Now Boarding......

FMV is not sure what's going on here - but we flew United last night and it looks like they had the "First Day of the New Program Jitters"

The gate agents were all over the place and therefore they thought the new program allowed Premier Exec AND Premier members as part of Boarding Area 0.5. Question: Who else was left? Nobody. The scene was such that Boarding Area 0.5 was simply the same as previous Boarding Area 1.

We're told that other flights did it correctly, and only Premier Execs were part of the 0.5 - but we also had this thought. By making the Premier Executive benefit so public - you also make the Premier benefits less valuable since you took away something they previously had....

Boarding Zone 0.5 ??

FMV recently recieved the following email from United:

Dear FMV: Beginning November 12, our Premier Executive members and Star Alliance Gold guests will board before Seating Area 1 customers through the Economy Lane.

The new boarding order will be as follows: Global Services, 1K and customers sitting in United First will continue to board first through the Red Carpet Lane, followed by our United Business customers. Our Premier Executive and Star Alliance Gold members will then be invited to board.

After all of our most-valued guests are on board and getting settled, the regular boarding process of seating areas 1 through 4 will begin.

Previously, there wasn't a ton of obvious difference between Premier Execs (50,000 miles flown) and "regular" Premier (25,000 miles) members. Yes, you had priority for waitlists and maybe upgrades, you could book exit row seats, and you had the nebulous Star Gold benefits - but it wasn't very obvious. Especially for international travellers. On the contrary, Seating Area 0.5 changes this and makes a very public benefit.

Most airlines are pretty blatant that their elite fliers matter more than the causal flier. On one hand, it causes some bitterness, on the other hand FMV is Premier Exec so YAY !!

Fed Ex Airlines

WAAYYY back in May, 2007 - FMV had this thought:

FMV considers [the idea of] carriers partnering with the baggage shippers to provide more customer options and deflect complaints about baggage fees.

Well - it's come true courtesy of United, who introduces their "Door-to-Door Baggage" Program:

Stop lugging your luggage around. Instead, send it ahead with Door-to-Door Baggage. Purchase this service at united.com, and FedEx will pick up your baggage from your home or office and ship it directly to your destination. Or if you prefer, you can drop off your baggage at a FedEx Office location or any other FedEx authorized shipping center.

The unique feature about this program is that United has tied FedEx into their passengers' itineraries. Once you sign in to your United.com account and press the "Door to Door Baggage" link - the site automatically starts the FedEx process using the dates and cities of your itinerary.

The kicker is the boastful tagline:

United is the first airline to save you time and money with this simple and convenient service.

Save you money?!! How much do they charge for this?? Starting at $149 !! (vs. $15 for a first bag fee??). Hey, thanks for the money savings United !

Hence, this program isn't really about cash savings. It's about time savings. This is for the guy that kind of wanted to send his golf clubs ahead to avoid the hassle of checked bags. He also didn't trust the airine not to lose his clubs. The same logic could hold for business people who don't want to shlep business materials and simply say "eh, I'll just ship it and expense it".

However, the real winner here is FedEx, who picks up some highly qualified leads over its competitors. If UA can skim some of that value, and spin it as a positive for their customers, good for them. It's time to fly.

Poke in the Eye (4 Travel)

We were at the Eye 4 Travel North American Conference – that now combines 3 conferences into one: Distribution / Ancillary Revenue / Revenue Management. Man has this conference really taken a hit. Fairly brutal in terms of content (weak), speakers (boring) and attendance (low), and there is only ONE thing that saves it from being a complete waste:

VEGAS BABY !!

By our definition – any trip to Vegas is time well spent. And since the craps tables were kind to us this year, we’d probably categorize this as a great trip overall – even if the conference was pretty much a waste.

Basically – the morning has only two items of note, both from Frontier Airlines:

Jim Young – VP Distribution had some actual numbers regarding:

1) Travel insurance. Finally !! It looks like only 0.5% of travelers buy insurance if it outside the booking path, and about 5% if the option to purchase travel insurance in within the booking path.

Finally – some real hard numbers that make sense. 1 in 20 buy insurance – those are numbers we can believe in.

2) Also – Frontier says that 50% of travellers check in a first bag, and 5% check in a second bag (which is down from 11% since they instituted a fee).

Young was asked, if oil continues to go down – will the baggage fees stay? While noting that carriers always have to keep an eye on competition, he believes fees are here to stay now that they are introduced to the market, are big money for airlines, and seem to be accepted as a cost of doing travelling now. Can't beat honesty ! We concur. No one pulls a legit revenue stream (except maybe Blockbuster late fees).

CWT and UA Make Nice Nice

This is mostly to close up an ealier post and let everyone know that CWT and United has once again agreed to be friends. From the Travel Weekly (which is updated daily):

"Carlson Wagonlit Travel and United Airlines have come to terms on a preferred-supplier agreement...CWT spokeswoman Shannon Coughlin said no further comments or deails would be released...."


Sheesh - they made their spats so public, but then take their make up private. How's a blog supposed to make a living??

