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.

Benefits come with a price, so British Airways is boarding cheap fares last

Gate boarding procedures vary across the industry, from an open system of “anyone can board at any time” to specific policies that assign the order of who get on first. This only becomes an issue with economy passengers as premium classes as has been their privilege may board on their own time.

Because of limited overhead bin space, economy passengers may compete to board early. Traditionally most airlines board passengers from the rear so as to avoid bottlenecks in the aisle. The idea is to hasten the process that may cause a delay in take-off if it becomes problematic. From the perspective of efficiency, that seems to make a lot of sense.

Courtesy British Airways

That, until some airlines hit on the opportunity to make boarding a benefit to be purchased in a bucket of ancilliary charges. Now British Airways (BA) has announced that it will board passengers who have paid cheaper economy fares last. BA said the new procedures aim to “speed up the process and make it simpler for customers to understand.” Really? That’s a hard pill to swallow.

BA’s defence is that this is already a procedure practised by some other carriers. Yes, US carriers such as the Big Three of American, United and Delta have introduced basic economy fares – their version of budget fare to counter the no-frills competition – which do just that besides other non-entitlements such as no seat assignment until boarding at the gate.

But there is one difference – passengers are made aware of that sub-class before they amke the choice. However, most airlines sell different fares for the same economy seats, designed to help them sell the seats. One wonders if you purchase a ticket during a promotion period and become committed to flying maybe a year later, will you now be penalised for not paying a higher fare that is usually the case closer to the date of the flight? It is only fair that customers know and understand what they are paying for.

Of course, BA’s new procedures have already raised a lot of ire among its customers. Some of them feel that while they may have purchased cheap fares, they do not deserve to be made to feel cheap or to be treated as such. Oh well, as some people may say, you have the choice. Or, take it with a pinch of salt as Banjobob@scottishcringe says: “Nothing quite like a British class system to let you know your place!” Or, punch back with a new challenge, as Martin Lovatt wrote on Twitter: “I wonder if disembarkation will be in the reverse order then?” Now, that will be quite a task managing the process in economy based on fare.

Southwest will follow JetBlue: Better a policy of no overbooking than compensation

Courtesy Getty Images

AFTER the fallout of United Airlines in an ugly overbooking situation, Delta Air Lines said it would pay any volunteer who gives up a seat close to US$10,000, which United now emulates. But Southwest Airlines does it better with the assurance it will not overbook seats.

Southwest CEO Gary Kelly said the airline “had been thinking about ending overbooking for a long time”. Thanks to United, it is now looking to implementing the new policy sooner with “better forecasting tools and a new reservations system coming online next month.”

In fact, JetBlue Airways already has the policy in place. In a published “Customer Service Plan”, the airline states: “JetBlue does not overbook flights.” There may be exceptions to the rule. The statement goes on to state: “However, some situations, such as flight cancellations and reaccommodation, might create a similar situation.” In which event, affected passengers will be paid denied boarding compensation of US$1350.

Courtesy JetBlue Airways

In the present climate when travellers are weighing in on the issue, JetBlue CEO Robin Hayes reaffirmed the airline’s policy. “We are committed to our policy of not overselling flights,” he said. “And our crew members have always been in power to make decisions in rare cases where we have to put someone on a flight.”

Last year, according to the Transportation Department, JetBlue bumped off 3,176 passengers involuntarily while 1,705 passengers agreed to take another flight, out of 34.7 million passengers.
This, Hayes said, was largely the result of downsizing planes.

Ironically, Southwest had the highest total number of involuntary denied boardings last year – at 0.99 per 10,000 passengers,. JetBlue was not far behind 0.92. The rates for both airlines more than double United’s 0.43.

One badly handled incident, so it seems, can really do more damage than the number of incidents added up might suggest.

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”.

More offloading stories: What’s right, what’s wrong?

Suddenly, following the United Airlines incident of a passenger being forcibly removed from the aircraft in an overbooked situation (see The saga continues: United Airlines CEO promises no repeat of David Dao incident, Apr 14, 2017; United Airlines flew deeper into a PR storm, Apr 11, 2017; Fly the friendly skies? Not on United Airlines, Apr 10, 2017), air travellers are awakened to the harsh reality that even when they hold a fully-paid for confirmed seat, there is no guarantee they may not be bumped off.

Suddenly too, stories about more incidents of being bumped off are circulating via the social media.

A passenger travelling with her husband and a child happily publicized a windfall when Delta Air Lines compensated her US$11,000 for giving up their seats.

Yes, Delta has announced a change in its policy to compensate volunteers an amount as high as US$10,000 for giving up their seats. More specifically, gate agents can offer up to US$2,000, up from the previous maximum of US$800, and supervisors can offer up to $9,950, up from $1,350.

That’s mighty generous of Delta, and why not if it means taking down the competition? However, a recently published list of the ten worst US carriers for overbooked flights did not list Delta, which means the offer may not be made as often as you might think.

Many people believe if United had upped the compensation, it would have been spared the bad PR patch it went through.


Courtesy Air Canada

Just as soon as the Canadian authorities quickly reacted to the United debacle and vowed to protect consumers’ rights, a story surfaced of an incident on Air Canada of a 10-year-old child being denied boarding. His mother asked if an adult travelling with them could give up his seat for the child and was told that seat could not be guaranteed for the boy and would likely go to another passenger.

Oh, come on, Air Canada, to think this could happen in a country known for its people’s compassion!

The airline now said they were “following up to understand what went wrong” and that they had apologized to the family and offered a C$2,500 (US$1,866) voucher. If only airlines could understand how money cannot adequately make up for a disrupted holiday and the stress they caused, all the more in this case of separating a child and his parents.

A couple posted their story of being asked to leave the aircraft of yet another United Airlines flight, and this was not a case of an overbooked situation. Apparently they found another passenger lying across their assigned seats, asleep, and decided to sit in a different row which happened to be “economy plus” seats . According to the crew, the couple tried to sit in an upgraded seat and refused to comply with instructions to return to their booked seats.

Well, well, it looks like anything United now does that displeases a passenger is wrong, even if it means following the rules. It is every traveller’s right to heed the call to boycott the airline after the way it treated passenger David Dao, but it is not fair to take advantage of the airline’s vulnerability.