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The Skift Airline Innovation Report is our weekly newsletter on the business of airline innovation. We look closely at the technological, financial, and design trends at airlines and airports.
Brian Sumers writes and curates the newsletter, and we send it on Wednesdays. You can find previous issues of the newsletter here.
When an airline emails asking if you wish to add a rental car or travel insurance, or buy an upgrade to premium economy, do you suppose that’s by chance?
We’ve published two stories this week detailing how airlines personalize offers. We know Ryanair often emails leisure customers about two months before departure, using what it knows about them to craft the message. “We will let them book the flight,” Ryanair’s chief marketing officer told me. “And then we will say, ‘Do you want to book car hire?’ And here is a Citroen Picasso with child seats available in Malaga at the time your flight arrives.”
We had a similar conversation with Mark Nasr, Air Canada’s vice president for loyalty and e-commerce. Air Canada is starting a new frequent flyer program because it wants to know customers better, allowing it to customize more offers. “Amazon doesn’t put a bunch of product in front of me which is not really relevant to my needs,” Nasr said.
Do you think airlines can improve at personalization? Email me with your thoughts.
— Brian Sumers, Airline Business Reporter, firstname.lastname@example.org
Stories of the Week
Why Air Canada Is Starting From Scratch With Its Loyalty Program: You have to credit Air Canada for deciding to fix the mistake it made about a decade ago when it gave up control over its loyalty program because it needed cash. By 2020, the airline will bring the operation in house again. Why? “One of the biggest advantages for us isn’t necessarily going to be a whole lot more data as much as it’s going to be a more modern platform that allows us to take that data and use it to customize service offerings,” Nasr said.
Travel Megatrends 2018: Airlines Try to Become Storefronts Beyond the Seat: This story includes one of my favorite quotes. It’s from Peter Glade, commercial director for Sun Express, who said he fears airlines who don’t refine their e-commerce strategies might soon be marginalized. “Our decision as an airline shall be, ‘Am I the one that is transporting the passenger from A to B, or am I the one that is managing the problem that the customer has to an extent that the customer is happy and wants to fly with me again,’” he said. “Do I want to be a transportation organization or a problem solver?”
American Airlines CEO Insists Growth Plans Won’t Start a Fare War: At its investor day on Jan. 23, United Airlines said it would add flights in many smaller markets, a lot of which now only have service on American and Delta Air Lines. Investors fear this could start a new fare ware, with airlines fighting to protect share in places like Wilmington, North Carolina. But American CEO Doug Parker said that’s unlikely.
JetBlue Has Started Shrinking Legroom and Upgrading Interiors on Its Older Aircraft: JetBlue first said in late 2014 it would retrofit its Airbus A320s soon. But the first aircraft just went into the hangar, timed with a heavy maintenance check. During the retrofit, the airline will add 12 seats, allowing for a new capacity of 162 passengers. That’ll mean tighter pitch, but travelers probably won’t mind. The A320s have old interiors, and with updates, they’ll look fresher. Plus, they’ll have improved TV screens.
Southwest Expects a Tax Reform Windfall Will Keep Its Momentum Going in 2018: Southwest Airlines CEO Gary Kelly — the industry’s number-one supporter of tax reform — is at it again. Southwest told analysts the new tax law will save it $1.15 billion from deferred and future tax payments. According to this story from Skift’s Andrew Sheivachman, Southwest plans to use the money for aircraft and airport maintenance, as well as employee bonuses.
EasyJet’s New Male CEO Takes Pay Cut to Match Female Predecessor: Some interesting public relations from EasyJet’s new CEO, Johan Lundgren. You can criticize this for being a publicity stunt, and it probably is. But how many executives willingly give up money they’ve been promised? Not many.
Qatar Airways Makes Concessions in Long Open Skies Battle With U.S. Legacy Carriers: With its neighbors still engaging in a blockade, Qatar Airways has decided it’s not worth it to fight with U.S. airlines anymore. In this agreement, Qatar Airways agreed not to fly any “Fifth Freedom” routes to the United States — those are flights between the United States and other countries, such as Emirates’ Athens-Newark route — and to be more transparent with its financial accounting.
Surprise Ruling Means Delta Will Fly Bombardier’s Passenger-Friendly Jets Sooner Than Expected: Trade disputes are fun, but let’s concentrate on what this means for passengers. Delta Air Lines is going to fly the C Series soon, and customers should be pleased. They’ll get a surprisingly quiet plane, with unusually roomy seats and big windows.
United Exits 2 More Guam Routes as Demand Falls: Guam routes were once profitable for Continental Airlines, which ran them under the Continental Micronesia operating certificate. But times change, and United’s new management has been consistently cutting frequencies and routes. Now, according to Flight Global’s Ned Russell, United is cutting Sendai and Shanghai. How long until the hub goes completely? United could use those aircraft on the mainland.
A One-Man Q&A About United’s Domestic Growth Plan: No one analyzes U.S. airlines like Brett Snyder, who blogs as CrankyFlier. Brett understands why United has decided it must grow — it lost too much domestic share under previous leadership — but he’s skeptical about whether the airline can do it without provoking a competitive response. “Delta and American will respond to defend their turf, and this could turn into a fare and capacity war,” he wrote.
I’ll be visiting American headquarters on Thursday for discussions with executives from the world’s largest airline. I’ll chat with American’s head of loyalty and the man who decides what routes the airline will fly. Stay tuned for reports.
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.