Monthly Archives: June 2014

Get $50 Off $200 Hotel Booking with Expedia App

Quick one this morning: Now through July 7th, save $50 on a $200 hotel booking when you use the Expedia app. Here’s how:

Go here and give them your cell phone number (yeah, I know…if you don’t want the $50 coupon then don’t give them your number)

– They’ll text you a coupon code and a link to the app. (The code you receive may say $25 off initially, but when you apply it, it will be for $50)

– Download the app.

– Book the hotel and use the code (it’s a one-time use code). Voila, you’ve saved $50.

Thanks, Slickdeals.

A Few Quickies: Delta New Routes; New York Airport Wifi; No No No, Granada – not Grenada!

– Newark Airport, LaGuardia Airport and JFK Airport will now offer free 30 minute wi-fi sessions in their terminals. Welcome to 10 years ago, New York!

– A man is suing British Airways because he got on a plane at Gatwick heading to Grenada (the island in the Caribbean) instead of Granada (the city in Spain). At least he did not mistakenly end up in a Ford Granada.

– Delta is launching twice weekly service from JFK and Atlanta to Barbados beginning in December.

– Spirit Airlines cancels Chicago to Orlando flight after 9 hours including 2 hours sitting on tarmac with no air conditioning. I guess someone wouldn’t pony up the $4 per passenger for air conditioning.

JetBlue: New York to Hyannis, MA for $29 Each Way

JetBlue has $29 flights from JFK to Hyannis, MA (Cape Cod) for $29 each way on lots of Sun-Wed flights throughout the summer. Check out their fare finder here if you’re interested.

(Thanks, Flyertalk!)

Pay Attention Before Booking Your Transcon Flight on United

I’m heading out to Los Angeles in a few weeks, and I wanted to pass along this quick caveat:

I’m flying United because I’m tied to their frequent flyer program, not because they offer the best product. They do not. United has long considered Newark to be a different market than JFK. That’s fine. The JFK-LAX market is highly competitive, with solid offerings from AA, Delta, JetBlue, United PS service, and (to an extent, though their premium cabin is now 1 generation behind), Virgin America. AA offers 3 cabin service, JetBlue has the new Mint service, United’s PS is perfectly fine. They all have wi-fi and (save for Virgin America) flat beds up front.

But out of Newark, where United is the only carrier it’s a mishmosh of service options. My advice: when you’re flying United out of Newark to LA, make sure you pay attention to the aircraft they’re flying on your particular flight. In July they’re offering a 7:59am departure on an A319, with overhead video and no in-seat power. Seriously. And that’s the same price as the handful of internationally-outfitted 757-200s they fly on the route (which ARE upgrade eligible, though good luck with that). They also offer a mix of 737-800s and -‘900s, which have live TV, though no wi-fi (on most of those). Your enjoyment of the flight will vary considerably by aircraft.

I almost ended up on that A319 (blech) until I realized what was happening and simultaneously remembered that United is flying a daily 787 from Houston to LA (I haven’t flown a 787 yet). So I’m flying from LaGuardia and connecting to the 787. You didn’t need to know that, but I figured if I can’t share that here, where can I share it? (Answer: nowhere).

All of those JFK flights offer pretty solid options for domestic flights, but just be careful you don’t end up staring at a 13″ monitor hanging from the ceiling on your next flight out of Newark.

Finally…All Business Class 727 Service from Baku, Azerbaijan, to Amsterdam…Your Prayers Have Been Answered

The people spoke and The Man listened…

That’s right, the fine folks at AA (Azerbaijan Airlines) are rolling out the all-business-class 727 service that you’ve been clamoring for twice weekly between Baku, Azerbaijan, and Amsterdam.

You’re probably thinking to yourself: Gee, I didn’t know that Azerbaijan Airlines had a 727 outfitted with all business class seats. Yeah, that’s what most suckas would say. But let me drop this bomb on your ass: It’s operated by Silkway Airlines on BEHALF of Azerbaijan Airlines.

