Thursday, October 29, 2009

Continental to add fees, review meal policy

Since September 11, 2009, Continental Airlines has lost more than $1 billion. That's according to President Jeffrey Smisek, who on January 1, 2010 will succeed Larry Kellner as Continental's Chairman and Chief Executive Officer.

Bloomberg has all of the details of an interview with Smisek, but Continental flyers (like me) should be aware that we "absolutely will see change in [Continental's] products."

Everything is on the table. Some ideas, like offering premium non-alcoholic beverages like electrolyte water for the same $5.00 cost that already applies to alcoholic beverages in Coach, would be genuine choices.

Also on the table as a potential cut: complimentary meals.

Continental is the only U.S. airline that offers free meals to Coach passengers. It's something that makes Continental unique.

On the other hand, the airline is losing money. Every other airline that offers meals charges for them and pockets that revenue to shore up the bottom line, and it's not clear that Continental has actually benefitted from increased demand on account of what is frankly a pretty big gesture of goodwill.

"We're either really smart or we're really dumb" for providing free meals, he said. "Time will be a great test of that."

Fly for $25? Check out Southwest's 4th Quarter Sale.

Southwest is offering a very limited-time fare deal through its 4th Quarter Sale promotion.

Through midnight tonight, you'll pay one-way fares based on the length of the flight:
  • $25 for up to 374 miles;
  • $50 for 375-500 miles;
  • $75 for 501-999 miles; and
  • $100 for 1000 miles or more.

Sale fares cover travel between December 2-16, 2009 and January 5-February 10, 2010.

Tuesday, October 27, 2009

Continental joins the Star Alliance!

After officially departing SkyTeam on October 24, Continental spent two days wandering in limbo before today formally entering the Star Alliance.

Continental's addition raises the number of airlines in the Star Alliance to 25, including domestic partners United and U.S. Airways and German powerhouse Lufthansa.

The Star Alliance's diverse membership, which also includes South African Airways, Air New Zealand, Singapore Airlines, Air Canada, and Japan-based ANA (among many others), means that passengers can go just about anywhere while concentrating elite and award miles in one frequently flyer program of their preference.

For Continental OnePass members, this transition means new Alliance-level benefits at one of two levels: Star Alliance Silver for OnePass Silver, or Star Alliance Gold for OnePass Gold or Platinum members.

The transition also brings several new program-level benefits to OnePass members:
  • Saturday night stays are no longer required for award travel.
  • Discounted fares purchased from third-party consolidators now qualify for 100% of elite-qualifying mileage.
  • Complimentary elite upgrades now apply to flights between Los Angeles (LAX) and Hawaii.

OnePass members should be aware that they no longer enjoy complimentary upgrades on Northwest flights, which would be eliminated anyway as the merger of Delta and Northwest continues to take effect.

In addition, effective immediately, OnePass members do not earn elite qualifying mileage or points, or elite mileage bonuses, on travel with bilateral partners, including Emirates, EVA Airways, Hawaiian Airlines, Island Air, Kingfisher, US Helicopter, or Amtrak.

This is a huge change for Continental and the industry. We'll see where it leads.

Tuesday, October 20, 2009

U.S. Airways Club expanding its privileges?

For most of the time that they've been supposed partners in the Star Alliance, United and U.S. Airways have had rather chilly relations.

Two years ago, U.S. Airways decided that its Club members should pay $120 more if they wanted reciprocal access to United's Red Carpet Club network.

CEO Doug Parker was particularly fee-happy at that time, also trying an abortive plan to charge passengers for beverages (which failed) and requiring an outrageous $240 membership upgrade for Club members to get reciprocity with non-domestic Star Alliance airlines' clubs.

Throughout this chapter, Red Carpet Club members continued to enjoy complimentary reciprocity to U.S. Airways Clubs when traveling of U.S. Airways flights.

Well, that's changing.

Effective October 30, U.S. Airways Club memberships will be converted to a single style that allows reciprocal access to lounges operated by United, Continental, and other Star Alliance airlines. No additional fees will be needed.

Starting that same day, members will also have complimentary selections of wine and beer available in addition to the soft drinks that have always been complimentary.

Why the change? My guess is that someone must finally have crunched the numbers and realized that, with the upcoming switch of Continental Airlines from SkyTeam to Star Alliance, and with United and Continental already establishing tight associations, U.S. Airways was almost sure to lose out.

Thursday, October 15, 2009

Imperfect Substitutes

When airlines started adding fees for checked baggage, many people assumed that passengers would shift their business to carriers that reject such fees, like Southwest and JetBlue.

Christopher Elliott cites several studies that have analyzed that idea, and guess what? It isn't true. I'm also completely unsurprised.

People assuming that passengers would change their behavior made their assumptions on the basis of a premise that different airlines are perfect substitutes. Those of us who travel tens or hundreds of thousands of miles a year know better. Two factors drive airline selection:
  1. Convenience. Which airlines are strongest at your preferred airport (which is usually but may not be your closest airport)? People like more flight options, especially direct flights.

  2. Loyalty. Frequent flyers get more benefits from concentrating miles in one or just a few programs, and those of us with elite access (who generally pay no bag fees anyway) are particularly likely to go with our preferred airline or one of its partners, even if it costs a few bucks more.
Now, every now and then, an airline tries something so outrageous that it does take a hit. U.S. Airways ran into that last year when it tried to charge for beverages. No one followed suit, and free drinks returned to the aisles.

But not everything is so clear cut. Continental, after all, is the only airline in the United States -- legacy or low-cost -- that still serves free meals in Coach. Notice that plenty of people fly with other airlines.

My apologies to Southwest and Jetblue. In an age where practically everything is a carry on, checked baggage fees just aren't enough of a hassle to drive away passengers.

Correction: It's a holiday surcharge.

Two weeks ago, I blasted the airlines for imposing what I understood to be a fee for travel on certain days defined as holiday time. At the time, I said that using add-on fees to avoid raising fares was inexcusable.

I stand by that notion, but it turns out that what the airlines have put in place are holiday surcharges, not fees -- and the difference matters.

A fee is an add-on. Passengers pay fees to check bags, buy drinks, and sometimes to access preferred seating. Fees are costs added to what would otherwise be bottom-line prices.

Surcharges are different. Under the Airline Deregulation Act, airlines in the United States have to publish their fares in advance, and changing published fares for just a few days can be complicated. The FAA allows airlines to use surcharges as costs included in the bottom-line prices shown for tickets.

I was angry about a "holiday fee" because I believe that traveling on a certain day should be part of the bottom line. But surcharge is entirely transparent to passengers, and the ticket price you see includes any applicable surcharges.

It still means higher fares. But there's nothing shady about raising fares in times of short supply (like holidays). That's how competition works, and if you compare the fares we have today -- even with the $10 surcharge for holiday travel included -- with the fares we had in 1960, well... competition has really made flying cheap.

So, I don't see these surcharges as a problem.