Delta to sell Economy Comfort seats through Amadeus

[eolesen]

Economy Comfort will now (eventually) be available for agencies to book via either Amadeus or Travelport. Good move for corporate travelers who can't book direct with the airline.

ATLANTA and MADRID - Delta Air Lines and Amadeus announced today they have expanded their commercial relationship to enable the sale of Economy Comfort, Delta's premium economy seats offering more leg room, through Amadeus' global distribution system (GDS).

The expanded long-term agreement provides more choices for Delta customers and travel agents to access the popular Economy Comfort seating when booking travel via Amadeus.

"Delta is encouraged by the direction of the technology innovation at Amadeus, and this partnership demonstrates that Delta is listening to its valued corporate and agency partners by broadening the availability of our popular Economy Comfort seating," said Wayne Aaron, Vice President, Marketing Programs and Distribution Strategy at Delta. "It's part of the more than $3 billion we're investing to improve the travel experience of our customers at all points of their journey."

As part of this new agreement, Amadeus also will work with Delta on initiatives to further personalize and enhance the customer experience as Delta continues to transform the distribution of its products and services. Amadeus also will continue to distribute Delta's branded fares as well as its Economy Comfort premium seats.

Economy Comfort features three to four inches of additional leg room across Delta's fleet of two-class aircraft as well as giving passengers priority boarding. On long-haul international flights, the seats also have up to 50 percent more recline than standard economy class seats and customers receive complimentary beer, wine and cocktails. Economy Comfort is available on all Delta mainline aircraft and more than 250 two-class regional jets.

"This new agreement is a testament to the partnership philosophy shared by both companies and an understanding of what is important to our mutual customers. We believe this opportunity to distribute Delta's Economy Comfort product will allow Amadeus to further demonstrate our innovative technology that meets the complex and changing needs of the global marketplace. We are also especially pleased to reach this agreement with Delta Air Lines because of their critical importance to travelers across the globe," said Holger Taubmann, SVP Distribution for Amadeus worldwide.

Amadeus has a committed focus on securing long-term distribution partnerships with leading airlines around the world. Amadeus currently has long-term content agreements in place with airlines worldwide representing over 80 percent of all bookings made by Amadeus travel agencies.

 

[737823]

E, I thought Economy Comfort is like UA's EconomyPlus where your fare is a standard Y bucket and you just purchase an upgraded seat. So is this announcement basically Amadeus and DL are partnering for the sale of Economy Comfort and other ancillary fees/services? I know for my company we book through a portal for most carriers but occasionally I can book directly with the carrier and use my corporate charge (Amex) but they do prefer we use Amex travel services whenever possible. Not sure if its running Amadeus or not, but I get Economy Comfort seats for free anyway. Besides, does anyone actually pay for these? I do know one friend that flew DL to LHR with their family, paid for Economy Comfort and had someone sitting next to them and moved back to standard economy to get a row to themselves go figure.

Josh

 

[eolesen]

Pretty certain at least one carrier has already said that their 25K tier will only have access to their extra legroom/preferred seats thru the end of the year. If so, and if other carriers like DL follow suit, the list of travelers getting comp'd could shrink and the need for this increases.

When I book travel thru Amex, I usually wind up going to the airline's website later to take advantage of my profile and better seating options...

 

[WorldTraveler]

I believe you are referring to UA.

DL's approach to Economy Comfort was different from UA's from the beginning. DL's EC cabin is much smaller than UA's and part of the reason DL launched EC was as a revenue generating option for people willing to pay, not just as an extension of first class upgrades that don't clear.

 

[eolesen]

UA already charges their MP Silver (25k) for Y+ unless it is still avail at check-in. Golds (50k) get a discounted rate on international.

AA is only saying that Gold (25k) will have complementary access thru Dec 2013. That opens the door for charging or continuing to offer it for free.

So there's room either way for DL to drift. Once the functionality is available in both Travelport and Amadeus, at least they'll have the ability to sell it thru the GDS properly if they decide to chase the money. Personally, I'd prefer to see them leave it complementary, since it provides a differentiation from what UA is doing, and may sway AA to continue offering it on some basis.

 

[WorldTraveler]

yes, you are right, it was AA that said there was a limited period of "gratis"

Wasn't UA's E+ effort in response to AA's then MRTC?

