You all know that I like fees. I think having ancillary fees lets people pick and choose what they want when they fly, and that’s a good thing. This isn’t a rant on fees. Instead, this is a rant on bad fees that really make it difficult to get people to accept the fees that make sense. United has just jacked up its standard domestic change fee by $50 up to $200. (There has also been a more limited increase in international change fees from $250 to $300.) This is a bad move, and what’s worse is the way the airline is justifying it. For this, United has earned itself a shiny new Cranky Jackass award.

Before you all start crowing about how Southwest has no change fee so we should fly them, I should make it very clear that I like change fees. I’ve long advocated that Southwest should have a small change fee, because there is a real cost when people change (or don’t change) a ticket. I think kudos should go out to Frontier for its maximum $50 change fee when booked on the website or Alaska and its $75 fee. Even JetBlue and Virgin America with their $100 fees don’t seem bad. But for domestic travel, going above $100 changes things mentally. The $150 fee seemed excessive already, and now the $200 fee just seems downright obnoxious.

United is an airline that has just come off a long period of pissing off its customers. It is finally getting its act together after a very sloppy merger integration. At the same time, the use of fees has been expanded throughout the industry, and there has been an effort to get people to accept these fees. Things should be getting better. What’s a great way to derail that? Increase a fee that has questionable validity at its current level; one that people love to hate. Oh, and then make up a fake reason for doing it.

According to the company representative on FlyerTalk, the increase in the fee is “an adjustment to better compensate for the costs incurred when a traveler elects not to fly in a reserved seat.” That would be a valid excuse if it were in any way based in reality. When an airline pulls out that excuse and it’s completely disingenuous, it dilutes the ability to get people to believe it when it’s actually true. It just hurts United’s credibility because it’s so not true.

Why is it so unfair to use this excuse? Well, this is a flat change fee that applies to everything. However, the costs involved vary greatly depending upon the situation. If someone is booked on a flight from LA to San Francisco midday on a Wednesday 200 days from now and he makes a change online, it costs United virtually nothing to make that change. But if someone decides at the last minute to change off a flight from LA to New York that’s completely full, United could have sold that seat for a lot of money to someone else. In theory. But then again, that’s why airlines overbook. They expect some people to no-show. So they’re really playing the odds here. It’s quite hard to see how anyone could suggest that $200 is actually required to cover the cost of someone making a change, even if they are looking at averages.

Of course, trying to tie a change fee to the actual cost of making the change is silly in the first place. Change fees aren’t meant to cover costs. They are meant to raise revenue and encourage certain types of customer behavior. There are plenty of people who make speculative bookings and just leave credits hanging out there with Southwest because there is no penalty pushing people to be responsible. It makes sense to have a fee that pushes people to book flights only when they think they’ll use them. It also makes sense to try to prevent people from just sitting on reservations for flights where they already know they need to change. For an airline like Frontier, Alaska, JetBlue, etc, those fees are high enough to prevent people from making speculative bookings but also low enough to get people to make their changes when they know they need to. But once you start getting to such high change fees as we’re seeing with United, then you encourage more behavior that goes against what United should want.

For example, if a change fee is $200, how many tickets do you think have a value of less than $200 in the US? When you consider one way fares, there could be a lot of them out there. So if the value of your ticket is less than the change fee, what do you do? If you’re savvy, first, you hold on to it and hope that there’s a schedule change in advance that will let you change. Then you go and buy another ticket completely because that’s cheaper than paying the change fee. Then you wait until the last second and hope that the original flight cancels or there’s some other problem that will get you a refund. Worst case scenario, you just throw away the ticket and don’t use your seat. That’s how the incentive structure is set up. How messed up is that?

It does make you wonder why United would increase the fee. To get more money, of course. The simple math says that the airline can increase its haul by a third on all domestic changes. But there are three offsets to that.

1. There are a number of tickets that were between $150 and $200 in value that no longer have any value worth changing. Before, United could have earned $150 on those, but now they get nothing. (Though if someone just buys a new ticket on United, then United is still happy, even though the traveler is steaming.)
2. Some people will decide not to make a change because the price is too high. They stick with their original plans even though they would have paid a lower change fee if it existed.
3. People will start booking away toward other airlines with lower change fees.

