Airline Fee Outrage is Just a Symptom of the Real Problem: The Brand

I’m sick and tired of people complaining about airline fees. You might think this means I’m going to defend the airlines and blame everyone else for being dumb. That’s not the case, at least not today. Today, I’m going to jump on the airlines for really screwing themselves here. But first, let’s go through some background.

As you’ve probably heard by now, US airlines collected $5.7 billion in bag and change fees during 2010. The media has jumped all over this saying how awful it is. Even Conan O’Brien put together a video with faux Delta execs rolling in the money. The problem is that it’s a completely warped view of things. The amount of fees an airline brings in doesn’t matter. People think they’re being gouged, but look at company net income to see if there are excess profits here. There aren’t.

Net Airline Margins Versus Most Admired Companies

I put net income of the airlines next to that of the most admired companies according to Fortune magazine. Those companies made silly amounts of money, yet how often do you hear about these companies gouging people? (Ok, maybe Microsoft . . . .) You’ll notice that Southwest is walled off. Why is that? Because it’s the one airline that has overlap between the two groups.

You might think that Southwest’s no-fee policy is contributing to this standing. There is likely some contribution, but Southwest’s standing versus the other big guys happened long before people were talking about fees. Why is that? I think it’s because Southwest really pays attention to its brand while most others (excluding JetBlue) don’t even know what a brand is.

If you look at those companies at the top of the admired list, they’re all very strong brand names (or stewards of strong brands, like Procter & Gamble). They have spent so much time and effort setting customer expectations and delivering upon them, that they rank highly, even if they make a ton of money with high-priced products. If you look at the airlines, you’ll see that most of them would have lost money in 2010 were it not for these fees. Why should people be so angry with airlines for finding a new business model that actually allows them to eke out a small profit? Because people just like to hate airlines anyway. This is just another thing for them to latch on to.

Part of this is certainly because people have a warped view of what air travel should be. Anyone expecting the lap of luxury while shooting across the country for $200 is crazy, but that’s exactly what happens. But like I said, this post isn’t about bashing passengers. It’s about bashing airlines. Both sides play an important part in this.

I started thinking about this more after reading PlaneBusiness last week. Holly wrote extensively about the power of the brand, and talked about not only the airlines, but Lebron James. (If you aren’t a subscriber, you should be.) I agree with her that brand matters. Unfortunately, most airlines don’t believe that to be true, or they have a warped sense of what a brand should be. Southwest, however, gets it right.

When you fly Southwest, what do you expect to get? You expect frequent, on time flights for a low price, right? Southwest has drilled this into our heads so well over the last forty years that even when the flights aren’t on time (the airline finished 10th out of 18 in 2010 with many months toward the bottom) and fares aren’t low (just do a comparison some time), the brand still stands. Of course, that can’t happen forever if Southwest doesn’t hold up its end up the bargain, but it shows the power of the brand.

What do the big guys do? They do crap like this:

Now I know that United got all kinds of accolades for this campaign during the mid-2000s, but it made my skin crawl. What does this tell travelers? It makes it look like every person you encounter at United will be smiling, you’ll have great wide seats, and excellent service making all your dreams come true. For how many travelers on United does this apply? None. Because it neglects dealing with traffic, delays, security lines, annoying seatmates, the occasional (at least) angry employee, and more. This is unrealistic and United is bound to fail with garbage like this.

Delta’s more recent attempts have been better, but they still don’t work for me.

At least Delta acknowledges that there are real problems here, and not everything will be perfect. But it puts an awfully large burden on the shoulders of its people to fix everything when that’s not always possible. Again, it sets expectations higher than they should be. This aspirational stuff just doesn’t make sense for airlines even though that’s how they’ve always sold themselves.

The funny thing is that aspirational brands can work in other industries. Look at Coke, for example. When Coke puts out an ad with polar bears sledding and drinking Coke, nobody actually thinks that will happen when they buy a Coke. But it creates a warm fuzzy feeling around the brand. Coke’s product is fairly straightforward and it can’t really get messed up that much. (If it does, it’s because someone put the wrong mix of syrup and soda water, and nobody blames Coke for that.) But in an industry as complex as airlines, where it’s considered a good thing when 1 in 5 flights is late, aspirational brands simply can’t survive.