Boom.

There ya go.

But where did Silkway Airlines manage to find a 727-200 aircraft, you may not be asking yourself at this very minute. I’ve got the answer for you right here: That’s right, Northwest Airlines.

Anyway, it’s about $800 each way for that bad boy. Enjoy your flight.

Hm…Why Do Business Class Tickets to Amsterdam Cost $7,000?

I flew to Amsterdam on Monday on United in a coach seat, for which my company paid $2200 or so for the round trip ticket. I was in an Exit Row, in the window seat (I’m an aisle seat guy), and while it had plenty of legroom, I feel slightly confined in the window seat, compared to the (relatively?) more open confines of the aisle. All-in-all, the flight was fine, I slept for a few hours, watched a movie, and arrived as exhausted as anyone would be after a not-long-enough flight to Amsterdam that arrived at 2am Eastern Time. I just flew back in a quite empty coach cabin, where I had a row to myself.

After we landed, I was thinking about the people sitting in Business Class. They likely paid $7,000 (the typical no-Saturday-night-stay fare on the route, though it can be as low as $5,000, and I see it as high as $11,000), or rather their company paid $7,000 for the flight.

In other words, they paid about $5,000 more for their ticket than I paid for mine.

Stop. Think about that for a minute. Five. Thousand. Dollars. Five thousand dollars can buy you this rather beautiful Cartier Ballon Bleu watch. You will likely have this watch for your entire life, at the end of which you will leave it for your children.

Let’s pause here for a moment. I’m not saying the airlines are charging too much. Not at all. They’re charging what the market will bear, and that’s totally fine. I have no problem with them charging $7,000 for that ticket.

But I was thinking about that price, and I was thinking that $5,000 gets you either a luxury timepiece that will survive generations, or it will buy you a bigger seat and some food on a 7 hour flight to and from Amsterdam.

Until quite recently, United would have given you that seat in exchange for 100,000 miles, an amount of miles that no one would reasonably say is “worth” $7,000. Upon checking in for my flight home, United offered to sell me an upgrade for $689, which suggests to me that they believe they can fill up the empty seats for a $689 premium over the coach price, which is to say that Business class is “worth” $689 more than a coach seat.

I realize that most of those $7,000 seats are only “worth” $7,000 because someone’s business is paying for it. And perhaps the argument here is not that people are very willing to spend $7,000 of their company’s money, but rather that companies believe their employees are $5,000 more productive after flying business class versus flying coach. I’m not sure about that, though that seems like the most reasonable possibility for why people would pay a Cartier more for a business class seat than a coach seat.

Which makes me think that international business class tickets are actually a pretty complex product to price. The price of them is wildly dependent based on who is purchasing them, and the airlines need to come up with ways to segment pricing based on what people will pay. I know that sounds a bit obvious, but it’s a challenging question. By all means, there are businesses that will pay the $7,000 because they believe their employees are $5,000 more productive when they fly business class versus coach. But they probably can’t sell all their tickets at $7,000. So they make those seats available for $689 to those customers.

This is a recent development – United has only been selling those upgrades for the past couple of years, but it represents an enormous opportunity for them. It also gives us a glimpse into what they think the business class product itself (rather than the increased productivity) is worth – which is to say, $689 more than coach.

I don’t have a huge point here other than I think it’s interesting that people pay $7,000 for the seat, not because of the product itself, but because of secondary benefits (staying awake in a meeting).

American Airlines Reduces Business Class Seats on New 777-200s

According to this thread on Airliners.net, American Airlines has changed their minds a bit about the seating configuration in their new 777-200s.

Originally, the aircraft were to feature 45 business class seats, 39 Main Cabin Extra seats, and the remaining seats in coach.

Instead, they will reduce the number of business class seats down to 37 (36 for sale, with 1 crew rest seat), 36 Main Cabin Extra seats, and the remaining seats in coach.

