Airline fees go through the roof … but are we actually surprised?

For airline consumers, the news has been unremittingly bleak in the past few years, what with ancillary fees rising and in-flight comfort going the way of the dodo bird.

But when you think about it, this is something that was bound to happen.

According to the Associated Press, the average roundtrip fare for domestic flights in the United States today is approximately $500.

Let’s compare this to when I was a student in college 40+ years ago. Back then, coach airfare between Minneapolis-St. Paul and Nashville, TN typically ran approximately $250 — so roughly half of what today’s figure would be.

But when we calculate the inflation factor, that $250 fare translates to nearly $1,200.

The equivalent of $1,200 a pop explains why it was financially necessary for me to stay in Nashville over various holidays such as Thanksgiving break instead of flying home for only a few days or a week.

On the plus side, flying back then was a breeze compared to today. Not just the stress and irritation of the terminal security lines, but also far fewer travelers, with planes often only one-third or half-full.

Deregulation followed by vastly cheaper airfares have led to flying being within nearly everyone’s budget, which is all very egalitarian but also making the air travel experience high on the “frustration factor.”

How about the airlines? They’ve had to deal with all sorts of regulatory developments along with sharply higher operating costs — jet fuel just for starters.

And while the airlines have benefited from serving more travelers, that hasn’t made up for the decline in fare prices.  So it isn’t surprising that the airlines started cutting in other ways.

First it was in-flight meals, moving away from delicious hot platters to sandwiches … then to peanuts or pretzels … and now to nothing sometimes.

Next, it was the removal of pillows and blankets.

Accessing in-flight entertainment costs extra, too — as well as gaining access to cyber-communications.

And has anyone noticed the “squeeze play” going on in the coach section? That isn’t your imagination.  Today’s typical coach seat is 17 inches wide, which is nearly a 10% decrease from the 18.5 inches from about a decade ago.  (That corresponds with an average 8% heavier traveler over the same period, by the way.)

Space constraints spill over into the ever-smaller footprint of airplane lavatories. If you find that you can’t turn around in them, that’s because they’re literally smaller than a phone booth.  I know I try to avoid using them as much as possible.

In any case, all this nibbling around the edges hasn’t been able to make up for airline revenue losses elsewhere. So now we have fees being levied for checked luggage — in the range of $25 to $40 per item.  For a while the charges were levied on extra pieces of luggage, but now Delta, American Airlines and United Airlines are charging for the first checked item, too.  Among the major carriers, only Southwest remains a holdout — but one wonders for how much longer.

And reservation change fees? They’re increasing for everyone — even people who have traditionally been willing to pay more for an air ticket if they’d have the opportunity alter their travel plans without a being charged whopping change fee.  Those fees can sometimes go as high as $200 — nearly the cost of purchasing an entirely new one-way ticket.

According to transportation and hospitality marketing firm IdeaWorks, in 2017 the top 10 airlines brought in nearly $30 billion in ancillary revenues — a figure that’s sure to be significantly larger in 2018. It’s almost as if the ancillary revenues are as important as the base fare.  As Aditi Shrikant, a journalist for Vox puts it, “Buying a plane ticket has been stripped down to mean that you are paying for your mere right to get on the plane.  Anything else is extra.”

In their own lumbering way, the U.S. Congress is now making noises about cracking town on what it characterizes as unreasonable airline fees.  I’m not sure that any such legislative moves would have the desired effect.  Already, Doug Parker, American Airlines’ CEO, predicts that of Congress moves in that direction, the industry would respond by making airline tickets nonrefundable:  “We — like the baseball team, like the opera — would say, ‘We’re sorry, it was nonrefundable.'”

What are your thoughts about the unbundling of services and fees in the airline industry? While that business model gives passengers the choice of flying for less without access to the amenities, it turns the process of purchasing an airline ticket into something that seems akin to a fleecing.

Do you have particular criticisms about the current state of affairs? What would you prefer to be different about the scenario?  Please share your comments below.

Frequent flyer programs: No longer going the distance.

What took so long?

frequent flyer programsDelta and United Airlines have announced what they hope will be an industry-pacesetting change in the way frequent flyer programs are administered by the world’s biggest airlines.

The two air passenger carriers are shifting away from awarding points based on flight distance, and instead will award points based on the actual airfare paid by the traveler.

The change in procedures will become effective in 2015 (in January for Delta and in March for United).

In retrospect, one wonders why it took so long for the big airlines to make this move.

After all, the very nature of loyalty programs is to reward a company’s best and most profitable customers.

Business travelers who book a flight a few days ahead – not to mention people who prefer to travel first class – are far more valuable to an airline than someone who books the “Cheapy Charlie” web-only fare months in advance.

Besides, prominent low-cost air carriers like JetBlue, Southwest and Virgin have been using revenue-based methods of calculating their frequent-flier points for a good while now.

As for which types of travelers will come out winners vs. losers in the frequent flyer program changes, it’s exactly who you’d expect:

  • Big Winners:  Business passengers traveling internationally and on refundable-fare domestic flights + first-class passengers.
  • Big Losers:  Leisure fliers in coach class + business flyers who travel on cheap fares.
  • In-Betweeners:  Business passengers who travel using a mix of business and economy fares.

The recent announcements by Delta and United leave only American Airlines as the last big U.S.-based global carrier that still maintains the traditional distance-based calculation for earning miles.

