More Than Points

The DOT has released some figures regarding air travel delays during the busy summer travel season.

• John F Kennedy International (JFK) in New York was worst among North America’s 40 busiest airports, with les than 55% of flights arriving on-time
• LaGuardia (LGA), also in New York, was the 2nd worst with 58% on-time arrival rate
• Rounding out the NY trio was Newark International (EWR) with a 60% on-time arrival rate
• For reference, the average at all other major airports was 74%
• JetBlue was the worst performing airline in July with less than 70% on-time arrival rate
• American Airlines was worst in June, with only 58% on-time arrivals

So, if you plan your travel around avoiding delays, then next year consider flying to Salt Lake City (on Southwest Airlines). SLC had nearly an 86% on-time performance, and as usual Southwest was the major carrier with the best on-time performance. Here is the full report

Delta, following the lead of its competitors, has announced plans to rollout wireless broadband internet access on all its domestic mainline fleet by mid-2009.

"Delta is joining with Aircell®, a 17-year leader in airborne communications for business and commercial aviation, to install the company’s Mobile Broadband Network on the carrier’s domestic fleet. The system, Gogo™, will enable Delta customers traveling with Wi-Fi enabled devices, such as laptops, smartphones and PDAs, to access the Internet, corporate VPNs, corporate and personal e-mail accounts, as well as SMS texting and instant messaging services.  Gogo will be available to customers for a flat fee of $9.95 on flights of three hours or less, and $12.95 on flights of more than three hours.
“Delta remains committed to providing a travel experience that maximizes the time our customers spend with us onboard by offering them even more productivity options,” said Richard Anderson, Delta’s chief executive officer. ”Our customers asked for in-flight connectivity, and we’re responding by rolling out the most extensive Wi-Fi network in the sky.  Beginning this fall, our passengers will have the ability to stay connected when they travel with us throughout the continental U.S.”

Gogo will be offered initially on Delta’s fleet of 133 MD88/90 aircraft and will rapidly expand to the remaining domestic fleet of more than 200 Boeing 737, 757 and 767-300 aircraft throughout the first half of 2009. The airline expects to have more than 330 aircraft complete by summer 2009.  The full fleet agreement between Aircell and Delta will provide a consistent, convenient experience for customers traveling on the airline who wish to use the Gogo Internet service."

Here is the original article from Delta’s News Room. By the way, American has already started this service on their 767-200 fleet; here is a review of the service by WSJ reporter Walt Mossberg.

The Travel Industry Association commissioned a recent study on the state of the travel industry. Roger Dow, president and CEO of the Washington, D.C.-based association, said the research "should be a wake-up call to America’s policy leaders that the time for meaningful air system reform is now." "The air travel crisis has hit a tipping point – more than 100,000 travelers each day are voting with their wallets by choosing to avoid trips," Dow said in a statement.

From this study, we gleaned some very interesting nuggets worth sharing

• Nearly half of American air travelers would fly more if it were easier, and more than one-fourth said they skipped at least one air trip in the past 12 months because of the hassles involved.
• The 41 million forgone trips cost the travel industry $18.1 billion – including $9.4 billion to airlines and $5.6 billion to hotels.
• The lost tax revenue to federal, state and local authorities equals $4.2 billion in the past 12 months.
• When 28% of air travelers avoided an average of 1.3 trips each, that resulted in 29 million leisure trips and 12 million business trips not being taken
• 44% of the air travelers surveyed said they would take more air trips each year if airport hassles could be reduced or eliminated
• People who flew more than five times in the past 12 months were more likely to describe air travel as frustrating, at 52 percent, compared with 33 percent of infrequent travelers, defined as people who flew one or two round trips in 12 months, according to the survey.
• More than half of respondents said either efficiency or reliability is getting worse, 60 percent said the system is deteriorating, and 56 percent said flying is the "bad" or "worst" part of travel – though 62 percent said air travel security is improving

I’m surprised that only half of flyers find air travel frustrating. When was the last time you ran into someone who enjoyed their flight?

For the 2nd time since the TSA implemented it’s "No-Fly" list, I found myself on the list of flyers prohibited from checking in because I present a potential threat to national security. True? Doubtful. Here are my travel credentials: 1K flier with United Mileage Plus, Gold Medallion status with Delta, Silver OnePass with Continental, Platinum with Marriott, etc. Have I painted a sufficient picture? Needless to say, the frequency of my travel should remove me from this list immediately.

The most interesting thing is that I was placed on the list within days of receiving clearance for the Fly Clear card. If you’re not familiar with this program, it requires a significant background check by the TSA, so you’d think it would be safe for me to get on an airplane. Needless to say, for about 2 months I was unable to check in online and had to be manually cleared for check-in before boarding every flight.

