Anyone else get the feeling that there comes a point when social media can be a bad thing? Oh sure, it has incredible power, but that’s both good and bad. On the good side, it enables mass communication on levels never seen before in real-time. Many have tied social media to the success of the so-called Arab Spring, and that makes it truly impressive. But there’s a bad side. Social media has no fact-checking requirements. If a story sounds good, it can blow up in minutes even if it’s silly or even downright wrong. The airlines have really felt a lot of that lately. What’s worse about this? I honestly don’t know the best way for airlines to react.

Take Delta, for example. It has had a one-two punch lately of bad stories that got out of hand quickly. The most recent was the completely silly idea that Delta hates Jews. The article was first published in some fringe website with the title “Delta’s incredible ‘no-Jew’ fly policy.” The suggestion was that since Saudi Arabian would be joining the SkyTeam alliance, of which Delta is a member, and since Jews aren’t allowed in Saudi Arabia (not really true), Delta therefore hates Jews. As my mother would say, oy gevalt.

The formula was simple here. Some group with an agenda to push brings together a few tiny bits of fact and turns it into a story. It makes the story sound juicy enough so outlets start picking it up. Within no time, some site with at least a little credibility picks it up and then it snowballs from there. Within hours, the world thought Delta was going to ban Jews from its flights. (Good thing that’s not true since I’ve got a ticket for September.)

The reality is that none of this is airline policy. Saudi Arabia, along with every other country, sets rules for who can and can’t enter the country. Airlines make it a policy to ensure that every passenger that gets carried to that country has the proper documentation for entry. Saudi Arabia doesn’t have a full ban on Jewish people, but it does say that people with an Israeli stamp or visa “could be refused entry.” (It also says the same thing about people who don’t comply “with the Saudi Arabian requirements regarding general appearance.”) Is that a bad policy? Yes. Should Delta take heat for the policies of a country to which it doesn’t even fly? Come on. But that didn’t matter – the story exploded and Delta looked terrible in a matter of minutes.

This one, of course, came on the heels of the military bag fiasco. In that one, soldiers were coming back from Afghanistan and had four bags each. Delta offered three bags for free to active duty military members traveling on orders, but they had to pay for that fourth bag. The soldiers posted it on YouTube, and Delta quickly became unpatriotic and evil. Why? Because the airline only allowed three free bags instead of four? People just couldn’t believe that an airline would charge soldiers to take bags after war. But guess what? The Pentagon actually reimburses soldiers for that. Oops. Not such a big story in reality, but soldiers are a hot button issue and this one took off quickly.

In both cases, Delta had to rush a response, and that’s dangerous. In the military incident, Delta increased its free bag allowance and others followed. With the Saudi Arabian deal, Delta simply clarified its relationship by explaining there would be no codesharing or frequent flier redemption. The former isn’t a surprise, but the latter is very strange since mileage earning and redeeming is a cornerstone of any alliance. But Delta felt it had to react before things got worse.

And that’s the scary thing here. If a story gets big, it can have a real impact on any airline. So those “influential” people with a large Twitter following or a gaggle of Facebook friends can basically hold the airline (or any company) hostage. (I’m not suggesting that the soldiers were acting maliciously here – just using that as an example of a story that can blow up quickly.) This encourages people to try to take up arms and go to the web to get their way. It’s great when someone is actually wronged, but that’s not always the case. By caving and changing the airline’s baggage policy, Delta is opening up to people to try to influence them even when those people are wrong. And people who are more “influential” online carry more weight.

I spoke about this with Morgan Johnston, the man who built JetBlue’s social media presence from simply himself to a cross-functional team with 19 members. He said that JetBlue is certainly cognizant of this as a potential problem. If you give preferential treatment to those who just happen to be “influential” in cyberspace, then it’s doing a disservice to everyone. Sure, the angry passenger might be happy but someone with a legitimate concern might be overlooked because the company is busy focusing on more “influential” people.