Afraid of Travelling

FMV gets really irked when companies market fear in order to sell their products. Travel insurance seems to do this – which may explain some of its new-found popularity. Well, as we’ve said – we’re constantly told it’s popular even though we don’t know anone that really buys it reguarly.

Eye 4 Travel (yes, we know it’s a PR wire) had this bit of advertising astroturf (it appears to be a real grass roots story, but it’s fake once you really examine it) that had the shocking, just shocking headline:

"[R]esearch has indicated that one in four Brits (24 percent) still plan to go on holiday this year without travel insurance.

Chris Rolland, Head [of] American Express Insurance Services, said, "As the cost of living rises and there is less money left over at the end of each month, our research shows that one in four Brits are struggling to meet the cost of holiday insurance. If it is a case of people cutting back on travel insurance in order to afford their holidays then perhaps they should think twice before booking. Should something happen, the current economic market means that the last thing Brits need now is an unexpected bill."


A few notes:

1) “Head” is a sucky title for Mr. Rolland

2) This “article” basically says that 76% of Briton’s buy travel insurance on a regular basis. Can that be?

3) We can’t seriously believe that American Express is saying “if you can’t buy the travel insurance, you shouldn’t really be travelling…” Way to advertise fear Amex !!

Interestingly - the article goes on to mention that the "research" was performed by a group called Yougov. Well, we did some digging and found this story:

"A May [2007] survey for Norwich Union, conducted by YouGov, found that a quarter of all British travellers go without insurance. The study also found that while travellers believe that lost baggage is the main reason why they might need to make a claim, in fact medical emergency and cancellation are far bigger risks. And those can be a lot more costly than a missing suitcase."

Hmmmm - Same study performed a year earlier with same results... Great work if you can get it.

Consumers Redeeming Miles for Travel

A woman named Mary Jane Credeur wrote a really nice article for Bloomberg this week that was published in many papers (Greetings from Asbury Park). It explains that consumers are burning miles for travel more than in the past, as evidenced by growing redemption tickets. Awards become more attractive as fares have increased. Further, banks are buying and giving away miles like drunken sailers. [Ed. note - Have we learned nothing from the mortgage crisis?] IdeaWorks is cited as claiming that half of all miles earned are not from flying.

We thought it was interesting to compare the reported increases in redemptions with the carriers' published traffic statistics:


Pretty clearly the redemptions are up much more than capacity, load factor, and passengers carried. Taken as a whole, this table is a roundabout way of confirming that carriers were selling fewer tickets in the first half of the year (ARC transactions were down 3.9% in 1H08). Hence the flurry of capacity cuts announced for 2H08 and 2009.

Interestingly, it also suggests how important banks' money from buying miles is for the overall airline revenue eco-system. If consumers won't directly buy air travel; let them do it indirectly via credit card purchases! As such, we'd like to see carriers continue to invest in tools that make it easier to redeem miles. And get a little more creative about how they manage the "price" of a ticket in miles. We'd also like to see a Cubs vs. White Sox World Series...but there's only so much an airline can do.

CWT QSI on UA ASAP !

According the an article in TravelWeekly.com (which comes out daily by the way) - It looks like CWT is having a spat with United and "continues to move market share away from the carrier"

The Beat is also on it saying that UA canceled its U.S. CWT agreement in June, so CWT in turn cancelled its International agreement - and they have not come to terms on a commission structure.

As a result - "[CWT] have shifted a substantial amount of traffic away from United... We are still shifting business away from United when all else is equal. Where there are markets served by United as well as other major carriers, and scheduling and pricing is as good for our clients, we have taken business away from United in favor of primarily one of the other big four U.S. carriers."

Overall - this seems pretty crazy. We know UA is taking aim at their huge commission costs, but UA also relies very heavily on agency corporate business. CWT being the biggest out there - seems like a tough fight. In addition, IF it's true that they are successfully moving business away from UA - it seems like this will only get worse once CWT starts to broaden the reach of online Symphonie initiatives and can easily automate rules to their clients.

UA used to place a huge emphasis on the QSI metric - the "Quality of Service" that is the marker for how much any agency should be selling on any route. We wonder if they have moved away from this - or if CWT really wasn't selling much of UA to begin with...

We're Back - And We Remember

We've been pretty silent the last few months - Combination of our day job really hitting us hard, and the fact that it was a great summer weather in Chicago. If you're from Chicago - you know you have to really maximize the summers in order to slog it through the 8 months of crappy winter hits.

However, FMV had a really interesting conversation the other day that we thought we should share.

We were flying on Weds (Sept. 10th) and sat next to a older couple who kindly asked "do you fly often?" We said "all the time - what about you?". She responded - "Well, this is our first flight since 9-11 since we were pretty scared about air travel, but they seem to have it pretty under control now.."

It took us a few minutes for that to sink in - and kind of amazing that it took SEVEN YEARS before this couple decided that they should get moving again. Those of us in the airline business prolly forget about things like that.

We actually flew on 9-18, the next week after the attacks - and we can still remember how tense it was. It's a world different now, but we guess it shouldn't be taken for granted. We remember and we guess it's time for us to get moving as well.

We're back to doing posts, and hopefully some interesting stuff will hit so we don't have to work too hard during halftimes of Bears wins !!

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...