You know the drill: An airline hikes its fees, and within seconds travelers vent their outrage in response. JetBlue shows that it doesn’t have to be this way. When United Airlines raised its ticket change fee to $200 (up from $150) a few weeks ago, the masses grumbled in here-we-go-again exasperation, in full expectation that the competition would follow suit with fee hikes of their own. Sure enough, by early May, Delta, US Airways, and American Airlines had all also boosted their ticket change fees from $150 to $200. Among the holdouts that didn’t jack up their change fees were Southwest Airlines and JetBlue, the two most fee-adverse carriers, which still allow passengers to check at least one bag free of charge—and which, by no small coincidence, regularly receive the highest ratings in terms of customer satisfaction. As of May 17, however, JetBlue raised its change fees. (MORE: The One Airline That Stubbornly Refuses to Pile on the Fees — For Now) What’s more surprising than the fact that JetBlue jacked up its change fees is that hardnosed travel advocates aren’t hating on the new fees. Brett Snyder, who writes the CrankyFlier blog admits that he “bashed” United’s change fee hike. JetBlue’s policy changes instead represent the “right way to increase your change fee,” Snyder wrote. “Good work, JetBlue,” he wrote. “You found a way to increase your change fee in a way that’s more consumer-friendly.” How can any fee increase be consumer-friendly? Well, in JetBlue’s case, travelers can at least see that the policy changes make sense compared to what’s become the industry standard. The $200 fee for changing a ticket with United, American, and the others is a flat charge assessed no matter what the price of the original ticket, and no matter when the passenger is making an itinerary change. These rules strike many travelers as unfair, and perhaps even silly and counterproductive. A traveler who purchased a one-way ticket for, say, $125, and needs to change travel dates has no incentive to report the change to
Even as overall baggage fees have increased, some of the nation’s biggest airlines aren’t collecting as much as they did a couple of years ago. Perhaps even more surprisingly, there’s been a sharp rise in travelers who aren’t bothered by the idea of paying extra for checked luggage. The Bureau of Transportation Statistics just released airline revenue data for 2012, and guess what? We paid more in fees than the year before. The Associated Press and other outlets highlighted how the nation’s 15 largest airlines collected baggage fees totaling $3.5 billion and $2.6 billion worth of ticket change fees, representing increases of 3.8% and 7.3%, respectively, compared to 2011. The numbers probably aren’t surprising to the average traveler. Airline fees have been rising for years, and the idea that baggage fees crept up by merely a few percentage points may even come as somewhat of a relief. A closer look at the BTS’s figures, however, offers some data that is a bit of a surprise. Delta tops the list of baggage fee collectors, with $866 million in 2012. Yet Delta barely increased its baggage fee revenues last year; they reached roughly the same level ($864 million) in 2011. What’s more, the totals of both years are down significantly from 2010, when Delta reaped $952 million in baggage fees alone. (MORE: One Airline That Stubbornly Refuses to Pile on Fees — For Now) So believe it or not, the $866 million in baggage fees collected by Delta probably comes as a disappointment to the airline. Insiders said last summer that Delta had plans to collect an extra $1 billion in passenger fees—all kinds, not just baggage—annually by 2014. Delta isn’t the only major carrier struggling to siphon more baggage fee money from customers. American Airlines has also seen a falloff in baggage fees: $580 million in 2010, $593 million in 2011, and “just” $557 million in 2012. Meanwhile, Spirit Airlines, the country’s most fee-crazed carrier, managed to crank up baggage fee tallies to $168 million last year, more than the double
NEW YORK — U.S. airlines collected more than $6 billion in baggage and reservation change fees from passengers last year — the highest amount since the fees became common five years ago. These fees — along with charges for boarding early or picking prime seats — have helped return the industry to profitability. (MORE: One Airline Stubbornly Refuses to Pile on the Fees (For Now)) Airlines started charging for a first checked suitcase in 2008 and the fees have climbed since. Airlines typically charge $25 each way for the first checked bag, $35 for the second bag and then various extra amounts for overweight or oversized bags. The nation’s 15 largest carriers collected a combined $3.5 billion in bag fees in 2012, up 3.8 percent from 2011, according to the Bureau of Transportation Statistics. Reservation change fees totaled $2.6 billion, up 7.3 percent.