Want to avoid being on the list? Here are a few steps you can take

1. Check Whether Your Name Appears on the OFAC Specially Designated Nationals List
2. Check Your Credit Reports For OFAC Alerts
3. Check Your Name for Terrorist Matches at S3 Matching Technologies’ TeraMatch
4. Use the DHS TRIP Program to Resolve Appropriate Travel Related Issues
5. Contact an Attorney, If You are Placed on a No Fly List in Error
6. Get Up to Date Information
7. Vote For Candidates Who Support Watchlist and Civil Rights Safeguards

My approach was to file a complaint with the Department of Homeland Security TRIP program (#4). This worked and now I’m free to check in online and fly the friendly(?) skies again.

Here are a few celebrities and unlikely terrorists that have also been detained: Nelson Mandela, Sen. Ted Kennedy (D-MA), US Rep. Don Young (D-AK), US Rep John Lewis (D-GA), singer Cat Stevens.

You can find the full text of the article here

In other words, they are reducing costs at your expense.

What This Means to You:

• Less planes
• Less airline staff
• First checked bag fee $15
• In-flight beverage "purchase" program
• No more bonus miles with Preferred status

“US Airways is also eliminating its bonus miles program for Preferred status Dividend Miles members. Preferred members currently receive mileage bonuses based on their status level. The Preferred bonus program will be discontinued for tickets purchased on/after Aug. 6, 2008.”

• Increased fees for booked at airport or through call centers
• "Redemption Processing Fee" for using Dividend Miles

I hate being the bearer of bad news.

This is just another sign, airlines are moving towards an "a la carte" menu to extract additional dollars from their customers.

In business school, this approach involves extracting additional customer surplus to maximize company profits.  By further segmenting the flying population, the airlines can extract additional surplus which it was giving away on a first come, first serve basis.  With oil prices at a record high, airplanes are competing to stay in business, not steal away customers from other airlines.  By cutting down on flight schedules, seat capacity is now in short supply so there is no concern about flying empty airplanes.  In a market with limited competition, the customer will pay the price. 

Just when you thought it was over…

Here’s a few choice quotes from the article:

"…the combination of reducing seating capacity within the airline’s fleet, moving toward an a la carte system of charging fliers for such things as checking bags, eating and drinking, along with expense reductions, will save the Tempe, Ariz.-based carrier $500 million annually."

"In addition to charges for baggage and refreshments, US Airways has raised the $15 charge to book flights through its call center to $25 for domestic flights and $35 for international flights. The $20 service fee to buy a ticket at an airport or city ticketing office increases to $35 for domestic travel and $45 for international travel."

"Most airlines except Southwest have announced capacity and personnel reductions, and a la carte charges."

"Fare-paying now looks like the customer is just paying the base price for the flight…You want doors – that’s going to cost you more."

"Right now, you’re dealing with a panicked industry which, after fuel costs, is making about 30 bucks a seat…If they can get an extra $10 out of a passenger, that’s a 33 percent increase. The industry already has sold most of its product for July and August below cost."

Don’t hold your breath - you can expect the other airlines to follow shortly.

If you haven’t heard already, you’re probably not a Northwest or Delta flyer. Subject to regulatory review, Delta and Northwest Airlines are merging. The new (old) name will be called Delta Air Lines. The details can be read from the following email sent out to a Northwest WorldPerks member.

Letter to a Northwest WorldPerks Member:

Dear John Smith,

As a valued Northwest Airlines customer and WorldPerks&reg member, I wanted you to be among the first to hear that we have announced a merger with Delta Air Lines. Subject to regulatory review, our two airlines are joining forces to create America’s premier global airline which, upon closing of the merger, will be called Delta Air Lines.

By combining Northwest and Delta, we are building a stronger, more resilient airline that will be a leader in providing customer service and value. Our combined airline will offer unprecedented access to the world, enabling you to fly to more destinations, have more flight choices and more ways than ever to earn and redeem your WorldPerks miles.

You can be assured that your WorldPerks miles and Elite program status will be unaffected by this merger. In addition, you can continue to earn miles through use of partners like WorldPerks Visa&reg. And once the new Delta Air Lines emerges you can look forward to being a part of the world’s largest frequent flyer program with expanded benefits.

The combined Delta Air Lines will serve more U.S. communities and connect to more worldwide destinations than any global airline. Our hubs – both Delta’s and Northwest’s – will be retained and enhanced. We will be the only U.S. airline to offer direct service from the United States to all of the world’s major business centers in Asia, Latin America, Europe, Africa and around North America.

