Uh oh. It looks like the DOT has found something else they don’t like about airlines with which they want to get involved. This time, it’s the refunding of bag fees when bag aren’t delivered. Guess what? I agree with the idea.

First I’d like to say that I hate when the feds get involved with anything, because they usually screw it up. It sounds like definition of the words “timely manner” might be in play right now, and you know this will never be implemented properly. Of course, had the airlines been more proactive in this area, they wouldn’t have had to deal with this. I realize that when Secretary Ray LaHood gets his focus on something the airlines do, he seems to enjoy rushing it through without actually measuring consequences. So, let me give some suggestions on what might make sense here.

The key is determining what exactly you’re paying for when it comes to bag fees. I believe that you’re paying the airline to deliver your bags to your destination on the same flight you’re scheduled to take when you check those bags. If you show up on that flight and your bags don’t, you should have the fee refunded. I’m not so sure it should be a full refund, but we’ll talk about this later.

Of course, bag fees aren’t new, but they’ve never impacted as many people as they do today. Bag fees have existed for ages when you think about excess and overweight bags. I would say the excess bag fees should also be refunded if the bag doesn’t arrive because you’re ultimately paying for that specific piece to go with you. Overweight bag fees, however, should not. In that case, you’re paying for the extra care and liability involved in handling such heavy bags.

The focus, of course, is on whether or not the standard bag fees should be refunded. I think they should. Others, including the airlines, will disagree. Are you paying for the bag to be delivered on your flight or just delivered at all? After all, the airline still has to do all the work to carry the bag, even if it arrives late. That’s where the amount of the refund comes into play.

As I said, I think you’re paying for your bag to travel with you, but that doesn’t mean the airlines couldn’t create a different structure if they wanted. What if the airlines said (numbers are just for demonstration purposes) that you could pay $30 to check your bag on your exact flight or you could save $15 for the airline to deliver it within 24 hours. In other words, in exchange for giving you a discount, airlines could pull your bags off your flight because it’s already full or it’s running late and put it on a later flight instead. They would trade revenue for operational flexibility. In that case, if you paid $30 and your bag doesn’t arrive on your flight but comes soon after, you’d get $15 back. If it didn’t arrive within 24 hours, you’d get it all back.

Some airlines have already tried to address this issue, and they deserve credit. The one that’s received the most attention is that Alaska gives you a $20 voucher if your bag doesn’t arrive at the carousel within 20 minutes. It’s not a refund, but it goes a long way to at least recognizing that the airline has a responsibility. I also just learned that Delta has a $25 to $50 voucher if your bags are delayed by more than 12 hours. That surprised me (in a good way).

Only one airline, however, has really stepped up to the plate. Frontier has now put the most concrete policy out there. If your bag doesn’t arrive on your flight, you get a refund of the fees. If those fees had been waived because you bought a higher-priced ticket or you’re an elite member, you’ll still get a voucher for what the amount would have been. Great job, Frontier. It’s all part of that airline’s recent customer-friendly changes. I’m planning to write about that later this week.

What do you think? Should the fee be refunded? (I suppose I’m most curious to hear from those who think it shouldn’t.)

[Original photos via Flickr users rynosoft and Unlisted Sightings/CC 2.0]

In-flight entertainment following the times – CNN Out of the Office
I remain convinced that one of these days, inflight entertainment will simply be internet and power. The airlines could just provide content if they so chose.

In the Trenches: Making a Pricing Change the Right Way – Intuit Small Business Blog
We’re looking at some pricing changes for Cranky Concierge, and I’m kicking the effort off this week.

Remember that post about how Spirit should move into the intra-Caribbean market? Looks like JetBlue is going to beat Spirit to the punch. JetBlue already flies from San Juan to Santo Domingo, and now it’s going from San Juan to St Maarten as well. Is this a good move?

San Francisco opens (or shall I say, reopens) Terminal 2 with Virgin America and American as residents today. I was able to get a sneak peak last Monday and I have to say, I’m impressed. They really did this right in terms of design and, most importantly, in terms of cost.

This terminal was first opened in 1954 and was the main terminal for much of its life. In the 1980s, SFO made this the international terminal and it stayed that way until the new international terminal opened in 2000. The terminal sat there unused for the last decade until a renovation plan came along that culminates with today’s opening.

As you can imagine, a lot of work had to be done to get this terminal into shape to serve customers today. Since it is now primarily a domestic terminal, more gates were added to reflect smaller aircraft being used. There are now 14 gates split evenly between Virgin America and American. American is moving over from Terminal 3. Its old concourse will shut down and be renovated so that it can become a terminal for Star Alliance members next year. Virgin America is currently in the international terminal and that will just leave more space for future international flight growth.

For Virgin America, this was important because it has a ton of airplanes coming online and no place to put them in the international terminal. Now it will go from roughly 3 gates (lots of sharing in the international terminal, so it’s a rough estimate) to a whopping 7 gates on the south side of the terminal. American, however is going in the opposite direction. It is shrinking from 9 gates today down to 7 to start. The plan is to eventually only use 6 gates and there will be one common use gate.

When you enter the terminal, the center is dominated by the stairs down from the AirTrain station. On the right is Virgin America’s counter and on the left is American’s. The counters have a nice look to them with wood paneling and good lighting. Both counters angle in toward the security area. One interesting thing to note is that the only retail outside security is a Starbucks. Not even a newsstand is out there, so if you’re meeting someone in the terminal, you won’t find much to keep you busy.

The security area is huge, as you’d expect. They were very smart to build it on a floating floor, so that as TSA requirements for cabling and power change (they always do), the changes can be made easily without having to drill all over the floor.

