Is the industry shooting itself in the foot?

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Aug 19, 2002
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New US airline ticket rules may backfire-analysts[/P]
By Meredith Grossman Dubner[/P]
CHICAGO, Sept 13 (Reuters) - With dwindling demand and revenues exacerbating problems caused by high overhead and pricey labor contracts, stricter ticketing rules now in force seemed like a simple way for the biggest U.S. airlines to bring in more cash.[/P]
But analysts say the tougher ticketing policies alienate travelers, who they say will not easily forgive the industry for dumping its financial woes on its customers.[/P]
In the last month, most of the top U.S. airlines have decided that less expensive, nonrefundable tickets not used on their scheduled travel date will be worthless after that date. Previously, passengers could apply credit for unused tickets toward other trips.[/P]
Thos included the top three carriers, UAL Corp.'s [UAL.N] United Airlines, AMR Corp.'s [AMR.N] American and Delta Air Lines Inc. [DAL.N].[/P]
In addition, travelers who opt to fly stand-by on flights other than the ones they have ticketed will now have to pay a $100 fee on many airlines. And passengers who choose paper tickets over electronic tickets will pay a $20 fee on many major carriers.[/P]
What they're trying to do now is indiscriminately cut expenses, and they've destroyed service, said Richard Copland, president and chief executive of the American Society of Travel Agents. They're making a major mistake, and that's why they're drowning in red ink.[/P]
The airline industry has lost about $10 billion since the Sept. 11 attacks, and Wall Street analysts predict it will lose another $6 billion this year.[/P]
Carriers are struggling to find creative ways to boost their bottom lines and weather an industry downturn that has forced one of the top U.S. airlines, sixth-largest US Airways Group [UAWGQ.PK], into Chapter 11 bankruptcy.[/P]
No. 2. United Airlines said last month it may also have to file for bankruptcy protection if it cannot negotiate less costly labor agreements with its workers.[/P]
They're going to look in every single corner. They're going to leave no stone unturned when it comes to finding pockets of revenue, Merrill Lynch airline analyst Michael Linenberg said.[/P]
JUST LIKE THEATER TICKETS[/P]
Passengers will still be able to change travel plans prior to their departure date by paying certain fees, the airlines said.[/P]
I don't think it's uncommon for nonrefundable things like this to be treated in this way, said David Swierenga, chief economist of the Air Transport Association, the airline's main trade organization. Think about a hotel room: If you don't show up for that first night, you'll still get a charge on your credit card. If you have theater tickets and you don't show up, your tickets aren't good the next night.[/P]
Why should the airlines bear the cost of you not showing up for a
flight?[/P]
But some industry analysts disputed that logic, given that a theater patron can resell his tickets for a show to someone else while an airline passenger cannot sell his ticket to another person once the ticket has been issued in his name.[/P]
Swierenga noted that airline ticket prices are at bargain levels not seen since 1988, but air traffic is still off about 10 percent from a year ago. He said only a few people will be affected by the policy changes.[/P]
But Kevin Mitchell, chairman of the advocacy group Business Travel Coalition, said many of his clients -- which include Black & Decker [BDK.N], Procter & Gamble [PG.N] and DaimlerChrysler AG [DCXGn.DE] -- estimate their travel expenses will be about 20 percent higher next year as a result of the new fare rules.[/P]
Instead of spending more money, Mitchell said, his clients are reevaluating their 2003 budgets to cut back on travel, make use of low-fare carriers or even plan more teleconferences.[/P]
I cannot imagine how this is going to be revenue-positive for the airlines. It's not customer-friendly at a time when you need your very best customers to support you, Mitchell said. It's going to be the final nail in the coffin for a couple of these carriers.

[/P]
 

AAmech

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Attention Mr.Kevin Mitchell!! If the people you represent are buying these cut-rate, discount, advanced purchace tickets for which these rules apply, you are NOT our Very Best Customers!!!
 

whlinder

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[blockquote]
----------------
On 9/16/2002 9:43:04 AM AAmech wrote:

Attention Mr.Kevin Mitchell!! If the people you represent are buying these cut-rate, discount, advanced purchace tickets for which these rules apply, you are NOT our "Very Best Customers"!!!
----------------
[/blockquote]

Not necessarily. How many customers ALWAYS buy Y fares? Your best customers buy a mix of fares. Some high, some not so high. If you piss them off for buying low fares, they won't buy any fares from you.
 

KCFlyer

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[P]
[BLOCKQUOTE][BR]----------------[BR]On 9/16/2002 9:43:04 AM AAmech wrote:
[P]Attention Mr.Kevin Mitchell!!  If the people you represent are buying these cut-rate, discount, advanced purchace tickets for which these rules apply, you are NOT our Very Best Customers!!![/P]----------------[/BLOCKQUOTE]
[P]AAmech - if a person is flying your airline on a weekly basis, they are indeed your very best customers, regardless of the airfare that they paid. I can only think of one occasion where any company that I worked for paid full fare, and that was an emergency situation. Otherwise - they were almost always non refundable' tickets. [/P]
 

Wild Onion

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Obviously many business customers buy a mix of tickets, however if they are willing to pay full Y on some ooccasions, paying an extra $100 fee on others shouldn't be all that onerous.

Often the $100 date change fee is cheaper than an extra night hotel. Often these business travelers' time is valuable enough to justify the expense for standby travel. What about a corporate attorney who bills in the $150-$200 an hour range? If he pays $100 to be able to work an extra 4 or 5 hours, he will be money ahead.

