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The Skift Airline Innovation Report is our weekly newsletter focused on the business of airline innovation. We will look closely at the technological, financial, and design trends at airlines and airports that are driving the next-generation aviation industry.
We also provide insights on developments in passenger experience, ancillary services, revenue management, loyalty, technology, marketing, airport innovation, the competitive landscape, startups, and changing passenger behavior. I write and curate the newsletter, and we send it on Wednesdays. You can find previous issues of the newsletter here.
When your airline tells you your flight is delayed — perhaps for weather, or air traffic control issues, or crew availability — is it lying?
I don’t usually think so, but I spend more time in airline operations centers than most travelers. At these facilities, you’ll see airline employee professionals obsessed with ensuring flights run on time. They’re often passionate about a few metrics — D:00, for departures that leave exactly on time or early; A:14, for flights that arrive within 14 minutes of schedule; and completion factor, for the percentage of flights that arrive at their destination, no matter how late. An airline with a high completion factor cancels few flights.
Of course, operations centers have some wiggle room. If the Airbus A320 an airline is sending to New York LaGuardia breaks on a Thursday afternoon, and it’s filled with high-value business customers, perhaps the carrier will cancel the Buffalo flight instead, and use that plane to New York City. But that doesn’t change the key fact: A plane broke, and the airline has to remove it from service.
This is a timely discussion because this week United Airlines had planned to start a several-week trial of a new program to communicate about flight delays longer than one hour. During the test, customers in Phoenix and Houston were to receive an email, text, or a notification through the mobile app with extra detail about their flight delay — a program United called “Every Flight Has a Story.” (Curiously, United never responded to requests for comment, although the airline has explained the trial in internal communications.)
“We have situations where our customers are super frustrated because we can’t tell them what’s going on — a maintenance delay, weather, or rolling delays,” Scott Kirby, United’s president, said last year at a town hall meeting in Los Angeles. “They’re frustrated with that, or they think we’re lying to them.”
Context is important, Kirby told employees, because passengers don’t always understand the intricacies of running an airline. For example, United might code a Newark-Chicago delay as weather-related, even when it’s clear in New York, Chicago, and along the route. But perhaps, as Kirby told employees, the problem might be the inbound flight to Newark, which was rerouted around a thunderstorm on the way from Florida. During this trial, United might tell customers about how the Florida-Newark flight is late due to an en route weather problem, forcing United to delay their flight to Chicago.
While this sounds like a promising idea, the devil will be in the details. How much information will United give customers? Will it be enough to quell passenger anxiety? Or will United simply use three vague sentences to replace what today is one vague five-word phrase, such as “delayed due to aircraft maintenance”? And is it scalable? It’s one thing to try this in a couple of cities, but another to roll it out systemwide.
What do you think? Send me your thoughts via email — firstname.lastname@example.org — or on Twitter. I’m @briansumers.
— Brian Sumers, Airline Business Reporter
Stories of the Week
United Airlines Will Add Premium Economy to Match Delta and American: You may remember June 2016, when United CEO Oscar Munoz made a splash in Gotham Hall in New York City to announce the airline’s new business class. A year and a half later, the special seats are on 18 planes. So for premium economy — admittedly a different, less high-brow concept — United went simpler. It made a three-sentence announcement telling passengers to expect premium economy “later this year.” There was no mention of which planes would get it, or which routes. And we don’t know when it will debut. But given how the rollout of Polaris has gone, perhaps the airline decided to under-promise and over-deliver.
American and Delta Will Collaborate Again in Rebooking Passengers During Flight Disruptions: American and Delta once again will take care of each other’s customers when flights are delayed or canceled. For travelers, that’s good news. The two giant airlines stopped cooperating in 2015, and passengers have been hurt
EasyJet Is Making More Money From Bag Fees Than Its Competitors: Money from ancillary fees accounts for almost 20 percent of EasyJet’s revenue, Skift’s Patrick Whyte reports — not that much compared to other discount airlines. In the most recent quarter, EasyJet earned $315.7 million from sales of ancillary items. For comparison, Whyte writes, ancillary accounts for more than 40 percent of Ryanair’s revenues.
United Covets Competitors’ Profit Margins in Smaller U.S. Cities: United Airlines President Scott Kirby has high confidence in his own abilities — and for good reason. At every stop in his career, from America West to US Airways to American Airlines, he has the magic touch. He has now been at United for a year and a half, and the airline still lags its competitors on profits. But Kirby thinks he has the answer. United will grow in Chicago, Houston and Denver.
United Will Begin Giving Passengers Details About Why Their Flights Are Delayed: Here’s my original story about United’s plans to share more information about flight delays with customers. Details, unfortunately, are sparse, as United did not reply to multiple requests for comment. But you get the gist.
