disneyholic family
disney on my mind....
- Joined
- Jan 31, 2002
well despite my comments about them earlier in the week, i guess i'll have to take a second look at Southwest - they're the only airline resisting this trend.....according to the article below from the New York Times...
At Least the Airsickness Bags Are Free
By MICHELINE MAYNARD
Published: August 16, 2008
As far as airlines are concerned, you are no longer just a passenger. You are an opportunity to raise “ancillary revenue.” And when it comes to charging for things that were once free, the sky’s the limit.
In just a few short months, the airlines have discovered to their glee that their customers are willing to pay for most everything from checked bags to soft drinks to pillows and blankets — and are doing so without much fuss. With that knowledge in hand, the airlines aren’t about to stop.
From United to JetBlue, from Delta to US Airways (which Time magazine recently called the industry’s “stingiest” airline), marketing staffs are coming up with ways to extract more money from travelers’ wallets.
The opportunities seem enormous: United thinks that it can raise as much as $1 billion a year from this new menu of fees, which the industry has called an à la carte approach.
The airlines are unapologetic, with a ready excuse in the form of record jet fuel prices, which topped $4 a gallon this summer. “Airlines need to have a way to recover the cost of their product,” said Edward Bastian, the president and chief financial officer of Delta.
Fast-rising oil prices kicked in the door to higher ticket prices and other fees that the airlines couldn’t wedge ajar in recent years, thanks to a plethora of Internet travel sites that passengers use to find the cheapest fares. Most of the new fees apply to coach tickets on domestic flights.
Many travelers seem willing to accept the airlines’ explanation that consumers must shoulder the burden of higher fuel prices. “We all understand that gas and oil are so expensive,” said Kay Kelly, 57, a physical therapist who traveled from Florida to Fargo, N.D., earlier this month for a class reunion and family visit. “There’s only so much they can do to stay competitive, and we don’t get too riled up over the fees.”
Voicing a sentiment that the airlines must hope other travelers will embrace, she continued: “If we’re going to fly, we’re going to fly — and whatever it is, it is. It wouldn’t prevent us from going where we want to go.”
Travelers’ willingness to accept the fees isn’t attributable solely to their acknowledgment of higher gas prices. Consumers have seen service charges popping up on everything from tickets to Broadway shows and rock concerts to amenities on cruise ships. Across the economy, marketers have turned the practice of tacking on extras into an art form, softening up airline passengers for what now seems to have been inevitable.
Another factor is at play, too. Overnight, the 9/11 attacks turned travel from an adventure into a hardship, with intrusive security checks that passengers must endure if they want to board a plane.
Add it all up, and the landscape for air travelers has changed drastically. The shift causes veteran customer service experts to shake their heads. Mary Gilly, a professor of marketing at the University of California, Irvine, said: “I think the airlines are being pretty disingenuous calling it ‘à la carte pricing.’ Please. This is not a Chinese menu.”
Yet the airlines seem to have turned a deaf ear to any grumbling that is heard in airport corridors and that resounds on industry Web sites. That’s not surprising, considering the money they’ve generated in a short time by charging for former freebies. JetBlue collected $40 million in the second quarter by charging extra for seats with more legroom. United, meanwhile, expects to yield $275 million this year from charges for baggage.
As they rearrange the dynamics of what customers can expect for their air fares, the carriers are looking at charging for everything from selecting a seat — any seat, not just a window or aisle seat, or one with extra legroom — to wireless Internet connections.
They’re also considering a new type of all-expenses-paid ticket that would include all the “services” for which they now charge extra. In other words, it would be an easy, one-stop way to pay for everything that was free just a few short months ago.
THE word “glamorous” hasn’t applied to air travel for quite some time. But passengers like Leo Lanoie, 59, a doctor in Prince Albert, Saskatchewan, remember when it did. He recalls merry flights when even coach-class travelers could drink all the cocktails they wanted, gratis, and when the only complaint was that Air Canada served merely steak, not a choice of entrees.