On the flip side, we have US Airways which really doesn’t believe in branding at all. That’s not the right strategy either, especially since it already inherited a negative brand image from the old US Airways and its years of suck. So what’s the right way to do this?

If you look at the legacy airlines, which one has the best rep? It’s the one that will soon cease to exist in name – Continental. Its advertising was much more matter-of-fact with witty slogans like “There’s a term to describe old planes. Theirs.” These help build up Continental as a no-nonsense airline. Is it promising you’ll sleep on a cloud, as United has done in past ads (seriously)? No. If you live in New York, it’s all about saying that Continental has the most nonstops to the most places. It’s a convenience argument that doesn’t try to talk about how it will be a flawless experience.

I hope we see more of that from the new United, now that Continental has been taking over. But really what we need is airlines to stop pretending like flying is glamorous, because for the vast majority of people, it isn’t. Flying is an incredibly complicated business and instead of promising a perfect end-to-end experience, airlines should instead promise the little things and then over-deliver.

60 Responses to Airline Fee Outrage is Just a Symptom of the Real Problem: The Brand

  1. Ivan says:

    Actually, I would argue that Alaska has a fairly strong brand too. It isn’t a legacy carrier, but it is quite large on the west coast, and people (that I’ve talked to/heard about) tend to like them because they do care about customer service, such as with the 20 minute bag guarantee.
    It also happens to be one of the most profitable, so they must be doing something right.

  2. JM says:

    I think Delta’s current campaign is positive in one respect in particular because it admits that mistakes have been made by not only the industry– but Delta itself.

    Here in Atlanta there have been many billboards advertising: “THE RED COATS ARE BACK”.

    For anybody who has been around Atlanta for some time, they know that, 1) traditionally, the Red Coats are go-to people for excellent customer service; and, 2) Delta screwed itself by getting rid of them in the first place.

    That’s a hopeful sign.

    For what it is worth, you won’t catch me on a Southwest flight, in part because of their advertising. It’s goofy! The giant ball of red tape?! Goofy!

    Then again, what do I know?

    I still miss Eastern’s The Wings of Man: http://www.youtube.com/watch?v=A4rM1oJeGYA&feature=related

    JM

  3. b757capt says:

    Bret,

    For a very short period of time US was running these videos:

    http://www.youtube.com/user/usairways?blend=3&ob=5#p/a/3878D70EFCD8878D/1/VXtmnY-_33k

    I thought this went very good with your topic today.

    • CF says:

      Not bad. Thanks for posting. I imagine US got Oracle to chip in for some good press there as well. But it takes a lot more than a fleeting few commercials to build a brand, and it sounds like these didn’t get much play.

  4. Dan says:

    CF,

    I’ve long agreed with you about branding, or lack thereof, with the airlines. But I think one point you missed is with the premium cabin — these days, with all of these “upgrades” going on, it’s hard to figure out what seat you will actually be getting. Least one claim that only the rich and famous are effected by that, I’ll throw out that many people play the frequent flyer game quite successfully.

    • Craig says:

      Premium cabins represent one of the greatest challenges airline brands face. Two sets of customers will have — by design — vastly different experiences under the same brand. There are really no other industries in which that’s the case; Coke doesn’t use the exact same brand name and delivery system to offer a watered-down formula for $1.50 and a dramatically better beverage for $150.00.

      The airlines that have the best-defined brands — Southwest and Jetblue — don’t have to worry about premium cabins so they are free to focus on delivering exactly what their brands promise. That’s not the only reason for their branding success, but it’s much easier to define a brand that offers a single consistent experience than it is to define one that has the breadth of customer interactions that the legacy network carriers do.

    • CF says:

      It’s true – the premium cabin adds a ton of complexity to an already complex process. It certainly does muddy the water when it comes to how an airline can present itself.

  5. Great article! This statement is worth repeating: “Anyone expecting the lap of luxury while shooting across the country for $200 is crazy,”

    Much as we like to romanticize air travel, airlines are primarily a transportation business (like Greyhound), not a vacation business (like Carnival). Passengers deserve friendly and efficient treatment, just like they do on Greyhound, but to expect safety & luxury for a song is, well, delusional.

