Letters to U

[TomBascom]

I sent this to Dave yesterday. If get some time he''ll get another, more detailed letter, today or tomorrow.
Dave,

As a US Airways'' frequent flyer (US1 # XXXXXXX) I was incredulous to see this morning''s news:

US Airways Revamps Policies to Cut Costs
Tue Aug 27,11:09 AM ET
ARLINGTON, Va. (Reuters) - US Airways Group Inc. , which filed for bankruptcy earlier this month, said on Tuesday that it has changed some of its fare policies and eliminated some amenities, like free paper tickets and alcoholic drinks, to cut costs.
US Airways said it will no longer let passengers who buy nonrefundable tickets for many routes in North America and Europe use the value of an unused ticket as a credit toward the purchase of another one.
"If you miss the event, your ticket isn''t good for the next day," said B. Ben Baldanza, senior vice president of marketing at the airline.

What do you think you''re doing? This is quite possibly the most arrogant and obnoxious statement made to date by any airline -- and that is saying a lot.

The airline feels perfectly free to cancel flights and alter schedules on a whim and yet when we, your passengers, the people who pay the bills, need to make a change you''re just going to pocket our money? You were already charging so much to make any sort of changes to these tickets that there was little value in doing so -- but to flat out steal the money is amazingly arrogant.

I had thought that the airline was on the road to recovery but I was clearly wrong about that. Today''s changes to refundable tickets, standby policies and the earning of preferred miles are beyond belief. Charging for paper tickets and eliminating free drinks makes sense.

US Airways management needs to spend some time talking to customers and learning why your business is being threatened by SouthWest. The primary reason why I am strongly considering switching all of my business to SouthWest is not price. It is flexibility and reasonableness. SouthWest has fare rules that I understand and policies that make sense. The above gem illustrates perfectly what is wrong with US Airways and the rest of the "major" airlines. Talk to your customers!

 

[TomBascom]

I sent this to Kevin Mitchell at the Business Travel Coalition this morning -- the included letter to Ben Baldanza went out yesterday (and has been acknowledged by Mr. Baldanza, my subsequent follow-up has not, however, been acknowledged). Mr. Mitchell has forwarded the letter to various parties in the press as well as within government -- he thinks it makes some excellent points.

Mr Mitchell,

I noticed your comments in the press regarding US Airways' current insanity. I'd say that I couldn't agree more -- but actually I think there is more that needs to be said. The general press seems to be missing the point. This isn't some petty FF "perk" issue. The two most significant changes by far are the "use it or lose it" and "no stand-by" policies. These constitute a huge price increase -- it now costs many times what it cost just a few days ago to buy an equivalent ticket.

To most travelers "non-refundable" means "We have your money, we won't give it back. You can use it for an in-store credit if need be." This is reasonable and understood. Nobody expects it to mean that their investment is lost for such arbitrary and arrogant excuses as US Airways is proffering.

Many travelers are probably completely unaware that many of the tickets that they buy are non-refundable. They may have heard the words when the reservations agent said them -- but did they understand? Or do they think that paying $1,500 for a ticket must naturally mean that it is a refundable ticket? Almost all of US Airways fares are subject to these restrictions -- spend some time checking out fares and rules. In the markets that I examined only the top 2 fares were refundable. Everything else -- from $198 V fares to $1,500 B fares had the "non-refundable" restriction buried in the rules.

US Airways is trying to claim that they have not increased prices -- this is not true. The same product is no longer available for the same price. That product now costs many times what it did before.

I think a few other points might be worth touching on -- there is a lot of misrepresentation going on and they need to be taken to task about it. The following is a letter that I wrote to Mr Baldanza. It addresses a number of points of concern that I think you might want to be aware of:

Mr. Baldanza,

As a US1 (DM# XXXXXXX) for many years now I'm astounded. I've read your press release, you comments in the press and your form letter response to concerned Dividend Miles members.

You seem to feel that these changes are something that we, your customers, asked for and will appreciate. Nothing could be further from the truth.

You did not ask me, nor anyone I know or know of, about any of this. In all my years of flying US Airways I've never spotted you or any other executive on a flight. Nor have I ever been asked to complete any sort of customer opinion poll or survey -- so I'm having a hard time understanding where you might have gleaned your information from.