The headline here is that there will be 9 fewer business class seats available, which means there won’t be quite the award availability you may have hoped on the new planes.

(For some background on the new cabins, check out Lucky’s overview here).

Before You Start Crediting Your United Flights to Other Programs, Consider This…

I’m seeing a bunch of posts elsewhere about crediting your United flights to other programs after the change to a revenue-based program next year.

Be careful about that.

In general people who fly more than 25,000 miles a year on United would still want to get status on United (upgrades, ability to grab Economy Plus seats for free), so I would be surprised if someone flying more than 25,000 miles a year would credit their flights elsewhere because of their fear of missing out on some miles. But either way…

Here is my concern:

If you credit your miles elsewhere, you will end up orphaning miles in another program. It will be difficult to earn exactly the number of miles you need for a trip, so some miles will likely be orphaned wherever you move them to. So you’re not really gaining all the miles you think you are.

If you already have United miles, the miles you add to those miles make a greater range of trips possible. In other words, adding 14,000 miles to your 52,000 miles means you can fly round trip to Europe. Adding 19,000 miles to Turkish Airlines’ program won’t get you a trip to Europe.

If you’re not flying that much, do you really want to manage multiple programs? To gain, what, 10,000 additional miles that you may end up orphaning anyway?

I could be convinced that it would make sense to credit your United flights to another program MAYBE if you earn the miles you need for a very specific trip, so that you’re earning and spending those miles quickly. But to earn 19,000 miles with the possibility of orphaning them (which means not only do you basically lose those miles, you didn’t get the lesser number of miles you could have earned by crediting to United) is not a risk I’m willing to take.

The reality is this: for some people they will earn fewer miles when they fly United (or Delta). For most people who have status, you may end up a bit worse, or you may end up a bit better (for everyone who complains about the $400 Transcon that only earns 2,000 miles, as a Gold I’ll now earn 2,400 miles for that $300 ticket to Detroit). In any case, for the infrequent flyer, having to manage multiple programs and take the risk of losing those miles, I just don’t believe it’s worth it.

Do We Even Know Why United Airlines Is Struggling Relative to Its Peers?

I’ve been really fascinated with why United Airlines has continued to struggle, even as its peers in the airline industry have long turned a financial corner. I’m in a Q&A kinda mood this week, so let’s Q and then let’s A what the hell is going on at United.

Q: What the hell is going on at United?
A: Here’s what’s most interesting to me: Continental was the first real turnaround story in the airline industry in the 1990s and 2000s. Most airlines that struggled back then just disappeared. Gordon Bethune was the poster boy for how to turn a mess of an airline into a world leader. He made his employees happy to work there, he upgraded the product (BusinessFirst), and he focused the network (hubs in Newark, Cleveland, Houston and Guam). It brings tears to my eyes to even write that, because it seems so obvious now. But it wasn’t.

Q: If things were so good, why did they merge with United?
A: The industry needed to shrink. Except for a few boom years, the industry struggled as a whole and reducing the number of airlines was the best way to get pricing where it needed to be (this is true of most commodity businesses – fewer competitors brings pricing power. My wife works in the paper industry, and the same thing is happening there.) The unfortunate part about that consolidation is that the one well-run airline felt they could not survive as a standalone business. That’s a shame, because those of us who were fans of Continental were heartbroken to learn that about the merger.

Q: Why?
A: Because Continental offered a really solid product with employees who seemed to care. United had old planes and employees who had years of misery. I think that most of us who flew Continental feared the worst – that merging those 2 companies would be a mess. And we were right! (yay us?)

