Monday, February 23, 2009

U.S. Airways abandons charging for drinks!

Seven months and who knows how many lost sales having passed since U.S. Airways CEO Doug Parker announced that his airline would charge $2 for soda or water and $1 for coffee or tea, he's finally admitting what travel experts everywhere already knew: it was a really bad idea.

Over the last year or so, airlines have begun charging or boosted fees for all sorts of things. Passengers now pay to check even one bag on some carriers, and every carrier charges for a second or third piece of luggage. Change fees have gone up. Fees have been added to mileage redemption. United Airlines got out in front by offering a proactive charge to earn more miles through its Award Accelerator program.

Yet despite that apparent willingness to add and expand fees, not a single U.S. airline followed Parker's lead on charging for beverages. Why?

Simple: the idea was stupid.

Seriously, at a time when air travel is less pleasant than ever, why would you possibly want to antagonize passengers by charging them $2 for bottled water?

Parker's example stands in marked contrast to Continental (which still offers complimentary meals to Coach passengers) and highlights a key flaw in the airline model: cutting costs only goes so far. At the end of the day, airlines provide services, and treating passengers like cattle leaves them preferring to fly with a competing airline.

So, after months of defending the supposed success of his policy, Parker has backtracked--apparently surprising some of his own executives, who were still touting the merits of the plan--and U.S. Airways returns to mediocrity from the depths of complete disaster.

I guess we can cheer for that.

Wednesday, February 18, 2009

Behind its Acela fare cut, Amtrak hides a pretty big change

According to the Boston Globe, Amtrak is cutting fares on its Acela Express trains by as much as 25%. It makes sense: since the latest fare increases during the 2008 gas-fueled ridership boom, Acela fares have gone for as much as two and a half times equivalent Regional fares.

The lower fares are offered to passengers booking at least 14 days in advance and apply to Business Class tickets only. Limiting the discount, and making these tickets specifically non-upgradeable, feels like a misstep; Amtrak had a great opportunity here to introduce people to Acela First Class service (which is rather nice) and lure them as long-term customers.

But there is also another twist, and it is far more troubling: these discounted tickets are non-refundable.

For people used to flying, this might seem like 'no big deal.' Up until this point, though, Amtrak had two big advantages over its sky-based competitors:
  1. Amtrak fares included all taxes, so there were no surprises; and
  2. Amtrak fares were fully refundable and changeable.

Introducing non-refundable fares is a new twist for Amtrak, and frankly one that carries with it more downsides than it did for airlines.

Air travel is a big deal, involving a trip out to the airport; checking baggage; security screening; the flight itself; arrival procedures; baggage reclamation; and travel into to the city. Rail travel means showing up at the station, having a ticket, stepping on the train, and traveling.

In other words, you would rarely book a flight on a whim, because you can't cancel it if circumstances change. You can do that with rail, so it's easier to decide to travel. Nonrefundable fares get rid of that flexibility--and once that happens, how can I justify that it often costs just as much to take the Acela as to fly with a low-cost airline?

Wednesday, February 11, 2009

Reducing Customer Complaints

United Airlines has found an innovative new way to lower the number of customer complaints that it receives: effective immediately, United will stop publishing a customer relations phone number. By the end of April, it will drop the number altogether.

Odds are that this approach is not what most people have in mind.