Friday, May 29, 2009

American's Complaint Against Imhof Joining Delta - Now Viewable Here

Here is the actual complaint American had lodged against Charles Imhof, former MD-Passenger Sales at AA.

While not nearly as soap-opera worthy as the Starwood/Hilton complaint but we really have to wonder about the basic judgement skills of a senior executive with AA. Sending highly confidential files clearly marked as such to a personal email address days before resigning to take a similar role at a chief competitor? Downloading sensitive documents onto a stick? Negotiating an employment agreement from his email address? ReAAlly?

Read the complaint and make your own decision.

Round I: Starwood vs. Hilton, Round II: AA vs. DL

Crains NY is reporting that American Airlines has filed a lawsuit against Chuck Imhof who recently left the top sales position at AA in New York for a similar role heading up Delta's sales efforts. The suit alleges that Mr. Imhof, prior to his resignation, emailed confidential strategy and pricing documents to a personal email account from his work account.

Sounds quite similar to the current saga unfolding between Starwood and Hilton where several senior executives departed Starwood for Hilton and, according to Starwood's complaint, decided to take more than a few confidential documents along to jump-start their future careers.

AA is sueing to prevent Imhof from working for Delta and is also suing him personally to claw back deferred compensation, performance bonuses and stock options as well as legal fees.

We are waiting for a copy of the actual complaint - we'll have more to share after we review.

Wednesday, May 27, 2009

Expedia Does Away With Air Booking Fees for Good and Drops Others as Well

As we predicted, Expedia today made the removal of air booking fees permanent, matching Priceline and sister site Hotwire's no-fee consumer proposition for the long-term. No word yet from Travelocity and Orbitz but we expect they will fall in line as well. Of note, Expedia has removed all air booking fees - Orbitz is still charging them on multi-airline and international tickets with originations outside of the US/Canada/Mexico/Caribbean.

In so doing, Expedia has removed one of the major obstacles to their continued growth in the domestic US markets - a $7 price differential vs. booking direct.

In addition, Expedia has also removed the annoying "ankle-biter" fees that they used to charge for changes, cancellations etc of air tickets, hotel rooms, cruises and rental cars. Sister site had already removed these fees on hotel room changes and cancels some time ago and Priceline began the trend. These fees were charged by Expedia and were over and above the fees that airlines or hotels charged for making changes or cancels. Rest assured, those fees still exist regardless of booking channel. Funny that as airline continue to race to add fees for everything from redeeming frequent flyer miles to checking bags that Expedia is heading in the opposite direction.

A critical missing element in the press release was any mention of the go-forward plan on hotel booking fees - something Expedia has never messaged to consumers - only to Wall Street. Orbitz is still running with a July 15th cut-off date for their reduced fee promotion on hotels but given Orbitz's site changes to highlight the "all-in" price, we doubt highly that they will back off come mid-July keeping the heat on Expedia and Travelocity. Priceline, of course, hasn't had any of these fees (air or hotel) for some time.....

JetAmerica: Proof that There is Plenty of Folly Left in the Airline Industry

We are all for new airlines and adding competition. But the latest offering from a start-up called JetAmerica really defies all logic. Brought to you by the original founder of SkyBus (remember the airline that flew from Columbus, Ohio to a bunch of tiny, random cities that no one really wanted to fly to?) JetAmerica seems to have a similar business model.

First of all, do we really trust an airline that can't get the city code for Minneapolis/St. Paul right on their home page? This isn't a hard one like MSY (New Orleans) or my personal favorite, SUX (Sioux City, Iowa) - this is MSP! MPS, for the record, is a small city in South Carolina but maybe Jet America is thinking of service there as well.

And how about those $9 fares? Guess what, turns out there is no way to actually buy a $9 fare. Consumers are used to government fees and taxes being added on to advertised fares but JetAmerica has taken it to a new level by adding a booking fee - obviously they are not quite in touch with the recent booking fee changes over at Expedia et al.

Adding insult to injury is that JetAmerica hides the fee. On the booking page they offer this disclaimer which fails to mention the $5, non-optional fee that JetAmerica charges consumers for booking on their website:

If that were not enough, look at how they sneakily add in the booking fee under the guise of a tax that is collected by the government when a user clicks for more info:
They have even invented a new tax code for it: CNV. (All the rest of the tax codes are the industry standards that appear on every ticket.) How can this be "not a gimmick?"

