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.
We learned this week United Airlines may introduce another new business class seat, which it likely will use to delight transcontinental domestic passengers, and perhaps thwart the growth plans of a certain New York-based airline.
Scott Kirby, United’s president, teased the news Tuesday at the International Aviation Forecast Summit in Denver, saying the airline likely will install new flatbeds in some Boeing 737 MAX 10s, the first of which will be delivered in 2020. United has developed a prototype seat, Kirby said, and some of the airline’s best customers will test it this fall.
Conventional wisdom suggests airlines can only sell flatbeds for premium revenue on two domestic routes: New York-Los Angeles and New York-San Francisco. But in the past three years, New York-based JetBlue Airways, with its Mint product, has disrupted the market, selling flatbeds from New York and Boston to cities like Seattle, Las Vegas, and San Diego, and apparently making good money. In some markets, Delta has followed, deploying its Delta One product to keep passengers from defecting.
United also has added internationally configured aircraft on more transcontinental routes, though it has been quiet about most of the flights, so most passengers may not know they can fly a better product. But the financial results from those tests, such as Los Angeles to Washington Dulles, likely have persuaded United that flatbeds can work elsewhere.
“Trying to fly from Denver to L.A., I think you would have a hard time making the economics of lie-flat work,” Kirby said. “But would Newark to Seattle work? Probably. Would San Francisco to D.C. work? Probably. We think there is demand, but it’s almost exclusively transcon demand.”
I interviewed Kirby this week in Denver. Learn more about what he said about fees, basic economy, and Polaris seat delays in my story.
— Brian Sumers, Aviation Business Editor [firstname.lastname@example.org, @briansumers]
Stories of the Week
United’s Revenue Architect Plans to Add New Fees for Slightly Better Seats: In the interview, Kirby confirmed United will charge extra money for more desirable coach seats in the middle of the airplane. These seats don’t have extra legroom or other exciting attributes, but passengers generally choose them first. And seats passengers actually want should cost more, he told me. “Look, when you go to a concert, do you think you should pay the same price to sit in the nosebleed seats as to sit up front?”
Delta Will Fly Newest Jets With Fewer Middle Seats on Key Business Routes: Here’s a slightly different case of an airline rewarding passengers who pay more. Delta Air Lines will deploy its first Airbus A220s next year on a couple of key routes: New York to Dallas and Houston. The routes have a lot of high-value customers, and Delta wants them on its most comfortable domestic airplane. If they’re not content with Delta’s product, the customers might defect to American Airlines or United.
Video: Why JetBlue Is Betting a Revolution Is Coming for Short-Haul Travel: JetBlue isn’t the largest or strongest of the U.S. airlines. But it is betting its Silicon Valley venture firm, which is investing in new technology for short-haul routes, such as electric-powered aircraft, will help catapult it past its stronger rivals. This video features JetBlue Tech Ventures President Bonny Simi at Skift Tech Forum, held in June in Silicon Valley.
Battle for Air Supremacy on Key Australian Route Heats Up: Skift freelancer Allan Leibowitz examines recent changes in the Australia-New Zealand market. Qantas, as you may know, is entering into a closer relationship with Air New Zealand. It’s an odd coupling, because the two carriers compete vigorously on many routes. But it may work for both companies. Plus the tie-up effectively neutralizes Virgin Australia, which is ending its relationship with Air New Zealand.
Airlines Recoup $500 Million in Blocked Funds From African Countries: Skift’s Cape Town-based correspondent, Richard Holmes, has some good news about international airlines that have had cash trapped in Nigeria, Sudan, Angola, and Mozambique. IATA, the global trade group, has helped global airlines repatriate about half of what they’re owed. (This is also an ongoing issue in Venezuela, where airlines may never get their money.)
Air France Unions Aren’t Happy With Newly Appointed CEO’s Big Salary: French unions must be contractually obligated to complain about everything Air France does, right? Air France-KLM hired Air Canada President Ben Smith, a highly-respected industry veteran, and the unions are whining about it. It makes no sense. Turning around Air France will take some work, but Smith is probably up for the challenge. Unions should be pleased he said yes, even if Smith may squeeze them for concessions.
Air Canada Wins Takeover Battle With $345 Million Bid for Loyalty Program Aeroplan: Anyone surprised? It always seemed likely Air Canada would get its target, even after negotiations stalled several week ago. But Aimia got the price it wanted, and now Air Canada will have its loyalty program back in house. Bloomberg has details.
Frequent Flyers Are Getting Happier With Most Airline Loyalty Programs: According to J.D. Power, roughly half of all people who belong to a frequent flyer program don’t understand how it works. Not surprisingly, consumers prefer more simple programs, like JetBlue’s or Southwest’s. The problem with those programs is that they’re less generous than the schemes of United or American.
Skift Aviation Business Editor 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 him an email or tweet him.