Lufthansa
This should not be news, but it is: U.S. airlines have finally begun advertising some airfares properly, meaning they now show round-trip prices instead of the longtime marketing ploy of “each way based on a required round-trip purchase.” But those are just baby steps, as some taxes and fees are still being excluded.
When I wrote about false fare advertising in 2008, my copy editor at the Washington Times put this headline on my column: “Fare sales often lost in translation.” I compared the deliberately misleading airline practice to the mysterious “Twin Peaks” revelation “The owls are not what they seem.” I also wondered, If a round trip is required, why on earth is only half of the actual fare being advertised?
This month, United Airlines became the first major U.S. carrier to change its policy and advertise predominantly round-trip fares on its website — the only exceptions seem to be last-minute weekend specials. The airline is currently promoting five domestic and four international sales on its site, and they all include round-trip prices and fuel (YQ) surcharges — though some taxes and fees are excluded.
For example, a Business Class fare for a round trip from Los Angeles to Shanghai is shown as $3,513, while the total final price as of today is $3,572, if booked on nonstop flights. A round-trip Business Class fare from Washington to Rome is displayed as $2,411, and the final price is $2,460, if purchased today on nonstop flights. As you see, the differences are not that big.
All other carriers should follow suit. Continental and US Airways display some fares as round trips, but most of their advertising is still being done the old-fashioned way, as is American’s and Delta’s. Southwest, Alaska Airlines and Virgin America show one-way fares but don’t require round-trip purchases.
Although the Department of Transportation has looked into the issue and called on the industry not to deliberately mislead consumers, it has done nothing to stop the controversial practice. The European Union (EU), on the other hand, has been much more proactive on behalf of travelers. That’s why fares in Europe are advertised with the full ticket price.
Some of the European carriers that fly to the United States, such as Spain’s Iberia, are honoring the EU rules globally and displaying actual full prices on their U.S. websites as well. But others, such as British Airways, Air France and Lufthansa, while observing the rules on their home turf, have given in to the pressure from their U.S. competitors and adopted the “one-way based on a round-trip purchase” policy.
In January, all four above-mentioned European airlines offered the same fares from New York to London. The last three advertised $199, while Iberia showed $584, which is what the actual fare was, including all taxes and surcharges. Singapore Airlines, also having the guts to be honest with its customers, promoted a $586 fare from New York to Frankfurt that was truly the final price.
It’s high time the airline mentality of trying to trick customers changed once and for all.
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US Airways has denied recent suspicion that it has begun to block award seats made available by its Star Alliance partners for mileage redemption by members of its Dividend Miles program — a practice pioneered by United Airlines, which I first exposed in 2008.
The airline has been silent on the issue since reports about apparent blocking surfaced last fall. Many travelers said they found award inventory on various Star carriers, using one or more of the publicly available sources — the websites of All Nippon Airways, Continental Airlines and Air Canada — but US Airways agents were unable to see those available seats.
To some of us, that looked very much like StarNet blocking — manipulating the alliance’s award “middleware,” which provides access to any Star partner’s inventory on a first-come-first-served basis, to avoid paying other carriers for seats booked on their flights. The patterns resembled those on United, with the most filtering applied to Business and First Class cabins, though some fliers stumbled on coach seats as well. The most affected availability appeared to be on Lufthansa, but also on Swiss, United and others.
In addition, it made financial sense for US Airways to be limiting access to premium partner awards. In the last couple of years, it has in effect been printing miles with lightening speed, as a result of extraordinary promotions it has had, including selling miles at 100-percent bonus. Many Dividend Miles members bought miles and redeemed them for Business and First Class on partner flights, which likely weighed heavily on US Airways’ budget.
Several travel bloggers wrote about the issue, including Gary Leff on “View from the Wing” and Ben Schlappig on “One Mile at a Times.” Leff was more inclined to give the airline the benefit of the doubt, suggesting the problem might have been caused by technical glitches, as well as US Airways agents’ ignorance that some of their partners have First Class in addition to Business.
I’m not a big Dividend Miles fan, though I did help my sister buy miles for a trip to Europe with her family last summer, so it took me some time to look into the issue. I finally got around to it and alerted a US Airways contact at its Phoenix headquarters who has been very helpful in the past — Valerie Wunder, associate manager of media relations. She asked the powers that be and gave me the following response:
“We don’t block award inventory on other airlines, nor do we do the inverse — other Star partners block us from seeing their inventory to maximize their revenues.”
Probably the most frequent difficulty Dividend Miles members have been experiencing has to do with intercontinental First Class awards on Lufthansa, Swiss and others, so I asked Wunder if US Airways may be trying to restrict access to those specific seats.