Moreover, are consumers really well served by a couple of flights a week from Melbourne, Florida to Toledo? Or three flights per week from Newark to Melbourne? Or three weekly flights from Toledo to Minneapolis? One would assume that if MSP-Toledo (or MPS!) was such a barn burner that Northwest would have added flights on the route a long time ago. And Melbourne-Newark? How long before Continental decides to re-enter the market.

What is most offensive about these new flights is that we, as tax payers, are actually funding them. Yes, in these tough times, there is still an FAA program called the Small Cities Air Service program which allows carriers to receive money in exchange for adding new service to under served markets. While this is a good concept, using the money on a fly-by-night, less than daily operation hardly serves travellers in the best possible way. We are all for the good citizens of Toledo having nonstop links to important destinations but wouldn't they be better served with one daily flight on a regional jet to Newark and one to MSP? If the goal (which it should be) is to facilitate business travelers to stimulate the Toledo economy, operating less than daily service on an airline not listed in the Global Distribution Systems (where most business travelers book) or on the major online travel agencies is simply not going to help. The FAA has given $400,000 to this effort + the Toledo airport has kicked in another $200,000. The Boyd Group offers a great discussion on the program and how they have successfully used this funding mechanism to bring truly valuable air service to small, under served communities. Toledo, Melbourne and Lansing officials would do well to read the Boyd Group's primer and shoot for air service that really serves their communities rather than grasping at straws.....

Tuesday, May 26, 2009

Delta Finally Seems to Admit that Shuttle Pricing is Broken on LGA-DCA/BOS

Last week, Delta quietly lowered pricing on the Delta Shuttle which operates between New York LGA and Boston/Washington Reagan National.

For years, Delta (and USAirways) have both charged over$300 each way for a last minute, walk-up fare. Of course, corporate discounts lowered these fares considerably for companies with huge volumes but the masses were stuck with paying $329+taxes each way.

Several months ago, Delta down-sized the LGA-DCA flights from MD-88s to Regional Jets in response to slowing demand on the route

But now it appears that a combination of the decline in business traffic, Amtrak's success in the market and competition from JetBlue from JFK to Washington Dulles and Boston have finally pushed Delta to think differently about this market.

A check of Shuttle flights this afternoon showed walk- up fares to Boston as low as $129 and DC at $169. Talk about relief! There are even lower fares out there when booking round-trips and staying a minimum of 3 days or over a Saturday night - as low as $199 total, including tax roundtrip. With a 21 day advance purchase one way tickets up to Boston are just 74 bucks including tax.

To further sweeten the pot, Delta is offering 2,500 bonus SkyMiles each way (+ the normal 500 you would earn anyway) until July 26th. More details here.

Now if only they could fix the Air Traffic Control delays into LGA.........

Tuesday, May 12, 2009

Summertime and the Hotel Bonus Points/Offers Continue

If anyone thought things were getting better in the hotel industry, just take a look at the latest salvos the chain hotel loyalty programs are offering for stays this summer.

Starwood started the bonanza by offering 1 free night for every two stays until July 31st - a very rich offer - especially because the awards can be redeemed at some of Starwood's most exclusive hotels. Like all the chains, Starwood segments hotels into specific categories based on average room rate. Starwood starts at Category 1 (e.g. Four Points by Sheraton Saginaw) all the way up to a few uber-luxury hotels in Category 7 such as the W Resort Maldives. The free nights promo allows redemptions (with no blackout dates or capacity controls) as high as Category 6. The nights may be earned at any category of hotel. So, stay a couple of times at a Four Points and then you could redeem for a free night at the St. Regis Rome, the Westin Paris or the St Regis San Francisco. The only catch is that you can only redeem on Fri/Sat/Sun nights and you have to use them by the end of September.

Not to be outdone, Intercontinental Hotels has made a similar offer which offers a free night after two stays as well between now and July 3rd. However, IHG limits guests to earning four free nights (after eight stays) but they do allow redemption until December 26th. IHG allows redemption at all hotels worldwide (except a few in Japan) which makes this a great promotion as well.

Marriott jumped on board this morning with a similar stay and play offer which offers a free night after 3 stays between now and August 31st. The free nights can be used until the end of the year. Alas, Marriott is not allowing redemptions at their most elegant (and expensive!) hotels - only Categories 1-4 (out of a total of 8) are allowed for redemption. So, don't plan on earning your free nights in Cleveland and burning them in Paris.