If you're coming home from Disney World it sucks, but otherwise maybe it isn't such a big deal.

I would be in favor or increasing the availability of changeable, yet nonrefundable 3 day advance purchase tickets.
 

AAmech

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KC-I'm hung up on the Very Best part of his statement. A customer who flys regularly on an advanced purchase non-refundable ticket is a good customer. Would hate to lose him or her, but probably could replaced. Someone who plunks down the $$$ for a Y fare regularly is the Very Best customer and they are very hard to come by and harder to replace
 

KCFlyer

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If one is to use your definition of very best, I would submit that the number of those passengers wouldn't fill an MD80 on any given day. So I think the title of very best really deserves to go to your second best customers.
 

DFWCC

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A couple of yrs back, I purchased tickets to a rodeo. DFW had one of its rare ice storms. Just about everything was closed. Since the performers stayed near the arena, they put on a show, how good I don't know. The weather prevented me from going and most others. Oh well too bad so sad, no change of tickets to another date. Your tckets were for yesterday and we can't be responsible if you didn't come.
Had tcks for a sporting event. Something came up could not attend. Oh well too bad so sad. No refund here. Guess what? It hasn't stopped me from going to another football game. Same team too. It just somthing you expect.
I think the airlines need to wise up and play be the same rules.
 

KCFlyer

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DFWCC, you COULD have either given or sold your football tickets to someone else who could have used them. Try that with an airline ticket. Funny thing, we had tickets to go see Willie Nelson a couple of weeks ago. He was on the bill with several other performers at a Y'allapalooza. Now, I'm not a big fan of country music, but I do like Willie. But Willie cancelled his stop here for medical reasons. Everybody else on the bill was here and the show went on. But....there was a little note in the paper...IF you bought your tickets specifically to see Willie Nelson, you could get a refund. How thoughtful. The airlines need to wise up and learn something from that.
 

Winglet

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An airline seat is a perishable comodity. If you buy a fare and don't use it, the revenue for that seat is lost. If someone buys a concert ticket and reserves a seat, then doesn't go for WHATEVER reason, do you really expect the theatre to refund your money. Airline ticket prices for the most part are DIRT CHEAP if you're willing to abide by the conditions.
 

KCFlyer

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[P]
[BLOCKQUOTE][BR]----------------[BR]On 9/17/2002 10:35:03 AM Winglet wrote:
[P]An airline seat is a perishable comodity. If you buy a fare and don't use it, the revenue for that seat is lost. If someone buys a concert ticket and reserves a seat, then doesn't go for WHATEVER reason, do you really expect the theatre to refund your money. Airline ticket prices for the most part are DIRT CHEAP if you're willing to abide by the conditions.[/P]----------------[/BLOCKQUOTE]
[P]Winglet - allow me to type slowly. If I buy a concert ticket and cannot go, I can GIVE the concert ticket to my neighbor and HE can go. [/P]
[P]If I buy an airline ticket and cannot go, I can't even give the ticket to my wife or daughter since the ticket isn't in their name. so the airline is forcing this commodity to perish by not allowing me to give it to someone who COULD use it. [/P]
[P]As I mentioned in my earlier post, I bought tickets to see Willie Nelson and not She Daisy. I stayed home. And got a refund[/P]
 

KCFlyer

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[P]
[BLOCKQUOTE][BR]----------------[BR]On 9/17/2002 1:06:51 PM DFWCC wrote:
[P]KC Flyer,  You can not give tkts to some one for security reasons. That is a function of gov regs. Do you want to change that?  In today's world I'm glad at least they know who is getting on your fl.[BR]    Also if The star football player on the Chiefs stubs his toe on Sat eve and can't play the next day, Will the Chiefs give you your money back bec the starting QB will not play?  Think Not[/P]----------------[/BLOCKQUOTE]
[P]I hope this doesn't impact Southwests RR tickets. Even though they send them to John Smith, he can give them to Jim Jones to use however he wants. It seems to me that it shouldn't be totally impossible to be able to call the airline and tell them I am afraid I won't be able to fly on Saturday, however, I have given my ticket to Jim Jones, so please change my reservation to reflect that. They know that Jim Jones will now be flying and all records would show that, therefore the commodity will not perish for me or the airline. As far as the Chiefs go - bad example. First, I won't pay $60 plus parking to watch a football game, but I just might if the starting quarterback wasn't playing. [/P]
 

DFWCC

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KC Flyer, You can not give tkts to some one for security reasons. That is a function of gov regs. Do you want to change that? In today's world I'm glad at least they know who is getting on your fl.
Also if The star football player on the Chiefs stubs his toe on Sat eve and can't play the next day, Will the Chiefs give you your money back bec the starting QB will not play? Think Not
 

N305AS

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KCFlyer-

First off, Winglet wasn't rude to you, so your condescending tone wasn't necessary. I'm surprised; normally you make very intelligent arguments without the need to fling mud.

That having been said, the reason you can't simply give your airline ticket to someone else (like a ticket to a football game) is that the airline ticket is a non-transferable contract between the passenger and the carrier.

The reason behind this is to keep businesses and other frequent travelers from making speculative bookings and/or purchases at discount fares and then simply changing out the names at will later on, when that last-minute new customer should really be buying a last-minute fare.

The remedy, of course, is for businesses or customers to buy higher-priced, more flexible fares that allow refunds if they need flexibility, such as if the person who was ticketed can no longer travel. This way they can get a refund and buy a ticket for the new person traveling in their place.

It's something that most likely will not change unless the domestic U.S. fare structure dramatically changes across the board.
 
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