    • Fred says:

      Well, I think that people should expect safety too. But luxury (or even comfort as some people would define it) and free ‘extras’ cannot be expected.
      Besides, you can buy a first class ticket if you insist on comfort and free stuff.

  6. Hunter says:

    CF, my understanding is that CO’s agency will represent the new UA. I’ve also noticed the same “witty” and straight to the point ads out there with updated UA branding, as well as airport posters. The one slapped all over IAH and CLE carries the familiar blue box, gold outline and the new UA globe and says: “Who’s merging is not nearly as exciting as what’s emerging.”

    • CF says:

      My understanding is that they are using Continental’s agency now, but they are going out to bid again for the combined account. With the Continental guys in charge, I have to imagine that we’ll see something with a similar mindset, regardless of who wins.

  7. Bill Hough says:

    Cranky asks “Why should people be so angry with airlines for finding a new business model that actually allows them to eke out a small profit?”

    I answer, “because it’s misleading, dishonest and annoying.” People hate to be quoted a price, only to be nickel-and-dimed when they get to the airport. Airline fees went nuts when fuel prices spiked in 2008. But when fuel prices came down again, did fees go away? Of course not. And I fail to understand the logic of nickel and diming the passenger with extra nuisance fees on top of the airfare. I’ve discussed this with my co-workers, friends, family and business associates, and there is a general consensus among us that airlines should charge one honest fare and eliminate the extra fees. I’ve been flamed for this point of view on this blog, but it answers Cranky’s question above. For decades, the airfare the airline quoted was the airfare paid (except for misleading “bucket shop” ads that quoted one way fares that required a round trip purchase.) Now there is this new system with a low-ball fare quote that bears no relation to what you actually pay.

    People want transparency. Good for WN and B6 for recognizing this.

    • Fred says:

      “airlines should charge one honest fare and eliminate the extra fees”
      Agreed, but to the extent of mandatory fees and taxes. The things that people are complaining about are baggage fees, change fees and others like that. Those truly are optional. So if you pay for a ticket with all mandatory taxes and fees, the airline will get you to your destination and you don’t have to pay any more. Everything else is optional, so not including it in the ticket price is reasonable and intelligent.

    • Bill the problem is that passengers say this: “there is a general consensus among us that airlines should charge one honest fare and eliminate the extra fees.”

      But they act differently. They go after the cheapest fare and don’t look at the extras that are included. Which is probably a function of the fact that the airline hasn’t branded their product properly….

      • Bill Hough says:

        Nicholas, I think that the next year or so will shed more light on the issue you present. How Southwest and JetBlue do vs. the majors will be interesting. For example, right now ATL doesn’t have a bag-fee alternative, but as WN absorbs AirTran that will change. Let’s see if people vote with their wallets and support Southwest.

        • Well I think you could look at DEN. Southwest is having a hard time digging in there against Frontier and United. There might be some shift, but I’ll place a small bet that it won’t be a big one.

          • Bill Hough says:

            The difference between DEN and ATL is that at the latter, WN is buying an significant existing operation that has been competing with DL for over a decade. Unless they really muck it up, WN should do well in Georgia. On the DEN front, exactly how well is F9 doing? According to this article, pilots with Frontier Airlines have approved concessions to help the airline: http://www.thedenverchannel.com/news/28273613/detail.html. The article goes on to say Frontier reported a pretax loss of $55.2 million in the quarter that ended March 31. Meanwhile, Southwest must be doing something right because in May they announced their 139th consecutive quarterly dividend.

      • tharanga says:

        People don’t bother to learn about the fee structures ahead of time, before they book. It’s interesting – people don’t mind a la carte pricing at a restaurant; price fixe is the exception, not the rule. and then, people don’t mind it when they buy a car. So for frequent, low expense items, people can handle a la carte. For very infrequent, very expensive items, they’ll take the time to study the pricing. But for somewhat infrequent, $250 items, they don’t bother, and then get angry afterwards.

        • Dan says:

          In all fairness, when I sit down at a restaurant, every “fee” is presented to me up front. With the exception of taxes (and some drink prices, which does piss me off) I know what I’m going to spend before I place my order. If the restaurant only priced out the entrees and then made me ask about prices for everything else (sides, appetizers, deserts) I’d get pretty pissy.