Q: Is there anything United could learn from the Delta/Northwest merger?
A: The Delta and Northwest merger was smart but also benefitted from good timing, forcing the airline to execute brilliantly as they were combining the airlines during the economic crisis. Northwest likely would not have survived on its own, and combining with Delta created a large competitor, while pulling capacity out of the marketplace allowing the entire industry to raise prices. Delta’s pretty early success with the merger allowed them some room to invest in upgraded onboard products, creating a point of differentiation for them relative to United, American and US Airways. United and Continental have struggled to get their backend systems combined (which is generally not brought up as a reason that airline mergers struggle – people always talk about fleets and networks, but those are easily changed, relative to the difficulty of combining reservations systems). That’s taken the focus away from other areas, while Delta (and American to an extent, but mostly Delta) has improved their product.

Q: So if United improved their onboard product things would be OK?
A: No. If only it were that simple. United says their problems stem from operational issues (ie, late flights and cancelations), increased competition to China, and cost issues relative to their peers. And although they’ve brought on newer 737s, they haven’t invested in their product the way Delta has (have you flown a former United 757?). But their problems go beyond just having an inferior product.

Q: Like what?
A: I’ve read 2 quotes from analyst that I think get to the root of the matter. Airline analyst Jamie Baker asked on the last earnings call: “I’m just not convinced that even if properly executed, even if properly mined, United has the same profit potential as your primary competitors.” And in a recent Barrons article an analyst from Wolfe Research is quoted as saying “We believe [United Continental] has a structural deficiency relative to peers. We believe this deficiency is partly a result of a network that is too large and uses planes that are not optimized for the routes they serve. We believe in order to fix this problem there must be a willingness to forego revenues in order to save costs. We believe bad IT and poor customer service metrics exacerbated the problem, but good IT and better customer service can’t completely fix it.”

Q: Ouch.
A: Right? It’s not a simple problem – it just shows how complex the airline industry is. Like I said earlier, when airlines merge people always talk about whether there are now too many aircraft types, or whether their networks are compatible. It’s not that simple. US Airways (and now American) is a very well-run airline. The guys who run US Airways did an amazing job turning around America West, then turning around US Airways and, at least for now, are starting AA of on the right foot. United isn’t struggling because their flights are late or their A320s are old, they’re struggling because their flights are late, their A320s are old, their IT infrastructure isn’t modern, they probably have 1-2 too many hubs, they face significant low-fare competition at Denver, fuel is expensive, a stronger US Airways at PHL means that some people who used to drive to Newark from Central New Jersey will now go to PHL for cheaper flights, their planes are old, they have too many routes (58% more than Delta), they are facing increased competition to Asia, and their employees aren’t happy.

Q: That’s not good.
A: No, it’s not. As the guys from Wolfe Research said in that same article “We believe planes need to be put down without replacement, we believe the associated headcount must be evaluated, and we believe a hard and honest evaluation of the value of the current network will yield a difficult conclusion: fewer planes, fewer cities served, and less revenue might result in lower costs and higher profits. We believe current [United Continental] management will get there.” In other words, they’ve got to shrink. Sadly, they were shrunk when they were separate airlines and perhaps United could have been allowed to die. But that wasn’t going to happen (according to management United was turning a corner when the merger happened). We can argue all day long whether they are correct with their point that current management can implement the changes.

Q: Running an airline is difficult, isn’t it?
A: Yes! Very. It’s a utility and a manufacturing business (they manufacture connections at hubs), and an operational nightmare that is bogged down by acts of God, and it’s a consumer facing, customer service heavy nightmare. Airlines have basically failed since deregulation, except for a handful of lowfare carriers that have avoided running complicated networks (Allegiant and Spirit), and Southwest (which was as much a customer service and branding play as anything, and they’re so unique I’m not even sure other airlines can learn anything from them). Oh, and probably Alaska. The new Delta is only a couple of years old. US Airways and America West were successes, both only for a few years before they were swallowed up. So many things have to go right, and you need such a strong leader that, in the end, I don’t know if we can even say that there is a formula for how to run a large network-based airline profitably over the long haul.

