from 57 percent. In fact, self-service is already the norm, with more than 70 percent using airport kiosks for flight check-in, and two-thirds want to see expanded kiosk use, including: paying baggage fees, purchasing meals, printing bag tags and getting delayed luggage.

I guess this provides support for that old saying: if you want it done right …

[photo by joiseyshowaa via Flickr]

Fallen American Airlines could be next to merge … with JetBlue?

by Tom Johansmeyer on

American Airlines used to be the largest airline in the industry – now it’s third. Merger activity has narrowed the field, with Southwest–AirTran and United-Continental the latest deals that hit the sector. So, all eyes are on who will succumb to the urge to merge next, and American is being eyed as the next player.

According to a Forbes blog post, analysts from Morningstar believe that American Airlines “needs to make a big splash” to remain a player in an increasingly competitive market. The post continues:

“Once the industry’s largest carrier, [American Airlines] is now the third-largest…and any scale advantage it may have garnered is gone,” the Morningstar analysts write. “Ironically, AMR is at a substantial disadvantage, given that it steered clear of bankruptcy during the recession,” [Basili] Alukos and [Adam] Fleck say, pointing out that American’s labor rate is the industry’s highest on an equivalent basis.

So, who’s the right partner for American? The analysts at Morningstar are looking at JetBlue, especially given the latter’s “lighter cost structure.” Notes founder of Training the Street and former M&A investment banker Scott Rostan, “Three dominoes have fallen – Delta/Northwest, UAL/Continental and Southwest/AirTran.” He sees Alaska, Frontier and JetBlue as likely to make some noise.

[photo by Andrew Morrell Photography via Flickr]

Airlines getting scammed online, fighting back

by Tom Johansmeyer on

Airlines lose a boatload of cash – tens of millions of dollars a year – because of online fraud. Think about it: you pay for your pillow and to check a bag because some degenerate can’t bother to work for a living. The airlines are keeping their customers in mind (shockingly), though, and they’re fighting back. Better protection systems, increased staff and a higher priority for prevention are now on the agenda as carriers seek to protect their coffers.

The stakes are high, and airlines are exposed. A Deloitte UK survey conducted in 2009, with 50 U.S. and global airlines responding, report that 48 percent have seen increases in fraud year-over-year, with average losses of $2.4 million a year. Yet, it could be far, far worse. CyberSource and Airline Information conducted a poll and came to an estimated loss amount of $1.4 billion in 2008.

According to USA Today:

“The general feedback from everybody … is that they see it getting worse,” says Graham Pickett, partner in charge of aviation services for Deloitte UK, which conducted its survey for the International Association of Airline Internal Auditors. “The main driver has been … the Internet, and in particular credit card type bookings.”

Airlines have invested in protecting their profits over the past two years, especially the larger companies. Of course, they aren’t all that willing to talk about specific measures:

“Common sense on this issue limits a discussion of what we do to track, prevent and seek prosecution of such occurrences,” says Tim Smith, a spokesman for American Airlines. “We’re just not interested in providing a ‘how to’ lesson on the subject.”

The cyber-attack on airlines comes after online travel agencies, such as Orbitz, steeled their systems. For a while, they were the primary targets, with Orbitz, for example, getting spanked for millions of dollars a month by fraudsters.

The anti-fraud measures appear to be working. AirTran‘s team has reduced fraud losses to less than 1 percent of revenue, and Southwest says it has cut fraud by 73 percent.

How much does this matter? Think about all the small cuts you’ve had to deal with as a passenger. Every dollar matters to the airlines. Cutting fraud losses is just putting cash back in your pocket.

[photo by jepoirrier via Flickr]

Department of Transportation mulls expanded passenger delay rule

by Tom Johansmeyer on

The Department of Transportation is thinking about getting even stricter with the airlines. After implementing a rule last spring that involves heavy fines for carriers that keep passengers on a plane on the ground for at least three hours, the DOT is already considering expanding the scope to small airports and international flights.

MSNBC reports:

“The situation is much worse than the [official] statistics indicate,” said George Hobica of AirfareWatchdog.com. “We have to include every airport, every type of plane and every type of flight.”

Unsurprisingly, the International Air Transport Association isn’t crazy about Hobica’s approach, with spokesman Steve Lott saying, “If DOT goes ahead with this, they’re going to cause a much larger problem than the one they think they’re trying to solve.”

The final rule won’t come down until the spring, so there’s plenty of time for both sides to fight this out.

For the airline sector, this measure seems to be seen as a signal of something much worse – the prospect of broad regulation and constraints on its ability to operate effectively in the manner to which it has become accustomed.

For its part, DOT won’t announce a final rule until next spring, but you can expect a lot of others to weigh in before then. Hundreds of last-minute ideas were lobbed over to the DOT, according to MSNBC, addressing all kinds of passenger and watchdog hot buttons, such as: advertising, fee disclosure and compensation for those denied boarding. The big one, of course, was the issue of delays on the tarmac.

International carriers oppose the expanded rules – shocking, right?! Lott, taking the standard industry stance, raises the issue of cancellation instead of risking a $27,500 per passenger customer fine, telling MSNBC, “I don’t think getting stranded in a U.S. city for a day or more is necessarily helping passengers.”

This may be a risk, but the data tells the only reliable story:

Meanwhile, as the airline industry and consumer advocates press their points of view, two truths regarding tarmac delays remain. Delays of three hours or more for domestic flights are down substantially since the original rule went into effect – there were only three in July, says DOT, compared to 161 during the same period last year – and international flights do present a much more challenging scenario.

[photo by williamcho via Flickr]

China Airlines fined for price fixing

by Sean McLachlan on

China Airlines is the latest carrier to get fined for price-fixing air cargo rates. The Taiwan-based airline plead guilty and now faces a $40 million fine. Northwest Airlines has also plead guilty.

A total of 18 airlines have been snared by the Department of Justice in an ongoing investigation. Eight airline executives have also been charged. The Department of Justice has imposed a total of $1.6 billion in fines and given four executives jail time for a conspiracy that reaches back to early 2000. China Airlines was conspiring with other airlines to fix cargo rates to and from the United States, a violation of antitrust laws. Rates are supposed to be subject to the free market, but the airlines secretly agreed to set a rate in order to maximize profits.

For a complete list of the airlines and executives involved, click here.