JetBlue understands this, but not everyone does. And the more that others give in when the spotlight shines, the more it will empower other people to do the same.

So while social media can do a lot of good, it can do a lot of bad as well. That’s why I was sad to see Delta give in on the military bag policy. Was there really a problem? No. But it’s hard to put all the blame on Delta. How can you not react when the entire country starts suggesting you hate our troops? I don’t know that anyone knows the best way to react in these situations yet, because it’s a relatively new phenomenon. I certainly don’t know the right thing to do here, and that makes it frustrating.

What do you all think?

And we’re back with Spirit’s Chief Marketing Officer, Barry Biffle. Yesterday we dug in on the new routes out of Chicago and Vegas. Today, it’s time to talk fees. Many of you love to hate fees, but as long as they’re properly disclosed, then I see no problem at all with this kind of model. Here’s what Barry has to say. See a few of my comments at the end as well.

Cranky: Now what about Vegas? People have long thought of Southwest as the low fare airline, and you’re coming into Vegas-West markets where Southwest has long ruled the roost. But you think that Southwest’s fares have risen to the point where there’s room for a lower fare operator?

Barry: Well, we added LA last month. You’ve still got Delta, US Airways, American, and United. There are plenty of high cost guys. But we do have lower costs than Southwest. We also offer a different product. Southwest would actually go out and tell you that everything is free. They tell you bags are free, but what they really ought to say is that you’re subsidizing people who want to check bags. It’s like when you go out to dinner with friends and someone orders a really expensive bottle of wine. When you split the bill, you’re paying for it whether you drank the wine or not.

In 2006 our total revenue per passenger was $109. We actually had less than $5 in non-ticket revenue. In 2010, our average total prce including options was $112. It was only up $3 but our non-ticket revenue was $35. We don’t nickel and dime. What we’ve done is allowed people options. Most people are figuring out that we’re a much more consumer-friendly model. But we also cater to a different clientele. If you’re the guy who always orders that wine, you like the Southwest model.

Cranky: Let’s talk about one of the more controversial moves. You’ve started charging for people to bring carry-on bags.

Barry: We were averaging 17 gate-checked bags per departure at LaGuardia. The reason is because airlines lie to you, not Spirit, well, they don’t really lie but they’re allowing you two bags when there isn’t enough space above all the seats for everybody to jam a bag up there. If it’s a full flight, there’s a backup, nowhere to put the bag so its gets checked. It delays the flight and the customer gets mad. Will it be checked to my connection? Wait, I’ve got to get my medicine out. We don’t have those issues anymore. We’ve ended up with a better customer experience. Our total turn is down by 7 minutes because I’m not gate checking bags. Are we evil or are we actually the best option for consumers?

Cranky: Some people think that you’re being sneaky and trying to hide fees from them.

Barry: I want you to know what’s optional and what’s not and what’s included and what’s not. Part of the challenge is that there are so many requirements for disclosing this or that (not just in the airlines) and so people don’t pay attention. I don’t want to deceive anybody. I want people to feel good about the purchase that they bought. We just think the airline industry operated forever in a manner that didn’t give options. If you go way back, we assumed everyone wanted a meal.

At the end of the day, if you take a Haitian who lives in South Florida and they immigrated here 10 years ago and they’re living the American Dream and they want to go see their mother back in Haiti, who am I to say they need bags or they need a TV or they need food? We believe it’s our job to get them the cheapest possible way to go see their mother because otherwise they might not be able to afford it.

Cranky: But disclosure is a lot tougher for sales that aren’t through Spirit directly. And you do sell through third parties.

Barry: I think there’s frustration with the third parties. If they sell the ticket they should be obligated to tell our policies. How many times have you gone to Expedia and then you get to the hotel and there’s a $15 a day resort fee and it’s mandatory. Wait, so this is required of me and you didn’t tell me this? But they should have just said it.

