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Booking Strategy Budget Travel

Goodbye, Cheap Europe Flights? Icelandair Offers to Buy WOW Air

Editor’s Note: WOW Air shut down in March 2019.

Icelandair has announced an offer to buy its fellow Icelandic airline and low-cost rival, WOW air, in a move that would drastically reshape the transatlantic airfare market. Icelandair expects to close the deal over the coming weeks, and says it will run the two airlines as separate brands.

WOW air made a name for itself by offering low fares to Europe through Reykjavik, including $99 one-way fares to the Icelandic capital. The airline offers quirky but no-frills services built on a la carte pricing: Base fares include a personal item and little else, and the airline is known for delivering a customer experience that could best be described as “uneven.”

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Despite all that, the airline surged onto the scene thanks to its too-good-to-be-true fares. Along with Norwegian Airlines, WOW ushered in a wave of affordable transatlantic travel, and the airline quickly expanded to destinations across the U.S.

What Went Wrong?

In an email to WOW employees (English translation below), founder and CEO Skúli Mogensen explained that while the early days of WOW were heady and hopeful, the outlook has turned less rosy of late:

“There have been many victories but also some major challenges,” Mogensen wrote. “This year in particular, has been extremely challenging compared to the incredible growth and success that we enjoyed during prior years.

Unfortunately, external conditions have continued to deteriorate and the outlook for many airlines has gotten extremely rough. WOW air is no exception and despite us working around the clock trying to improve the outlook we have now been faced with some extremely tough decisions.”

He adds that there will be no changes to daily operations or the current roster of destinations, at least for now, before addressing what is likely the elephant in the room:

“I realize this will come as a shock to many of you and obviously it was not part of the original game plan. However, given the circumstances I think this is the best solution for our team, our passengers, the continuity of WOW air as a low-cost carrier and not least for the travel industry in Iceland.”

But this begs the question: Can WOW continue as a low-cost carrier without an airline to truly compete against?

What This Means for Budget Airfares

With WOW in the fold, Icelandair now operates 80 percent of the air traffic into Iceland. The two airlines competed vigorously on routes, and WOW was also aggressive on pricing to the rest of Europe, going head-to-head with other mainline carriers to popular destinations.

Going forward, a lot will depend on whether or not Icelandair continues operating WOW as an a la carte alternative to traditional service. Icelandair certainly could do that, perhaps while improving the service quality a bit and shedding some underperforming routes. This would allow Icelandair to offer two distinct products for different types of travelers.

But Icelandair isn’t doing too well itself. The airline has cut profit projections amidst a cooling tourism market in Iceland, so the decision to purchase WOW could simply be as straightforward as eliminating a competitor.

Either way, the acquisition likely means the demise of those $99 fares. However, travelers can hope Icelandair chooses to operate WOW as a revamped low-cost airline, thus preserving some of the low-price pressure WOW created.

More from SmarterTravel:

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Airport In-Flight Experience

Virgin America Flies Its Final Flight

Goodbye, Virgin America.

The last Virgin America flights operated on April 24, departing San Francisco at 9:30 p.m. Two years after being bought for $2.6 billion, the airline is officially incorporated into Alaska Airlines.

[st_related]Alaska and Virgin America Merge, Creating Fifth-Largest U.S. Airline[/st_related]

But you might not notice its absence at all, at least according to the travel blogosphere: Alaska took a good look at the problems generated by prior airline mergers, and has made sure that the Virgin America reservations systems has worked smoothly with its own. It seems there will be no surprises.

But that’s in the short term. Overall, the newly expanded Alaska Airlines system is facing something of an identity crisis, especially on former Virgin America routes. Alaska has apparently decided not to emulate the Big Three airlines (plus JetBlue) in offering a true premium option on transcontinental routes. It has, however, decided to offer seat-only “basic” fares starting sometime this fall.

The Big Three airlines—especially Delta—are steadily moving onto Alaska’s West Coast turf. It’s anyone’s guess how Alaska Airlines will accommodate this increasingly competitive environment, but you may well see some surprises from them within the next year or so.

[st_content_ad]The good news? If you’re flying on Alaska or a Virgin America-booked ticket over the next few days, you can expect a no-surprises transition.

More from SmarterTravel:

Consumer advocate Ed Perkins has been writing about travel for more than three decades. The founding editor of the Consumer Reports Travel Letter, he continues to inform travelers and fight consumer abuses every day at SmarterTravel.

Categories
Booking Strategy Budget Travel Travel Trends

The Southwest Effect Is Alive and Well

In 1993, the Department of Transportation published a study of the impact Southwest Airlines had when launching service in a new market. In the three California markets reviewed, the DOT found that after Southwest started service, average airfares dropped by 50 percent and traffic more than tripled.

