Extra seat charges: big bias or svelte snobbery?

by Tom Johansmeyer on

As airlines are scrambling for any shred of extra revenue they can find, some policies are getting more attention than others. The so-called “fat passenger policies,” which govern the accommodation of passengers who require more than one seat, have attracted the ire of the NAAFA. Never heard of it? It’s a new one on me, too: the National Association to Advance Fat Acceptance. On the other hand, passengers who pay for one seat and use only one seat wonder why the hell larger passengers should consume two of the airlines’ fundamental units for sale (i.e., the use of a seat on a plane) for the price of one.

Here’s the perspective that’s been lacking: revenue per available seat mile (RASM). Check “Making Sense of the Airline Industry” for a deeper look at how this measure works. Then, come back here and think about what it means for the sale of seats on planes. Cash-strapped airlines are forced to give up revenue.

United Airlines seems to have found a way to balance both sides of this argument. If there is an extra seat available on a flight, a passenger who can’t fit into one seat will be given the extra at no charge. On full flights, larger passengers can wait for a later one that has space and can occupy two seats at no extra charge.

Southwest, Alaska Airlines and Continental have policies, as well. Though the specifics vary, the armrest is pretty much the decision maker. If you can’t put it down, you can’t occupy only one seat. Southwest and Alaska Airlines require the purchase of an extra seat but will refund that part of the fare if the flight is not full. Continental, on the other hand, won’t refund the difference. In fact, the airline requires the purchase of an additional seat on each segment flown at a “hefty day-of-travel rate [read the original article, “hefty” was not my word, though I applaud the writer for being gutsy].”

JetBlue has no formal policy and claims that its larger seat size is already a step in the right direction. Delta and Northwest say that they’ll do what they can to accommodate larger passengers, but a purchase may be necessary. Virgin America asks that the big folks buy two, with one refunded if there’s an empty on the flight.

You can get my thoughts after the jump.At the end of the day, there is only one point that matters. Airlines are businesses run in the interests of their shareholders. Since most of these businesses are struggling, they need to do what they can to maximize revenue. If that means charging for two seats for passengers who can’t fit in one, so be it. If an airline feels that that’s a public relations nightmare and would rather accept the degradation RASM … it’s up to them.

It’s a numbers game – and not the numbers on the scale.

I’ve always been a believer in “pay to play.” You want a seat? Cough up. You want two? Cough up twice as much. “Buffet-style” air travel – in which you pay once and take as much as you want – simply doesn’t work.

And, I respect airlines for addressing the rights of all passengers. Everyone has a “sitting next to a fat guy” story. Yes, some are really just infantile bitching because planes are generally cramped. But, some are legitimate. A larger passenger who wants to save a few extra dollars and can’t put the armrest down is having his ticket subsidized by mine. That has an effective financial impact on me, and it’s unacceptable.

It’s not an issue of weight. However you look at it, the concern is financial. Take the word “fat” out of the equation, and it’s much easier to solve.

Making sense of the airline industry

by Tom Johansmeyer on

The situation is currently grim for airlines, having gone from “bad in January to ugly by March,” according to USA Today, mirroring the U.S. economy as a whole. But, some feel that the worst is behind us. At the same time, a decline in business traveler traffic may suggest that we have a long way to go.

That’s why I love USA Today … two perspectives for the price of one!

Let’s make one thing perfectly clear: airline executives are unanimous in refusing to state that a recovery has begun. Keep in mind that CEOs have to be incredibly careful whenever they speak. Something that’s interpreted as a prediction could be disastrous later. A prediction becomes a goal to be met, and failure to do so can have harsh implications on the stock price.

In case you don’t know, that means real people lose real money.

That being said, Delta, American and Continental executives allowed themselves some modest hope, suggesting that “at least traffic levels aren’t collapsing the way they did last year.”

For now, there’s little to celebrate aside from the hope that we’ve hit bottom. Continental’s revenue per available seat mile (RASM) fell 4.8 percent in January, 11.5 percent in February and 20 percent in March. April is likely to be down 13 percent to 15 percent.

RASM basically tells you how much revenue an airline pulls in for every seat flown. Let’s make it easy: assume that a plane has two seats and flies 100 miles. One passenger pays $200 and the other pays $100. The first passenger pays $2 per mile, and the other pays $1 per mile. It averages out to revenue of $1.50 per available seat mile.

Now, assume that we have a third seat … and it’s empty. So, we’re working with $2, $1 and $0. That’s RASM of $1 (as opposed to the $1.50 above).

Figuring this out for an entire airline for a full month is obviously much more complicated, but you can probably see the value in doing so. It’s a way to figure out just how productive every seat on every plane is – even the empties.

Delta’s perspective is that things aren’t getting worse right now, even if they aren’t good, and American believes that it’s too early to tell.

The decline in business travel is seen as a big part of the problem. Business travelers tend to spend a lot of time in planes, and they don’t always get the lead time to buy tickets (or prepare their families for long absences) that they’d like. As a result, they often pay more for tickets than vacationers, who have the luxury of planning ahead.

