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.
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