If you’re an airline, it’s very easy to do the simple math. $200 > $150. Hooray! But it’s a lot harder to measure the negative impact of the change. This kind of change just uses brute force and does nothing to consider a better way to handle it. If the people at United were smart, they would do something like a tiered change fee where at least cheaper tickets would have the chance to change at a lower rate. But this isn’t the mark of an airline being smart when it comes to treating the customer well.

The worst part is that there is no alternative if you fly United. What, are you going to buy that $1,000 refundable fare instead? Yeah right. At least other airlines, like American, give you the opportunity to purchase waived change fees up front for a lower fee as part of their fare bundles. That’s somewhat more customer friendly.

I just hope that other airlines will be very careful before matching this. (As of last night, none had.) Considering how badly airlines want consumers to accept this new a la carte fare structure, you would think they would do their best to put fees out there that make sense. This isn’t one of them. It’s just going to set the industry back in its quest to gain acceptance of its new fare structure. And for that, United has definitely earned itself a Cranky Jackass award.

There have been so many good news stories about aviation in Latin America lately that it seems like everything is going well. The LAN and TAM merger created a powerhouse, the Avianca/TACA merger is also coming together quite nicely, and then of course, there’s little Copa rocking it in Panama. So is anything going wrong in Latin America these days? Oh yeah. We just haven’t looked far enough to the south.

Aerolineas Argentinas is a disaster of an airline that loses silly amounts of money providing a sub-standard product. (But hey, at least you can send a fax from onboard.) So why does this crappy airline still exist? It’s the same reason just about every crappy airline still exists – government funds keep propping it up.

But in the case of Argentina, it’s more than just government funding that helps Aerolineas Argentinas. It’s also a host of blatantly unfair policies that prevent a real airline like LAN from providing good service to the people that need it. LAN Argentina started a few years ago but it has had nothing but trouble since it first tried to challenge Aerolineas. A recent La Nacion article about five things the government of Argentina has done to hurt LAN (and competition in general) caught my eye.

I should say that it’s not easy to catch my eye when articles are written entirely in Spanish. But using my rusty Spanish language skills, I was able to decipher what simply didn’t seem like it could be true. So I reached out on Twitter and got a little help from @HouseofV to fill in the gaps. It turns out things were even worse than I thought. This would be funny if it didn’t mean that the people of Argentina are suffering because of it. So for that reason, I’m very happy to award the Cranky Jackass to Argentina for all kinds of suckiness. Let’s review.

1) No jet bridges for LAN
Back in 2010, a law was apparently passed that said Aerolineas Argentinas got priority for using all jet bridges in the country. Originally, nobody else could use them, but then that changed so that airlines could use them for up to two flights a day. That naturally works for some of the foreign carriers with limited flying, but it doesn’t work for LAN Argentina with a lot of domestic flights. But LAN did work around that and had a contract to use jet bridges.

If you’re flying on LAN in Argentina today, however, you’re going to be in for a surprise. All those nice covered jet bridges are off limits for LAN passengers now because the airline has been cut off. But it’s not just that they’ll have to walk up and down stairs. The airplanes are parked remotely meaning that people need to take buses back and forth between the terminal and the airplane. That slows things down and makes LAN less attractive to travelers. But why?

Guess who does all the ground handling in Argentina? It’s a group called Intercargo. And guess who owns Intercargo? That’s right, the government does. It turns out that LAN signed an agreement to have Intercargo handle its ground ops, and that agreement was to go through the end of March, 2014. But then Intercargo decided that contracts don’t really matter, and it alerted LAN that rates were going to rise by 55 percent. When LAN balked, Intercargo just stopped letting them use the gates. Now it looks like this.

2) Attempts to hurt LAN in Buenos Aires
Buenos Aires has two airports. Ezeiza is the main airport for international operations while close-in Aeroparque is used for domestic flights. At least, that was the case until 2010 when Aeroparque was also opened for flights to Brazil, Uruguay, and Chile. As you can imagine, business travelers flocked to Aeroparque from places like Sao Paulo and Santiago because of its convenience. But then guess what happened? The decision was made that LAN wouldn’t be allowed to fly internationally from Aeroparque in order to, of course, protect Aerolineas. Only after the surrounding countries threatened to block Aerolineas did they finally back down and let LAN fly, but LAN still only has a few slots while Aerolineas has many more.