Both airlines bring tremendous strengths to this new partnership. Our complementary service networks form an end-to-end system that is truly greater than the sum of its parts. This is a merger by addition, not subtraction, which means all of our hubs – both Northwest’s and Delta’s – will be retained. In addition, building on both airlines’ proud, decades-long history of serving small communities, we plan to enhance global connections to small towns and cities across the U.S.

All of these positive benefits of our combination mean that we can:

• Offer a true global network where our customers will be able to fly to more destinations, have more schedule options and more opportunities to earn and redeem frequent flyer miles in what will become the world’s best and most comprehensive frequent flyer program.
• Continue to serve our current roster of destinations and to maintain our hubs in Atlanta, Cincinnati, Detroit, Memphis, Minneapolis/St. Paul, New York, Salt Lake City, Amsterdam and Tokyo.
• Improve our customers’ travel experience, through new products and services including enhanced self-service tools, better bag-tracking technology, more onboard services, including more meal options, new seats and refurbished cabins. While we work to secure approval of our merger, which may take up to 6 to 8 months, it will be business-as-usual at both airlines. We will continue to operate as independent airlines and the people of Northwest will remain focused on providing you with the very best in safe, reliable and convenient air travel. At the same time, both airlines will be planning for a seamless integration of our two airlines, one that delivers to you the enhanced benefits that will earn – and retain – your preference.

As we work through this process, we will keep you informed at every step along the way. Thank you for your business and we look forward to serving you on your next Northwest flight.

Sincerely,

Bob Soukup Managing Director, WorldPerks

There you have it - straight from the horse’s mouth.

If you fly American, you may appreciate the new feature. Southwest has had this feature for as long as I remember, but imitation is the highest form of flattery.

The link takes you to a flash demo of the upcoming feature.

That’s what I’m hearing. This comes on the heels of a USAir hostile take-over bid for Delta Airlines last month for $8.7 billion.

From a business viewpoint, it looks like it makes sense, since each airline is focused on different regions, although they share many of the same routes, especially between each other’s hubs.

Chicago-based United is the nation’s fourth-largest carrier in terms of passenger traffic and is strong in the Midwest and Asia. It has major hubs in Denver, Chicago and at Washington’s Dulles International Airport. Its parent company, UAL, has a market capitalization of about $4.8 billion.

Houston-based Continental is the nation’s sixth-largest carrier and has major hubs in Houston, Cleveland and Newark. It has strong links to Europe, the Caribbean and Latin America. It has a market capitalization of about $3.9 billion.

Nothing is set in stone, and there are a few things standing in the way such as:

• Approval by federal regulators
• An agreement between Northwest Airlines and Continental that gives Northwest the means to block a merger

What does this mean?

Well for the carrier employees, it likely means layoffs as duplicate flights are cut.

For carriers, it means lower overhead costs, which ideally would be passed onto the customer. Logically-speaking, many people would believe less competition means higher prices, but I point you to an article on a study done in 2000 specifically around airline mergers.

The study by the Economic Strategy Institute, a free market-oriented public policy research group, analyzed 322 individual markets currently served by the six carriers with the largest networks.

Assuming consolidation into three carriers, it found competition would soar 74 percent among markets with access to two or more major metropolitan centres, or “hubs,” while decreasing in 13 percent of cases and remaining unchanged in another 13 percent.

Who knows what it means to frequent fliers – my first guess is our status and the our points would be devalued as consolidation takes place. We’re talking more frequent fliers on less flights and more points being spent on less flights. On the flip side, it also opens up the possibility of more destinations so who knows?

I guess we’ll find out, shortly.

One small catch – you need to fly in/out of Chicago O’hare (ORD). The promotion can be found here.

Promotion Summary

Trips Taken:

• 1st Trip = 5000 Bonus Miles
• 2nd Trip = 10,000 Bonus Miles
• 3rd Trip = 25,000 Bonus Miles

Here’s all you need to do to receive your bonus miles:

• Book your trip between November 16, 2006 and January 31, 2007
• Register prior to travel and before December 31, 2006 with promotion code FLY06.
• Travel between November 16, 2006 and January 31, 2007 †

With just three trips, you’ll earn enough miles for a free* MileSAAverSM award ticket for travel anywhere we fly within the continental U.S. and Canada! Use your award ticket to explore the charm of Nashville, Savannah or Key West. Or enjoy the excitement of cities like: Boston, Denver, Los Angeles, Miami, New York, Phoenix, San Francisco or Washington D.C. You decide where your miles will take you.

*Standard AAdvantage award terms and conditions apply. Any taxes and fees associated with award travel are the responsibility of the passenger and/or the AAdvantage member. Seats for award travel are subject to capacity controls and may not be available on all flights.

† First qualifying round trip must be completed by December 31, 2006, in order to be eligible for this bonus offer.

Enjoy.