Only five years ago, airline passengers could expect a free meal on many flights, along with a pillow, a blanket and a choice of magazines. These days, even business class can be less plush. The linen tablecloths were missing on a recent Northwest Airlines flight from Detroit to London — the catering crew did not put them on board the plane, one flight attendant explained — and the warm bread promised for breakfast on the printed menu turned out to be a cold cheese Danish.
BUT those are minor complaints, compared with the major adjustments that passengers have had to make of late. First, five airlines decided in April to begin charging passengers $25 to check a second bag and even more to check a third bag, depending on the carrier. Then, US Airways, American and United announced that travelers would pay $15 to check their first suitcase. (Spirit Airlines, a low-fare carrier, already charged for baggage checks.)
“I suppose people are generally acting like they’re O.K. with the fees because they don’t feel like they have a choice,” said Mr. Lanoie, who flew through Chicago on United recently. “All the airlines are doing it, so it’s not as though you can just take your business elsewhere.”
Such a sense of helplessness is widespread, said Banwari Mittal, a professor of marketing at Northern Kentucky University and an expert on consumer behavior.
“Consumers will get angry when they find a target of retribution, which is a specific company or a specific person,” Professor Mittal said. “But when it’s the macro environment, there’s nothing to get angry at.”
Moreover, passengers have learned that venting their anger at an airline employee means that they may be escorted off the premises by federal authorities, Professor Gilly said. “You complain at Starbucks, you get a freebie,” she said, “If you throw a fit at an airport, you could be picked up by the T.S.A.”
That helps explain why even the most controversial changes, like a recent decision by US Airways to begin charging $1 for coffee and tea, and $2 for bottled water, have slipped through without much dissent. Before that charge took effect earlier this month, the flight attendants union at US Airways vowed that attendants would provide free beverages in order to calm irate passengers.
Water riots, however, have failed to materialize, and the airline said in a recent employee newsletter that the change had come off without a hitch. “The feedback? Pretty darn good!” the airline declared in the newsletter, called AboutUS.
David Barger, the chief executive of JetBlue, took a similar tone when explaining his airline’s decision to begin charging $7 for a pillow and blanket set on flights lasting two hours or more. “It’s a nice way to offer an amenity to our customers,” he told Larry King on CNN last week, adding that because the kits contained a $5 coupon for a purchase at Bed Bath & Beyond, the net cost was really just $2.
European airlines actually beat their American counterparts in adopting fee schedules that catch even some seasoned travelers off guard.
“We were on a flight from Paris to Stockholm on SAS, and they charged us three euros ($4.45) for a bottle of water, and it wasn’t even that big,” said Christy Kuczak of Washington, D.C.
Ms. Kuczak, 31, an employee of the United States Fish and Wildlife Service, said she was in line at an airport recently when passengers were told that they could be charged hundreds of dollars extra if their luggage weighed more than 100 pounds. (The standard bag weight is about 40 pounds.) “You could hear everyone gasping, and looking at their bags, and wondering,” Ms. Kuczak said.
Even as many airlines embrace the fees, there have been holdouts. Continental Airlines still provides meals, pillows and blankets, although it joined the others in charging to check a second bag.
Southwest Airlines, which carries the largest number of passengers within the United States, has staunchly resisted other airlines’ efforts to impose new fees and charges and is using its decision as the basis for a marketing campaign.
“LUV” — the airline’s stock ticker symbol — “is freedom from fees,” Southwest declares on the front page of its Web site. It is not freedom from higher fares: Southwest, like other carriers, has raised its prices a number of times since the price of oil hit $100 a barrel in early January.
“We decided we would make a strategic business decision that customers would rather deal with transparent pricing,” said David Ridley, senior vice president for marketing and revenue management. The charges at other airlines are “just a brand violation for us,” he said.
Southwest was the only major airline to earn a profit in the second quarter, when the other majors collectively lost $6 billion, so it can afford to be a holdout. And Mr. Ridley acknowledges that it is leaving easy money on the table at a time when other airlines’ actions would give it cover.
One of the biggest questions for the industry is whether passengers will be so compliant if energy prices continue a recent decline.