Southwest, Delta and Singapore Air Are Among Most-Admired Companies: According to Fortune, three of the world’s 50 most-admired brands are airlines. The criteria for inclusion is a little simplistic — the publication rewards brands that previously made the list — and the list is heavily weighted to U.S. companies. But it does show that business executives and analysts respect airline business models more than most travelers.
Boeing Decides to Make Its Own Seats as Manufacturing Delays Anger Airlines: Few things irritate airlines as much as seat delays, especially when it means they can’t take delivery of jets from the factory as scheduled. In recent years, this has happened to United Airlines, with Boeing 777-300ERs and American Airlines, with Boeing 787s. Now, Boeing is joining the seat business, through a joint venture with Adient Plc, which specializes in automotive seating. We’ll see if it has better quality control than existing manufacturers. (Related: Qatar Airways is refusing to accept new A350s until the company that makes its business class suites solves its quality control issues.)
Malaysia Air Finds a New Use for Its Surplus Superjumbos: Former CEO Peter Bellew has moved back to Ireland for a job at Ryanair, but his big idea — using Malaysia Air’s surplus A380s to transport Muslim passengers on pilgrimages to Saudi Arabia — lives on. According to new CEO Izham Ismail, Malaysia regularly fills two Airbus A380s at relatively high fares. “The passengers who go to the Umrah and Hajj are often elderly, so we can’t cram them into a tin can,” he told Bloomberg. “We can keep the current configuration and offer a product that’s superior to the current Hajj product. It’s a captive market, so we can move the pricing up a little bit.”
Delta Air Lines Seeks to Crack Down on Fake Service Animals: Airlines know too many passengers travel with fake service animals to avoid paying fees. But some are wary about cracking down, in part because they’re nervous about mistakenly denying legitimate service animals. If an airline makes just one error, the story almost certainly will go viral. But Delta, apparently, has decided enough is enough.
Hawaiian Airlines CEO Reveals Where He Sees the Next Big Opportunity: Hawaiian CEO Mark Dunkerley is retiring in March, but he’s put the airline in strong shape by pivoting it toward Asia, according to Business Insider. “What I will say right now is that we haven’t seen the limits of demand,” he told Benjamin Zhang. Europe could be the next frontier, he said, but that’s only possible if Hawaiian takes the A330-800neos it ordered in 2014. There’s some question about whether Airbus ever will produce that model since other airlines don’t want it, but Dunkerley said he’s confident the order is firm.
Changes at Sun Country
The Airline Innovation Report congratulates Brian Davis, who started this week as senior vice president for commercial at Sun Country Airlines.
You probably haven’t thought much about Minnesota’s Hometown Airline — it actually owns and uses that trademark — but that should change. Jude Bricker, former chief operating officer at Allegiant Air, became Sun Country’s CEO last year, before Apollo Global Management, a New York private equity firm, bought the airline.
Bricker plans to remake the airline, which essentially had operated like a legacy carrier known for its “Minnesota Nice” service, into a nimble discounter. Sun Country will reduce seat pitch on its 737s, while adding fees for carry-on bags and advanced seat assignments. It’s also discontinuing its elite frequent flyer program, so passengers who fly more than 50,000 miles per year will lose perks, such as priority boarding and first class upgrades.
It’s making other changes, too. It plans to diversify away from its Minneapolis/St. Paul hub, planning to chase more routes with high leisure demand, including Los Angeles to Honolulu, a route that was once a top performer for Allegiant. It may add new 737s as it tries to grow.
Davis helped me with my favorite story last year, when he was vice president for marketing at Allegiant. In mid-2017, Allegiant took delivery of its first new aircraft, and Davis helped decide how the interiors would look. Because Allegiant had always bought used planes, it never had to worry about what color to make the carpet, or what pattern to use on sidewalls.
With all the choices Airbus offered, Davis compared the process to building a house.
“They kind of walk you through the process and say, ‘Now it’s time to make these 14 decisions,’” Davis said in the story. “That’s when we open the catalog and say, ‘Oh, shit, there are many, many options.’”
Davis also took readers inside Allegiant’s process for launching the discount airline’s first co-branded credit card. In that story, which ran in September 2016, he said Allegiant’s average customer had a household income slightly above $100,000 and prefers to eat at Olive Garden and shop at TJ Maxx.
Skift Airline Business Reporter Brian Sumers [email@example.com] curates the Skift Airline Innovation Report. Skift emails the newsletter every Wednesday. Have a story idea? Or a juicy news tip? Want to share a memo? Send me an email or tweet me.