Hilton has an offer of 1000 bonus HHonors points per night running until the end of June but we expect that they'll have something more exciting soon.

In the current environment, the chains are particularly concerned about losing even a tiny bit of revenue share from the road warriors who participate heavily in these loyalty programs. Hence, the chains are in a "me-too " battle - and the winners are clearly consumers who are still hitting the road.

Monday, May 11, 2009

American Airlines to Allow One-Way Mileage Redemptions

Over the weekend, American Airlines quietly released new functionality on which simplifies mileage redemption and allows one-way award travel. This may not seem all that huge, but AA is the first US major carrier to allow customers to redeem half the number of miles for a one-way ticket.

In the past, if a consumer wanted a simple one-way ticket, they were required to redeem the full amount of miles required for a round-trip. For example, a one way ticket from JFK to LAX now "costs" 12,500 miles or half of the 25,000 miles required for a roundtrip "MileSAAver" award in coach.

Consumers can also now book a coach ticket in one direction and first class in the other - handy if award seats are only available in first one way and coach the other. Also nice in this case because the first class award seat is 25,000 miles one way - the same amount as the "double mileage" often required for a seat in coach. We'll take a big seat any day!

It also makes combining miles and paid tickets an interesting proposition, especially in today's world where many airfares are simple one-way tickets. For example, if you found a great fare to LAX from JFK for say $129 but the return was very expensive, you might look at buying a ticket one way (and earning more miles!) and using miles for the return.

Southwest, JetBlue, and AirTran all offer one-way awards today but AA is the first of the majors. Many international carriers also offer the option including fellow AA oneworld partners British Airways and Cathay Pacific along with Air France/KLM.

Thursday, May 7, 2009

Travelzoo Integrates a listings into Weekly Top 20 With a Cool Calendar

How often have you heard about a great fare but been unable to find the right combination of outbound and return dates to actually get the fare? Airlines love to throw out low-ball fares but then tightly control the dates/times etc when consumers can actually get those fares. Basic revenue management, yes, but frustrating nonetheless.

Travelzoo's long standing Top20 Newsletter has a cool new link over to that helps solve that problem. Check out this screaming deal to Maui from New York:

Until now, it has been pretty hard to find when this fare might actually be applicable and available.

Now clicking on the link above brings the user to a cool table which shows when the fare is available:

Pretty cool! And $354 to Maui is a pretty amazing fare to boot!

Granted, Kayak and others have had fare calendars once a user has conducted a search but driving one from a fare advertisement, before a user has entered dates, is a nice twist.

And, about time that Travelzoo starts sending traffic to their own site!

Wednesday, May 6, 2009

Delta Brings Back Agent Commissions - Really

Delta, the airline which in their last earnings call suggested that travel agents and OTAs should pay them for content, has apparently had a change of heart and decided to pay agents.

Travel Weekly is reporting that Delta is offering agents a 10% commission on all flights originating in the New York metro area (LGA, JFK, EWR, HPN and SWF) to Mexico, the Caribbean and Central/South America.

When was the last time we heard of a major US-based airline increasing commissions? Obviously, private back-end commissions and overrides have continued to be part of the landscape since the airlines reduced and ultimately cut back on commissions years ago. But we haven't seen a broad, shot-gun approach to the market like this, except maybe from the likes of Air India...

Agents need to book tickets by June 30th for travel until December 15th so DL is clearly targeting the softer summer(Northern Hemisphere, anyway) and fall periods.

Offering the bonus on routes to Mexico is clearly understandable but motivating people to travel who are scared is notoriously difficult - think post 9/11.

As for the other routes, clearly DL is seeing softness in one of the areas where they have recently added extensive new service. Since last December, Delta has added service to Bogota, Manaus, Fortaleza, Recife, Tegucigalpa and expanded service to Sao Paulo, Rio and Guayaquil. Granted, most of these routes are operated from Atlanta, but New York metro area is clearly a major feeder market for these flights. From New York, Delta operates nonstops to Sao Paulo, San Juan, Mexico City, Bogota and a host of other Caribbean islands.

But how ironic that Delta has gone from asking for payment from agents to paying them in a just a few short weeks.... and will the Caribbean/Latin market leader, American, react? And how will Delta's soon to be ex-partner across the Hudson, Continental (who also operates a huge route system into Latin America and Caribbean) react?