          Now, as far as prices go on larger items (“studying” them as you say) that’s probably not as true as you assert:

          I bought a brand new car last year for the first time ever. The dealer lured me in with an “internet special” which included all *possible* rebates. Well, guess what? I didn’t qualify for all of the rebates (recent college grad, returning customer) so my price was automatically higher. Then there’s the stupid “dealer option” and delivery fees. Are any of these advertised? Nope. Add to that, they’d only give me scrap value (and not blue book) for my trade-in, and let’s just say I was no happier with the dealer than I was the airline.

  8. Jason H says:

    Branding is tough when you start from a negative value proposition. Once a company is recognized as not “hip” or whatever term you want to use it is extremely hard for them to turn perceptions around. Now there are plenty of companies that soldier on despite a strong anti bias in the media (Starbucks for one), but they also offer something people want and have the margins to allow them to give away things to people when they mess up.

    For airlines I think the problem is rooted in history. The legacy carriers carry a history of the pre-deregulation era, which contains a mythical charm of white glove service and fine china. I started flying after that time, but you still hear people of my age bracket comparing things to the pre-deregulation era. However, after reading Naked Airport: A Cultural History of the World’s Most Revolutionary Structure many of the complaints we have today appeared during regulation.

    Airlines like Southwest don’t have to compete with their history as much while airlines like Alaska don’t have the past image of white glove service to tackle. In this realm the legacy carriers are hamstrung by their history.

  9. The United ad makes you think he is flying off to his mistress and the Delta ad uses Donald Sutherland as the voice over. He does a lot of voice ads and people know his name, and since he is not always doing crazy Hollywood stunts to get his name in the press, people will trust him and …..Delta.

    Look at airlines ads over the years and the majors will show your and brag about their first and business class products, but how many of them show you the actual inside of the planes coach cabin. Very few since it’s not a pretty picture. They will show you the happy family ready to fly off the Disneyland but not the unhappy condition and experience of flying in coach.

    Funny how when Coca-Cola came up with ‘New Coke’ and the world said it was crap, they did away with it and went back to the regular coke the world loved. Everyone complaines about the airlines, but the airlines do nothing if it doesn’t involve first and business class. And since those are mostly filled with coach upgrades, it’s not even the same (class) and exerience as flying first and business in the pre-upgrade days.

    Where’s all that airline china and silver service pieces? Oh yeah, on eBay from the in the collectable section.

    • A says:

      I agree that it hurts brand when you promote a first or business class product that is primarily given away “free” to people with so-called frequent flyer status. IMO airline loyalty programs have hurt them in the branding/consistency department. They use the “freebies” to buy loyalty instead of building an honest customer loyalty. You never hear of Honda giving someone a free car just because they bought 4 cars from them previously. But they have loyal customers that keep coming back. Yet the airlines still think loyalty programs are a must have to maintain a customer base. Bogus.

  10. A says:

    You hit the nail on the head with Southwest as they have been consistent with their customer experience for a long time. It has been a benefit to them that the public has demanded cheap flights and their business model was built around that.

    Legacy airlines have a lot more things going on to maintain consistency. Nevermind the usual ups and downs of the airline business. I agree that marketing shouldn’t paint a rosy picture of flying when the reality for most is a greyhound bus at 30,000 ft. That said, I think it would financially impossible for a legacy airline to maintain consistency similar to a Coke or P&G.

  11. Geppetto says:

    Sorry CF but I don’t agree with you.

    I am traveling since January from LGA to IAH for business reasons. I am constantly booking my flight 3 weeks ahead and still, my airfare spread from a meager $ 288 to over $ 700. I don’t know any other industry who sells a ‘serious’ product with such a price fluctuation.

    This is what everyone likes about SW, just be honest and charge what you think is a reasonable price for your product. The airlines themselves messed this up many years ago and the customers have to pay the price today.

    I also love the comparisons always made how ‘cheap’ flying is becoming. Well, many industries made productivity improvements over the years. So, where is the productivity improvement in the airline industry and how much are the airlines willing to invest? I think not much, just look at bag handling, managing planes at the ground and air traffic control.

    • Geppetto, you’re not buying the same product. Lets presume that you purchased each of these tickets the same exact number of days before your origination and you still had the variation. (If you didn’t, then you’re adding more variation into your product.)