I never told you that I'd like to lose the value of my tickets. In fact I've been becoming increasingly angry about the rules, restrictions and fees surrounding every minor aspect of a ticket. This has become so noxious of late that I've gone out and researched the rules at "low fare" carriers -- guess what? You don't compare favorably. Which means that yet another differentiating factor between US Airways and the low fare carriers has been eliminated.

I never told you that I don't want to be able to stand-by. In fact I stand-by often. For me it's a key reason to fly US Airways. I'd like to see the stand-by rules relaxed not "strictly enforced" -- especially in light of the coming schedule reductions which will make it even more difficult to match my scheduling needs to your service offering.

I never told you that I have any concerns about upgrade seat competition due to low fare elites. I've missed upgrades on occasions when I'm quite certain that those who displaced me were, in fact, just such elites. But I also know that if I had paid for a higher fare I could have displaced those people because those fares are upgradeable at any time and they come out of a completely different inventory class and that those seats remain available for purchase until just prior to departure. In fact I appreciate that those people, like me, have probably bought tickets that were discretionary -- they could have taken another airline or they could have used miles instead of spending money with US Airways -- and they probably did so in order to earn that seat.

I never told you that preferred check-in lines are too long because of such elites. In my view the main reason that preferred (or any) check-in line is long is because of the labyrinth of fare rules and restrictions that must be navigated whenever someone has an issue at check-in. Simplifying this would truly address the problem. Reducing the number of elites 18 months from now does nothing for it.

I never told you that I have a problem with handing out "comp'd" status like candy. You're still doing that but it's ok with me. If it draws more people to the airline and they actually fly then that's great! Welcome aboard!

As a matter of fact I don't have a problem with any of these issues. If I were to be concerned about a need to "preserve" these "valuable and expensive perks" I know that there are many solutions to be had. I also have to question just how expensive they are. If you really expect concessions like this from passengers then be prepared to open your books just as you did with the unions -- most of us are in some sort of business and we have an idea or two about what these things cost. Some of us even put these things together for people like you.

You indicate in you press release that you are "recognizing a new competitive reality." You are claiming that these changes are targeted at "low fares" and that it doesn't happen until next year. Not true -- it started yesterday and almost every fare except the very top fares are immediately subject to "use it or lose it" etc -- you can pay $1,500 for a ticket and not be able to stand by and lose all of the value if you miss a flight. That's not a "low fare" in my book. Nor is it something that any consumer will be "thankful for".

You make a specious analogy to tickets to a ballgame -- first of all tickets to a ballgame aren't in the same pricing ballpark as plane tickets. Second, I can transfer those tickets to anyone that I want whenever I want. Third, such tickets are sold in a one to one relation to seats -- airlines sell more tickets than they have seats so they aren't "losing" anything if I don't show up. Fourth, many such tickets are in fact exchangeable (even after the fact) if you're unable to make the event -- it's simply good business.

Supposing that I agreed with you Mr. Baldanza, repented and wanted to stop buying "low fares". Being a good customer of US Airways I would, of course, want to buy refundable tickets at all times. After all my plans might change, I might be called for jury duty, my reserve unit might be called up, I might have a sick child, I may be involved in a car wreck while hurrying to get to the airport before "lose it" time or maybe I'll die. So I go to the web site to book my trip. Just which fares are refundable? Are they clearly marked on a screen where I'm comparing fares? Can I assume that a really expensive fare is refundable? (The answers are "no" and "no".)

In your response to complaints you claim to be protecting "... those who pay on average more for their tickets." And yet your policies fail to take average price into account -- you only count the top fares towards preferred and only exclude the very top fares from restrictions. That isn't an average.

You also say "Our non-refundable fares are increasingly being set by airlines like Southwest and Airtran. Those airlines do not offer high-value perks because they cannot afford to." You better hope that nobody actually checks with those airlines because they do offer many of the same perks. They even offer better perks in a lot of respects. And they do so at lower cost and with fewer hassles.