The DOT dubbed that combination of lower prices and higher demand the Southwest Effect.

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[st_content_ad]A lot has changed in the quarter century since that DOT report. The airline industry has consolidated, through bankruptcies and mergers and acquisitions. And Southwest no longer enjoys the cost advantages that once allowed it to turn a profit on cheap tickets. Which raises the question: Does the Southwest Effect still exist?

According to a new study, “Public Benefits and Private Success: the Southwest Effect Revisited,” published by the business school at the University of Virginia, the Southwest Effect remains very much alive and well.

In an analysis of 109 new markets entered by Southwest between 2012 and 2015, the study found the following:

  • In 74 markets, fares dropped an average of at least 10 percent
  • In 56 markets, fares dropped an average of at least 15 percent
  • In 12 markets, fares increased
  • Demand increased by an average of 28 percent

To be sure, the fare decreases and demand increases aren’t of the same magnitude as those reported in the 1993 DOT study. But they are nevertheless measurable and significant. The new study estimates that Southwest accounts for $9.1 billion in annual airfare savings on domestic flights.

Southwest is a divisive airline, loved by many for its cheap fares and unpretentious ways, loathed by others for its bare-bones service and lack of elite perks. Whichever side you’re on, though, and even if you never fly Southwest, the airline’s very presence has probably saved you money.

Call it the Southwest Effect.

Reader Reality Check

Are you a fan of Southwest?

More from SmarterTravel:

After 20 years working in the travel industry, and 15 years writing about it, Tim Winship knows a thing or two about travel. Follow him on Twitter @twinship.

[st_newsletter]

Categories
Booking Strategy In-Flight Experience Travel Trends

Travel + Leisure Readers Pick the World’s Best Airlines

Looking for travel suggestions? The results of Travel + Leisure’s annual best-in-travel survey were released this week, with recommendations aplenty.

The survey is nothing if not comprehensive, eliciting more than 200,000 readers’ votes for the best airlines, airports, car-rental agencies, cities, cruise ships, destination spas, hotels, hotel brands, islands, tour operators, and safari outfitters.

In the airline category, voting included appraisals of carriers’ cabin comfort, service, food, customer service, and value.

Best Domestic Airlines

In the latest survey, Alaska and Hawaiian Airlines traded places, but the five top-rated airlines remained the same as last year’s, with Virgin America claiming the top spot for the tenth consecutive year.

  1. Virgin America
  2. JetBlue
  3. Alaska Airlines
  4. Hawaiian Airlines
  5. Southwest

Conspicuously missing from the list are the Big Three airlines — American, Delta, and United. Through mergers and acquisitions, they now control a disproportionate share of the country’s commercial air traffic, and thereby set the standards for service and pricing for the entire industry. And they’re the least loved by the traveling public.

The consolidation story continues, with Alaska’s acquisition of Virgin American, and the incorporation of the latter, the country’s best airline, into the former.

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Best International Airlines

As it has for 22 consecutive years, Singapore Airlines was rated the best international airline, which is tantamount to being rated the world’s best. Runners-up were Emirates and Qatar, which repeated from last year as the second- and third-ranked airlines.

The top 10:

  1. Singapore
  2. Emirates
  3. Qatar
  4. Cathay Pacific
  5. Japan Airlines
  6. Virgin Atlantic
  7. Air New Zealand
  8. Korean
  9. All Nippon Airways
  10. Eva Air

With seven of the top 10 carriers hailing from the Asia-Pacific, the theme is that region’s ongoing dominance. And unlike the domestic situation, there’s plenty of competitive pressure to keep raising standards higher.

Reader Reality Check

How do these results compare with your own assessment of the world’s best airlines?

More from SmarterTravel:

After 20 years working in the travel industry, and 15 years writing about it, Tim Winship knows a thing or two about travel. Follow him on Twitter @twinship.

[st_newsletter]

Categories
Booking Strategy Frequent Flyer

The End of Virgin America’s Elevate Program: What You Need to Know

Alaska Airlines’ acquisition of Virgin America closed on December 14, 2016, and it was announced earlier this year that on January 1, 2018, Virgin’s Elevate program would be discontinued, with members’ points automatically converted to miles in Alaska’s Mileage Plan shortly thereafter.

That left a lot of question marks, mostly concerning the status of Elevate’s marketing partners.

This week, the timeline for Elevate partnerships was released, revealing for the first time when the various earning and redemption opportunities will be discontinued.

For Virgin’s four airline partnerships (Emirates, Hawaiian, Singapore, Virgin Australia), the last day to earn or redeem points will be September 30.

September 30 will also be the final day to earn points with any of the participating Elevate car-rental companies, as well as the hotel partners.

And with very few exceptions, September 30 will the last day to earn points with the other Elevate partners as well.

