Where Are You !!?

Sigh.

Yes - we know thatwe have been absent lately. But to tell you the truth - there is not much going on. Check that - there is - but it can all be boiled down to five math equations:

1) The price of oil is very high = Airlines in trouble;

2) Airlines are in trouble = Airlines cutting flights;

3) Airlines cutting flights = Airlines sell less tickets;

4) Airlines sell less tickets = Airlines charging fees;

5) Airlines charging fees = travellers are not happy.

That's really it. So we're not dogging it - we're just not seeing blog-worthy stuff to bore you with besides Carrier A cutting capacity, Carrier B is losing money, Carrier C now charging fees, etc. Sure, there's higher fares and bankruptcy speculation in the mix - but you can read that anywhere.

The only really interesting thing is the whole AA vs. Kayak kerfuffle - but we are putting a 3 week (subject to change without notice) blogging ban on it because we think it will be all resolved by then. Time will tell...

AA and the High Life!

FMV now has confirmed that there are some people at AA who are smart, rationale – and are willing to put some reasonable limits on the latest round of “fee-mania”.

According to the Travel Weekly (which, by the way, is updated daily):

American Airlines’ new checked baggage fee does not apply to duty-free liquor purchases in the U.S. Virgin Islands, according to Tourism Commissioner Beverly Nicholson-Doty. “It is a great relief and a show of good faith that American granted us this special waiver," Nicholson-Doty said.

Visitors to the USVI can bring home $1,600 worth of duty-free items, double that of other Caribbean destinations, including four liters of liquor (five if one liter is a product made in the U.S. Virgin Islands).

Think about that - up to $1,600 worth of booze. Welcome to the AA High Life!!



BONUS CONSUMER TIP:

Oh, wait - only 5 liters duty free allowed? That must be really good stuff! Let's run the numbers:

• USVI top shelf duty free booze purchased on AA: $1,600 for 5,000 mL is $0.32/mL.


• US Airways in-flight cocktail: $7 for 50 mL bottle is $0.14/mL or $700 for 5,000 mL.

If you're not too choosy - you're better off buying 100 mini-bottles on US and paying the $15 to check them.

US Goes Service Fee Nuclear

Bypassing GO! and collecting $200 for anything that is not nailed down, US Airways has introduced almost too many service fees and cost reduction efforts to list:

• $15 for the first bag. Well played - pioneers get the arrows, settlers get the land. AA has already taken a beating, United has already jumped on board, pretty safe move....


• New fees for certain NRSA employee guests. We get it, if you're dead weight and burning fuel, you're paying for it...


• Boosting the call-center and ATO ticketing fee to $25-$45. Get yourself on the information internet superhighway or pay a toll for the slow call center lane. Makes total sense....


• $2 for a can of soda onboard. Fine, whatever, buy it before you board...


• $7 for liquor onboard. Fine, makes sense, wha - - - WHAT?

This means it's $9 for a rum and coke? What kind of a world do we live in? US AIR - You just lost your right to sell the High Life, is what you did!! This has gone WAY too far now....

Victory for the Lowest Common Denominator

It turns out that UA has "matched" AA's $15 fee for the first checked bag. This to us was a matter of when, not if. We have to assume this charge will become the norm in the market (except for Southwest - who will really start to ramp up the PR machine on this fee now).

If so, then consumers don't really need to worry about cross-shopping confusion. The bag fee is just another necessary expense of travel, like airport parking, little tiny in-flight liquor bottles (hold the ice), and cigars at the duty-free shop...

BetaBlue: Still Free, Less Limited

There was about a 1" tall article in the WSJ this week explaining that JetBlue has expanded their Beta test of inflight Wi-Fi. WSJ subscription required, so link here instead. Here is why you can ignore this progress:

• The service is still only offered on one plane. Not a typo, one plane.


• The service now allows access to one web site, Amazon.com. Not a typo, one web site.

Here's why it's kind of interesting:

• E-mail now available via Gmail, Microsoft, and AOL


• One can conclude that the limited test to date has been successful, allowing [extremely nominal and arguably negligible] expansion of the pilot. Hopefully this means a full and worthwhile deployment may follow in our lifetimes.

We have to assume, given how much convention hotels charge for Internet access, many passengers would gladly pony up say $5/hour or $10-$20/flight (or more) for e-mail access. Corporate travel buyers may not be giddy about that prospect, but certainly Jetblue is. That aside, a nice round of applause for the PR person that padded their release count with this "news".

AA: The bag fee is no biggie

OK - this is the last AA Baggage Fee posting, we promise. But this one isn't our fault because AA is on the PR offensive and is contacting media outlets to explain "The Fee". Our headline paraphrases the situation, that this new bag fee really won't impact summer trAAvel. Per this story:

• They estimate that 25% of passengers will be affected by the $15 first bAAg fee;


• That's because (same story), 75% of summer travelers have already bought their tickets and thus won't be asked to pay the bag fee;
  
• Thus, travellers need not worry about being inconvenienced [oh, and please book on AA ASAP].

Makes perfect sense - until you start looking further:

- Back when the fee was announced, AA said that only half of their passengers check a bag. If true, then only 50% of the 25% percent (of passengers that haven't bought summer tickets yet) may pay the fee.

- Then remeber that a bunch of those pax are international and / or elite and / or bought a full price ticket - so no bag fee applies.