Jet fuel, which reached $4.26 a gallon in mid-July, dropped to $3.20 last week, according to the International Air Transport Association, reflecting a similar decline in gasoline prices. The decline prompted some Wall Street analysts to raise their ratings for shares in the major airlines, which they said would benefit from lower fuel prices, coupled with their new fees.
Given that, Mr. Ridley says he believes that the airlines, which are grounding planes and cutting about 8 percent of their available seats this fall, will not rush to remove the charges, which he likens to “fee heroin.”
Gerard J. Arpey, the chief executive of AMR, American’s parent, says the latest fuel prices remain well above those of a year ago, when jet fuel cost $2.16 a gallon and oil was about $72 a barrel. “We’ve gone from a Category 5 hurricane to a Category 4,” said Mr. Arpey, whose airline was among the first to charge $15 to check a bag. “The industry is still struggling enormously under the weight.”
Delta, for its part, has maintained something of a middle ground. It has not charged passengers to check their first bag, although its two bigger competitors, American and United, are doing so.
To Delta, Mr. Bastian said, plane fare means “a ticket, a bag, and a safe and reliable experience.”
“Beyond that,” he added, “we need to experiment and see what the additional experiences are that the traveling public will pay for and what they’re not interested in paying for.”
One likely next step is wireless Internet connections, which Delta, American and others plan to offer for about $10 to $13 a flight.
“We don’t believe customers have really quite gotten the full impact of all these fees,” Mr. Ridley said. When fliers arrive at airports for Thanksgiving or Christmas trips, their reaction “is going to be, ‘What is that?’ ” he said.
Southwest is betting that customers will turn to it as a refuge from fees, just as drivers shifted from big sport utility vehicles and pickups to smaller vehicles when gasoline prices reached $4 a gallon. There is no concrete proof just yet in terms of bookings, Mr. Ridley acknowledged.
But that could happen if passengers reach a personal tipping point. For Beth Schroeder, 48, a lawyer in Los Angeles, that point would come if there were fees for two basic needs. “Once they start charging for coffee and a carry-on, that’s when I’ll be frustrated,” she said. “That would be extreme.”
For Ms. Schroeder, it’s already one down, one to go.
http://www.nytimes.com/2008/08/17/business/17fees.html?partner=rssnyt&emc=rss
At Least the Airsickness Bags Are Free
By MICHELINE MAYNARD
Published: August 16, 2008
As far as airlines are concerned, you are no longer just a passenger. You are an opportunity to raise “ancillary revenue.” And when it comes to charging for things that were once free, the sky’s the limit.
In just a few short months, the airlines have discovered to their glee that their customers are willing to pay for most everything from checked bags to soft drinks to pillows and blankets — and are doing so without much fuss. With that knowledge in hand, the airlines aren’t about to stop.
From United to JetBlue, from Delta to US Airways (which Time magazine recently called the industry’s “stingiest” airline), marketing staffs are coming up with ways to extract more money from travelers’ wallets.
The opportunities seem enormous: United thinks that it can raise as much as $1 billion a year from this new menu of fees, which the industry has called an à la carte approach.
The airlines are unapologetic, with a ready excuse in the form of record jet fuel prices, which topped $4 a gallon this summer. “Airlines need to have a way to recover the cost of their product,” said Edward Bastian, the president and chief financial officer of Delta.
Fast-rising oil prices kicked in the door to higher ticket prices and other fees that the airlines couldn’t wedge ajar in recent years, thanks to a plethora of Internet travel sites that passengers use to find the cheapest fares. Most of the new fees apply to coach tickets on domestic flights.
Many travelers seem willing to accept the airlines’ explanation that consumers must shoulder the burden of higher fuel prices. “We all understand that gas and oil are so expensive,” said Kay Kelly, 57, a physical therapist who traveled from Florida to Fargo, N.D., earlier this month for a class reunion and family visit. “There’s only so much they can do to stay competitive, and we don’t get too riled up over the fees.”
Voicing a sentiment that the airlines must hope other travelers will embrace, she continued: “If we’re going to fly, we’re going to fly — and whatever it is, it is. It wouldn’t prevent us from going where we want to go.”