Q: That doesn’t bode well for United.
A: No, it doesn’t. But they’re not on the verge of bankruptcy, and they have enough cash to ride out some tough times. I think it comes down to whether their employees believe that the current management has a vision and ability to turn the thing around. That’s the biggest question to me: new seats and closing Denver won’t matter if employees are miserable. And happy employees don’t matter if they’re getting slammed in Asia. So many things have to go right. But I think it starts with whether the staff believes Jeff Smisek can fix it.

United Moves to Spend-Based Mileage Earning: An FAQ

In the least surprising announcement in quite some time, United is matching Delta and moving to a spend-based mileage earning program. To help you whine and complain in the best way possible, I’ve pulled together this FAQ:

Q: WTF?
A: You know how you used to earn miles based on the number of miles you flew? Yeah, that’s not going to happen anymore as of March 1, 2015. You’ll earn miles based on how much you spend (which really makes them points, not miles). If you have no status you get 5X the cost of the ticket; Silver gets 7X; Gold gets 8X; Platinum gets 9X; 1K gets 11X. This does not affect how many PQMs (what used to be Elite points) you earn.

Q: That’s on United tickets?
A: Yes, and on codeshare tickets issued by United (that would be ticket numbers that start with 016, if you care about that level of detail).

Q: What about fare class bonuses?
A: That’s built into that multiplier noted above.

Q: What about if I fly on a different Star Alliance carrier and I bought the ticket on that carrier’s website, but I credit to United?
A: Then you’ll earn the same way you were earning before.

Q: So, is this the worst thing that could ever happen?
A: No. Eliminating the program would be the worst thing. Or the best – I’m not really sure. In any case, United now joins Delta, JetBlue, Southwest and Virgin America in having spend-based programs. The world is going in that direction, and I would be shocked if AA didn’t roll theirs out once they’re further along with the US Airways integration. They have bigger fish to fry.

Q: Shouldn’t I just earn on a different frequent flyer program if I fly United?
A: Sure, but then you won’t earn Elite status on United.

Q: Son of a bitch!
A: I know

Q: Does anyone actually benefit from this change?
A: Actually, yes. If you fly a lot of short-haul where flights can be expensive, then you may make out like a bandit. I used to fly $1100 tickets between Cleveland and White Plains. As a Gold member, that would earn me 8,800 miles a week. Damn! Also if you (or more likely your business) is flying you on international business class tickets, you’ll be racking up the miles. Well, up to 75,000 miles per flight. So yes, if you fly on a $9,000 ticket and you’re 1K, you will only (“only”) earn 75,000 miles for that ticket.

Q: F- this, I’m going to fly Delta, at least they’re investing in their product.
A: Go right ahead. Good luck redeeming those miles.

Q: Crap, you’re right. AA here I come!
A: If you want to redeem to the Caribbean and Latin America, fantastic! Good luck redeeming non-fuel surcharged award tickets to Europe or Africa.

Q: Crap again.
A: I know…things have changed, deal with it. UA is still a pretty good option for redeeming coach-class awards just about anywhere in the world.

Q: Isn’t it a little weird that you can easily manufacture miles through credit card spend, but actually earning miles through butt-in-seat flying, especially on cheaper tickets, is difficult?
A: Yes. But the airlines are basically now saying that if you’re flying on the cheapest fare buckets, we’re happy to have you seek out cheaper alternatives. Just give us your full-fare business. It’s not an insane strategy.

Q: At this point, aren’t people so angry and annoyed with UA management that there’s little they could do that people would be happy about?
A: Fixing a broken merger is difficult, and it’s more difficult when basically every airline around you is thriving. It’s probably going to get worse before it gets better.

Q: So what are you doing in response to this?
A: Me? Nothing. Delta miles are useless. AA is a possibility, I guess, but I really do think that United’s miles (because I’m willing to redeem for coach awards) are the best option available. I’ll stick with what I’m doing and manufacture points through credit card churning.