3) No Rosario for LAN
Rosario lies about a 3 hour drive northwest of Buenos Aires. It’s a city with over a million people (third largest in Argentina) and it’s an important industrial center. LAN began flying from Rosario to Lima in order to connect people to important destinations internationally and the flight appeared to be doing well. Then a funny thing happened. The government told LAN its flight couldn’t continue. Instead, Aerolineas added Rosario as a free add-on to international flights in Buenos Aires so it could steal all the traffic.

4) Handcuffs on LAN’s Growth
Unsurprisingly, Miami to Buenos Aires is a good market. American flies it twice daily while LAN flies it once. Aerolineas flies it 11 times weekly. LAN wanted to add another flight in the market, but that wasn’t allowed. Instead, the government gave more flights to Aerolineas instead. Oh, and it also put the brakes on an investment for LAN to grow the fleet.

5) Summer charters only if approved
Lastly, it’s common for summer charter flights to pop up to take people from Buenos Aires to vacation destinations. The policy now, however, is that those flights can only operate if Aerolineas is going to be full.

What’s the end result of all this madness? People in Argentina suffer from poor service on a money-losing airline. New entrants are stifled and that isn’t going to change. In the meantime, Aerolineas lurches forward with attempts to get new airplanes. It hopes for success now that it’s a member of SkyTeam. But really, it’s unlikely to happen. And the people of Argentina will continue to pay the price until the government lets real competition into the country.

When United decided to fight Southwest’s effort to get international facilities at Houston’s Hobby airport, I didn’t blame the airline. After all, wouldn’t you want to fight anything that had the potential to hurt your business even a little? But now that the decision has been made to move forward, United has embarrassed itself thoroughly. What the airline has done is try to blame Southwest and the city of Houston for massive cuts that probably were going to happen anyway. This unprofessional behavior is akin to a three year old having a tantrum for not getting his way. For this, United, you most certainly deserve a Cranky Jackass award.

As I wrote a couple weeks ago, the original fight had been over the right to have international flights go in and out of Hobby airport, on the south side of the city. Southwest has been driving this as it finally ramps up to start a push into near-international markets. United said it would mean gloom and doom for its flights at Intercontinental because Southwest flying internationally would ruin its business forever. The end result would be 10 percent less capacity and 1,300 fewer jobs.

This seemed like posturing designed to pressure the city to walk away from the project, but the odds were against United from the start. And when Southwest agreed to pay for the required facility itself, there was no way this wasn’t going to happen. I figured that the hollow threats from United would just disappear. I guess I was wrong.

In a lengthy employee bulletin, United outlined what is now going to happen since the facility has been approved.

• “We expect to begin a 10 percent reduction in planned IAH capacity beginning with the fall 2012 schedule change … including not flying our previously announced service from IAH to Auckland, New Zealand”
• “… we will be forced to reduce employment at IAH as a direct result of the Mayor’s and Council’s action.”
• “… this decision puts the need for the remaining $600 million investment [into Terminal B's redevelopment] in significant doubt.”

Could United get any whinier? The reality here is that these are things United probably needed to do anyway. But it was in the middle of a political game and it figured that it had found a way to deflect the fallout. Blame this minor blip of an international facility issue and then it could walk away acting like it was the good guy in all of this. The problem is that this scenario is so implausible that nobody is going to believe it.

Keep in mind that Southwest doesn’t anticipate starting international service until 2015 from Hobby, and we really don’t know exactly where the airline will go, but it will be short haul. If the impact was known in advance, then I would expect to see reductions like this. We see that when airports build expensive new terminals. The extra cost won’t come down the line for a few years in those cases, but it’s a definite cost and the airline decides to operate assuming that cost going forward.

But this is very different. United has no idea where Southwest will operate three years from now, and it doesn’t know the impact. All it can rely on is the questionable results of a study showing how terrible it’s going to be. That is not something that’s actionable. It’s just a random guess. (And it should be noted there are two different studies with insanely opposite conclusions.)

So for United to make any moves now based on what may or may not happen in three years is just silly. Instead, what we see here is United trying to find a way to make changes it wants to make without looking like a bad guy.

787 Lost
Two years ago, Continental announced it would launch 787 flights from Houston to Auckland. This was an exciting prospect that was without question meant to drum up support for the merger with United that it was working on at the time. It used the 787 route to show that the merger would help create enough traffic that it could grow into great new routes like these. Whether this was ever an actual plan or not remains to be seen, but it’s clear the route had fallen out of favor with United as it announced Denver to Tokyo would be the first route for the 787. That’s decidedly less sexy since it doesn’t add a new city to the network – just connects two dots that weren’t connected nonstop before.