Travelers’ willingness to accept the fees isn’t attributable solely to their acknowledgment of higher gas prices. Consumers have seen service charges popping up on everything from tickets to Broadway shows and rock concerts to amenities on cruise ships. Across the economy, marketers have turned the practice of tacking on extras into an art form, softening up airline passengers for what now seems to have been inevitable.
Another factor is at play, too. Overnight, the 9/11 attacks turned travel from an adventure into a hardship, with intrusive security checks that passengers must endure if they want to board a plane.
Add it all up, and the landscape for air travelers has changed drastically. The shift causes veteran customer service experts to shake their heads. Mary Gilly, a professor of marketing at the University of California, Irvine, said: “I think the airlines are being pretty disingenuous calling it ‘à la carte pricing.’ Please. This is not a Chinese menu.”
Yet the airlines seem to have turned a deaf ear to any grumbling that is heard in airport corridors and that resounds on industry Web sites. That’s not surprising, considering the money they’ve generated in a short time by charging for former freebies. JetBlue collected $40 million in the second quarter by charging extra for seats with more legroom. United, meanwhile, expects to yield $275 million this year from charges for baggage.
As they rearrange the dynamics of what customers can expect for their air fares, the carriers are looking at charging for everything from selecting a seat — any seat, not just a window or aisle seat, or one with extra legroom — to wireless Internet connections.
They’re also considering a new type of all-expenses-paid ticket that would include all the “services” for which they now charge extra. In other words, it would be an easy, one-stop way to pay for everything that was free just a few short months ago.
THE word “glamorous” hasn’t applied to air travel for quite some time. But passengers like Leo Lanoie, 59, a doctor in Prince Albert, Saskatchewan, remember when it did. He recalls merry flights when even coach-class travelers could drink all the cocktails they wanted, gratis, and when the only complaint was that Air Canada served merely steak, not a choice of entrees.
Only five years ago, airline passengers could expect a free meal on many flights, along with a pillow, a blanket and a choice of magazines. These days, even business class can be less plush. The linen tablecloths were missing on a recent Northwest Airlines flight from Detroit to London — the catering crew did not put them on board the plane, one flight attendant explained — and the warm bread promised for breakfast on the printed menu turned out to be a cold cheese Danish.
BUT those are minor complaints, compared with the major adjustments that passengers have had to make of late. First, five airlines decided in April to begin charging passengers $25 to check a second bag and even more to check a third bag, depending on the carrier. Then, US Airways, American and United announced that travelers would pay $15 to check their first suitcase. (Spirit Airlines, a low-fare carrier, already charged for baggage checks.)
“I suppose people are generally acting like they’re O.K. with the fees because they don’t feel like they have a choice,” said Mr. Lanoie, who flew through Chicago on United recently. “All the airlines are doing it, so it’s not as though you can just take your business elsewhere.”
Such a sense of helplessness is widespread, said Banwari Mittal, a professor of marketing at Northern Kentucky University and an expert on consumer behavior.
“Consumers will get angry when they find a target of retribution, which is a specific company or a specific person,” Professor Mittal said. “But when it’s the macro environment, there’s nothing to get angry at.”
Moreover, passengers have learned that venting their anger at an airline employee means that they may be escorted off the premises by federal authorities, Professor Gilly said. “You complain at Starbucks, you get a freebie,” she said, “If you throw a fit at an airport, you could be picked up by the T.S.A.”
That helps explain why even the most controversial changes, like a recent decision by US Airways to begin charging $1 for coffee and tea, and $2 for bottled water, have slipped through without much dissent. Before that charge took effect earlier this month, the flight attendants union at US Airways vowed that attendants would provide free beverages in order to calm irate passengers.
Water riots, however, have failed to materialize, and the airline said in a recent employee newsletter that the change had come off without a hitch. “The feedback? Pretty darn good!” the airline declared in the newsletter, called AboutUS.
David Barger, the chief executive of JetBlue, took a similar tone when explaining his airline’s decision to begin charging $7 for a pillow and blanket set on flights lasting two hours or more. “It’s a nice way to offer an amenity to our customers,” he told Larry King on CNN last week, adding that because the kits contained a $5 coupon for a purchase at Bed Bath & Beyond, the net cost was really just $2.