So from October through the end of the year, Elevate will still be in operation, but only as a shell of its former self. Earn and redeem for Virgin America flights. Earn points for Alaska flights. And not much else.

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The Elevate program was never among the strongest airline loyalty schemes — too few options for earning and redeeming points, for starters. And Alaska’s Mileage Plan is among the industry’s most robust programs. So Elevate won’t be much missed.

The same can’t be said of the airline itself, however. While Alaska is a fine carrier in its own right, it will never have the outsized personality and distinctive style that Virgin brought to an industry that is generally lacking in both those traits.

Reader Reality Check

Will you miss Virgin America when it’s gone?

More from SmarterTravel:

After 20 years working in the travel industry, and 15 years writing about it, Tim Winship knows a thing or two about travel. Follow him on Twitter @twinship.

[st_newsletter]

Categories
Health & Wellness In-Flight Experience Passenger Rights Travel Trends

Congress Warns Airlines: Do Better, or Else

In his opening remarks before yesterday’s House Transportation Committee “Oversight of U.S. Airline Customer Service” hearing, committee chairman Bill Shuster (R-PA) referred to two recent incidents: United’s forcible removal of a passenger on flight UA3411, and an American Airlines flight attendant’s tussle with a passenger over her child’s stroller.

While those high-profile events may have triggered the hearing, remarks from the lawmakers made it clear that they viewed the airlines’ failings as far deeper and more pervasive. As Shuster put it, “Something is broken, and the obvious divide between passengers and the airlines needs to be addressed.”

[st_related]Are U.S. Travelers Satisfied with These Airlines?[/st_related]

Over a grueling four-plus hours, committee members subjected top airline executives from United, American, Alaska, and Southwest to a withering critique of current airline-industry practices, including overbooking, fees for bags and changes, and contracts of carriage that put the airlines’ rights ahead of their customers’. (Delta decline to attend the hearing, claiming it was working directly with individual members of Congress to address customer issues.)

The airlines were predictably remorseful. And just as predictably, they promised to perform better in the future, United for its part pointing to its recent pledge to make 10 “substantial changes to how it flies, serves and respects its customers.”

As have the travelers they represent, lawmakers have heard the airlines’ apologies and plans to improve the customer experience before, with no appreciable change for the better. Their frustration was evident.

Shuster left the airlines with a message that left no doubt as to the seriousness of the situation: “Seize this opportunity, because if you don’t, we’re going to come and you’re not going to like it.”

For all the tough talk, travelers have every reason to be skeptical of lawmakers’ ability to make the skies friendlier.

The airlines and their lobbyists have stymied government efforts to impose consumer-friendly protections in the past, and are well positioned to continue doing so.

And if there were ever a time when more regulation of the airlines was especially unlikely, it’s now, with an administration that is dead-set against government meddling into the business of business.

Flyers can watch and hope as the lawmakers bemoan the sorry state of the industry. But they should be prepared for more of the same.

Reader Reality Check

What are the odds that Congress will force meaningful change in the airline industry?

More from SmarterTravel:

After 20 years working in the travel industry, and 15 years writing about it, Tim Winship knows a thing or two about travel. Follow him on Twitter @twinship.

[st_newsletter]

Categories
Airport Booking Strategy Health & Wellness In-Flight Experience Passenger Rights Travel Trends

United Airlines Has a Plan to Fix Its Public Image

United’s forcible ejection of a paying passenger from flight UA3411 earlier this month was a perfect storm of bad decisions, both leading up to the incident and in its subsequent handling by company chief Oscar Munoz. The airline’s image, less than sterling to begin with, was deeply tarnished.

As part of its recovery efforts, United today published a detailed accounting of the events of April 9, and a list of 10 “substantial changes to how it flies, serves and respects its customers.”

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Here, verbatim, are the 10 items United is committing to:

  • Limit use of law enforcement to safety and security issues only.
  • Not require customers seated on the plane to give up their seat involuntarily unless safety or security is at risk.
  • Increase customer compensation incentives for voluntary denied boarding up to $10,000.
  • Establish a customer solutions team to provide agents with creative solutions such as using nearby airports, other airlines or ground transportations to get customers to their final destination.
  • Ensure crews are booked onto a flight at least 60 minutes prior to departure.
  • Provide employees with additional annual training.
  • Create an automated system for soliciting volunteers to change travel plans.
  • Reduce the amount of overbooking.
  • Empower employees to resolve customer service issues in the moment.
  • Eliminate the red tape on permanently lost bags by adopting a “no questions asked” policy on lost luggage.

Several of the policies are nothing more than common sense, and leave one wondering why they weren’t in place previously. Increasing the maximum compensation for involuntary bumping to $10,000 makes for a nice headline, but it has the whiff of a public relations stunt about it. And the distinctly vague commitment to reduce overbooking is likely to strike many as tone deaf and unresponsive.

