No bag? Then airlines should refund fee – CNN Out of the Office
I’ve written about this here before. If your bag doesn’t travel with you, then you should get a refund of the bag fee, but that’s not the way it works at most airlines.

US Airways Warms to Inflight Internet – APEX Digest
I’m writing for the Airline Passenger Experience Association’s publications now. This piece was about US Airways revisiting inflight internet.

In the Trenches: Relying on Third Parties – Intuit Small Business Blog
Sometimes, you think you’re as prepared as you can be, but third parties can throw a wrench into things sometimes.

There’s been a lot of talk of supply and demand here on the blog this week, so I figured, why not pile on? Unlike our Monday discussion, however, this one isn’t controversial at all. Alaska has been lowering First Class fares. The result? More people buy First Class seats. Thank you, Captain Obvious.

On its recent earnings call, Alaska said that it had seen its paid First Class loads factor rise by two points in the last year, and revenues went up by 20 percent on an only 7 percent increase in seats. Good news all around. How did they do it?

Some of it is thanks to the more long-haul flying that the airline does. People may not care about First Class for the less than two hour flight from San Francisco to Portland, but they sure care a lot more on a 5+ hour flight to Hawai’i or a long haul from Seattle to Newark. Hawai’i in particular has really ramped up in the last couple years to become a major part of the airline’s route map, so that alone can make a big difference. But it’s more than that.

Alaska President Brad Tilden noted that back in the day, the First Class cabin barely earned its keep even though the fares were really high. Then this happened:

. . . we brought the First Class fares way down, I think our current add-on over the [full coach] fare is $150 in the longest stage length market. I think our customers have really responded to that value. We’ve gone from maybe from 1 to 1.5 [First Class] seats per airplane to four or five [First Class] seats per airplane. And we’ve also done a lot better with the upgrades, the fares that our mileage plan customers are paying to sit in first-class. And if neither of those work, we are selling first-class upgrades at the gate. I think we had a 20% increase in first-class revenue in the second quarter, and we are doing it in a way that our customer, I think, feels like they are getting really good value.

The decrease in fares isn’t a recent thing, but since it was brought up in the call, I thought it was worth discussing.In the end, this has resulted in a big revenue increase for the airline, and that’s great for everyone involved. The airline makes more money by selling more high fares, but the customers win because those “high” fares are lower than they used to be. This was the same kind of thing we did at America West back in 2002, though that was for the entire fare structure and not just First Class. The result, however, was the same.

So why don’t other airlines follow? Well, other airlines have a different passenger mix. Some of the big old legacy carriers actually sell more of those First Class seats, so cutting fares and increasing demand might actually result in dilution. It’s really an airline-specific type of thing, and only those airlines that don’t sell a ton of the high fares can afford to cut them down.

If you’re Alaska and you’re only selling 1 First Class seat per flight, you can cut the fare in half as long as you sell at least two of those tickets. Then everyone’s a winner. And that’s apparently exactly what’s happening here.

On the surface, Alaska Airlines seems like a company that Americans would love to hate, yet exactly the opposite is true. People love Alaska, and it’s no accident. Let me explain.

Think about everything going against the airline. First of all, it’s an airline. Hating every move an airline makes is actually required in the US in order to graduate from high school. If, however, you build a brand as a low fare airline that eschews fees like Southwest, then you get a pass. Alaska is not that airline. Alaska looks more like a traditional hub-and-spoke airline. You’ll pay to check bags and fares aren’t rock bottom. Want inflight entertainment on a long haul? That’ll be $14. How about food? You’ll pay for that as well.

Last quarter, Alaska had an epic meltdown when its computer system failed and thousands were stuck. As if that’s not enough, Alaska is posting record profits. In the first quarter, Alaska had an operating profit of nearly $134 million. Its operating margin was nearly 14 percent. That’s a rock star result.

Were any other airline making that kind of money, people would be screaming bloody murder. Employees would be clamoring for fair treatment and better pay while customers would demand that the “outrageous” fees go away. But that’s not what’s happening here. And here’s why.

1) Alaska is Small
The bigger the company, the bigger the target it is. Think about oil companies. People love to jump on ExxonMobil and BP, but how many people hate, say, Sinclair Oil? Nobody. Well, I’m sure someone does, but it’s not vilified on a daily basis. Sinclair has gas stations in 21 states, so it’s certainly a visible name, but it’s not in the cross hairs when people think of big, bad oil. Being small also means that earnings don’t look so huge. Sure, Alaska had a great margin but its operating profit was only $134 million. Had United achieved a similar operating margin, it’s operating profit would have $1 billion. That just sound enormous.

2) Alaska’s Fees Seem “Fair”
It helps when other airlines set the bar for what the public considers to be greedy. It means if you do something below that level, you look like a hero. The big legacy airlines charge $150 to change a ticket. Alaska charges half that for changes made online. If you want to check a bag on Alaska, it’ll be $20 for each bag up to three. That may not seem that much cheaper than other airlines, but it comes with a promise. If your bag isn’t on the carousel within 20 minutes, you get compensation.

3) Alaska Operates Out of the Spotlight
Being based in Seattle means that people don’t really pay attention to you. Oh sure, the local papers will jump on stories when things go wrong, but you’re not likely to end up on the national news unless you really mess something up in a huge city like LA, New York, or Washington DC. Being in the Northwest insulates Alaska nationally, both when things are good and when they’re bad so it’s a mixed blessing.

