Airlines dangle the premium economy carrot

IT looks like the traditional economy class may be heading toward a split between premium economy and basic economy, with the in-between normal economy not quite as exciting in terms of perks or costs.

While basic economy as already introduced by American carriers (American Airlines, Delta Air Lines and United Airlines) and Asian rivals such as Cathay Pacific and Singapore Airlines (SIA) in an attempt to stamp a potential loss of the business to low-cost carriers, the premium economy in a way will make up for reduced profit at the very bottom of the scale.

Courtesy Singapore Airlines

United Airlines may be Johnny-come-lately, but it promises to be as good as the slew of airlines that are already in the game. Its version of the class to be known as United Premium Plus will have more spacious seats, and customers according to its spokesperson will “enjoy upgraded dining on china dinnerware, free alcoholic beverages, a Saks Fifth Avenue blanket and pillow, an amenity kit, and more.”

EVA Air may be said to be a pioneer of such seats, but it is Cathay that has created an exclusive class with its own cabin that has propelled the popularity of a product that is better than economy but not quite business class, particularly for long-haul flights.

But airlines, which have been cautious about hopping on the premium economy bandwagon are not going to abandon the old workhorse but will instead make it work harder. A number of them are already making plans to increase more seats at the back of the aircraft,with British Airways announcing recently that economy seats in its new planes will no longer be able to recline.

More space in the forward sections of the plane can mean less legroom at the rear as airlines dangle the premium economy carrot to entice customers to upgrade.


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.

United Airlines moves ahead of Singapore Airlines

Courtesy Getty Images

United Airlines does it again, stealing march on rival Singapore Airlines launching its nonstop flight from Los Angeles to Singapore – now the world’s longest nonstop flight – on Oct 28. The flight covers a distance of 8,700 miles and may take as long as 18 hours.

SIA plans to introduce a similar service next year.

Back in February last year, United started a nonstop from San Francisco to Singapore, ahead of SIA’s introduction which came months later in October.

Demand for United’s Los Angeles flight seems healthy, considering the low launch fares for a round trip as low as US$384 which no doubt boosted the sale. No doubt it is good publicity to raise awareness, and it looks like the competition will benefit travellers when SIA joins the race next year. Meantime, United enjoys the run-in to build loyalty.

In Singapore, United’s Vice President of Atlantic and Pacific Sales Marcel Fuchs said: “United is proud to launch the long-awaited Singapore-Los Angeles route for our customers in Singapore.”

In the bigger picture, United must be looking at the initiative as being “the leading US carrier to Asia” as mentioned by its senior vice president of worldwide sales Dave Hilfman, who added that the new route would consolidate the airline’s position in Asia. Conversely, Mr Fuchs said: “The addition of this new exclusive service gives more options for our customers to conveniently connect to our extensive US network.”

United Airlines repairs image, ups compensation for passengers

In the aftermath of an ugly incident when a passenger on an United Airlines flight was forcibly removed to seat a positioning crew employee, the airline is taking the cue from rival Delta Air Lines’ offer of up to US$9,950 for passengers who volunteer to give up their seats in an overbooked situation. United said it would offer up to US$10,000.

In an effort to repair its damaged image, United made a few promises. It would no longer require police personnel to remove seated passengers in an overbooked flight while taking action at the same time to reduce such flights. Positioning crew members would be required to book into a flight at least an hour ahead of a flight. It would all in all improve customer satisfaction which will be a yardstick to assess staff’s performance.

In a statement, Untied said: “Our goal is to reduce incidents of involuntary denial of boarding to as close to zero as possible and become a more customer-focused airline.”

Incidentally, it has been argued that the David Dao incident was not a case of an overbooked flight but that United was bumping off passengers to make room for their crew members. Dao’s lawyers are likely to argue that it cannot be said that he was denied boarding as he was seated in the plane.

While it appears that US carriers are beginning to compete with each other to attract customers with the generous offer, it is only fair that passengers who are inconvenienced are amply compensated for more than just the cost of a ticket, never mind that there may be a small number who are on the lookout for a windfall which they rightly deserve. The issue is not who will be taking advantage of the offer but that there be takers.

Notwithstanding too that it may well be academic if the airlines better manage the booking, there will be still be calls for volunteers as airlines weigh in on the option as the situation arises. They are unlikely to stop overselling if that favours the bottom line.

Come June, United will want to be seen to be even more generous, paying passengers whose bags are permanently lost an amount of US$1,500 for the value of the bag and its contents. There will be “no questions asked”.

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.”

For United Airlines, it never rains but it pours

Courtesy Getty Images

For United Airlines, it never rains but it pours. A passenger flying in business class from Houston in Texas to Calgary in Canada said a scorpion fell from the overhead bin onto his head during lunch service. He put it on his plate and was stung before flinging it to the floor. A crew member placed a cup over the insect, which was subsequently flushed down the toilet.

However, the passenger said he had no plants to sue United, which had offered him and his companion flying credit as compensation.

These days, all kinds of strange creatures are flying too. Last month a rat was found on a British Airways flight departing from London Heathrow for San Francisco. There were earlier stories about the rodent found on flights operated by Air India, Emirates Airlines and a Chinese carrier Loong Air. In March, a snake was found loose on a Ravn Alaska commuter flight, apparently a pet left behind by a passenger on an earlier flight. In January, Emirates cancelled a flight from Dbai to Muscat after a snake was spotted in the cargo hold. Earlier in November last year, a snake fell from an overhead storage compartment in first class on n Aeromexico flight.

So United is not alone, but it must be wondering when all the flak is going to stop raining down on it. Everything that happens subsequent to the David Dao incident could be another contentious issue to drag its name into the mud.

There was some good news for the airline though at the start of the week as it reported a profitable first quarter which exceeded expectations even though there was a sharp drop in profit of almost 70 per cent to US$96 million. And while one wonders how the Dao incident would affect profitability in the current quarter, United president Scott Kirby said: “We saw positive trends in the revenue environment in the quarter and are optimistic about the year ahead.”

Anyway, to repair its dented image, CEO Oscar Munoz vowed: “ We are more determined than ever to put our customers at the center of everything we do.” From now on, police personnel will not be called to remove passengers from a flight in an overbooked situation.

Time helps, if United stays competitive and shows it means what it promised.