There is an issue with people who haven’t flown us and bought us through a third party. The third party causes the most challenge. We like that distribution partner, but we’re not in all of them. We’re comfortable with the partners we have and we see value in it. We’re just trying to isolate the specific issue you mention. We’re not going to go to them with a big mandate, but at some point we’re going to have to figure out a way for them to disclose better and better present the options to the customer.

But the third party is a separate issue. When we changed our model in 2007 in a big way, there were people who had flown Spirit before who were not familiar with the new model. I’m not aware of a complaint we’ve ever got from Haiti, but routes that we had flown before, there was a higher propensity. There definitely was a conditioning of previous customers on previous routes. Last year was a good example. When we announced carry-on fees, we had these huge banners, maybe we went overboard. If I’m going to carry 700,000 people a month, if I get 99 percent, if 1 percent of people don’t know, that’s still a large number of people. I don’t know how we get every last person conditioned, but I’m committed to trying to get there.

Cranky: You talk about places like Haiti, but those are markets where people usually do bring a lot of bags when they go back to their families. There hasn’t been any backlash?

Barry: What we normally do to illustrate it to people is explain that your fares are going to drop so much that you can afford to go back and forth. Before you were paying $700 and you wanted to make that trip count, so you would take a gazillion things back with you. But now they don’t need to bring as much stuff. We see checked bags drop the longer we’ve been in a market.

And that was the end of the interview. I tend to agree with just about everything Spirit says, but there are a couple practices that I don’t like. First, Spirit charges an $8 passenger usage fee each way. This applies to everyone unless you buy at the ticket counter, so that’s how they get around it being considered optional. I’m fine with that, but I want a disclaimer that shows me that I can save $8 each way if I go to the airport. It’s not very clear.

The second issue is with opt-in versus opt-out. As Barry mentions, people do get overwhelmed with disclosures and end up missing things. So when, for example, travel insurance is already pre-checked for me and I have to opt out, that’s a little tricky in my mind. How many people fail to uncheck it even if they don’t want it? Of course, this will be going away with the recent DOT regulation change, so it won’t be an issue for much longer.

Other than, I like what Spirit does. I have no clue if they can make big city markets work, but hey, they think they can and the results have been promising in those cities with the trial balloons they’ve sent up so far.

I know that a lot of people love to hate Spirit, but I’m not one of those people. That airline has made its model very clear. You’ll get a very low base fare but just about everything else will cost extra, including carry-on bags that don’t fit under your seat. If you don’t like it, you don’t have to fly on Spirit. But it’s a perfectly good model, and customers have responded. The airline is making money.

This past week, the airline announced some big moves. It will begin flying from Chicago/O’Hare to Boston, Dallas/Ft Worth, Detroit, New York/LaGuardia, and Orlando. You’ll also see flights from Vegas to Portland (OR), Oakland, and San Diego. These are big moves in big airports, and I was able to get Spirit’s Chief Marking Officer Barry Biffle on the phone to learn more about it. We ended up having a wide-ranging discussion, so it’s going to be broken into two parts. Today we’ll talk about the new markets. Tomorrow, look for talk about fees and why Spirit loves them so much.

Cranky: Where is all this capacity coming from for these new routes?

Barry: There are two more aircraft coming in at the end of this year and three more at the beginning of next year. There’s not a lot of frequency on these routes, so they don’t actually use a lot of aircraft. You can take San Diego to Las Vegas for example. It’s only an hour flight. We operate our airplanes 13 hours a day, so that’s a small amount of time for a roundtrip.

Cranky: Tell me more about this move. You’ve really focused on Caribbean and Latin America for awhile. Recently you’ve gone into small cities like Plattsburgh (NY) and Latrobe (PA). Now you’re doing big city routes.

Barry: The geography may be a little different, but it’s 100 percent consistent with the business model. What we look to do is provide something different in the marketplace; we are the price leader. We look for markets that have really high cost competitors, we look for really high fares, and we look for cities where we can we have an efficient operation. Then the question is: Will the market stimulate if we come in?