You state "... we have chosen to make them available only for those customers that more regularly buy something more than simply the lowest fares in the market." Your argument is disingenuous -- many customers who routinely buy very expensive tickets at prices far in excess of the lowest fare will be subject to the "use it or lose it, no stand-by" restrictions. These customers probably think that they are ok because they paid a lot of money. It's not like the gibberish that you publish under rules and restrictions is readable.

You then say "Rewarding high usage without above average prices is an uneconomic proposition." This is facetious -- the average price isn't important -- a profitable price is what is important to the economics of the proposition. I'm willing to concede that what is profitable and economic for US Airways is different from Southwest and Airtran. But if it is as different as the chasm between low fares and unrestricted fares is at US Airways then it is a facetious number that has no bearing on the economics.

Finally you say "I hope that we can continue to earn your business." I hope so too. But this isn't how to do it. If you want to earn my business you have to offer a reasonable product at a decent price. You aren't doing that and your rationale for making these changes does not hold water.

What I, as a business traveler, need is a ticket that is reasonably priced and flexible. It doesn't have to be the rock bottom lowest price. But it cannot be two or three times more expensive than a leisure fare either -- remember I have to pass this cost along to my customers too -- and they are keenly aware of the costs of air travel and quite interested in minimizing those costs. They know perfectly well what it costs to fly Southwest and Airtran. And I need to be able to make reasonable changes to my itinerary without extraordinary charges.

I believe you should offer something along these lines (the multipliers look high to me -- I'm being generous):

7 day advance basic fare similar in price to today's V fare.
7 day advance basic "business" fare for 1.5x the basic fare.
"walk-up" fares at 2x the basic fare.
7 day advance purchase F fare at 2.5x the basic fare.
"walk-up" F fare at 3x the basic fare.
eliminate price gouging on monopoly routes
DM earning and benefits the same as they were last week. Allow any ticket to be converted to a higher class of ticket for the difference in price if there is inventory available (and don't play games with inventory.)

Allow same day changes if there is inventory available.

All tickets should be refundable. You get to hold the money and earn interest on it. You also have the chance to sell the seat to someone else -- and you frequently do so. The seat isn't consumed by the ticket not being used. The very concept of a non-refundable ticket is offensive.

Right now the airline that best meets my flexible tickets at reasonable fares criteria is clearly Southwest -- and more because of the flexibility than the price. I currently put up with somewhat higher fares and much less flexibility with US Airways primarily because of the perks of being Chairman's Preferred. To make it more difficult for me to attain and enjoy that status is not helping the situation. I certainly can't use those perks a justification to employers and customers for incurring dramatically higher airfare.

My current outlook for the remainder of the year has me taking another 10 to 15 trips. In spite of the bankruptcy and the uncertainty I was looking forward to flying US Airways for those trips but I am now very seriously reconsidering that -- only one of those trips has been scheduled so far.

If the Dividend Miles program is going to proceed in the direction that it appears to be heading in and if the changes in ticket refund and standby policies are as they appear to be then my business and the business of those people that I influence will go elsewhere. There will be no reason for me to choose US Airways and there are increasingly compelling reasons for me to choose carriers such as Southwest.

Please reconsider these ill-advised changes and instead have the courage to make the honest change to a rational fare structure that this industry needs to survive.

 

[KCFlyer]

Your suggestions, while obviously VERY convenient for YOU, are based solely in the realm of fantasy. Even Southwest and jetBlue make many of their fares nonrefundable. It's a simple trade-off; if you want low fares, be prepared to accept the fact that they carry some pretty heavy restrictions. If you don't like those restrictions, then be prepared to pony up extra cash for a more expensive and more flexible ticket.

US Airways policy of rendering unused (if not changed or cancelled prior to departure) tickets invalid is based on the fact that you're costing them the ability to make money on that seat, since they've reserved it for you but you haven't traveled.

The argument some people use of "But I can take a blender back to the store for in-store credit" isn't valid. Why? That store can easily re-sell the blender and make money on it, but an airline can't re-sell and make money on a seat for past-dated travel.

Sorry, but while SWA has many "non refundable" fares, they have zero "use it or lose it" fares. In fact, should plans change (for example you get sick on the day of your flight and cannot go), Southwest will give you FULL CREDIT towards the price of another ticket. Every other airline charges between$25 and $100 to change a "non refundable" ticket, PLUS any fare difference.