Today on CNBC, Southwest CEO Gary Kelly committed to eliminating overbooking entirely “very shortly.” United could have done the same, and probably should have. It’s the right thing to do, and it would have been a much needed feather in United’s cap.

The list is accompanied by a statement attributed to CEO Munoz, likely crafted by his P.R. team, that reads in part as follows:

Our review shows that many things went wrong that day, but the headline is clear: our policies got in the way of our values and procedures interfered in doing what’s right. This is a turning point for all of us at United and it signals a culture shift toward becoming a better, more customer-focused airline. Our customers should be at the center of everything we do and these changes are just the beginning of how we will earn back their trust.

Of course, that’s what United should have said two weeks ago, instead of blaming the affected passenger and defending the airline’s own actions, responses which further outraged United’s many critics.

United will survive this debacle, but not because it learned from its mistakes and will perform appreciably better in future. Rather, it will survive because it’s one of the Big 4 airlines that control more than 80 percent of the domestic air-travel market. It’s too big to fail. Unfortunately for the traveling public, that means United will walk away from this incident little changed, and the lot of flyers will be little improved, if at all.

Reader Reality Check

Do you see any good coming from the United incident?

More from SmarterTravel:

After 20 years working in the travel industry, and 15 years writing about it, Tim Winship knows a thing or two about travel. Follow him on Twitter @twinship.

[st_newsletter]

Categories
Airport Booking Strategy Health & Wellness In-Flight Experience Passenger Rights Travel Trends

United ‘Re-Accommodates’ a Passenger and the Internet Explodes

The media—social media, asocial media, major media, marginal media, all media—has been positively aflame for the past 24 hours with reporting and editorializing on United Airlines’ latest mishandling of a passenger confrontation.

The facts of the case are not in dispute. United’s Sunday-night flight UA3411 between Chicago and Louisville was full—100 percent full—and all passengers were seated and awaiting departure. Four United employees advised the gate agents that they had to be on the flight, in order to operate a flight from Louisville. United agents boarded the aircraft and called for volunteers to take a later flight, offering up to $800 in compensation. No one raised their hand, and United randomly chose four travelers to be involuntarily ejected from the flight. The first three complied, grudgingly. The fourth did not. Following a prolonged verbal dispute, during which the passenger proclaimed that he was a doctor with patients he was scheduled to see and couldn’t change his travel plans, Chicago Aviation Security officers were called to forcibly remove him. He was dragged, kicking and screaming, off the plane.

It was an ugly incident. An incident that could and should have been avoided. And, naturally, it was recorded in gory detail on at least two passengers’ cellphones. The video was posted on social media, and it went viral.

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It was front-page news on the New York Times. The Los Angeles Times also featured the story on the front page, alongside two editorials on the topic. The story was everywhere on Twitter and Facebook, replete with newly created memes. (Example: a picture of a United plane overlaid with the copy, “If we cannot beat our competitors, we beat our customers.”)

The United-bashing was near universal, ranging from wrist-slapping (could have handled it better; should have offered more compensation) to full-throated condemnation (never fly them again; there oughtta be a law). There’s a Change.org petition calling for the resignation of United chief Oscar Munoz. China’s People’s Daily led with photos of the passenger’s bloodied face, and suggested that he was the victim of racism (the doctor appears to be of Asian descent). United’s credibility and reputation, already teetering after the recent dress-code incident, took a big hit.

As a former airline P.R. manager, I’m well aware of the difficulties United faced, both in handling the original problem and in dealing with its aftermath. The airline had to choose between bumping four passengers and delaying or cancelling the Louisville flight the four crewmembers were scheduled to operate. Munoz, in his infuriatingly evasive non-apology, had to choose between supporting his workers and issuing a full-throated admission of misbehavior. These are lose-lose choices. And United lost big.

But at the end of the day, the incident itself should come as no great surprise. United’s Contract of Carriage, like other airlines’, allows it to remove passengers involuntarily from a flight. And although United doesn’t do so often, it does do it. As do other airlines. In this case, the affected passenger was intransigent, and things spiraled out of control. It happened on a United flight, but it could have happened anywhere.

What is more surprising than the blow-up is the reaction, both in its extent and in its fervor. I can’t recall another incident that sparked so much outrage by so many people.

Why this? And why now?

There are likely many factors in play here, but what’s readily detectable beneath the anger is frustration. Perhaps it’s frustration with institutions generally, including government, as the recent presidential election might suggest. Perhaps it’s with corporations in general. But inarguably, there’s a high level of frustration with the airlines specifically.