“We have no restrictions on redemptions, regardless of class,” she said.
However, she offered no explanation for the problem. The mystery continues.
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There are so many travel-industry rankings at year’s end, it’s hard to keep track. It’s even harder to figure out which — if any — of them are credible and meaningful. Looking at some of the results, one has to wonder when some of the respondents last flew on the airlines and through the airports they assessed.
Rankings are usually administered by various magazines — one exception are the new Frequent Traveler Awards. In the last several years, I’ve made it a habit to look at the Global Traveler Magazine‘s so-called Tested Awards, most of which make sense. However, as I was reading this year’s results during a flight last week, I couldn’t help but gasp in astonishment at some of the results.
Many of the categories are certainly subjective, and different people’s experiences could easily be different. For example, the in-flight service on the same airline could vary depending on the cabin crew — or even your particular flight attendant.
Still, Lufthansa’s second place for best First Class is surprising. For comparison, Emirates is fifth, Korean Air sixth, and Singapore Airlines eighth. Seriously? Lufthansa is a great airline and it deserves to be in the top 10 — it came out fifth overall in the “Best Airline in the World” category.
But anyone who has flown in Lufthansa First Class in the last couple of years knows that its hard product lags behind most of its competitors. The most glaring example of that is the tiny TV screen. On the carrier’s Boeing 747 aircraft, First Class is on the upper deck, with 16 seats in a 2-2 configuration, which is the standard for Business Class on most other airlines operating the same aircraft type.
To its credit, Lufthansa has recognized the limits of its product and has undertaken steps to improve it. The above-mentioned 2-2 configuration is about to change to 1-1, which will no doubt disappoint some fliers because it will reduce the number of First Class seats by half, but eight seats is the industry standard and makes a lot of sense.
Lufthansa has finally come out with a new First Class seat on its Airbus 380 planes. Could it be that Global Traveler readers were evaluating those seats? No, because surveys were collected between January and August, and the first Airbus 380 didn’t enter service until late August.
There is one First Class feature on Lufthansa that beats all other airlines to the punch: its First Class Terminal in Frankfurt. But it’s used almost exclusively by Frankfurt-originating passengers, so it’s unlikely its weight in assessing the overall product was predominant for all survey respondents.
Lufthansa was also ranked fifth for best Business Class. Again, if you’ve had a chance to compare its hard product with other Business cabins, you’d probably disagree. One could argue that Lufthansa’s service is better than that of United Airlines, but United’s truly flat seats are among the best in the industry. Lufthansa made the short-sighted decision to install the old Business seats on the Airbus 380, but later announced it would roll out a new hard product next year.
United is the only U.S. carrier in the top 10 of any of the leading overall global categories, taking 10th place for best Business Class and best Business seat design, and fourth place for best First Class design. Its “new” hard product, which was first introduced three years ago, has so far been installed on less than 60 percent of its long-haul fleet.
Deservedly, Lufthansa is missing from the top 10 in any of the best-seat categories. But another perplexing presence in the best Business seat category — ahead of United — is South Korea’s Asiana Airlines. Not only are its current seats not truly flat, but they are less comfortable than comparable products on other carriers, such as Thai Airways. Asiana’s service is, of course, superb, but this is strictly a seat-related category.
In the best global airport category, another surprising result: in third place, Amsterdam has beat out Hong Kong and Munich. In North America, Atlanta came out ahead of San Francisco. Really?
Oh, and did you know that Delta Airlines has the best airport lounges in the world? That’s right, and Lufthansa and Singapore Airlines have been shut out of the top 10 completely. If that’s not madness, I don’t know what is.
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As if the existing methods to overcharge travelers weren’t enough, some airlines have just found a new way deeper into your pockets. It comes in the form of sophisticated software designed to increase prices based on your desperation and lack of choice. Will you fall for the latest gimmick?
The new application is courtesy of Amadeus, one of the major distributors of airline and other travel-related data worldwide. This week, it announced the launch of “Active Valuation,” an “IT solution that enables airlines to maximize revenues across multiple channels,” or to charge you more for something you can otherwise get at a lower price.
Amadeus was surprisingly open about how it will help carriers to take more of your money, although it makes marketing sense to point that out in order to attract airlines to sign up. Amadeus already has contracts with several major airlines, including Lufthansa, Singapore Airlines, Brazil’s TAM, the United Arab Emirates’ Etihad and Air Baltic. The first three carriers are members of the global Star Alliance.