European airlines actually beat their American counterparts in adopting fee schedules that catch even some seasoned travelers off guard.
“We were on a flight from Paris to Stockholm on SAS, and they charged us three euros ($4.45) for a bottle of water, and it wasn’t even that big,” said Christy Kuczak of Washington, D.C.
Ms. Kuczak, 31, an employee of the United States Fish and Wildlife Service, said she was in line at an airport recently when passengers were told that they could be charged hundreds of dollars extra if their luggage weighed more than 100 pounds. (The standard bag weight is about 40 pounds.) “You could hear everyone gasping, and looking at their bags, and wondering,” Ms. Kuczak said.
Even as many airlines embrace the fees, there have been holdouts. Continental Airlines still provides meals, pillows and blankets, although it joined the others in charging to check a second bag.
Southwest Airlines, which carries the largest number of passengers within the United States, has staunchly resisted other airlines’ efforts to impose new fees and charges and is using its decision as the basis for a marketing campaign.
“LUV” — the airline’s stock ticker symbol — “is freedom from fees,” Southwest declares on the front page of its Web site. It is not freedom from higher fares: Southwest, like other carriers, has raised its prices a number of times since the price of oil hit $100 a barrel in early January.
“We decided we would make a strategic business decision that customers would rather deal with transparent pricing,” said David Ridley, senior vice president for marketing and revenue management. The charges at other airlines are “just a brand violation for us,” he said.
Southwest was the only major airline to earn a profit in the second quarter, when the other majors collectively lost $6 billion, so it can afford to be a holdout. And Mr. Ridley acknowledges that it is leaving easy money on the table at a time when other airlines’ actions would give it cover.
One of the biggest questions for the industry is whether passengers will be so compliant if energy prices continue a recent decline.
Jet fuel, which reached $4.26 a gallon in mid-July, dropped to $3.20 last week, according to the International Air Transport Association, reflecting a similar decline in gasoline prices. The decline prompted some Wall Street analysts to raise their ratings for shares in the major airlines, which they said would benefit from lower fuel prices, coupled with their new fees.
Given that, Mr. Ridley says he believes that the airlines, which are grounding planes and cutting about 8 percent of their available seats this fall, will not rush to remove the charges, which he likens to “fee heroin.”
Gerard J. Arpey, the chief executive of AMR, American’s parent, says the latest fuel prices remain well above those of a year ago, when jet fuel cost $2.16 a gallon and oil was about $72 a barrel. “We’ve gone from a Category 5 hurricane to a Category 4,” said Mr. Arpey, whose airline was among the first to charge $15 to check a bag. “The industry is still struggling enormously under the weight.”
Delta, for its part, has maintained something of a middle ground. It has not charged passengers to check their first bag, although its two bigger competitors, American and United, are doing so.
To Delta, Mr. Bastian said, plane fare means “a ticket, a bag, and a safe and reliable experience.”
“Beyond that,” he added, “we need to experiment and see what the additional experiences are that the traveling public will pay for and what they’re not interested in paying for.”
One likely next step is wireless Internet connections, which Delta, American and others plan to offer for about $10 to $13 a flight.
“We don’t believe customers have really quite gotten the full impact of all these fees,” Mr. Ridley said. When fliers arrive at airports for Thanksgiving or Christmas trips, their reaction “is going to be, ‘What is that?’ ” he said.
Southwest is betting that customers will turn to it as a refuge from fees, just as drivers shifted from big sport utility vehicles and pickups to smaller vehicles when gasoline prices reached $4 a gallon. There is no concrete proof just yet in terms of bookings, Mr. Ridley acknowledged.
But that could happen if passengers reach a personal tipping point. For Beth Schroeder, 48, a lawyer in Los Angeles, that point would come if there were fees for two basic needs. “Once they start charging for coffee and a carry-on, that’s when I’ll be frustrated,” she said. “That would be extreme.”
For Ms. Schroeder, it’s already one down, one to go.
http://www.nytimes.com/2008/08/17/business/17fees.html?partner=rssnyt&emc=rss