- Now figure that less people will be willing to check a bag because they now have to pay $15.

Now we're figuring maybe 5-10% of summer travellers on AA will pay this first bag fee? Hmmm..

At $15 a bAAg, that's still a lot of money. But AA is certainly getting a TON of bad publicity for this and they don't seem to know how to make a bad story go away. FMV's advice - just zip it already! Don't keep trying to explain it, don't keep trying to justify it, and for goodness sakes - DON'T try to tell your customers that it's actually a "bargain" !!

"The airline defended the fee, saying it was a bargain compared with the cost of shipping a 45-pound bag overnight on a package-delivery company. A spokesman for the airline said the cost of sending a bag from Dallas to New York would range from $150 to $230 or more."

FMV is also thinking of making this a paid site for our new customers for $10 a month. We figure it's a huge bargain compared to paying for online newspapers, CNN.com, espn.com and others! oh wait, those are free too....

Southwest = Complete Clarity

Once again, we have to hand it to Southwest. With the US majors struggling to boost revenue and cut costs, not a day goes by without a carrier looking like an anti-consumer enemy of the state in the news. Yet Southwest emerges with their value proposition as clear as ever: Basic air transportation at a decent price with no nickel-diming.

They drove it home with a full page ad in today's WSJ (and likely elsewhere) featuring a coupon (redeemable only on Southwest) reading "DON'T #$*!% ME OVER". The coupon is followed by a list of the various fees Southwest does not impose. The message is simple, and brilliant, and it will resonate not only with Johnny Lunchbucket trying to enjoy some R&R, but also with the coveted business crowd.

They also unveil a new tagline, "Fees Don't Fly With Us". Of course, neither do we (three letters for you, MDW). However, we can understand why people do. And we suspect many more will. Pass the peanuts.

DiAAling up the fees!

The big news today, AA has announced a $15 fee to check a bag. That's for every bag, starting at the first one checked. A second bag is still $25 to check. Yes, yes, some restrictions apply (e.g. Elites, strollers, international travellers, etc.). However, this is a huge step up in the ticky-tack approach we've seen in the market to date.

Consider some of the major ramifications:

• Travellers really can't cross-shop carriers now. This is effectively a $30-$80 fare increase for most leisure travellers that is opaque during shopping.


• Airport operations just got more complicated. It's usually quite a wait to check a bag, so we rarely do. Now every stooge in that line has to complete a payment transaction, too. Not to mention AA probably needs more cash in the drawers at the airport.


• Overhead bin space goes from endangered to extinct. No further explanation required here.


• Gate checking proliferates. This can't speed up the boarding process. Unless AA follows this jab with the haymaker of reduced carry-on size allowance.

This is a pretty strong move by AA. Are they committed if no one else follows? This will be a fun one to watch.

Though possibly not for travellers....

What's in a Name?

We have to wonder what’s going on in the world of naming travel companies. It just seems like there must be a master list of names, or that there is simply too many companies so that naming them is really really hard now.

The latest example is the new airlines from British Airlines called “Openskies”. Yes – it seems to be predicated on the “Open Skies Agreement” that frees up competition for international routes, but it also unfortunately shares the same name as the Navitaire Host system. Painful.

But it gets worse.

Even names that we thought were pretty unique have close twins. Check out the names of YAPTA (known for flight tracking) – and its bizarro-world twins called YATRA (online travel portal). And seriously – check out the logos - even those are similar!!

But it gets worse.

One of the original names WAS Bezurk, an Asian based Metasearcher– but they decided to rename themselves WeGo.com. Which is an awful name to switch to because there is already a WeGoLo.com, which is an European LCC meta. Looks like Bezurk just didn’t go low enough.

There is now TripAdvisor, TripConnect, TripIt, InsideTrip, TripDoor, and CTrip. It’s a complete marketing nightmare. Don't get us started on the fare names. Farelogix, FareCast, FareCompare, etc.

Where is the creativity? Now on the other hand, behold the name Fare Market Value. That's a beaut.

Insurance Against Bad Reporting

We all know that a huge Ancillary Revenue stream for airlines is “Travel Insurance”. Although FMV will admit that we don’t know anyone that actually buys it – we are repeatedly told by airlines that everyone does.
A NY Times article last week explained that people who buy travel insurance tend to think that they are then less likely to lose their bags, get sick or have an accident. The psychology of buying insurance is fairly interesting, but then the NY Times had go and mess it up:

“These results presumably come as no surprise to marketers of travel insurance, which is now purchased by half of American leisure travelers — a fivefold increase since 2001, according to the United States Travel Insurance Association.”

Huh? *HALF* of leisure travelers now purchase travel insurance?? That sounds pretty unbelievable that so many travelers would add this premium to their vacation travel costs. As a result, we decided to do our own research at the US TIA website:

“Utilizing industry and government statistics we estimate that approximately half of Americans who took a cruise, tour or international leisure air trip in 2005 purchased a per trip insurance policy,” notes Brad Finkle, USTIA president.

AHHHH - That still sounds high to FMV, but a little more believable. It's not all leisure travellers, it's the subset purchasing cruises, tours, and international. It's especially logical for tours - because in some cases the cost of travel insurance is actually baked into the package price. However, FMV feels vindicated that the NY times was wrong. We maintain it's going to be a stretch to get half the hapless rubes on the redeye from Vegas to buy insurance. Unless the dealer's showing an ace, of course.