Even if you're travelling on a full Y fare on U, if your plans change, and you don't need to go, then they REFUND you the money and your seat STILL goes out empty. Absolutely boneheaded policy.

 

[N305AS]

Geo-

The problem is that while they may no longer need to oversell the flight for no-shows on nonrefundable tickets, there's a disproportionately higher percentage of REFUNDABLE ticket holders who no-show. Why? Because they know they're not financially liable; they can get a refund for their unused ticket at any time. Also, many of these refundable tickets don't require purchase until the day of travel, whereas the nonrefundable ones require instant purchase, or purchase within a set time frame after making the reservation.

So in theory, if ALL of US Airways' tickets were nonrefundable and required instant purchase, they'd never need to overbook. Unfortunately, the problem of no-shows by people holding refundable tickets means there will always be a percentage of overbooking that takes place.

 

[geo1004]

US Airways policy of rendering unused (if not changed or cancelled prior to departure) tickets invalid is based on the fact that you're costing them the ability to make money on that seat, since they've reserved it for you but you haven't traveled.


And how does overbooking fit into this scenario? Just how reserved IS that seat? The fact is that US will sell more tickets than seats on EVERY flight it operates if they can. Choose a side....

 

[N305AS]

KCFlyer-

Yep, WN is the best thing to ever happen in the history of commercial aviation. We get it already. []

 

[N305AS]

Tom-

Your suggestions, while obviously VERY convenient for YOU, are based solely in the realm of fantasy. Even Southwest and jetBlue make many of their fares nonrefundable. It's a simple trade-off; if you want low fares, be prepared to accept the fact that they carry some pretty heavy restrictions. If you don't like those restrictions, then be prepared to pony up extra cash for a more expensive and more flexible ticket.

US Airways policy of rendering unused (if not changed or cancelled prior to departure) tickets invalid is based on the fact that you're costing them the ability to make money on that seat, since they've reserved it for you but you haven't traveled.

The argument some people use of "But I can take a blender back to the store for in-store credit" isn't valid. Why? That store can easily re-sell the blender and make money on it, but an airline can't re-sell and make money on a seat for past-dated travel.

 

[KCFlyer]

Another thought - I don't have a problem with the no standby policy. Southwest HAS been doing that for years. But...most of the employees who think this policy is the greatest thing since sliced bread would always combat any argument about U vs SWA with "well, you can stand by for an earlier flight for no charge...try THAT on Southwest". Well, try THAT on U today.

 

[TomBascom]

----------------
On 8/29/2002 4:52:21 PM

Yep, WN is the best thing to ever happen in the history of commercial aviation. We get it already. []
----------------

No, you don't get it. That's the problem. [(]

 

[TomBascom]

----------------
On 8/29/2002 4:17:56 PM

Tom-

Your suggestions, while obviously VERY convenient for YOU,
are based solely in the realm of fantasy. Even Southwest and jetBlue make many of their fares nonrefundable.

My suggestions are intended to fix your problems. If you want to be a viable airline a year from now you better start listening to customers when they tell you what they want.

Non-refundable and use it or lose it are not the same. Yes, some of those low fare guys also have use it or lose it. But replacing it isn't a $1,000 proposition with them either. And the exemplar low fare airline -- SWA does not have lose it or lose it.

It's a simple trade-off; if you want low fares, be prepared to accept the fact that they carry some pretty heavy restrictions. If you don't like those restrictions, then be prepared to pony up extra cash for a more expensive and more flexible ticket.

You're wrong -- that isn't my choice. That's only my choice if I keep the blinders on and only consider US Airways for my flying.

There are plenty of alternative carriers that meet my criteria. None of the majors have gone along with this. SWA doesn't have this. The list goes on.

US Airways policy of rendering unused (if not changed or cancelled prior to departure) tickets invalid is based on the fact that you're costing them the ability to make money on that seat, since they've reserved it for you but you haven't traveled.

The argument some people use of "But I can take a blender back to the store for in-store credit" isn't valid. Why? That store can easily re-sell the blender and make money on it, but an airline can't re-sell and make money on a seat for past-dated travel.