I wonder how much longer they’ll hold out?

Only a matter of months, I’m guessing.

What are your opinions about the changing policies?  Are there particular frequent flyer programs you love?  … Or love to hate?  Feel free to share your thoughts with other readers.

A surprise? Corporate reputations on the rise.

Corporate reputations on the riseWhat’s happening with the reputations of the leading U.S. corporations? Are we talking “bad rep” or “bum rap”?

Actually, it turns out that corporate reputations are on the rise; that’s according to findings from the 2011 Reputation Quotient® Survey conducted by market research firm Harris Interactive.

Each year since 1999, Harris has measured the reputations of the 60 “most visible” corporations in the United States. The 2011 survey, fielded in January and February, included ~30,000 Americans who are part of Harris’ online panel database. Respondents rated the companies on 20 attributes that comprise what Harris deems the overall “reputation quotient” (RQ).

The 2011 survey contained 54 “most visible” companies that were also part of the 2010 survey. Of those, 18 of the firms showed significant RQ increases compared to only two with declines.

The 20 attributes in the Harris survey are then grouped into six larger categories that are known to influence reputation and consumer behavior:

 Products and services
 Financial performance
 Emotional appeal
 Vision and leadership
 Workplace environment
 Social responsibility

Each of the ten top-rated companies in the 2011 survey achieved between an 81 and 84 RQ score in corporate reputation. (Any RQ score over 80 is considered “excellent” in the Harris study). In cescending order of score, these top-ranked corporations were:

 Google
 Johnson & Johnson
 3M Company
 Berkshire Hathaway
 Apple
 Intel Corporation
 Kraft Foods
 Amazon.com
 Disney Company
 General Mills

At the other end of the scale, the ten companies with the lowest ratings among the 60 included on the survey were:

 Delta Airlines (61 RQ score)
 JPMorgan Chase (61)
 ExxonMobil (61)
 General Motors (60)
 Bank of America (59)
 Chrysler (58)
 Citigroup (57)
 Goldman Sachs (54)
 BP (50)
 AIG (48)

Clearly, BP and AIG haven’t escaped their bottom-of-the-barrel ratings – and probably won’t anytime soon.

What about certain industries in general? The Harris research reveals that the technology segment is perceived most positively, with ~75% of respondents giving that sector a positive rating.

The next most popular segment – retail – had ~57% of respondents giving it a positive rating.

For the auto industry, the big news is not that it’s held in high regard (it’s not) … but that its ratings jumped 15 percentage points between 2010 and 2011. That’s the largest one-year jump recorded for any industry in any year since the Harris RQ Survey began.

What industries are bouncing along the bottom? Predictably, it’s financial services firms and oil companies.

But the news from this survey is, on balance, quite positive. In fact, Harris found that there were actually more individual companies rated “excellent” than has ever been recorded in the history of the survey. Considering the sorry state of the economy and how badly many brands have been battered, that result is nothing short of amazing

Frequent Fliers’ Lament: U.S. Airlines are Second String

It isn’t just with automobiles that the U.S. public sees American companies as worse than their overseas counterparts. Our airline industry also comes in for its share of lumps.

Anyone who has ever heard horrific air travel stories from colleagues, friends or relatives – and that’s most of us – wouldn’t be surprised if consumer ratings of U.S. airlines pale in comparison to others. And now we have the record to prove it. SeatGuru, TripAdvisor’s online site that bills itself as “the ultimate source for airplane seating, in-flight amenities and airline information,” has just released the results from its most recent annual survey of frequent fliers (defined as people who have flown at least eight times in the past year).

And what does this year’s survey tell us? For starters, U.S. air carriers have the least comfortable seats of all airlines.

Also, they serve the worst food – if they serve it at all.

Rude flight attendants? Bottoms again.

Who ranks best? If you’re looking for good food, the survey respondents tell us we can’t go wrong with Singapore Airlines, British Airways or Air France. Perhaps surprisingly, Continental Airlines also ranked well. But avoid American, United and U.S. Airways – rated the worst of the bunch.

These same three U.S. carriers also scored at the bottom of the heap for the comfort of their economy-class seating. JetBlue does score well in this category; too bad most of us never get the chance to fly this airline because they serve precious few cities. (For the best business class seating, respondents gave highest marks to British Airways.)

And guess what? The very same three carriers – American, United and U.S. Airways – topped the list for having the nastiest flight attendants. If polite, friendly service is your thing, you’re far more likely to find that over at Singapore Airlines or Southwest.

What about the all-important performance metric of on-time flight arrivals? For that, we can look to actual data compiled by the U.S. Department of Transportation’s Bureau of Transportation Statistics rather than rely on survey findings. What we see is that for the first three months of 2009, Hawaiian Airlines had the best on-time performance of any U.S. airline company, with more than 90% of its flights arriving within 15 minutes of schedule.

But they’re a small airline company. What about the biggest carriers? Southwest has performed the best, while Continental is at the opposite end of the scale.

And what flight to take if you want the dubious distinction of traveling the worst airline route of all? That would be Northwest Airlines Flight #5803 from Atlanta to Honolulu. It was late a mere 96% of the time. Well, there’s consistency for you at least!

As for getting yourself to your destination in one piece … may your pilot be Chesley B. ‘Sully’ Sullenberger.

Happy Travels!