      But whats going on around you flying? Is it spring break? Or perhaps there are a plethora of conferences?

      You don’t expect a coke to be the same price at a huge grocery store when you buy a twelve pack at room temperature as when you buy a single bottle thats refrigerated for you, do you?

      The product you’re buying varies by the time its delivered and the environment in which its delivered.

    • CF says:

      Geppetto – Your post is a perfect example of why branding works, even though you say you disagree with me.

      Let’s say you want to fly on Southwest roundtrip from LA to Nashville this week. You leave tomorrow and come back the next day. You know what you’ll pay? It’s $977.90. What if you book those same flights in October? It’s $427.90 roundtrip.

      In other words, Southwest is no different these days than what you’ve found in your example from the other airlines. But why do you think that everyone likes Southwest? Because Southwest has built a strong brand with a great halo on it.

  12. Roger says:

    The airlines only have themselves to blame. When people sitting next to each other getting exactly the same product could have a ten times difference in what they paid, the airlines have been removing all differentiators (eg no food, no pillows) and the pricing policies have been very clear it is all about the money (no Saturday night stay – you must pay more) then it is hardly surprising consumers get the message and focus so much on price. Heck do any two customers on a plane pay the same amount?

    Profit margins are not particularly relevant because we see so much waste. The expenses of that waste are subtracted from revenues so an inefficient company will have lower profit margins. Why does it take so long for airline staff to do anything? The long queues should mean they are saving money. The fees for everything imply an underlying expense – $150 to change a ticket implies it costs that order of magnitude to make a change.

    The airlines reaped what the sowed and it took a many decade effort to do so.

    • Ryan says:

      This is another typical armchair response from someone who doesn’t sound like they work in the industry. If you can find productivity gains then by all means, go ahead. But the bottom line is the airline industry is an extremely expensive industry to be in and costs will always weigh down the bottom line. You can only maintain an airplane so cheap and you can only pay your people so little. The complex nature of the industry is such that there are plenty of things (like fuel, airport charges, government taxes, and an antiquated air traffic control system that the government continues to waffle over replacing, yet blames airlines for their delays and mistreatment of passengers when in fact most of those delays are caused by the system itself that airlines are subject to), that airlines cannot control or make more “efficient.” Many airlines have squeezed about all the productivity you can out of their employees (Southwest being one of them) and it won’t ever get much better than that without removing agents and forcing passengers to just interact with computers.

      Airlines are actually extremely efficient, you just choose not to look at their operations in great detail. Getting an airplane and all those passengers and bags from point A to point B with all the regulations, paperwork, and procedures is actually an incredible feat. And most airlines are now doing it on time 80% of the time. When you add people and regulations into the mix it’s very hard to be as efficient as a machine is at filling up soda bottles. There is a huge difference between those two actions.

  13. Asad says:

    Airlines have brought this on by themselves because of the way we book tickets. When you go to buy a ticket you have two filters, time and price. Imagine if you had different types of seats, meals or on time performance to pick from. Would you pay more for airlines with better on time performances ? And then imagine if the airline cared about its customers.

    Try calling Singapore Airlines sometimes and compare how they treat you over the phone vs United. And then look at the amount of data each one collects from you and how they use it. Singapore Airlines builds a brand while United is more concerned with yield management. So long as the airlines keep focused on how much money they can get from each passenger during the flight as opposed the total life time value of the passenger they will continue to lose money.

    • Isn’t this more the GDS’s fault? They’re the ones who push time and price. The airlines have been fighting a battle to be able to put this info out there, but the GDSes have been fighting them tooth and nail.

    • CF says:

      Nicholas – I think it was probably the airlines’ fault that we found ourselves in this predicament in the first place. But now that they realize that this is not a good way to sell travel, they’re hamstrung by the fact that the distribution systems won’t change. So it’s a mix of both.

  14. Exiled Antipodean says:

    Virgin America is clearly trying to build a brand like they did in long-haul and in Australia (fairly successfully). It is striking that the branded airlines are largely ones that flourished after de-regulation. During regulation the airlines competed on quality, since they were constrained on price competition, and a lot of their passengers didn’t actually bear the cost of the ticket personally. So, yes, in the 1960s and early 1970s flying was just as quick as today (maybe quicker, given less congestion?) and customer service quality was higher.

