It’s no surprise that our federal leadership has taken interest in the broadening fees-based services that airlines are charging Customers. There’s bound to be some concern when over $2.7b in baggage fees was generated in 2009. Almost 20 carriers are charging for the first and second bag these days, with JetBlue and Southwest Airlines being the notable exceptions.
Its not just the baggage fees that cloud the total purchase price for air travel. Once you pile on cancellation fees, change fees, and transfer rules you may find that a passenger’s out of pocket price at booking can increase considerably once they’ve finally taken to the skies.
It’s still difficult for customers to accurately compare the cost of travel across carriers, even though the Department of Transportation provided guidance back in May 2008 requiring that “air carriers should place a notice regarding the above-described additional baggage charges on the first screen in which the carrier offers a fare quotation of a specific itinerary selected by a consumer.”
For AA.com, Delta.com, Continental.com, and Orbitz this guidance is translated into a hyperlink paraphrased as “Additional baggage charges may apply”. That little link can turn into a price difference of hundreds of dollars for a family traveling with checked luggage. At no point is the Customers informed of the potential increase in purchase price on the itinerary qutoation screen.
The recent furor in the House over feess may require a more explicit description of the potential additional charges. Imagine if the carriers are required to fully disclose the potential “all-in” price for the trip. Let’s take a look at what that may turn out to look like….
The key components for this advisory would be the following:
Carry-on Baggage Fees
Checked Baggage Fees
A more advanced notice could include the following:
Lap Child Fees
Unaccompanied Minor Fees
Overweight Luggage Fees
Reservation Assistance Fees
With the recent concern over these fees, don’t be surprise if you see something like this appear in your favorite carrier’s booking flow. Although carriers may be upset to display this data – believing that it will cause abandonment – it should only impose a minor impact to their booking rates as the fees are now stabilizing across the legacy carriers. Additionally, this should reduce the sticker shock and pain that occurs at the stations.
I’ll continue to monitor the situation from the house to keep you in the loop.
(1) US Department of Transportation. Disclosure of charges for checked baggage. http://airconsumer.ost.dot.gov/rules/guidance.htm
It’s amazing how the airline industry has quickly converted the concept of free checked luggage into a new revenue stream through additional fees on coach fares that include baggage. With over $2 billion in baggage fees in 2009 alone, and over 20 carriers reporting bag fee collection, it seems as though this revenue train has no plans on stopping.
More interesting is how quickly this new line of income has grown. Below are a few stats of Baggage and Cancellation Fees from 1990 to 2009 based on data from the Bureau of Transportation Statistics.
In the last ten years…
Baggage Fees Increased 1566%
Cancellation Fees Increased 467%
From 1990 to 2009….
Baggage Fees comprised only $119,737,000 in 1990. By 2009, that number had increased 2186% to $2,728,850,000
Cancellation Fees comprised only $50,764,000 in 1990. By 2009, that number had increased a whopping 4575% to $2,373,019,000.
Google has just taken a giant leap into Travel through its recent $700m USD acquisition of the mathematician-heavy Ivy-leaugers at ITA Software.
TechCrunch has a great write-up of the acquisition
Google now has a foothold into flight pricing – and a powerful one at that. ITA’s QPX flight shopping and pricing engine has won rave reviews for it’s speed and scalability. It’s already powering a number of supplier, OTA, and meta-search sites – including Continental, Air Canada, Orbitz, Kayak, and interestingly enough Google’s competitor Bing.
It will also be interesting to see if or how Google integrates ITA”s Matrix 2 flight search result displays. You can see an example of Matrix 2 in action here.
Even more intriguing than new Search Results displays is to ponder how Google will plan to utilize ITA’s reservation management solution, named RES, to get in the same booking management business long dominated by SABRE and TravelPort in the US. Could Google become another CRS supplier?
Imagine the amount of customer targeting capabilities Google could have if it’s platform knew your travel patterns before they were even in effect. Google’s access to PNR data is a marketer’s dream. You could cross-sell and upsell from the time of booking through the time of return across all of Google’s ad network touchpoints. Now, Google just needs to have someone be the first to buy into ITA’s reservation platform….any takers?
Social Media has taken the travel industry by storm – blasting into Marketing and Technology groups just like the web did in the late 90’s. Just like any storm, social media interactions are often a fast and furious ride through changing Customer sentiment.
That desire to be the first brand with a a million Facebook followers or the the first to offer coupons via Foursqaure is truly exciting. Though, the thrill can turn into a nightmare when the brand is threatened, attacked or taken hostage by those followers your team worked so hard to gain.
Jake Hird from eConsultancy has written “Social Media Failures: examples from the Travel Industry” about how a lack of control over social media spin can damage a brand. He cites the examples of flight attendants speaking out of turn at Virgin Arilines, the guitar-crushing United Airlines anthem viewed by over 8 million YouTubers, and the tweet heard round the world when Southwest Airlines and Kevin Smith tussled in February. A great article indeed, with links back to the original incidents.
Hurd’s summation of social media tragedies in travel proves that preparedness is key. Having a well defined Social Media policy that is visible to your team can help prepare for the unforeseen and allow your team to quickly make a course correction. Check Forrester’s own Melissa Parrish’s Community Management Checklist for help navigating the currents and good luck out there.