Tuesday, May 5, 2009

Starwood quotes Hudson Crossing blog in Hilton Denizen Complaint

We didn't really expect Starwood (a great hotel company and former employer of your host) to take an interest in the HC blog, but today it was pointed out that an earlier post was directly quoted in Starwood's 91 page complaint against Ross Klein and Hilton... From page 34:
Anyway you cut it, this is going to get very interesting.....

Orbitz Extends Price Assurance to Hotels in Latest Chapter of OTA Battle Royale

This morning, Orbitz extended its Price Assurance program to hotels booked through the site. Price Assurance offers consumers a cash rebate if the hotel stay is booked by another Orbitz customer for the exact same dates and room category. This is true innovation from an OTA - no one else has a similar product save start-up

Orbitz claims the program has been highly effective on the air side in driving customers over the purchase hump. Clearly, Orbitz is expecting similar results on the hotel side, particularly when coupled with the hotel fee cuts promotion which is also underway.

Of note, there is a catch. Another consumer must actually book the exact same stay - if the hotel drops rates but no one else books the exact same stay (same check-in, check-out, room class etc) you are out of luck.

Price Assurance for hotels is likely to be far less costly for Orbitz than the similar version offered for air. Assuming a hotel drops the underlying net or merchant rate, (depending on Orbitz's contract) they may be able to rebook at the lower net rate and simply pass the difference back to the consumer. Even if the hotel does not allow a rebook, Orbitz can still probably pay a significant portion of the cash rebate back to the consumer out of the gross margin associated with that stay. On the air side, Orbitz is simply paying out cold hard cash - there is little, if any, chance to go back to the airlines and rebook at the lower price and, alas, there is very little gross margin on air...

Monday, May 4, 2009

New EXPE Board Member - Chairman of Amadeus - really!

In a small 8K filing late last month, Expedia added Jose Antonio Tazon to the Board of Directors. Tazon replaced Expedia long-time insider and fellow European Simon Breakwell who left the board.

Breakwell leaving isn't particularly interesting aside from the fact that he was one of the "old guard" from earlier times - he joined the company in 1997.

But the Chairman of one of the big three GDS systems joining the board is interesting indeed. Clearly, Tazon brings a wealth of European knowledge and insight to Expedia - which could be crucial as Expedia continues to slug it out with the likes of in particular. Amadeus also brings deep experience in serving both airlines and travel agents alike.

But Amadeus' market strength comes from the European Markets - not North America where Expedia's strengths lie.

Amadeus, on the other hand, unlike Travelport and Sabre, has limited experience in the direct-to-consumer online travel agency space. From a consumer marketing standpoint, clearly Expedia sets the bar.

We doubt this is a prognostication of further consolidation within the travel distribution space (yet) but Expedia and Amadeus certainly have plenty to learn from each other.

Continental matches Delta and NW with 500 miles for booking online

As we predicted, Continental has just matched Delta and Northwest in offering 500 bonus OnePass miles for new bookings at The offer is effective immediately and goes, not surprisingly, until May 31st.

Why May 31st? That is when the big 3 Online Travel Agencies (Travelocity, Orbitz, Expedia) are all due to sunset their "no air booking fee" promotions - something we also predict won't actually happen.

Could it be that the airlines are actually seeing share shift away from their sites back to the OTAs? We'd imagine it is hard to measure right now with all the noise in the system but it certainly looks like the airlines are starting to pay attention. How long before American and United match?

A New Travelocity Homepage Lands

Monday brings a new homepage from Travelocity. Its certainly a change from the past with a broad swath for marketing messages across the top of the home page. In fact, the current message is so jarring, we almost thought we had ended up at some sort of Swedish rental car site. Not quite sure why that huge yellow stripe at the top of the otherwise blue page is there - bringing cheery news about H1N1 - that is quite a marketing message.

That said, the new focus is clearly on bringing deals to the forefront. Across the top and down the right hand side and in numerous tabs are plugs for deals, deals and more deals. They still don't appear to be customized or focused (at least on the home page) but Travelocity is clearly dialing up the promotional content.

And Henry Harteveldt would be proud - the "ExperienceFinder" has been prominently moved up to the top navigation bar - Henry has previously bemoaned Travelocity for taking one of their best features and hiding it in no-mans land.

But, other than a slightly revised layout and new row of tabs across the top, we don't see a huge sea of change here. In fact, we really have to question why the search button (which enables a user to actually engage with the site on the home page!) has been moved beneath the fold.