El Al is about to face some serious low cost competition into Europe. Air Berlin started serving Israel on July 7 and easyJet starts in November, so El Al is trying to figure out how to compete. The idea was to come up with a low cost carrier but put it on the same airplane as their existing service. The seats are the same, but if you’re in regular coach class, you get frills. If you’re in the low cost coach class, everything else comes for a price. So just to make sure we’re clear, let’s get graphical. This is not what’s happening:

The seats are the same. This is the same type of bundling that Air Canada uses with its fare products. Frontier does it as well now. The cheapest fares get very little in the way of frills and the more expensive fares get more. But since the physical product isn’t any different, it’s not really a new class of service. It’s just fare bundling.

So El Al can call it whatever it wants, but it’s nothing new. It is, however, a good idea because it lets people pick and choose what’s important to them.

[Original photo via Wikimedia Commons - CC BY SA 3.0 (de)]

Republic Gets Court Approval to Buy Frontier, But It’s Not a Done Deal
Republic moved one step closer to buying Frontier, but it’s not done yet.

Alaska Details Interesting Gains and Losses
Alaska put out its forward-looking guidance, and there were some interesting tidbits to review.

American Kicks Off Earnings Season
American was the first to walk the plank with Q2 earnings, and no, they weren’t good. We expected that, of course, but it’s still painful to watch.

Continental CEO Larry Kellner Walks Away
Continental CEO Larry Kellner is hanging up his wings for a more earth-bound job.

US-EU Open Skies Phase II Talks Begin
All eyes are on round two of the talks – this, the EU hopes, will result in cabotage rights within the US.

United, Continental Antitrust Application Slammed by DOJ
The DOT was in favor of the broad antitrust immunity application, but the DOJ isn’t so happy.

Frontier Makes Money in May, What’s Next?
Frontier is making money, and that’s great, but it’s what happens next that really determines how this airline will be doing going forward. Lots of changes could be underway.

Boeing Set to Buy Vought?
Boeing seems to be having seconds thoughts about outsourcing most of the 787 part production, and it now appears to be bringing one of its suppliers back in-house.

They say it’s “industry-leading,” and that may be the case in Canada, but it’s pretty similar to most of the ones that have come and gone in the US over the years. That being said, Air Canada’s fare structure makes it even harder to use than most. If you buy a ticket on AirCanada.com (Canadian version only), you have 24 hours to find a lower fare elsewhere. If you find it, you report it online and get a $50 credit plus the difference in fare. One catch. That lower fare has to be within the same fare bucket.

You’ll remember that Air Canada has a branded fare bucket approach (that I love). Tango fares are the cheapest and come with a certain set of benefits, and it moves up from there to different buckets with different benefits. So if you bought a “Latitude” fare, you would have to find another Latitude fare for cheaper somewhere else. The only problem is that I don’t know of another website that breaks down Air Canada’s fares that way. So good luck.

You could always check with a travel agent to see if there’s a lower fare around, but that’s probably the only place you could do it across all fare buckets. (And who is going to do that, anyway?) I seem to remember reading that a lot of people upsell to higher fare classes, so this may be a nice marketing message, but I’d imagine that few people will actually be able to take advantage of it. That will just confuse and annoy people, and that’s not a great way to do business.

I hope they’ve got more up their sleeve than this.

Oberstar Questions Virgin America’s Citizenship Status
Though the DOT may not have been too high on reviewing Virgin America’s ownership status before, Rep Oberstar’s intervention will certainly change that.

Airline Executives Talk About Oil and the Economy
I promise I’m almost done with my wrap-up from the Phoenix Aviation Symposium. This is part one of the executive panel.

Unfortunately, it’s not a very straightforward process. Air Canada says that to take advantage of the opportunity, you have to go to the Optiontown website. Apparently, they’re the ones taking the risk here. Once there, you put in your confirmation number and last name and they prepare your offer.

Only parties of 1 or 2 people traveling on Tango or Tango Plus (the cheapest) fares are eligible on flights within Canada or between Canada and the US. Even those people may not be offered the option on every flight. When you enter your information, you get to decide how flexible you are. If you give them a wider range of availability (up to three days), you can earn more than if you just have a few hours of leeway. Once you pick your time range, they give you specific flights within that range from which to choose. At that point, you pick the actual flight that you would be willing to take as an alternate to your original, if they need you.

Finally, you get to choose how far in advance you need to know your plans, either 2 or 4 days prior to departure. If you give them 2 days, they’ll pay you more than if you need 4 days. More flexibility means more money for you.

So how much can you get? They’ll give you up to $7 (USD or CAD) just for signing up. Then if they actually opt to switch you to the new flight, they’ll give you up to $50 more each way. It’s not as much as you could get if you were bumped at the airport, but that makes sense. They’re giving you much more advance notice and they even let you pick your alternative.

This seems like a win-win to me. For Air Canada, they can gain flexibility. If they want to overbook as the flight gets closer, they know how many options they have to move people around. And it will ultimately cost them less to bump people in both monetary and emotional costs. For passengers, they can earn a little extra cash and pick the flight to which they’d want to switch.

My only complaint is that it’s a very complicated system, and you won’t know how much you could make until you actually go through the motions of signing up. That’s a lot of hassle for something that you may not opt to accept if the payment isn’t high enough. But still, it’s better than nothing. Let me know if anyone has the chance to give it a try.