Legacy airlines go the budget way

It’s yet another sign of how legacy airlines are feeling the heat of the competition posed by budget carriers.

Courtesy Getty Images

British Airways (BA) will operate planes for the short haul with seats in economy that cannot recline. The airline said the seats will be “pre-reclined at a comfortable angle”. Affected flights up to four hours include runs from Heathrow to Rome, Madrid and Paris.

BA which already ceased providing complimentary booze and meals for the short haul last year admitted to the pressure. It said the move will allow the airline to “be more competitive” as it will then be able to “offer more low fares”.

Many legacy airlines are already adopting the “pay for what you want” model of budget carriers, charging for extras such as checked luggage and seat selection at booking.

The big three US carriers of American, United and Delta have introduced “basic economy” fares which will board such ticket holders last with seat assignment only at boarding. There may be other restrictions.

Asian rivals Cathay Pacific and Singapore Airlines (SIA) are also moving in the same direction. Cathay’s economy supersaver and SIA’s economy lite do not permit seat selection at booking and do not accrue full mileage perks. SIA is also charging additionally a credit card service fee for tickets purchased out of certain ports. (See Same class, different fare conditions, Jan 5, 2018)

While legacy airlines are finding ways to cut costs to offer lower fares, this can be a double-edged sword that only serves to narrow the gap between them and budget carriers. What price, therefore, the differentiation? But, good news for travellers not too fussy about brands.


Same class, different fare conditions

Legacy airlines, faced with increased competition from no-frills operators, are going the budget way by restructuring their economy fares.

In the United States, the big three carriers of American, Delta and United have introduced basic economy fares, which are quite akin to the budget fare. Conditions include no pre-seat selection at the time of booking, seat assignment only at the gate, last to board and other restrictions that may concern baggage allowance and flight changes.

Courtesy Singapore Airlines

In Asia, rivals Cathay Pacific and Singapore Airlines (SIA) too have revised their fare structures. At the lowest level, Cathay’s economy supersaver and SIA’s economy lite may seem attractive, but travellers should check out the restrictions so as not to be disappointed or surprised by hidden costs. Such fares do not permit pre-seat selection at the time of booking, unless you are prepared to pay a fee for the privilege. Mile accruage has also been reduced – 50% in the case of SIA and 25% in the case of Cathay.

There may be other charges. Earlier in the week, SIA announced that it would levy a 1.3% credit card service fee maxing at S$50 for outgoing flights from Singapore from January 20 only to retract the policy before its implementation, following a public outcry. However, this fee has already been introduced for flights departing Australia since November 2016 and others departing New Zealand, Belgium, the Netherlands and the United Kingdom since April last year. SIA referred the fees to as “costs relating to the acceptance of credit cards” when really it is not a fee imposed directly on the consumer but rather the vendor. It brings to mind how airlines faced with rising fuel costs so adroitly levy additionally a fuel surcharge as if it was something between the fuel companies and the consumers.

True, whatever the costs incurred by the airlines, they are likely to be passed on to the consumer. How much is reasonable will be decided by the competition, given that there is indeed fair and open competition.

Many travellers may not be aware of the different tiers of fare and their conditions, and are consequently unhappy if they had to top up what they had initially thought was an attractive offer. Same class, but different fare conditions. So, as always, caveat emptor.

The isolation of Qatar Airways

Courtesy Alamy

AT a time when its neighbours – Saudi Arabia, Egypt, Bahrain, the United Arab Emirates, Libya and Yemen – cut diplomatic ties with Qatar, winning the Skytrax world’s best airline award could not have tasted sweeter to the Qatari flag carrier. It displaced last year’s winner, Emirates Airlines, which fell to 4th ranking.(See Consistency defines Skytrax best airlines, Jun 21, 2017)

The Gulf countries are stopping flights between them and Qatar, and closing their airspace to Qatar Airways. According to Qatar’s chief executive Akbar Al Baker, this has resulted in the cancellation of 52 routes and adding flying routes to others. He was quoted as saying at the Paris Air Show where the award was announced: “At these difficult times of illegal bans on flights out of my country by big bullies, this is an award not to me, not to my airline, but to my country.”