Cranky: But O’Hare is crowded and not the cheapest airport around, so can you have an efficient, low cost operation?

Barry: Specifically in Chicago, we’ve been there for a long time and we’ve been growing Chicago in just the last year and a half. We see the dynamics of the customer base in Chicago wanting more and more of what we offer. The fare environment has gotten really high. American and United have a great product and they’re serving the business customer needs very well but the reality is that $400 for a two-hour flight to Dallas is out of reach for leisure consumers and people visiting friends and relatives. So we saw a great opportunity there.

Las Vegas also meets those same criteria, and when you talk about the stimulation potential, Las Vegas is one of the greatest destinations on the planet. At the end of the day, it comes down to price. You have a lot of markets out there that are one- to two-hour flights that are over $100 on average. The only reason people go there is vacation or leisure, setting aside convention business. The price is gonna draw a lot of people in. Vegas is also important because the seasonal balancing opportunities are very good and it complements Ft Lauderdale. In Sept/Oct, which are decent convention months in Vegas, it’s hurricane season [in Florida]. Conversely, not a lot of people go to Vegas for Christmas.

Cranky: I understand the rationale for targeting these markets in general, but why O’Hare? If you are all about lowest costs and lowest fares, why not something like Gary or Rockford which is cheaper?

Barry: We’ve looked at Gary. We’ve looked at it a lot. It’s cheap. And we looked at Rockford. The best way to think about our airport selection is we will go where we believe we will have a cost advantage. We will not fly somewhere if we believe that the airport location is going to impede our cost structure. We fly to LaGuardia and we believe we’re the lowest cost operator there. We run 12 flights a day on one gate. We wouldn’t be in LaGuardia if I couldn’t find a way to be the lowest cost operator at the airport.

We’re already in O’Hare and by throwing out two gates of flying, we’re actually lowering our costs there. Our first choice is always going to be a secondary airport because of congestion and at the end of the day, the facility’s cheaper. But the reality is that there may not be a good secondary option. In Europe, it’s actually great, because there’s so much ground transportation. In the States, unfortunately, so many people have cars, but they don’t want to necessarily drive them that far.

Cranky: So you’re saying people don’t want to drive to Gary or Rockford for low fares?

Barry: Specifically with Chicago, my opinion is that if you’re going there for business, Midway is just as convenient to downtown or easier than O’Hare. In our case, we’re not targeting business traffic, so I don’t look at it that way. If you think about the geography where the population lives, specifically the suburban population, it’s north and west of downtown. So O’Hare is much more convenient than Midway. If you look at Gary, there’s just not that much population, and definitely not the affluent population on the south side, south and east of Chicago.

I actually think we’re still intrigued with Gary and I would actually argue that Gary serves a different geographic base. Rockford is a little bit different. You do kind of appeal to some of that west and northern suburbs and of course, I guess Allegiant has chosen that. Our view is that I’m already at O’Hare so we want to grow O’Hare to its potential before I consider another airport.

Tomorrow, we’ll talk fees. I can already hear you guys typing your comments, so I look forward to a “Spirit-ed” discussion. (Sorry for the pun, but I had to do it.)

What do airline alliances mean for you? – CNN Out of the Office
Airline alliances aren’t necessarily all they’re cracked up to be. There are some benefits, but not nearly as many as you might expect.

In the Trenches: Changing up the Routine – Intuit Small Business Blog
Making things run better at Cranky Concierge is always a good thing. I just need to make sure I don’t shoot myself in the foot.

That’s the question. What will Boeing do? The Airbus A320neo has been a hot seller at the Paris Air Show this year, and even American is said to be in talks with Airbus about buying. (This sounds like an effort to get Boeing off its butt, but that’s just me.) So what will Boeing do? Will it go for a 737 with new engines? An all new 797 to replace the 737? If it wants to keep winning narrowbody orders, it has to do something. The question is . . . what?