To keep expenses down, many companies are trying to cut their spending on travel, opting for other collaboration alternatives. While face-to-face meetings are nice, they tend to be a lot more expensive than webinars and conference calls. When you have to squeeze the budget, travel is an easy place to cut spending a bit.

I saw this firsthand during the last economic downturn (following the collapse of the “dotcom economy” and the terror attacks of September 11, 2001). I was a management consultant and flew every week. While my clients were willing to foot the bill for weekly travel, I found myself under a lot more pressure to find cheaper flights, stay at hotels that were less expensive (and less convenient) and take a taxi to the airport instead of driving and putting my car in the lot for a week.

Though business travel can be cut, it won’t go away completely. There will always be a need. While many cite conventions as a source of business travel, you’re more likely to run into weekly grind travelers at airports in this economic environment. Catch the first flight out of a major airport on a Monday morning, and you’ll see business and business casual attire, laptops clutched and weary looks. These people make the same run every week, returning home on a late flight Thursday or Friday. When you have a lot of people dropping $500 a week on flights – each doing it 40 times a year or more each – the airlines benefit. When they slow down, the airlines feel pain.

To compensate, as you’ve seen here on Gadling, airlines are coming up with more fees – and they’re not all as crazy as the Ryanair pay-to-pee proposal. Baggage charges seem to be most common, with Delta hitting up passengers for $50 to check a second bag on international flights (starting July 1, 2009). The airline hopes this will generate another $100 million this year.

Delta’s not innovating, here; it’s just the most recent.

The need is salient, given recently released first quarter financial results. JetBlue and AirTran stood out by turning profits ($12 million and $28 million, respectively), largely because the cost of jet fuel dropped. Take that out of the equation, and AirTran’s 31 percent revenue decline would have had a greater impact.

Meanwhile, US Airways posted a $103 million loss. Alaska Air Group lost $19.2 million for the quarter. Delta, American and United showed substantial losses, as well.

Leisure travel isn’t the primary driver, as fare deals have kept this section of the market fairly active, if less profitable. It’s the business travelers who are straining airline financial performance. It will take a turn in the economy to solve this problem. Any measures available to the airlines are more likely to slow the bleeding than repair the situation as a whole.

When will that happen?

Like the airline CEOs, I’m not crazy about making predictions, as my success is shaped more by luck than clairvoyance. But, I’ll take a small step out on a limb. Businesses will green light travel increases when they see an upside to doing so. When sales teams encounter big opportunities, they will be able to make the case to fly. This means that a client has to be ready to write a big check. Also, startup activity will result in the use of venture capital funding to hop on planes with the hope of pitching new ideas to clients interested in growing their businesses or realizing a cost savings.

You won’t notice it at first; these trends take a while to gain steam. Success builds upon success, with each win leading to several new opportunities and a willingness to fund travel for them.

Am I willing to throw a date or timeframe out there?

No way!

We’ll all have to wait and see.

Angry rush to cockpit forces Delta flight to land in Boston, not Tel Aviv

by Tom Johansmeyer on

When a Delta Airlines flight left New York for Tel Aviv, the passengers didn’t think they’d be stopping in Boston. After all, though it’s on the way, it’s a bit close to warrant needing to stretch your legs. An angry passenger rushing the cockpit, though, tends to make an emergency landing prudent.

Late last night, Delta Flight 86 boasted 206 passengers – 205 of which were perfectly reasonable. A 22-year-old Israeli man ran to the front of the plane and started to pound on the cockpit door. Passengers and crew put the smack down and subdued the nut-job until landing.

Now, the other passengers are stuck in Boston while an investigation is being conducted and luggage is checked.

As if flying weren’t irritating enough these days …

Wrong switch, gets Delta fighter jet escort

by Tom Johansmeyer on

Don’t slip!

A Delta Airlines pilot accidentally activated a hijacking alert on a flight from New York to Tel Aviv. As a result, Israeli fighter jets were scrambled to escort the plane “safely” to Ben Gurion Airport.

The fighter jets lingered briefly over the airliner and its 100 passengers … ultimately for no reason. Then, they escorted the plane – and probably a confused flight crew – into Tel Aviv. A technical malfunction, apparently, kept the pilot from communicating with the airport’s tower.

Nobody was hurt in this bizarre event, according to Israeli transportation ministry official Dani Shenar, and an investigation will be launched.

Uniform changes, soft drinks wait for Delta and NWA

by Tom Johansmeyer on

This week, Northwest employees will get some new threads. Delta has announced that the vanquished will don the mother ship’s uniforms this week, calling it “one of the first outwardly visible signs that the two airlines are now one.” More important than the employees’ new sartorial splendor, free snacks are coming back to all flights!

But, one important question remains: Coke or Pepsi? Delta and Coca-Cola, both Atlanta-based, have had a near-marriage for more than 75 years. So, does Delta want some strange, or will it honor its long-term commitment? Northwest currently serves Pepsi products on its flights.

According to a Delta mouthpiece, it could take a while to come to a landing on the “beverage strategy.” So, for now: same duds, different suds.

10 tips for smarter flying


5 steps to smarter packing