    That memory lingers, even though airlines now compete on price (between each other), and on the value of time with other modes of transport. Competing on saving time is not an area in which you’ll get meaningful customer service.

    • Methacrylate says:

      Well Virgin America is not ‘fairly successful’ – they have yet to make any money despite their product which is quite good. It isn’t perfect, as they don’t have the frequencies of other airlines, and you’re out of luck if you don’t want to fly to the 15 or cities they serve, but otherwise it’s a good product.

      Which is why it’s a good example about the brand not being everything – sure, it is important as we see here, but if you look at the numbers, other airlines have shown that you need a model that makes good business sense as well as the brand.

      • Methacrylate, I meant they had been fairly successful in longhaul and Australia at building a profitable brand. Can they replicate that in the U.S. with a different network geography and the foreign ownership regulations? To be seen, as you point out.

    • Bill Hough says:

      Will there’s a difference between Virgin America and Virgin Atlantic (the UK-based long haul airline) and Virgin Australia (the Down Under version). When they launched, Virgin America was looking like an airline with a new way of doing business and they were doing everything they could do to differentiate themselves from the old-line competition. I was lucky to cover VX’s 2007 inaugural for Airliners magazine, and they made a good first impression.

      Unfortunately, on March 19, 2009,Virgin American announced that it would begin charging passengers for the first checked bag effective May 5 of that year. And although a “selection of non-alcoholic beverages is complimentary” in coach, VX charges for food just like the so-called “legacy” carriers. Finally, Virgin America charges for pillows as well, as part of their “Red Eye Sleep Kit.” Sure, on VX, you get trendy mood lighting and “Red” IFE, but I’d rather go with WN and skip the bag fee. I have a analog IFE system called “books.”

    • CF says:

      Exiled – The Virgin airlines are certainly very good at building a brand, but I think their success has largely been due to unrelated circumstances. Virgin Atlantic got itself designated as the only other British airline permitted to fly from Heathrow to the US. And Virgin Blue (now Australia) just happened to launch right when former #2 Ansett went down the drain. So they both found themselves in advantageous situations.

      That being said, the customers of those airlines tend to be happier and probably like the airlines better because of the branding work that has been done to create this experience. It makes you wonder whether they would have survived as long as they have if passengers had hated them as they do BA or Qantas.

  15. Exiled Antipodean says:

    Bill, interesting perspective. I’m not sure that the issue of fees vs. non-fees is great in distinguishing what makes the Virgin airlines any better or different.

    Virgin Australia (Blue) have charged for bags for years, and charge for food and IFE. But no-one seems to mind that too much in Australia.

    All of this gets back to CrankyFlier’s original point was that it’s not the fees, it’s the brand.

  16. Ed F London says:

    Craig: first, a “complaint” and then a suggestion.

    The “complaint.” I think you’re scaremongering when you keep talking about UA taking over CO. While it is the United name that survives, isn’t it the CO management that has prevailed, post merger? I’m suggesting that we will see either more CO than UA or the better of the two offerings in the final, merged entity. (and I should confess I switched from CO to UA more than a decade ago and am a UA million miler.) To continually paint the merger as a loss of all things Continental is a bit OTT.

    And now a suggestion. I agree that one can’t expect any kind of luxury for $200 cross-country. What I would like to see is some kind of comparison/analysis of what a transcon flight from 1970 would look like when compared to today’s options. Is a coach seat from 1970 what a premium econ seat is now? What would a coach seat compare to today? And would the adjusted price get me into biz class every time? And how close is today’s business to yesterday’s transcon coach? Just wondering. And intereted.

    • Ed you mention cross country in the 70′s and I looked at some old timetables so for that smart math people out there, maybe you can work the ‘today’ cost from what was charged back then.

      Nonstop Los Angeles – New York/JFK

      TWA July 1970 – F- 192.24 one way/ Y- 153.36 ow/ Excursion roundtrip 245.16
      TWA July 1973 – F- 218.00 ow / Y- 168.00 ow / Excursion RT 292.00

      American 1970 – F- 193.00 ow / Y- 154.00 ow / no Excursion fare shown
      American 1973 – F- 218.00 ow / Y- 168.00 ow / Excursion RT 292.00

      AA must have used rounding to show fares.