The airline doesn't "reserve" a seat for me and then lose money on it if I don't show up. It isn't a consumable resource.

 

[N305AS]

US Airways policy of rendering unused (if not changed or cancelled prior to departure) tickets invalid is based on the fact that you're costing them the ability to make money on that seat, since they've reserved it for you but you haven't traveled.

The argument some people use of "But I can take a blender back to the store for in-store credit" isn't valid. Why? That store can easily re-sell the blender and make money on it, but an airline can't re-sell and make money on a seat for past-dated travel.

The airline doesn't "reserve" a seat for me and then lose money on it if I don't show up. It isn't a consumable resource.
----------------
[/quote]

Tom, a seat on an airplane is a highly perishable commodity. If you buy a ticket, the airline reserves that seat for you. The seat has just the one shot (on that flight, that day) to earn money for the airline, so they need a reasonable assurance that you're going to actually occupy that seat...hence, the nonrefundable ticket.

Now if you can't make the flight and call US Airways beforehand to let them know, they at least have the opportunity to cancel your reservation and possibly allow that seat to make them money for them on that flight by selling it to someone else. Because you've called to cancel, they give you the option to use that ticket value towards future travel, less a change fee.

But if you can't make the flight and don't bother to call them and let them cancel the space and attempt to re-sell it to someone else, that seat goes out totally empty! The airline had held your seat under the assumption that they could count on having earned the money you paid for that seat, that flight. But now that you've no-showed, they can't technically call it "earned revenue" since they still owe you the opportunity to use the money going forward onto a new ticket! This means not only have you essentially robbed them of the opportunity to have possibly had a fare-paying passenger occupying that seat, but now they have to worry about the cost of providing you with that value toward another seat on another day! ALL THIS NEEDLESSLY COSTS THE COMPANY MONEY. I don't know how you cannot see this.


Under their new policy, US Airways keeps your ticket value because you failed to relinquish the seat prior to departure time. In this manner, they're ensuring that they won't lose money on that flight due to your irresponsibility, bad luck, poor planning, or whatever. And then if you want to reschedule, you're giving them new money out-of-pocket for your new travel plans. It's a very fair and equitable system, regardless of what you may think.

 

[usfliboi]

Tom, let me say that we do appreciate your buisness and those who pay 1/4 of the fare u pay as well ! The fact is in todays environment the buisness travler and companies are not paying a premium for their fares.. ALthough they can be somewhat higher you get to do certain things that a person paying a cheaper price doesnt ! In your case i assume your a preferred passennger( no pun intended there). For that ther is a higher price. sir you receive many more choices of non stop flights. Flexablity in your travel arranging.... Upgrades, free coupons, boarding priority, early service aboard the aircraft etc etc .. The very things your complaining about are the disadvantages and pain that our new rules are having on you. For the most part if you were what we call BUISNESS passenger you would be paying the higher fare and would not be affected by the new rules. The fact that your company or yourself made the decesion to cut cost and are trying to save, is unforunate for yourself and im sure you had your reasons. No body blames you there ! OUr company is reorganizing and although we have and will make mistakes, if you would like full service you have to pay full price just as if you went to norstoms and paid 150 dollars for a sweater or walmart if u decided to save some money ! By no means am i comparing us to norstroms because norstroms were not but even they are having problems! I agree we needed to adjust out pricing policy at the same time we announced these new rules and it wouldve made more since. But untill then please for our sake and yours ! Pay full fare and youll get all that u say you have lost

 

[TomBascom]

-------
Tom, a seat on an airplane is a highly perishable commodity. If you buy a ticket, the airline reserves that seat for you. The seat has just the one shot (on that flight, that day) to earn money for the airline, so they need a reasonable assurance that you're going to actually occupy that seat...hence, the nonrefundable ticket.

Now if you can't make the flight and call US Airways beforehand to let them know, they at least have the opportunity to cancel your reservation and possibly allow that seat to make them money for them on that flight by selling it to someone else. Because you've called to cancel, they give you the option to use that ticket value towards future travel, less a change fee.