The airlines, naturally, would disagree. They’d point to their financial results (strong profits) and their operational data (flights running more than 80 percent full systemwide), suggesting that their success in these areas can only be predicated on their success in satisfying their customers.

In fact, the airlines’ robust performance simply reflects an imbalance in the supply-demand equation, in the airlines’ favor. People need to travel, however distasteful they may find the experience. And the airline industry—less competitive than ever, with more than 80 percent of domestic capacity controlled by just four carriers—is adept at manipulating flight capacity to retain pricing power in the marketplace. The airlines are doing well in spite of the fact that they’re failing to meet their customers’ needs and expectations.

So travelers, even as they plunk down cash for tickets, are frustrated and angry: at the long lines, at the lack of pricing transparency, at the devaluation of frequent-flyer miles, at the discomfort of crusher seats in coach, at their lack of rights enshrined in Contracts of Carriage and frequent-flyer program rules, at the nickel-and-dimeing disingenuously boosted by the airlines as choice, at the general lack of respect and concern for their welfare.

The revolution may or may not be televised. But the incident that sparked the revolution, if that’s what this turns out to be, was televised. The airlines—not just United—ignore the media firestorm, and the deep-seated anger underlying it, at their peril. At some point, “We’re not going to take it anymore” will become “We’re not going to fly you anymore.”

Reader Reality Check

How frustrated are you with the airline industry?

More from SmarterTravel:

After 20 years working in the travel industry, and 15 years writing about it, Tim Winship knows a thing or two about travel. Follow him on Twitter @twinship.

[st_newsletter]

Categories
Booking Strategy Frequent Flyer

Timeline for the Termination of Virgin America’s Elevate Program

Likely in deference to concerns expressed by Virgin America loyalists, who rightly fear the loss of what makes Virgin a perennial traveler favorite, Alaska Airlines has been especially thoughtful and deliberate in planning and executing the merger of the two airlines’ operations, and has taken pains to communicate the consolidation’s progress and next steps. While many of the remaining details of the merger were revealed late last month, a key element of the transition remained unknown: the timeline for discontinuing Virgin America’s Elevate program and converting members to Alaska’s Mileage Plan.

Now, however, we know. And Elevate members can plan accordingly.

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Here are the milestones in the two programs’ consolidation:

  • For the time being – Elevate members earn a 30 percent bonus when converting their points to Mileage Plan miles
  • Through “Fall 2017” – Elevate members may continue to earn and redeem points on most Elevate partners. In other words, partner earning and awards will be discontinued sometime before the program is terminated
  • January 1, 2018 – Elevate program ceases to exist
  • Early-2018 – Outstanding Elevate points automatically converted to Mileage Plan miles

The most important take-away from the timeline is the limited time to earn and redeem on Elevate partners. As it happens, the Elevate partner roster is rather limited, especially compared with the industry-leading network of Mileage Plan. Elevate members can only redeem points for award travel on Virgin Australia, Emirates (also a Mileage Plan partner), Hawaiian, and Singapore. If they plan to do so, they’d best do it sooner rather than later.

Overall, Mileage Plan is a vastly superior program to Elevate, so the conversion will amount to a significant upgrade for most Elevate members. The same cannot be said of the transition of the feisty-hipster Virgin into the plain-vanilla Alaska Air. Whether that will be a downright downgrade remains to be seen.

Reader Reality Check

Will the merger be a downgrade or an upgrade for Virgin America flyers?

More from SmarterTravel:

After 20 years working in the travel industry, and 15 years writing about it, Tim Winship knows a thing or two about travel. Follow him on Twitter @twinship.

[st_newsletter]

Categories
Airport Booking Strategy Budget Travel Frequent Flyer Security

Recap: The Week’s Biggest Travel Stories and Best Deals

Following is our regular summary of the latest travel news and best frequent traveler promotions reviewed during the past week.

If it was a good deal—or a notably bad deal—from an airline, hotel, or car rental loyalty program, you can read all about it here, and plan your travel accordingly.

The Future of Virgin America, Revealed (and Richard Branson’s Reaction)

Alaska Airlines this week went public with its plans for Virgin America. While the Virgin name will be retired, there’s hope that its DNA will survive.

Airport Alert: More Chaos and Confusion Coming to LAX

Delta’s upcoming $1.9 billion renovation and relocation project, estimated to take place over seven years, is just the latest inconvenience for LAX flyers.

U.K. Joins U.S. Laptop Ban as Skepticism Mounts

The U.K. has joined the U.S. in banning electronic devices on flights from some Muslim-majority countries. Not all travelers are on board.

The World’s 10 Happiest (and Unhappiest) Places

For travelers factoring countries’ chill factor in their plans, the annual World Happiness Report ranks 155 countries according to their levels happiness.

Electronic Devices Banned on Some Overseas Flights

Electronic devices will be banned in the cabins of nine airlines operating non-stop flights to the U.S. from 10 airports.

