Travel&Vacation

With the recent proliferation of new and higher fees, travelers could be forgiven for thinking that the airlines had exhausted every opportunity to “enhance” revenue with fees for this, that, and … well, for everything. But no! Delta today announced yet another fee, in the process establishing a new category of fee altogether: fuel surcharges for frequent flyer award tickets. Beginning on August 15, members of Delta’s SkyMiles program will be assessed fuel surcharges of $25 for domestic award tickets (including Canada) and $50 for international tickets. Yet another airline gouge, disingenuously rationalized as an offset to sky-high fuel costs? Quite the contrary. Whereas the recently imposed fees for checked bags and soft drinks and so on are effectively eternal—in other words,
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OK, enough doom and gloom. The airline industry is in crisis and catastrophe lies ahead. I get it. You get it. We all get it. And there isn’t much we can do about it. Except laugh. Indeed, the airlines have become the butt of a torrent of jokes, not all of which are suitable for publication in family-rated media. Among the airlines’ recent consumer-unfriendly moves, the bag fees in particular have become grist for the humor mill, inspiring the following from none other than Jay Leno on the Tonight Show (thanks to the Dallas Morning News’s Airline Biz Blog for posting the transcript): If you’ve been to the airport at all the last couple of weeks, you know the airlines are now charging people to check your bag. One bag, you have to check it now, and they charge you $15 to check a bag, 15
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When US Airways announced it would be imposing fees on anyone redeeming frequent flyer miles for an award ticket, it was shocking. A line had been crossed: Free tickets were no longer on the table. But it wasn’t a shock that US Airways would be the airline breaking faith with consumers. The new policy was altogether consistent with their charge-for-everything philosophy. And there was still the very real possibility that other airlines would resist the temptation to match US Airways’ move. Today’s announcement by American that, beginning June 21, AAdvantage members will be required to pay $5 for every award ticket issued is the real game-changer. The so-called Award Processing Fee applies to all award tickets, except those booked by Executive Platinum elite members and those already
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Our airlines, once world leaders, are now laggards in every category, including fleet age, service quality and international reputation. Fewer and fewer flights are on time. Airport congestion has become a staple of late-night comedy shows. An ever higher percentage of bags are lost or misplaced. Last-minute seats are harder and harder to find. Passenger complaints have skyrocketed. Airline service, by any standard, has become unacceptable. That grim assessment of the current state of the U.S. airline industry was delivered on Tuesday by one of the travel industry’s most respected figures, Bob Crandall, retired chief of American Airlines. (The full text of the speech, delivered at a Wings Club luncheon, is here.) There are few who would argue with Crandall’s evaluation. But his
(Read the full post about ‘Former American Airlines CEO on the airline mess: “We can’t stand much more.”’…)

Today we’re in news bite mode, considering three topics related to the current state of the airline industry. While not all the news is bad, the overall trend is a negative one. First, the bad news. The International Air Transport Association (IATA) has revised its projection for the airline industry’s financial performance. Based on the current price of fuel, IATA expects the industry to lose $2.3 billion during 2008. And it could get worse. According to Giovanni Bisignani, IATA’s Director General: “Despite the consensus of experts on the oil price, today’s oil prices make the $2.3 billion loss look optimistic. For every dollar that the oil price increases, we add $1.6 billion to costs. If we see $135 oil for the rest of the year, losses could be $6.1 billion.” As the losses increase, so
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Time will tell whether American’s new fee for checking a single bag generates the additional revenue the world’s largest airline is projecting. What we know already is that American’s move has generated a torrent of publicity, much of it negative. US News columnist Liz Wolgemuth, for example, cites the new policy as an example of airline mismanagement and asks, “So what’s your solution for American Airlines? Seriously.” It’s indicative of the low esteem the public has for the airlines in general, and American in particular, that the question arises at all, suggesting as it does that the problems confounding legions of competent, highly paid industry executives can be easily solved. The Onion takes a more explicitly sarcastic approach, using American’s new fee to tee up the following
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American dominated yesterday’s news cycle, drawing widespread media coverage of its newly announced fee for checked bags. While the bag fee garnered the bulk of the attention, it was just one of a number of measures alluded to in American’s announcement. And the larger picture depicted by American’s latest plan is a troubling one, both for American and for the industry overall. The centerpiece of American’s road map for surviving rising fuel costs and declining demand is an 11 to 12 percent cutback in flights in the fourth quarter of 2008. Double-digit capacity cuts from an airline which for years has taken undisguised pride in its position as the world’s largest airline? That’s huge. It suggests an unexpected level of desperation and financial vulnerability on American’s part. In
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Just yesterday, I predicted to a fellow travel writer that no other airlines would follow US Airways in awarding actual flown miles for shorter flights, rather than the industry-standard practice of awarding a minimum of 500 miles. US Airways announced its policy change on Valentine’s Day, with a May 1 effect date. At the time, I characterized the move as boneheaded, and went so far as to express cautious optimism that other carriers were too smart to follow suit. And two months later, that faith seemed justified. Unbeknownst to me, even as that conversation was taking place, United was matching US Airways, proving that there’s no percentage in betting on the airlines’ intelligence. Here’s the relevant portion of United’s announcement distributed yesterday via email: To ensure that
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While it will go unnoticed by most, tomorrow marks the end of an era in U.S. commercial aviation. On Wednesday, May 21, Herb Kelleher, one of Southwest’s co-founders and its very public face for more than 30 years, will step down as the airline’s chairman. Since 1971, Kelleher has piloted the prototypical low-cost carrier through good times and bad, prospering through airline deregulation, recessions, crises related to fuel prices and terrorism, and so on. Dozens of other discount airlines have come and gone in that time. Many of them assumed that Southwest’s low-cost, point-to-point model was simple, and could be easily copied as a blueprint for success and profitability. They were proven wrong. Under Kelleher’s leadership, Southwest has grown to become one of the largest U.S. airlines,
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The outlook for the Delta-Northwest and United-US Airways mergers? Ask the pilots. With the exception of the Department of Justice, which must ultimately give proposed mergers a clean bill of health on antitrust grounds, the pilot unions have as much to say as any of the many stakeholder groups. So critical was the pilots’ cooperation in the Delta-Northwest case that management made a special effort to secure the agreement of both unions before proceeding with other merger-related negotiations. When neither union proved receptive to the terms under which the workforces would be combined, the merger process was temporarily derailed. Delta was eventually able to reach agreement with its pilots, at which point the larger merger discussions were resumed, even without buy-in from Northwest’s
(Read the full post about ‘In airline mergers, pilots are in the driver’s seat’…)