But if you can't make the flight and don't bother to call them and let them cancel the space and attempt to re-sell it to someone else, that seat goes out totally empty! The airline had held your seat under the assumption that they
could count on having earned the money you paid for that seat, that flight. But now that you've no-showed, they can't technically call it "earned revenue" since they still owe you the opportunity to use the money going forward onto a new ticket! This means not only have you essentially robbed them of the opportunity to have possibly had a fare-paying passenger occupying that seat, but now they have to worry about the cost of providing you with that value toward another seat on another day! ALL THIS NEEDLESSLY COSTS THE COMPANY MONEY. I don't know how you cannot see this.

Fuel is perishable.

A meal is perishable.

An assigned seat on an airplane is not.

You haven't "lost" anything on an unused seat. You didn't "hold" it for me and you didn't not sell it to someone -- you will quite happily sell it for a substantial sum right up to the moment that the plane pushes back (or pretty darned near that moment). Whether I've been assigned to it or not. Whether I show up or not. In fact you count on it.

Someone with an assigned seat is simply the first person on the queue for that seat. Do you lose money for that seat when I vacate it for my upgrade?

Ok, you can't recognize the revenue. You're still collecting interest on my money. I've got a couple unused tix floating around right now -- by my calculations you've made more money off of the interest (at 5%) than the cost of that seat to you (calculated as the value of an award ticket as carried on your books...) And that's assuming that nobody flew in that seat.

And it isn't a matter of "bothering" to call. There are a great many very valid reasons why someone may not be able to call before the deadline. There are a great many equally valid reasons why someone will be in a position to not be able to take a flight.

If you want people to call ahead and cancel plans give them a positive reason to do so. Offer them 50 miles (don't laugh -- it seems to be working with the kiosks) or waive the change fee or something.

Under their new policy, US Airways keeps your ticket value because you failed to relinquish the seat prior to departure time. In this manner, they're ensuring that they won't lose money on that flight due to your irresponsibility, bad luck, poor planning, or whatever. And then if you want to reschedule, you're giving them new money out-of-pocket for your new travel plans. It's a very fair and equitable system, regardless of what you may think.
----------------

Don't talk about "fair and equitable" until you're ready to adjust your cancellation, schedule and equipment change and reaccommodation policies to match. No exceptions -- including weather, ATC and force majeure.

There is no way that I'm giving US Airways, or any carrier with this policy, new money out-of-pocket for this. I'll walk first. But in reality I'll just quietly shuffle over to SWA and buy their most expensive ticket. Case closed, problem solved, money saved.

If this is such a great cost cutting and revenue enhancing idea why hasn't the cost cutting profit leader of the industry embraced it? Because US Airways's thought of it first?

If you want to offer tickets with these restrictions go ahead -- but price them accordingly and mark them clearly. These are, essentially, Priceline tickets. The market says that they're worth half to a third of a typical V fare. Less on a good day.

Spend some time checking your own fares -- these aren't your lowest priced tickets. Some of the very highest priced tickets in your system are subject to these restrictions.

 

[MrMarky]

And when you no show and lose your money, what's to stop them from selling the seat to someone else? Now they've sold and collected money for the same seat twice.

On full flights there are almost always standby's to take the place of no shows. Of course with U's new policy there won't be which is kind of dumb. And really, none of this applies if the flight isn't full and/or overbooked, because it's leaving with empty seats anyway.

And what about the 10 minute rule? You no show and lose all your money, but 10 minutes before departure your res is cancelled automatically and your seat opened up for someone else. Once again, it only matters on a full flight, and then the seat will go to one of the oversold PAX, because now nobody can standby hoping for a no show so they can get the seat.

 

[N305AS]

MrMarky-

A customer's seat isn't subject to cancellation and reassignment (or resale to someone else) until within 10-40 minutes of departure (varies for domestic vs. international flights). This means a potential new customer couldn't buy a ticket for that no-show customer's seat until within this timeframe.

Since an airline ticket counter won't send someone to "run" for a plane within 10-20 minutes of that flight's scheduled departure time (especially since 9/11 security procedures have made that a moot point anyway), your scenario of the airline selling the no-show's seat to someone else is virtually impossible.