Most airlines view fees for baggage and ticket changes as easy, highly lucrative revenue streams. Southwest Airlines views them quite differently: If it added baggage fees on par with other carriers, Southwest says it would lose roughly $1 billion. When United Airlines increased ticket change fees to $200 (up from $150), the assumption was that competitors would follow suit. Well, airlines are just so predictable. To almost no one’s surprise, American, US Airways, and Delta are now also charging a $200 fee to any passenger hoping to change flight plans within the U.S. (International fees are higher.) In other airline fee news, Denver-based Frontier Airlines just tweaked its fee structure. Starting on July 1, passengers traveling on the cheapest tickets will have to pay $1.99 and up for in-flight beverages, while certain customers who are members of the airline’s loyalty program and/or who have booked pricier flights will continue to get non-alcoholic drinks for free. More confusingly, very soon, some Frontier passengers will have to pay $25 to $100 for the privilege of bringing a carry-on bag onto the plane. As the Denver Post reported, only customers who book Frontier flights through third-party sites such as Expedia and Travelocity are subject to the carry-on baggage fee. The exact amount a passenger is charged will be determined by how and when the customer checks in for the flight. The purpose of Frontier’s new carry-on fee is obviously to entice passengers to book tickets directly with the airline’s website—do so and a carry-on is allowed for free. Frontier is trying to get more revenues upfront (by not passing along a portion of sales to a middleman booking site), and if that’s not possible, to collect more money per passenger later on (from drinks and checked baggage fees). (MORE: End of New Airline Fees? Nation’s Most Fee-Crazy Airline Is Tapped Out of Ideas) For that matter, Frontier’s unique fare structure also forces customers to consider whether they’d prefer to pay now or pay later. Passengers select among four kinds of tickets, and while
Superfly launched at TechCrunch Disrupt SF in 2010 with plans to become the Mint.com of travel, or more specifically, for your rewards and frequent flier miles and travel spending. Following Kayak’s lead, over time, the startup added metasearch capabilities, integrating rewards and points into the flight booking process. Its approach attracted ex-Kayak CFO Bill Smith, who began advising the startup after leaving Kayak before its IPO.
Under his guidance, and backed by seed funding from travel veterans like Smith and Travelport Chairman Jeff Clarke, Superfly is today launching a product that clearly shows the travel startup is headed in a new direction. Whether you call it a pivot or not, Superfly founder Jonathan Meiri tells us that the team eventually became frustrated by the limitations of metasearch and simply trying to “build a better Kayak,” and has instead decided to move in a new direction, focusing on the areas where it can actually provide more value.
“The reality was that we’ve been fairly successful at acquiring customers at a significantly lower cost than traditional travel players, and, over time, our customers had entrusted us with a boatload of their travel data,” Meiri tells us. They quickly realized that this “share-of-wallet” data was its most valuable data, so, over the last nine months, Superfly has shifted its focus exclusively to that data.
During that time, Superfly developed Superbox, which, like LinkedIn, looks at a user’s email contacts to suggest new connections, and like TripIt organizes your itineraries, the service allows users to view and organizes their travel history.
Thousands of users are now our using Superbox to find lost miles buried in their email, the founder says. Beyond finding those lost accounts and emails, the startup’s patent-pending tech extracts data from key data points within emails, like receipts, itineraries, offers and boarding passes, for example, to build a deeper personal travel wallet.
Today, Superfly is adding an important piece on top of Superbox in an effort to expose these emails to users to help them better manage their travel. The product, called Travel Emails, is also part of the startup’s move to collect more nuanced data on your travel behaviors so that it can target flights, awards and promotions more effectively.