Good to Know: the 10 Most Dangerous Countries for U.S. Travelers

A newly issued report lists the world’s most dangerous countries for American travelers. The U.S. State Department should take note.

Alaska Air Enhances Mileage Program with New Europe Partner

The industry’s best loyalty program gets even better with addition of a new Europe airline partner.

Biggest-Ever Sign-Up Bonuses for 2 Hilton Credit Cards

For Hilton loyalists who don’t already have one of these Honors credit cards, there’s never been a better time to sign up.

Taj Mahal, Anyone? Win This 5-Day Trip to India for 2

Enter to win a trip for two to India, including airfare voucher, accommodations, Delhi tours and tastings, a cooking lesson, Taj Mahal visit.

Somebody has to win this trip, right? Might as well be you.

More from SmarterTravel:

After 20 years working in the travel industry, and 15 years writing about it, Tim Winship knows a thing or two about travel. Follow him on Twitter @twinship.

[st_newsletter]

Categories
Booking Strategy Entertainment Frequent Flyer In-Flight Experience

The Future of Virgin America, Revealed (and Richard Branson’s Reaction)

Perhaps no other airline merger has raised more questions than Alaska Airlines’ acquisition of Virgin America. Two certifiably fine airlines, with very different corporate cultures and products. Oil and water. How would they mix?

Specifically, how much of what made Virgin America the recurring winner of reader-favorite polls would be carried over under the new owner’s regime?

Alaska itself seemed ambivalent in the early stages, at one point signaling there was a chance the Virgin branding and some semblance of its service product might be retained long term.

This week, almost a year after the merger’s announcement, Alaska finally clarified its plan for Virgin America, positioning it as a “shared vision” of the two carriers.

The Virgin America name and logo will be retired, “likely sometime in 2019.” However, “the combined airline will adopt many of the brand elements that Virgin America enthusiasts love about their favorite airline, including enhanced in-flight entertainment, mood lighting, music and the relentless desire to make flying a different experience for guests.”

[st_related]U.K. Joins U.S. Laptop Ban as Skepticism Mounts[/st_related]

Among the more substantive changes:

  • New, redesigned cabin interiors beginning in 2018
  • New uniforms, designed by Luly Wang, in mid-2019
  • High-speed inflight Wi-Fi on all planes by end-2019
  • 50% increase in first-class A320 seating and new Premium coach seats from late-2018
  • Mileage Plan replaces Virgin Elevate program in 2018
  • New and renovated airport lounges by early-2019

Mood lighting and fashion-forward uniforms won’t transform Alaska into Virgin. But neither can such enhancements be dismissed as lipstick on a pig. Alaska is a solid airline, albeit a company with a less flamboyant character than Virgin’s. There’s as much reason for hope as there is for pessimism.

Sir Richard Responds

Perhaps no one is more emotionally invested in Virgin’s fate than the airline’s founder, Sir Richard Branson.

In April of last year, Branson expressed his opposition to the merger as follows:

I would be lying if I didn’t admit sadness that our wonderful airline is merging with another. Because I’m not American, the US Department of Transportation stipulated I take some of my shares in Virgin America as non-voting shares, reducing my influence over any takeover. So there was sadly nothing I could do to stop it.

This week, in response to Alaska’s announcement, Branson again expressed sadness, as well as some skepticism regarding any attempts to sustain the Virgin experience in a new corporate environment:

When a company goes public, decisions are made that benefit the shareholders. In the best of times, they also benefit consumers. It remains to be seen what will happen now – for travellers – with fewer airlines in the US than ever. Being different and on a mission to truly reinvent an experience for the customer is increasingly rare in this business.

After extolling Virgin America’s accomplishments and lavishing praise on the airline’s workers, Branson signed off on a semi-hopeful note:

George Harrison once said, “All Things Must Pass.” This was the ride and love of a lifetime. I feel very lucky to have been on it with all of you. I’m told some people at Virgin America are calling today “the day the music died”. It is a sad (and some would say baffling) day. But I’d like to assure them that the music never dies.

While the music may not die for Virgin’s employees, it remains to be seen whether the airline’s loyal customers will be left singing Alaska’s praises, or singing the blues.

Reader Reality Check

Are you optimistic or pessimistic about Alaska’s ability to incorporate Virgin’s strengths into its own operations?

More from SmarterTravel:

After 20 years working in the travel industry, and 15 years writing about it, Tim Winship knows a thing or two about travel. Follow him on Twitter @twinship.

[st_newsletter]

Categories
Booking Strategy Frequent Flyer

Alaska Air Enhances Mileage Program with New Europe Partner

By traditional measures, Alaska Airlines is a carrier of decidedly modest size, even after its acquisition of Virgin America. Its own flight network is small, compared to those of American, Delta, and United. And it’s not a member of one of the three global airline alliances.