Now Qatar Airways is setting eyes on getting a slice of OneWorld partner American Airlines. It is hoping to buy up to 10 per cent of the US carrier. Investing in foreign carriers is not something entirely new to Qatar Airways. In 2015, the Gulf carrier acquired 10 ten per cent of the International Airlines Group (IAG) which owns British Airways, Iberia, Vueling and Aer Lingus. This was subsequently increased to 20 per cent.

Qatar Airways also owns 10 per cent of South American carrier LATAM and is finalizing a deal to acquire 49 per cent stake of Italy’s Meridiana Fly. It has also expressed interest in Royal Air Maroc and setting up a joint venture in India.
Mr Al Baker has hinted at more acquisitions in the pipeline, but said the airline“is not going to collect crap.”

The timing of Qatar Airways’ interest in American Airlines smacks of more than just part of an expanding acquisition program although it is just as obvious being so. While other Gulf carriers may see the Trump’s restrictions on travel from the region and ban on in-flight carriage of electronic gadgets as a setback, Qatar Airways is keen to expand further into the United States. The isolation by the Gulf neighbours has made it all the more imperative for it to seek stronger relations elsewhere across the globe.

Reviving airlines’ customer care

US carriers are earning a bad name for customer service. Now it is American Airlines’ turn to have a brush with its customers. A pram forcibly removed by an employee struck a mother and almost hurt her baby. When a passenger intervened, the employee told him to “stay out of this” and then challenged him, “Hit me! Come on, bring it on.”

In a statement issued by the airline, American said: “This does not reflect our values or how we care for our customers. We are deeply sorry for the pain we have caused this passenger and her family and to any other customers affected by the incident.”

Admittedly there are rules and regulations to be complied with, but enforcement may be handled in different manners. So said American in its statement: “The actions of our team member do not appear to reflect patience or empathy, two values necessary for customer care.”

The employee was suspended and the affected passenger upgraded to first class on another flight.

It is encouraging to see fellow passengers standing up to the mistreatment. And if there is a good side to all the nastiness, it is the message sent to the airlines of the importance of good customer care in the competition.

An earlier incident on United Airlines triggered a call on social media to boycott the airline. In the aftermath of the incident, United said its management and board “take recent events extremely seriously and are in the process of developing targeted compensation program design adjustments to ensure that employees’ incentive opportunities for 2017 are directly and meaningfully tied to progress in improving the customer experience.”

Things are getting better for Economy travel

Courtesy Getty Images

American Airlines is not going to let rival Delta Air Lines go it alone in bringing back free meals for their flights. (See Delta Air Lines ups the ante, reintroducing free meals in Economy, 19 Feb 2017) However, American will for a start reinstate the freebie only two domestic routes – New York to Los Angeles and New York to San Francisco. Nevertheless it is an indication of how the competition is heating up, and how the game has come a full circle. It is only to be expected that United Airlines (and others) will follow suit.

In the end, it is not a matter of the meals but one of being ahead in the game, doing something different. Interestingly, across the pond in Europe, British Airways (BA) is doing away with free meals and has announced plans to add more seats in Economy, thus reducing the pitch. (See British Airways is becoming more “budget” than Ryanair, 7 Mar 2017) Here the critical question is whether BA is a leader or a follower in the European context, although it appears it is somewhat of a Johnny-Come-Lately and what Delta and American are doing may force it to re-think its strategy.

At no time than now is coach travel getting more attention from the airlines, which understandably have been paying lots more attention to the premium product because of the higher yield. (See Cathay’s loss is a sign of the times, 16 Mar 2017) And that’s good news for the majority of travellers.

Is Singapore Airlines liable for misconnections?

sia-logoamericanemirates-logoetihad-logoturkish-airliens-logoSingapore Airlines (SIA) is among five major carriers taken to task by the British Civil Aviation Authority (BCAA) for not compensating their customers for flight delays that resulted in missed connections. Emirates Airlines is said to be the worst offender. The other three carriers are American Airlines, Etihad Airways and Turkish Airlines.