4) Alaska’s Mileage Program is Flexible
Loyalists to Alaska’s Mileage Plan program are VERY loyal. There are so many mileage partners around the globe that members can use their miles to go just about anywhere. Those with MVP elite status get the same kind of benefits as other airlines give but with a lower mileage qualification threshold. (It’s only 20,000 miles to become MVP.) The program is also integrated with Delta SkyMiles to the point where elite members get priority boarding, better seating, and more. So it’s a program that can compete with the big guys and even provide better benefits by partnering across alliances.

5) Alaska Runs a Good Operation
For the twelve months ending February 2011, Alaska was second in on-time performance with 87.2 percent arriving within 15 minutes of schedule. There’s no question that the airline is helped by not flying much in horrible east coast congestion, but that’s not the point. Running on time means that there’s less for people to complain about. It doesn’t matter why you run on time. It just matters that you do.

6) Alaska Understands Customer Service
One of the most important reasons that people don’t hate Alaska is because when things go wrong, the airline is all over it. When computers failed, Alaska was pumping updates out constantly. Execs filmed a video apology and gave details on what happened. Alaska also encouraged everyone impacted to write in so that the airline could deal with compensation individually. It was an excellent effort all around and certainly reduced the negative impact that might have been felt by others in a similar situation.

I’m sure there are more reasons, and I’d love to hear everyone’s thoughts. I should make it clear that this doesn’t mean Alaska has a sparklingly perfect record. This is the same airline that in 2000 had one of its MD-80s crash off the coast of California. The resulting scrutiny over the airline’s maintenance created a ton of bad press and without question damaged the brand significantly. Alaska also took a hit after it laid off its 500 ramp workers in Seattle and outsourced the work to a third party. (It was later determined Alaska actually violated the union contract.) For these reasons, some people will always hate Alaska and I can’t blame them. But those people are in the minority today, and Alaska finds itself in one of the most enviable positions in the industry when it comes to customer perception.

Don’t let turbulence freak you out – CNN Out of the Office
This week I tackle turbulence. It’s not going to kill you, even it scares you senseless.

Shrinking Subsidies: Can Southwest Serve Mid-Tier Cities Profitably? – BNET Headwinds
It’s sort of a jump to get to this title, but subsidies are starting to shrink thanks to government budget cuts, and AirTran has a lot of cities it serves thanks to subsidies. Will Southwest be able to continue that?

New Entrants Race to Build Small Airplanes – BNET Headwinds
The 70 to 100 seat market is getting crowded with both Sukhoi and Mitsubishi throwing their hats into the ring. Chances for success seem slim to me.

Alaska to compensate fliers caught in computer outage – The Seattle Times
The reporter seemed very concerned that Alaska hadn’t immediately offered compensation to people impacted by the computer meltdown over the weekend. I said that it would have been foolish to focus on that when people just needed to get places. Worry about compensation after the fact.

In the Trenches: Why I’m Not Using Google AdWords – Intuit Small Business Blog
I’ve tried using Google AdWords a couple times and so far, no luck. But that doesn’t mean I won’t go back.

If you were flying on Alaska Airlines this weekend, you had a rough go of it. The airline’s computer systems crashed and that meant plenty of delays and cancellations. Unlike Southwest in its meltdown earlier this month, however, Alaska handled this brilliantly from a communication standpoint.

You can see more on what Southwest did wrong on BNET, where I wrote about Southwest’s Rapid Rewards transition, airport systems failures, and the meltdown that followed. (This, by the way, is my very last week writing for BNET after 3 years on the job.) Southwest said it didn’t want to proactively communicate more than it did because it didn’t want to overburden its website which was already having problems.

Alaska may not have had website problems to muddy the waters, but its decision to go forward with very proactive communication is something that I imagine would have been the case regardless. The airline was doing a backup power supply upgrade when a transformer “blew” and the systems went down. This happened about 3am on Saturday. There were significant delays for flights at that point, and cancellations soon start piling on – about 150 or so in total. At 802a, Alaska sent its first tweet on the situation.

If I have one complaint, I would have liked to have seen a tweet show up earlier. But after that first tweet, the airline’s Twitter account went into overdrive with 11 separate tweets giving status updates, links to more information, and of course apologies. (This doesn’t include tweets that were sent in response to concerns of others.) Certainly Twitter wasn’t the only place where the airline was active. There were also 7 separate Facebook page updates dealing with the problems and four press releases.

Most importantly, I think, there was a big travel advisory placed in orange at the top of the page with a link to more information about the outage. At the same time, Alaska decided to loosen its change policy so that anyone traveling Saturday through today could make a change without a change fee. It was noted that hold times were long on the phones, but customers could also make those changes on the website.

By noon, the systems were at least partially working but delays persisted, of course. By yesterday, nearly everything was back to normal. And that’s when Alaska got even better. Alaska President Brad Tilden and regional subsidiary Horizon Air President Glenn Johnson put a 2m29s video on YouTube apologizing for everything and giving detailed information on what happened along with how people could still get help. It put a very welcome human face on the problem.

As noted in the video, the airline is encouraging anyone who had problems to contact the airline’s customer care group for what I assume is further compensation. At the very least, a personal apology will be issued. This was reinforced on the Facebook page and with a tweet:

For those customers that were impacted by yesterday’s flt disruption, pls contact us so we may follow-up individually: http://bit.ly/hBbGpr

In the end, there were plenty of angry people, without question. People were delayed and canceled and there will undoubtedly be some horror stories that circulate around this, but sh*t happens. It’s all about how the airline deals with its customers when it does happen, and Alaska did a fantastic job in this case.