In spite of those shortcomings, Alaska has managed to cobble together marketing partnerships with 16 airlines, serving more than 900 destinations worldwide. Which is great for members of its Mileage Plan program: They can earn miles and take award flights on Air France, American, British Airways, Cathay Pacific, Delta, JAL, KLM, Qantas, and several others.

To that impressive list can now be added Condor Airlines, Germany’s third-largest carrier. Condor, a wholly-owned subsidiary of Thomas Cook, flies to 75 destinations in Europe, the U.S., Africa, and Asia. By this summer, Condor will serve 16 North America cities, including flights between Frankfurt, Germany, and Seattle, San Diego, Las Vegas, Portland, Anchorage, Fairbanks, and Vancouver.

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Beginning today, Mileage Plan members can earn miles for Condor flights. Better still, miles earned for Condor flights count toward earning Alaska elite status.

Condor flights will be available for award travel “at a later date,” yet to be announced.

The addition of Condor is more good news for members of Mileage Plan, which is already one of the industry’s top loyalty programs. In addition to earning miles for flights, Mileage Plan members earn miles for stays at 10 major hotel chains, seven rental-car companies, more than 800 online retailers, and so on.

But what gives Mileage Plan its biggest value advantage over competing programs is its adherence to traditional mileage-earning rules. Program members still earn flight miles according to the distance flown, rather than according to the price of their tickets. For the average traveler, Mileage Plan delivers more free flights, faster, at less cost.

Reader Reality Check

Are you a Mileage Plan fan?

More from SmarterTravel:

After 20 years working in the travel industry, and 15 years writing about it, Tim Winship knows a thing or two about travel. Follow him on Twitter @twinship.

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Booking Strategy Travel Trends

Pilots Vote ‘No Confidence’ in American Air’s CEO

Back in 2013, when Doug Parker, then US Airways’ chief, succeeded in what was in essence a hostile takeover of American Airlines, he was well regarded by American’s pilots union, whose support was crucial to his campaign. That was then.

This week, the Allied Pilots Association, which represents American’s 15,000 pilots, announced that its board of directors and national officers had voted in favor of a resolution expressing “no confidence” in Parker and his management team.

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The resolution includes a long list of charges against Parker. Among them:

  • “(S)ince the merger, Doug Parker has made questionable economic and strategic decisions and is squandering a rare period of record profits in the airline industry by failing to build a balance sheet that can withstand the inevitable downturns in this historically cyclical industry.”
  • “(D)espite the fact that American Airlines was the last major airline to exit bankruptcy, it has already accumulated 20 billion dollars of debt, which is more than all the other major network carriers combined largely because Doug Parker has championed $11 billion in stock buy-backs, representing over 80% of profits since emerging from bankruptcy.”
  • “Doug Parker has enriched himself and senior managers through substantial bonus plans while dismissing employee concerns and eroding the employee morale and motivational foundation needed for any customer service organization to succeed.”
  • “Doug Parker’s management team is responsible for declining customer satisfaction rankings due to a heavy-handed focus on internal performance metrics that treat our valued customers as numbers, rather than people, thus resulting in the erosion of the American Airlines reputation for quality which may have a long-term and lasting negative impact on future profitability.”

And the list of grievances goes on…

According to the union’s news release, the final straw was Parker’s failure to attend last week’s meeting between Donald Trump and U.S. airline chiefs. “His decision to disrespectfully not accept an invitation to meet with the President of the United States has left the APA leadership and many of our pilots amazed at the lack of judgment and leadership exhibited.” (In his own defense, Parker cited his previous commitment to address a meeting of American’s managers.)

The pilots aren’t the only American employee group expressing dissatisfaction with the company’s management. Yesterday, Valentine’s Day, flight attendants picketed at four American hub airports, citing compensation issues and unresolved problems with new rash-inducing uniforms.

If American can’t get its labor-management relations in order, flyers will eventually feel the effects of the festering ill will. At which point they’ll cast a no-confidence vote with their wallets. No one wants to travel on an airline bedeviled by strikes, slowdowns, and a depressed and demotivated workforce.

Reader Reality Check

Have you noticed any degradation in American’s customer service in recent months?

More from SmarterTravel:

After 20 years working in the travel industry, and 15 years writing about it, Tim Winship knows a thing or two about travel. Follow him on Twitter @twinship.