According to BCAA Director of Consumers and Markets, Richard Moriarty, the five carriers have “systematically” denied the passengers their rights. He said: “Airlines’ first responsibility should be looking after their passengers, not finding ways in which they can prevent passengers upholding their rights. So it’s disappointing to see a small number of airlines continuing to let a number of their passengers down by refusing to pay them the compensation they are entitled to.”

Under EU regulations, which apply to airlines even if they are not based in the EU, a delay of more than three hours becomes compensable, unless caused by “extraordinary circumstances”. An airline is off the hook if the delay is caused by factors outside their control, such as inclement weather, but not if it is due to poor performance resulting from, say, the lack of maintenance, procedural hiccups or staff negligence.

This is not the first time an airline has been charged with not giving their customers their dues. Protecting air passengers’ rights has been a long running battle between regulators and the airlines, and the matter is far from being satisfactorily concluded. Nor is it as widely pursued as in the EU, United States and Canada. Even then, monitoring is not an easy task, and as arduous is the arbitration to decide if an airline should be held accountable. Ever since the EU ruling came into force, many airlines have been fighting the cases in court, and this can mean unduly long delays of compensatory payments if ever they are ruled in favour of the passengers.

Singapore airlines is putting compensation claims “on hold” if they involve connecting flights. This is a contentious issue as the delivering carrier has no control over a passenger’s choice of onward journey if he or she makes separate bookings. The question hinges on what is considered a reasonable connecting time. If an airline arranges the entire journey including the connection, it is usually obliged to look after the passenger who misses the connection as a result of a flight delay. This may cover a stopover stay at a hotel, meals, rebooking on the next flight or an alternative flight, and other related expenses. Some airlines have leveraged on short-connecting times as a marketing strength.

Following the US Department of Transportation final ruling on protecting passengers’ rights, SIA published a customer service plan for tickets purchased in the US for flights to and from that country. The plan stipulates: “In the event that Singapore Airlines cancels, diverts or delays a flight, Singapore Airlines will, to the best of our ability, provide meals, accommodation, assistance in rebooking and transportation to the accommodation to mitigate inconveniences experienced by passengers resulting from such flight cancellations, delays and misconnections. Singapore Airlines will not be liable to carry out these mitigating efforts in cases where the flight cancellations, delays and misconnections arise due to factors beyond the airline’s control, for example, acts of God, acts of war, terrorism etc., but will do so on a best effort basis.”

While an airline like SIA is unlikely to put its reputation on the line (the airline has often been commended by its customers for going the extra mile), there is always the caveat that it can only do so much to the best of its ability and on a best effort basis. In response to BCAA, SIA pointed out “a lack of clarity in the law” which it hoped would be resolved in the ongoing discussion with the British authority.

Virgin America tops, according to Conde Nast

Courtesy Virgin America

Courtesy Virgin America

Virgin America is the best airlines in the US according to a readers survey by Conde Nast. It is a credible list.

The top five airlines are as follows:

1. Virgin America, for its service and roomy cabins that include such features as touch-screen menus ordering, seat-to-seat messaging, no shortage of power outlets, Netflix streaming and mood lighting.

2. JetBlue Airways, for its ten-inch seatback screens, entertainment streaming options, free internet, unlimited blue chips and snacks.

3. Hawaiian Airlines, for its lie-flat seating in the premium cabin, welcome mai tais and guava cookies, and reputation for punctuality.

4. Alaska Airways, for its friendly staff, comfortable seats, reliability and guarantee that checked luggage will arrive no later than 20 minutes after touchdown.

5. Southwest Airlines, for its fun staff, affordable fare, two free checked bags allowance and any change of ticket without penalty.

Worthy of note is the ranking in the top five positions of both Alaska Airlines and Virgin America, which have since merged but continue to operate under their different names for the time being. Their merged identity is set to be a major aviation powerhouse in the US,

Also worthy of note is the absence of the big three US airlines: American Airlines, United Airlines and Delta Air Lines. Size is not a plus in this case, it seems.