Essentially, the new tool collects users’ travel emails in a searchable timeline-type interface, which makes this data easier to parse. In a way, it’s not unlike the capabilities offered by TripIt, while focusing more on aggregating user travel data in a single interface, giving your travel info its own dedicated hub, rather than having it be drowned out in the noise of your inbox.
Superfly has been keen to streamline travelers’ ability to find promotions for their trips, along with loyalty updates for frequent fliers, reservations and so on. However, it’s been tough for the startup to offer any kind of real personalization from the limited publicly available travel profile data out there.
Getting access to this data is important, Meiri says, because it helps increase the opportunities for value (and revenue) generation. Of course, there’s a lot of responsibility that comes with access to this personal data, so the founder was quick to assure us that Superfly with never sell that data to third-parties, instead allowing travel suppliers to target offers to users based on the more robust travel profiles it can create from this data.
“Beyond creating value for consumers, travel suppliers can now leverage the aggregated traveler data to provide valuable offers and promotions to the highest value travelers,” the former Kayak CFO says, “and consumers can now receive these offers simply by joining Superfly.”
The last 10 years in travel have been dominated by the rise of meta search and OTAs. These companies have generated a tremendous amount of the value for shareholders by creating mass market tools, arbitraging web traffic and making affiliate revenue. While this game will continue to work for a while, Meiri says, the next ten years are going to be all about personalization. And personalization, of course, is all about consumer data.
For more, find Superfly at home here.
This week, United Airlines jacked up fees on passengers who need to adjust travel plans. For flights within the U.S., customers must fork over at least $200 (up from $150) for changing tickets. The carrier raised the change fee on certain international flights as well, from $250 to $300 for many routes to South America. In reality, passengers can wind up paying much more to change a flight itinerary. That’s because on top of the fee, a customer must pay the fare difference of the original flight price compared to the going rate of the new itinerary being booked. Say you purchased a round trip on United from Chicago to Phoenix for $300, and then needed to change the travel dates to a week later. At the time you made the change, a flight for the new dates was selling for $500. To switch to that flight, United would charge a $200 change fee, plus another $200 for the fare difference ($500 minus $300). So the change would cost $400 overall—or more than the original ticket cost! And that’s on top of the $300 spent on the initial booking. (MORE: End of New Airline Fees? Nation’s Most Fee-Crazy Carrier Is Tapped Out of Ideas) So-called legacy airlines have assessed change fees in this manner for years, but the fee itself has risen swiftly. The standard was $50, then $75, then $100. In 2008, United raised its change fee from $100 to $150, curiously citing “high fuel costs” as the reason. (It’s not like gas gets any more expensive when passengers change flights.) The Wall Street Journal noted that Delta and United collected $1.1 billion in reservation change fees just in the first nine months of 2012. And why would United need to hike fees further? “We carefully manage our seat inventory and incur costs when a traveler elects not to fly in a reserved seat,” a United spokesperson said in a released statement. “We adjusted this fee to better compensate us for those costs.” Consumer advocates view the situation differently:
WASHINGTON — U.S. airlines scored their second best performance last year in the more than two decades that researchers have been measuring airline quality, with Virgin America the leader, says an annual report released Monday. The report ranked the 14 largest U.S. airlines based on on-time arrivals, mishandled bags, consumer complaints and passengers who were bought tickets but were turned away because flights were over booked. Airline performance in 2012 was the second highest in the 23 years that Wichita State University at Omaha in Nebraska and Purdue University in Indiana have tracked the performance of airlines. The airline’s best year was 2011. Virgin America, headquartered in Burlingame, Calif., did the best job on baggage handling and had the second-lowest rate of passengers denied seats due to overbookings. United Airlines, whose consumer complaint rate nearly doubled last year, had the worst performance. United has merged with Continental Airlines, but has had rough spots in integrating the operations of the two carriers. The number of complaints consumers filed with the Department of Transportation overall surged by one-fifth last year to 11,445 complaints, up from 9,414 in 2011. “Over the 20 some year history we’ve looked at it, this is still the best time of airline performance we’ve ever seen,” said Dean Headley, a business professor at Wichita State University in Kansas, who has co-written the annual report. The best year was 2011, which was only slightly better than last year, he said. (MORE: Air Travel by the Pound and Other Odd Airline Pricing Schemes) Despite those improvements, it’s not surprising that passengers are getting grumpier, Headley said. Carriers keep shrinking the size of seats in order to stuff more people into planes. Empty middle seats that might provide a little more room have vanished. And more people who have bought tickets are being turned away because flights are overbooked. “The way airlines have taken 130-seat airplanes and expanded them to 150 seats to squeeze out more revenue, I think, is finally catching up with them,” he said. “People are saying, ‘Look,
Over 25 million Americans participate in frequent-flier programs that allow them to earn airline miles through flights and credit cards. Today, Chicago-based Rocketmiles is launching a service that will allow those travelers to earn miles just by booking rooms from select hotels, which Rocketmiles serves up directly on its website, and soon, on mobile, too.