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Categories
Booking Strategy Budget Travel Travel Trends

Why Warren Buffett Loves Airlines, and You Shouldn’t

When legendary investor Warren Buffett began investing in airline stocks last year, it was big news in the investing community. Theretofore Buffett had been a staunch critic of the industry’s underlying economics, and regularly unleashed scathing takedowns of airline investments. Like this, from 2002:

(T)he airline business has been extraordinary. It has eaten up capital over the past century like almost no other business because people seem to keep coming back to it and putting fresh money in. You’ve got huge fixed costs, you’ve got strong labor unions and you’ve got commodity pricing. That is not a great recipe for success. I have an 800 (free call) number now that I call if I get the urge to buy an airline stock. I call at two in the morning and I say: ‘My name is Warren and I’m an aeroholic.’ And then they talk me down.

And this, from 2013:

Investors have poured their money into airlines and airline manufacturers for 100 years with terrible results. It’s been a death trap for investors.

A death trap no more, apparently, given the significant airline stakes his holding company, Berkshire Hathaway, began accumulating last year. And according to an Associated Press analysis of Berkshire’s latest SEC filings, the company’s buying binge continues. The latest Berkshire airline holdings: 45.5 million shares of American, 60 million shares of Delta, 43.2 million shares of Southwest, and almost 29 million shares of United Continental.

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What accounts for Buffett’s pivot is bad news for travel consumers. In a word: consolidation.

When Buffett invested $358 million in USAir, in 1989, the airline industry was highly competitive. There were no fewer than 10 U.S. airlines referred to as “major carriers,” the Big 10 as they were known. Profits were elusive and hard-won. The consumer was king. And Buffett’s investment was nearly lost when the airline veered close to bankruptcy.

Today, following years of bankruptcies and mergers, 80 percent of the country’s domestic air traffic is controlled by just four airlines: American, Delta, Southwest, United. The balance of pricing power has shifted from the consumer to the airlines.

For 2016, the U.S. airlines are projected to have racked up profits totaling $20.3 billion. And because the industry has become an oligopoly, the outlook is for continued profitability for years to come.

That’s well and good for the airlines, and for Buffett, and for investors in Berkshire Hathaway and the airlines themselves. But it’s bad news for travel consumers, who have little choice but to pay whatever the airlines deign to charge.

The often repeated claim of the airlines and their boosters and lobbyists, that inflation-adjusted airfares have declined, is a cynical suppression of the full truth, which is that consumers would be paying even less if the industry was still dominated by the Big 10 instead of the Big 4.

There’s plenty to be learned from Buffett’s pivot to the airlines, not least this: If you’re looking for a deal, buy the airline’s stock, not its tickets.

Reader Reality Check

Are you a buyer or seller of airline stocks?

More from SmarterTravel:

After 20 years working in the travel industry, and 15 years writing about it, Tim Winship knows a thing or two about travel. Follow him on Twitter @twinship.

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Categories
Booking Strategy Frequent Flyer

Alaska Air Upgrades Mileage Program, Signals Bright Future

Alaska Airlines has been much in the news lately, with its acquisition of Virgin America and the announcement that it will be severing ties with longtime marketing partner Delta.

Eclipsed by those high-profile stories was this week’s announcement of enhancements to its Mileage Plan loyalty program, and, more importantly, a forward-looking statement regarding the program’s future form.

But first, the changes.

  • Lower award prices for shorter flights. Award prices for flights less than 700 miles are reduced from 7,500 to 5,000 miles. And flights less than 2,101 miles are reduced from 12,500 to between 5,000 and 10,000 miles.
  • More miles when flying on select airline partners, plus mileage credit on more coach fares.
  • Elite upgrades for Mileage Plan members flying on award tickets.

Those are positive changes, to a solid program. The bigger news, however, is what’s not changing.

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The key question in the minds of both travelers and industry-watchers has been if, or more likely when, Alaska would succumb to Wall Street pressure and follow American, Delta, and United in converting its loyalty program to a spend-based scheme. That move would likely increase revenue from Alaska’s most profitable customers, but would strip the program of value for average travelers.

Alaska has addressed the question in the past, assuring customers that there were no plans to switch from the current mileage-based earning scheme. But such pronouncements only apply to the short term; they hardly rule out such a change in the medium or longer term. And, as frequent flyers know all too well, airlines’ plans do change.

But the latest Alaska news release included the following:

At Alaska Airlines, we remain committed to our miles-based program. While many other airlines are heading in a different direction and simply looking at how much people spend, we’re focused on rewarding people across the board for how much they fly.

Again, that’s no guarantee that Mileage Plan will remain mileage-based forever. But it’s a clear signal that the company has explored the alternatives and made a strategic decision to maintain a program that works for the many, not just for the few.

For the great majority of travelers, that’s great news.

Reader Reality Check

Is Alaska’s Mileage Plan on your “Best Programs” list?

More from SmarterTravel:

After 20 years working in the travel industry, and 15 years writing about it, Tim Winship knows a thing or two about travel. Follow him on Twitter @twinship.

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