UA presumably got a lot of mileage out of keeping their program when AA pulled back MRTC but I think all of the carriers, AA included, recognize that adding ANY amenity on a comp. basis will have to be driven by demonstrated increased revenues and not just as a perk that elites can chase.

VX's new loyalty program, IIRC, is revenue rather than mileage based, something other US airlines have wanted to do for years. VX's efforts are probably more the norm where loyalty programs and the addition of no-cost amenities for elites are likely to go.

 

[737823]

Pretty certain at least one carrier has already said that their 25K tier will only have access to their extra legroom/preferred seats thru the end of the year. If so, and if other carriers like DL follow suit, the list of travelers getting comp'd could shrink and the need for this increases.

When I book travel thru Amex, I usually wind up going to the airline's website later to take advantage of my profile and better seating options...

DL Diamond, Platinum, and Gold get it free upon ticketing, Silver gets a 50% discount for advance purchase or free selection at T-24.

Appears UA is the same, their lowest Silver tier only gets free access at T-24 but limits to traveler and one companion while the other tiers get upto 8 companions on the same recrod

I too ticket through AMEX then go to the requisite carriers site to make sure my seat assignment matches and my upgrade request (if applicable) holds.

I've been on several DL flights where the Economy Comfort and exit row seats are wide open but standard seats are unavailable for selection. So people wait and the agents give away Economy Comfort for free. Clearly DL has done their homework on this one but I'm not convinced many people actually pay for it. Maybe I'm just too cheap to pay and not tall enough to require extra room but it seems like a silly idea to me.

Josh

 

[737823]

yes, you are right, it was AA that said there was a limited period of "gratis"

Wasn't UA's E+ effort in response to AA's then MRTC?

UA presumably got a lot of mileage out of keeping their program when AA pulled back MRTC but I think all of the carriers, AA included, recognize that adding ANY amenity on a comp. basis will have to be driven by demonstrated increased revenues and not just as a perk that elites can chase.

VX's new loyalty program, IIRC, is revenue rather than mileage based, something other US airlines have wanted to do for years. VX's efforts are probably more the norm where loyalty programs and the addition of no-cost amenities for elites are likely to go.

I suspect its a matter of time before all the airlines switch to a revenue based model. It really makes sense from a business stand point although what they have been doing has worked for many years it seems. As long as the banks (Citi, JPM, etc) and AMEX keep passing the buck it seems to be working for the airlines.

Josh

 

[WorldTraveler]

Airlines gain a huge amount of revenue from selling miles which consumers are addicted to, but airlines want to distinguish customers who actually deliver solid revenue directly to the airlines from those customers who gain miles through credit card companies.

A high mileage customer on an airline is infinitely more valuable to an airline than a credit card customer and airlines want to reward their own high value customers, if for no other reason than that they maintain solid direct relationships with their customers than to allow an intermediary to control their passengers and their revenue.

 

[eolesen]

Not so sure that the high mileage customer is always more valuable. From what I've seen elsewhere, the profit margin on the sale of miles to partners is still higher than the airline's operating margin. Especially when you consider spoilage.

 

[WorldTraveler]

Frequent flyer miles are profitable because there are virtually no costs involved in the sale. Mileage creates a liability on the airline's balance sheet but the cost is incurred only when the miles are used.

Mileage sales are big revenue generators because they are attached to large airline operations that have to exist in order for the mileage sales to have value to the consumer and the banks/institutions that use miles as part of their reward structure. Big network airline miles are more attractive because of the expensive network which backs them - and which isn't really reflected in the price of the miles.

Even when mileage is used, the cost of providing the transportation is at best no more than cost and likely a lot less since airlines are very good at using miles to help fill up flights that might not go out full or to extract higher mileage from flights that are planned to.

Given that multiple public sources say that 15% or less of the customers at large US network airlines generate 50% or more of the revenues, I think it is pretty clear that the highest value customers absolutely do make or break an airline and also pay for the complexity that network airlines use to differentiate themselves from smaller carriers. Based on those percentages, the highest value customers generate revenues at or above 50 cents per mile - four or more times the CASM.
Remember that every US legacy airline has looked at the possibility of ditching their current business model for a low fare carrier type model w/ stripped down service and has concluded that their revenues would not match what they currently obtain (as of the date of the survey) and they wouldn't be able to get costs out to a level necessary to make a low cost model work... that is why every legacy airline in the US still uses a hub and spoke two class (or more) service model that caters to business passengers etc.