Rocketmiles was founded in November 2012 by former Groupon exec, Jay Hoffman, who also previously ran the Mileage Plus program at United Airlines. Co-founders Bjorn Larsen and Kris Helenek also have a background in the travel industry.
Hoffman says he knows first-hand what it’s like to be a frequent traveler, having spent four to five days per week on the road earlier in his career when he worked with The Boston Consulting Group. He learned a lot about frequent-flier programs and the needs of businesses travelers in general through this experience, which he now brings to Rocketmiles.
Like the partnership programs with credit-card companies, Rocketmiles also buys miles from the airlines which it then ties to stays with its partner hotels. Prior to today, these deals were only available to a couple of hundred private beta testers who could search across eight cities in the U.S.
As of the public debut, however, Rocketmiles now supports 15 cities in the U.S. and plans to expand to even more markets over the next few months, adding about one to two cities per week.
What’s different about Rocketmiles, besides the fact that it’s a new way to accumulate miles, is that it’s also focusing on delivering a hand-picked selection of premium hotels that appeal to business travelers, as opposed to the hundreds of search results which aggregators offer, while also offering the same prices. The company gets its hotel rooms at a lower rate and resells them higher, leaving behind enough revenue to purchase more miles and generate revenue.
“You’re getting the same rate that you would have paid any place else,” explains Hoffman, “and you’re getting a gigantic incentive for booking through Rocketmiles.” The service appeals to the hotels, too, he adds. “If you think of this as an alternative to booking through Priceline or Hotwire, the hotels love this because they’re not publicly discounting their price,” Hoffman says. “Sometimes the hotels look down on the Priceline or Hotwire customers as being ‘deal seekers.’ We deliver to them a business traveler who’s a lot more likely to buy Wi-Fi or order room service…it’s going to be the kinds of people the hotel wants to work with.”
While the company isn’t disclosing transaction numbers during its pre-launch period, Hoffman did say that the average transaction is about 3,100 miles per night, and the service is focused only on stays where at least 1,000 miles can be earned. The per-booking average was 7,000 miles. Hoffman notes that the average business traveler taking a dozen or so trips per year could end up with an extra 80,000 miles per year using the service.
Though the company is targeting the travelers themselves, it’s also beginning to work directly with companies who want to offer Rocketmiles as an option to benefit their employees. A few consulting and tech firms have already begun to pilot this program at their own companies, we’re told.
Going forward, the plan is to continue to expand across the U.S. and prepare the launch of the Rocketboom mobile application, which has already been through a beta of its own. Rocketmiles has been self-funded until recently, but is now closing a round of seed funding north of a million, expected to be finalized in a few weeks’ time.
Interested travelers can sign up to try Rocketmiles today for hotel stays in the following 15 cites: Atlanta, Boston, Chicago, Dallas, Denver, Honolulu, Houston, Las Vegas, Los Angeles, Miami, New York City, Philadelphia, San Diego, San Francisco and Washington D.C., with more to come.