So instead of saying, “you know, this route isn’t going to work as well as we thought,” United is blaming the Hobby international issue for its demise. Oh please. According to United, the airline is going to be forced to cut a bunch of service domestically and elsewhere, and that means there won’t be enough connections generated to support the Auckland flight anymore.

Overdue Broader Cuts
The same rationale is given for other routes both international and domestic. The threat of Southwest is going to cause a 10 percent reduction in flights? That’s what United wants us to believe. It says that the prospect of future growth was going to turn currently unprofitable flights profitable. Now those hopes of growth are dashed so the routes will be cut. Were I an investor in United, I would be livid. Why the heck would the airline continue to operate unprofitable routes today simply because it thought the flights would eventually be profitable in the future? It’s not like these are slots that it gives up if it stops flying. More importantly, if 10 percent of the operation is living on that prayer, then United is mis-managing its network.

And that leads me to a point of clarification. I have no problem with United making these changes. It sounds like they’re overdue to me. But I have a problem with United trying to blame Southwest and, more importantly, the City of Houston. United already angered the city by moving the corporate headquarters up to Chicago, but this has to be the last straw. I can’t imagine the city wanting to go out of its way to help United at all if this is the thanks it gets for trying to do what’s right for the people of Houston.

This really is a sorry effort by United. The airline’s leadership should act like adults and explain the real reasons that these changes need to be made.

The EAS Flights blog stumbled on something yesterday that may be a new low for this industry. In fact, it’s childish enough that the owner of the website, Pacific Wings, has earned itself the Cranky Jackass Award.

What did the airline do that was so deserving of this award? Take a look at the homepage of its now-defunct KentuckySkies operation. I should say, the former homepage because it was already changed last night.

That’s right. The page title is Skip Kentucky followed by a simple yet not-so-elegant message beneath. What the heck did Kentucky do to deserve this kind of treatment? Well, it’s a long sordid story.

Pacific Wings flies under its own name in Hawai’i, but it has tried to grow its business on the mainland by going after small Essential Air Service routes. When it gets some, it uses a different marketing name in each area. There’s New Mexico Airlines in, well, New Mexico and GeorgiaSkies in… wanna guess? KentuckySkies was created to fly from Owensboro to Nashville and it was closely tied with TennesseeSkies which went from Jackson (TN) to Nashville. Both of these names are now gone, though the TennesseeSkies homepage still lives.

What happened? According to Pacific Wings in its filing with the federal government, the airline was “unable to procure counter or gate space at [Nashville International Airport] on reasonable terms.” Ah yes, congested Nashville Airport – a very difficult place to find space to operate. Hah.

Not quite. My guess is that it’s all about the price of that space. Pacific Wings didn’t like the deal it could get at Nashville so it opted to just back out of offering the service entirely. Not sure why this happened after it had already commenced service. You would think it would have had that figured out before it even applied. Fear not for the people of Owensboro and Jackson; Cape Air picked up the former operation and SeaPort the latter.

Now, if it was just an issue with the gate space in Nashville, wouldn’t the airline tell you to skip Tennessee, not Kentucky? Clearly there’s a lot of bad blood here that hasn’t quite boiled to the surface yet. This actually isn’t the first time Pacific Wings has been in an interesting altercation of sorts. Remember this piece I wrote back in 2009 about a physical fight in Hawai’i?

Look, I’m not here to take sides, because I don’t really know the story. But I can tell you that putting this kind of message up is just dumb. Pacific Wings still wants to bid for Essential Air Service routes. Does the airline think that communities are going to be receptive to these kind of shenanigans? I think not. It’s even worse to double down, but that’s exactly what Pacific Wings did. It changed the website to this last night.

Oh please. Ridiculous. This isn’t going to win the airline any friends.

If you decide to put out bad analysis, as UNITE HERE did last week regarding Lufthansa complaints, and someone calls you on it, what would you do? The smart answer would probably be to just let it go and stop calling attention to the work, especially since it has more holes than Swiss cheese. But fortunately for us, UNITE HERE has decided to go the opposite route.