“‘Active Valuation’ works by enabling the application of sophisticated business logic to dynamically adjust the yield (revenue expected) of an airline product, according to the context in which a booking is made,” Amadeus said in a statement posted on several travel news sites.
“These yield modifiers are used in a seamless manner in order to perform an origin and destination calculation,” it added. “This allows a dynamic segmentation of customers, taking into consideration their characteristics, the point of sale used and any connecting flight data, in order to better capture their willingness to pay.”
My feelings about this statement are strong and mixed at the same time. On one hand, Amadeus obviously deserves credit for developing a new product that will no doubt boost its business. On the other hand, “Active Valuation” sounds like a recipe for screwing consumers over big time.
How does this work? If you live in the United States and want to buy a plane ticket between two European cities, you may be paying more than someone who makes the purchase in Europe. The airlines are banking on your lack of knowledge about European fares and betting on your willingness to spend more money than a European traveler, who can distinguish a good fare from a bad one.
As Amadeus pointed out this week, airlines have been doing similar tricks for years through their inventory management and are now simply expanding them. “For example, when a customer requests availability information for a multi-leg journey, the solution automatically considers the complete value of the trip and delivers appropriate availability information to the customer,” it said.
What does that mean? Let’s say you need to go from Washington to Hong Kong — there are no nonstop flights on that route, so you’ll connect in Chicago. Let’s assume that the Washington-Chicago flight has availability in the lowest booking class, as does Chicago-Hong Kong. However, when those two segments are “married up” to produce your connection, the lowest-priced seats would often disappear, and you’d have to pay for a higher booking class, which could mean hundreds of dollars more.
None of the major U.S. carriers uses Amadeus, but American Express and Carlson Wagonlit, two of the country’s largest travel agencies, do. It also powers online booking engines, such as Expedia and CheapTickets. Plus, if Amadeus figured out how to do those new gimmicks, its competitors won’t be far behind.
So how would you fight against all those airline attempts to “maximize revenue”? Demand an addition to the Passengers Bill of Rights? Complain to your congressman? Good luck. We live in a capitalist society, and every company has the right to maximize revenue in any legal way it can find — although some have found questionable methods, such as the fake “direct” flights I wrote about last month.
As you might have guessed, my approach is education — learn as much as possible about what the airlines do, and about the entire air travel system, and beat them at their own game. If you don’t know that something is happening, how would you know how to avoid it?
In my last column, I explained why corporate travel lacks innovation. One of the reasons is companies’ heavy reliance on old-style travel agencies, which in turn rely on computers to tell them what to do. The result is millions of dollars in unnecessary spending.
The Amadeus announcement is another reminder that if you keep using the old approach, you will continue to waste money. My method is simple: having mastered the system and its intricacies, I rely on my knowledge and experience buying tickets and flying around the world — that’s how I beat the computer.
Is that good enough advertising for my “On the Fly” Seminars and the Kralev International advisory services?
In all seriousness, this summer I decided to dedicate myself to travel education, even though such a concept doesn’t even exist, and I’m probably the only person who uses the words “travel” and “education” together. I’ll continue to preach it until people start listening.
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Should the new United Airlines have international first class, like the old United, or not, like the old Continental Airlines? Most frequent fliers expect a decision in favor of one of the two models, but why not go with a mixed model? Why not keep first class on routes where it makes business sense, and fly two-cabin planes where it doesn’t?
Since the two carriers’ merger was announced in May, there have been many opinions in online travel forums advocating just coach and business class, but it’s hard to see the world’s largest airline without long-haul first class at all. Continental may call its premium cabin BusinessFirst, but it’s business class.
In addition, United has already installed new first- and business class seats on more than half of its wide-body fleet, and it makes little sense to now remove first class and expand business class.
Regardless of the mechanics, there are routes that can sustain first class and actually make money, especially now that business travel has recovered from the slump during the global recession. Wouldn’t it be a luxury for United to pick and choose the routes on which it operates three-cabin planes and even change them seasonally?
Many foreign airlines have flown both two- and three-cabin aircraft on long-haul international routes for years, including United partners in the global Star Alliance, such as Lufthansa, Thai Airways and Asiana Airlines. In fact, Asiana currently flies one two-cabin and one three-cabin plane daily between Seoul and Los Angeles. In the Oneworld alliance, British Airways, Cathay Pacific and Qantas use a mixed model.
If you look at the loads in both first and business class on all those carriers, you will discover that they are selling extremely well — many flights in the next few weeks are actually sold out. As I reported last year, the recession forced some airlines to cut back on first-class service temporarily, but things now are very different.
So let’s not count United’s first class out quite yet.
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