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
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.
(WASHINGTON) — Federal regulators are telling airlines they can fly Boeing’s 787 Dreamliners again as soon as they replace its problematic lithium ion batteries with a revamped battery system. A Federal Aviation Administration safety order posted online Thursday applies to all U.S. airlines, but only one airline — United — currently has 787s in their fleet. They have six. The FAA estimated the repair costs for those planes at $2.8 million. The planes have been grounded since mid-January, following a battery fire on a 787 parked at Boston’s Logan International Airport, and a smoking battery that led to an emergency landing by another 787 in Japan. There are 50 of the planes in service worldwide, but Boeing has purchase orders 840 more planes. Newly delivered will come with the revamped system. MORE: Reports: Boeing Dreamliner Could Fly Next Month
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:
Terrorism poisons everything. The greatest damage, of course, results from the lives that are lost and the people who are injured. Nonetheless, it’s natural to wonder whether an event such as yesterday’s bombing at the Boston Marathon is likely to have a longer-term impact on the economy and the stock market. Anything that makes people more anxious and uncertain about the future has a negative effect on business and on stocks. The bombing occurred shortly before 3:00 p.m. EDT, and the Dow – which had earlier in the day started to rally from the day’s lows – fell another 120 points in the last hour of trading. Is that likely to be it? Or should investors expect further big losses over the coming days and even weeks. The attack on 9/11 seems to suggest that the effects of a terrorist attack might be long-lasting. Following that tragedy, the Dow dropped 1,400 points and needed more than two months to get back to even. However, it’s worth noting that at the time of the attack on the World Trade Center, the Dow was already down 1,500 points from the year’s high. And after the market made up its losses from 9/11, it went on to gain another 1,000 points in the first four months of 2002. So clearly there were other factors driving stock prices. Moreover, not all incidents have such a drastic impact. In fact, it’s possible to divide terrorist acts into four categories with dramatically different economic results: Attacks on individual companies. Terrorism that targets a specific company – such as the kidnapping of employees or the bombing of offices – has a damaging effect on the shares of the company targeted. In some cases, a stock can be hit hard and have a sizable loss. But overall, the effect tends not to be very great. A recent study found that in 75 incidents, the average stock market loss was only 1% or 2%. Competitors were not affected one way or the other. Attacks on the energy sector. One industry
In the weeks after the Carnival Triumph debacle, cruise analysts and agents were quick to report that cruise sales remained strong, and that cruise lines felt no need to resort to “panic pricing” to fill ship cabins. Lately, however, it looks like Carnival is panicking. The infamous Triumph episode, dubbed the “cruise from hell” and the “poop cruise” due to the fact that passengers were stranded for several days at sea without toilets after a fire in an engine room, was followed by a string of other ugly incidents involving Carnival ships. In the aftermath, politicians have been calling for a new cruise ship “bill of rights” for passengers. And apparently, travelers by and large have simply been avoiding booking Carnival sailings, to the point that the cruise line has felt compelled to offer last-minute cabins at fire sale prices. Last week, Bloomberg reported that four-night Carnival cruises were being offered starting at just $149 per person—or a mere $38 per person, per night. (Normally, a cruise priced anywhere around $100 per person per night is considered a deal.) One travel agent explained to Bloomberg why it’s worth it for Carnival to drop prices so dramatically: “The prices did go down,” said Manny Lubian, president of Futura Travel Inc. in Miami. “An empty ship doesn’t make as much money. They’d rather have bodies in them, buying drinks and spending money.” (MORE: Is $500 Enough for Enduring the Cruise from Hell?) While those prices seem remarkably cheap—perhaps even cheaper than just staying home, considering that meals and entertainment are included—they don’t include several mandatory fees, notably port charges and taxes. The total for two passengers in the cheapest Carnival cabin was $454, according to Bloomberg. Like most cruise lines, Carnival also adds service gratuities automatically onto passenger bills, to the tune of $11.50 per person, per day. Carnival’s $149 sale has expired, but as of Monday the cruise line was offering a May 13 departure out of Miami on the Imagination starting at $179, or “as little as $45/night,” as the
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.