The union is using one of oldest tricks in the book: going after my credibility to muddy the water. This is just dumb. They really shouldn’t want to bring more attention to a flawed report like this. Now I’ve just dug in deeper and found even more problems with it. While I was waffling before, now I’m not. UNITE HERE has truly earned the Cranky Jackass Award.

You can read the union’s entire response here (pdf) if you’d like, but I’ll pull out the most fun parts. Let’s start with the opening.

One of the things I appreciate about your site is you are very open about your relationship to companies in the airline industry. And just one month after Lufthansa gave you a free round-trip, business class ride on its A380 from San Francisco to Frankfurt, perhaps I should not be surprised at your dismissive response to my report.

Ah yes, the back-handed compliment. A time-honored tradition that’s used to cover bad work. If someone calls out real issues, just call his or her credibility into question but look completely pleasant while doing so. This takes the focus off your bad analysis and tries to shift the issue. (Sounds like the author may have a future in politics.) It’s true, I’m very open about these things, and I did just fly Lufthansa at the airline’s expense. That doesn’t mean I won’t gladly rip Lufthansa a new one if it’s deserved. The problem here for the union is that it’s not.

You can read the rest of the response yourself if you’re interested in more sugar-coated insults, but let’s focus on the weak defense of the report itself and break that down.

The Department of Transportation data in the report is real, and to my knowledge is the only reliable U.S. source of compiled complaint information on international
airlines. If the DOT is willing to use these numbers to “to determine the extent to which carriers are in compliance with federal aviation consumer protection regulations,” then they’re good enough for me. Even if I am just a research analyst at a union.

*sigh* The issue is not whether this is the only place to get complaint data or not but whether or not it’s statistically valid and can be used to explain a trend or not. In this case, the year-over-year change in complaints from 2009 to 2010 moved by roughly less than one-thousandth of one percent over total passengers carried by Lufthansa to and from the US (using my rough passenger estimate). Even the initial number itself is so tiny that it’s not significantly different from zero. So regardless of what the purpose of the complaint reports are in the eyes of the DOT, that doesn’t magically mean that we can consider each number valid for any kind of analysis.

You’re right, I could have used the raw numbers, but I sort of agree with you that the raw numbers themselves aren’t incredibly exciting on their own. They’re small
because, well, how many people actually go through the effort to submit their airline complaints to the U.S. government? (If you care about an answer, you can look at the DOT analysis for the new passenger rights rule, where the DOT uses the ratio that every 1 complaint submitted to the DOT represents about 61 complaints submitted to the foreign airlines.

Excellent. Let’s just forget about using raw numbers because they aren’t “exciting.” I see. So we’re not looking for statistical validity here. We’re looking for excitement. You can apply any ratio you want to these numbers, but that still doesn’t make the small change valid. And this ratio is just an estimate by the DOT anyway, so using it would make a statistically insignificant change even less valid, if that’s possible.

The result of that comparison was clear. Lufthansa complaints went up, Air France and British Airways complaints went down. Is the sample number of complaints
small? Yes. But if the increases were random, would Lufthansa have seen them in 7 out of 8 top categories from 2009 to 2010? If they were random, wouldn’t Air France and British Airways have seen more fluctuation too?

This is my favorite part. I hadn’t even touched the Air France and British Airways numbers in my initial post, so I should thank the union for giving me even more firepower to show how awful the analysis is. The result is far from “clear” as proposed.

When I spoke with the research analyst, he told me that he didn’t bother looking at the monthly complaint reports. He just looked at the year-end summary and called it a day. That makes the analysis even worse because it doesn’t look for outliers. And that’s exactly why BA’s numbers are so different. In 2009, BA saw 347 complaints while dropping to a mere 120 in 2010. That’s great improvement, right? Wrong.

A look at the monthly data shows that in October 2009, BA received an incredible 244 complaints for reservations/ticketing/boarding. Why? According to the Bureau of Transportation Statistics, “The increase in the number of October complaints is attributed primarily to British Airways’ erroneous offer of $40 fares between the United States and India.” That’s an outlier and can’t be used to judge overall performance for an entire year. Guess what happens if we just substitute a more typical monthly result that month? We see an increase in complaints year-over-year approaching 20 percent. Fun with numbers, right? (Not that this is a significant change either.)

I highly recommend reading the entire response. In particular, I like the union’s effort to call into question the safety of the engines on the A380. Enjoy.