      By 1974 prices went up to F- 243.00 ow / Y- 187.00 ow

      • tharanga says:

        It’s a matter of picking an appropriate CPI table or deflator at this point. Starting out with CPI-U, just because it’s the first thing I found, and the BLS page has a cute little calculator for those who don’t like to fuss with the tables http://www.bls.gov/data/inflation_calculator.htm:

        American 1973 – F- 218.00 ow / Y- 168.00 ow / Excursion RT 292.00

        translated to 2011 is

        American 1973 – F- 1109 ow / Y- 855 ow / Excursion RT 1486

        (to go from 1973 to 2011, multiply anything by 5.09)

        • Tharanga, thanks I didn’t know there was a inflation calculator.

          So AA today has 29 fares between LAX-JFK including 3 first class fares 3156.00/2974.00/2570.00 one way (you pay more depending on the flight number). For AA118 the 7am out of LAX would be the 2974.00 with taxes/surcharges is 3034.70 one way.

          The plain -Y- fare base code (there are other Y’s) is 1956.00 ow, but using AA118 booked -Y- would be the YA2AA fare for 1431.00 ow with taxes/surcharges is 1491.70 ow

          But surprisingly they don’t have roundtrip excursions, only one fares. The lowest with 14 days advance purchase is 254.00 ow so roundtrip with tax/surcharges is 549.40.

          You don’t see anything lower on AA until about the last week of August.

  17. tharanga says:

    I’d argue that the lack of branding helps push the market in the direction of fees and lower service anyway. At the moment an infrequent traveler buys a ticket, that person is likely considering only two things: cost and schedule. The person doesn’t realize that the airline charging a little bit more will also give a more pleasant experience, or requires fewer fees for an expected level of service. This is partially because he doesn’t fly that often, and partially because the airlines don’t create strong brands. So then the airline ends up thinking there’s no incentive to create a nicer experience, and it thinks it has every incentive to have a lower base fare and make it up afterwards with fees.

    • Bob K. says:

      I think you make a great point here, especially for leisure travelers and for those business travelers who don’t travel frequently enough to build status or miles.

      Without branding to differentiate the product, the product becomes a commodity. Why do so many people pay a significant premium for branded ketchup, ibuprofen, and other such grocery items, when it’s either similar or identical (often made by the same company in the same factory)? It’s because when you buy a bottle of Heinz ketchup, you know what you’re getting, and you know what sets the product apart. When you buy the store brand you’ve never tried, you don’t know what to expect.

      Even for mild airline geeks like me, trying to figure out the “best price” for a given set of extras and flights involves a modeling exercise and a ton of research (down to the different costs to park at various airports, the bag fees, etc etc), and most airlines’ fees appear to be the same or similar until you dig into them- you know that with most of them you’ll be paying through the nose anyway, so why compare?

      Ultimately, for many of us it does come down to price and schedule, and even for many business travelers it does to a certain extent (I have to stay within a range or reasonably close to the minimum fare, else the accts payable people send me a nastygram), if just because there is so little differentiation and because those things are the easiest to compare.

      Would I pay 20% more for JetBlue, or 10% more for a 767 instead of a RJ? You betcha, but with most booking engines it’s hard to tell if you have a choice in the latter, and it’s rare that you have a choice in the former (if you don’t live within an hour of the ocean, odds are JetBlue is never an option).

      • nealio says:

        Bob K and theranga have excellent points. The more the customers can customize their experience in terms of the actual flights, types of aircraft and amenities onboard (ie: stuff the customer can control) then I think we’ll see a big attitude shift. As much as we rant about Delta.com, they are adding some innovative features to adjust your search, ie: uncheck ATL as a connection, make sure the plane has wifi, power outlets, etc.

    • CF says:

      Great point. I agree as well.

  18. frank says:

    Now I know that United got all kinds of accolades for this campaign during the mid-2000s, but it made my skin crawl. What does this tell travelers? It makes it look like every person you encounter at United will be smiling, you’ll have great wide seats, and excellent service making all your dreams come true. This is unrealistic and United is bound to fail with garbage like this.
    ======================================================

    Southwest had a NO FEES commercial: http://www.youtube.com/watch?v=hjUlrirW480

    yet, they’ve ADDED fees: http://www.startribune.com/business/46504982.html

    and: http://www.azcentral.com/business/articles/2009/09/02/20090902southwestfees.html

    • somchai_d says:

      Perhaps a slight exaggeration? I mean there are plenty of horrible things out there in the world that could make one’s skin crawl. But an airline ad? Methinks the drama/over-exaggeration quotient is in overdrive a bit there.