After security, you get into the recompose area where there are comfortable seating benches in an open space to get your things together. This is unlike the usual TSA benches in that they’re a) padded and b) outside the security area. Those insane jellyfish-looking things which you barely see at upper left are art, and they will actually move around in the breeze.

On the left of the recompose area is the Admiral’s Club which has double the space of the existing one and some trees. Yep, those fake trees in the middle add an interesting flair. This also has two shower rooms, something that will be huge for inbound Asian passengers connecting to American since there is no arrivals lounge for their use in the international terminal.

Back in the terminal, after the recompose area, you walk into the narrow neck of the terminal which is lined with shops. (There’s a better view of the jellyfish-looking art here.) They’ve gone with local businesses, plenty of organic food, a wine bar, etc. In other words, it’s exactly what you’d expect in San Francisco. Interestingly, there are no gates here. The airplanes that park along the neck can be accessed via long jet bridges from the main gate area.

The neck opens up into a pentagon-ish shaped gate area. The large central space will have tables and chairs giving a similar airy, outdoor feel as you find JetBlue’s Terminal 5 at JFK. They really opened this thing up to bring in a ton of light.

My favorite feature is the refill stations on either side of the main area. There is clean drinking water fountains that are meant for you to refill your containers that you couldn’t bring through security with liquid. It’s a great touch that’s also very fitting for the eco-friendly Bay Area.

The gate areas ring the pentagon with some shops in the middle. The seating is actually very comfortable (though the armrests prevent finding a good bed in case of a REALLY long delay). There are power outlets all over the place, including at some desk work stations that are scattered throughout the terminal. This has a very “Virgin America” feel to it, and I imagine American simply gets to benefit from it. (They came into the project later – apparently Southwest was originally supposed to go in here, but that never happened.)

The gate podiums have a very open feel to fit with the terminal, but let’s talk about the most important feature: location. This terminal sits very close to the runway 1L and has a perfect view out toward the Bay. There is probably no better place to watch airplanes than here, as long as you don’t mind looking through glass.

Baggage claim is just a sea of carousels, undoubtedly hampered by the original building structure. It looks perfectly functional, however.

In the end, this project cost $383 million for 14 gates. That will increase cost per enplanement at the airport by $0.66 per passenger, or about 5 percent. Considering what the airport got out of this, I give them full credit for keeping costs in check. Will these gates be necessary? If Virgin America continues to operate and grow as it plans, then yes. I suppose we’ll know for sure in a few years if they were necessary or not. But for now, travelers on Virgin America and American can just enjoy what appears to be one of the most friendly and functional terminals around.

[See more photos from my tour of SFO Terminal 2, including one of the piece of art so big that they just let it stay where it was and built around it.]

As usual, there was great discussion at the Phoenix Aviation Symposium last week, but one in particular grabbed me. Steven Kavanagh, Chief Commercial Officer for Aer Lingus in Ireland has an interesting way of looking at his airline. He wants to be “an expert at producing seats” and then make that a platform for others to peddle their wares. It’s a view that certainly isn’t shared industry-wide, but for an airline in Aer Lingus’s position, it probably makes sense.

This piece of the discussion came up during a back and forth about inflight internet. Steven argued that airlines shouldn’t have to pay to install internet at all and that the internet company should take all the risk. In his mind, Aer Lingus has a captive audience of people on the airplane and other companies, like internet providers, should pay a price to be able to have access to those people. So internet would be installed at the provider’s expense and in addition, a small royalty would be given to the airline for each sale. The bulk of the revenue goes to the internet provider.

You could repeat this with all kinds of products and services. Meals? Sure. Inflight shopping? Why not? Entertainment options? Yep. It’s an interesting way of looking at what an airline does. I imagine the view is colored by the fact that Aer Lingus has tremendous competition from Ryanair on nearly all its short haul routes. It’s tough to compete with those guys, but this kind of model lends itself well to that effort.

Of course, this biggest issue here is one of branding consistency. If you use this model, you’re going to be offering all different kinds of brands on top of your brand and the message can be muddled. That might not be an issue for Aer Lingus or other carriers where brand isn’t considered that important. After all, people make choices based primarily on schedule and price, right? So if Aer Lingus has a good fare at the right time (and it runs an on time airline), then it may think it’s got the idea right.

Others, however, disagree. Take a look at Southwest, for example. Gogo inflight internet has a model that’s somewhat similar to what Steven suggests. That company handles the pricing and takes on some of the risk. They also brand the service as Gogo. Southwest hates that idea, and that’s one of the main reasons it opted to go with a different provider, Row 44. It wanted to control the experience and have it branded as Southwest. Southwest wants to own the entire customer experience; the opposite of what Aer Lingus proposes.

Part of that may be that Southwest has one of the better brands out there (despite the recent problem of holes in 737s), so it wants to cultivate it and protect it. Opening the airline up to look similar to an app store for your mobile phone doesn’t work for that purpose.

But even those airlines that like this model only like it when it benefits them. Let’s say, for example, that Expedia pitches itself as a provider of travelers who want to book tickets and that if you want access to those travelers, you have to pay for placement. This is exactly the opposite of what American has suggested should happen. American has said that maybe Expedia and others should pay for the privilege of having their information available for the customers. It’s the opposite argument. Something tells me that we’ll only hear this argument when it means airlines don’t have to spend money.

In the end, this strategy isn’t right or wrong in general. It’s an airline-specific thing. And for Aer Lingus, which competes hard with low fare airline Ryanair, it probably makes sense. But it does come at the expense of the brand.

[Original photo via Flickr user UggBoy?UggGirl [ PHOTO // WORLD // SENSE ]/CC 2.0]