      If we hold marketers accountable to 100% accuracy in representing their product, I think you’ll find a lot of empty seats on a lot of airlines.

  19. Chris says:

    I personally find CO’s (and the new UA’s temporary advertising) to be abysmal. I suppose I understand your point that airlines are not elegant or luxurious and as a result should not be branded as such, but I find the Kaplan Thaler ads to simply be obnoxious and childish, not to mention that the design they use looks extremely dated. I suppose it’s good news then for me to hear then that Kaplan Thaler is not one of the firms bidding on the permanent UA contract…

  20. Cranky state: “The amount of fees an airline brings in doesn’t matter.” If this is correct why do the airlines continue to gouge the paying public with open distane by increasing or inventing fees on a regular basis?

    In my opinion, the fees will continue as long as the public accepts them as a financial fact to travel by air or a couple of more legacy lines drop them to improve their customer profile.

    Until then – bend over and hand over your wallet!

  21. fred says:

    I was told that airlines fees have become all the rage because “fees” are classified differently from “fares” for tax purposes. So the story goes, “fees” are considered a reimbursement (to the airline) for some “extra” or adjunct service that enables the main business, and hence are, in some fraction, tax-deductible, or otherwise classified differently from “fares” and hence make a proportionally higher (i.e. less taxed) contribution to the company’s bottom line. Anyone here know if this is true?

    • Well, I don’t think they’re tax-deductable for the airline.

      That being said, if there are any percentage taxes on the fare, they don’t apply to the fees. So it ends up looking (and being) cheaper for the passenger.

    • CF says:

      There is some truth to that. From an income tax perspective, there is no difference. But fares are subject to a 7.5 percent excise tax (at least domestically) and fees are not. So there is a benefit.

      While that’s part of the reason, I think the bigger reason is because of how people shop for flights. They don’t think about fees when they purchase travel, so it’s a de fact fare increase.

  22. Vedran Prorok says:

    Air Tran has done great job at creating a brand with young people. As a college student, I can’t even begin to tell you how many times I’ve heard my peers planning a trip, only to suggest hopping on an Air Tran U standby flight. The fact that the program seems geared to college students gives it exclusiveness and the constant availability of it caters to spontaneity (black out dates become a harsh reality at the airport). 20 somethings aren’t looking for white glove service, they just want the greyhound 30,000 ft. in the air.

  23. Taylor says:

    I think you are spot on with all points except Delta. Flying Delta for the last five or so years, I have watched service steadily improve and, especially on my most recent TATL flights, Delta should be proud of what they’ve created. With the creation of @DeltaAssist on Twitter, they’ve taken customer service to whole new heights, no pun intended.

    UA has, as you said, always been the worst when it comes to managing expectations in my eyes. Sure, maybe if you pay $6000 for an international first class ticket you’ll get exceptional service, but for the vast majority of fliers that will not be the case and they’ll have to deal with sucky food, a horrible hard product, and angry F/As.

    As some posters said above, though, the vast majority of fliers will not care about branding or the hard product, and will pick an airline based on schedule and cost.

  24. Bill Hough says:

    And, right on cue comes this report from the American Customer Satisfaction Index where passengers gave airlines a satisfaction score of 65 – “a very low score.”

    http://www.airportbusiness.com/online/article.jsp?id=45634&siteSection=1

    “Leading the pack was Southwest Airlines, which raised its score, based on a zero-to-100 scale, by two points to 81. Southwest is the only major carrier that does not charge a fee for either the first or second checked bag.” Next in the group is bag-fee-charging Continental Airlines, but its score of 64 fell 17 points behind Southwest’s.

    I’d say that bag fees, or the lack thereof, now help to define the airline brand.

  25. bill says:

    Regarding branding I think this ad from JetBlue is great and other airline ceos would be wise to follow JetBlue’s lead.
    http://www.youtube.com/watch?v=rFAhk-1f2jA

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