Brett Snyder, of CrankyFlier.com, joins host David Lytle for a discussion of recent news and issues in the travel industry: decreased demand, ever-increasing fees, and how you can still find a good deal.
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Announcer: Blog Talk Radio.
David Lytle: Welcome to the Frommers.com Travel Podcast. For more information on planning your trip to any one of thousands of destinations, please visit www.frommers.com. Hi, this is David Lytle. I am the Editorial Director of frommers.com. Today I am talking with Brett Snyder. He's a self-confessed airline dork who is the driving force behind CrankyFlier.com. He's also a regular contributor on BNET.com where he reports on the airline industry.
Hey, Brett, how's it going?
Brett Snyder: Good. How are you? Good morning, David.
David: Good morning. Glad to have you back on the podcast.
Brett: Yeah, thanks for having me back. That means I didn't mess up too much last time.
David: You didn't mess up. You're a wealth of information. We love having conversations with people who really delve into their niche, and you do a good job of that.
Brett: Oh, thank you.
David: Just to kick off this conversation, let's get a general picture of where the airline industry is right now.
Brett: Well, as usual, things aren't good. When was the last time things looked great? But right now the biggest issue the airlines are facing is the tremendous decrease in demand. Part of that is the decrease in the willingness to pay higher fares out there. Fares have really plunged, and there are fewer people that want to fly. So, airlines are in shrink mode.
David: Are you noticing... I know statistics show this. I still feel like when I get to an airport it's no more manageable than it ever was before.
Brett: You know, I don't know. For me, when I travel, I usually check in online at home and go straight to security, which, of course, security is always a pain, but the airlines have been furloughing people and as they cut service they cut people as well. It's not like there's more people out there that can help you because there are fewer people that are traveling.
David: Just the same ratio of traveler to airline support that can help you.
Brett: It might be a little different with the TSA. I don't know what their numbers look like with people, but I imagine that they might have more staff still but airline-wise, not really.
David: Well, I do know one of the tools I had in my kit to get to the airport more quickly was the ClearPass. Unfortunately, it went the way of the dinosaur. For people who don't know, it was a pre-approved, basically pre-screened traveler program where I had my identity on a card and I would go to a kiosk and be bumped to the front of the line. For security you still got screened, but you moved through more quickly. I found it saved me sometimes upwards of 20 to 30 minutes, depending upon the time of the flight and the airport.
Brett: So, are you an Elite Member of any airline Frequent Flyer Program?
David: No, because I fly so many different airlines that I never really rack up miles on one more than another. I tend to stick with American for international flights, and a lot of my flying is between San Francisco where I live and back to New York to Hoboken where Frommers headquarters is with Wiley Publishing so I fly Virgin a lot.
Brett: I was going to say because the ClearPass effectively was just a front of the line pass. It didn't get you much else, but if you're an Elite Member in some of the programs you can already get that front of the line pass.
David: Right, but I'm not. I initially bought the pass to try it out and have the experience to know whether it was worth it or not. It's not worth it if you're a frequent traveler at all. They just kept raising it, and they started adding the pyramid scheme effect, too. Get your friends to buy this and we'll give you a discount.
David: When you start getting promotions like that, you know you're in trouble.
Brett: Yeah, it didn't work out well for them in the end.
David: Exactly. So, jumping back to the whole idea that demand has decreased, how are airlines dealing with this?
Brett: Well, incredibly they're actually dealing with it better than they usually do. Since last summer when oil spiked, last summer it wasn't a demand problem, last summer it was a cost problem. They couldn't fly most of these planes profitably. Now that oil's gone back down but demand has tanked as well, so we've kind of seen this continued need for reduced capacity for different reasons, and the airlines have actually reduced capacity. Even Southwest is reducing capacity, the perennial growth spurt airline.
David: Right. It gives it back life.
Brett: So everyone is actually behaving pretty rationally, for the most part. The question is how much capacity do they need to cut, and there's more coming.
David: Oh, so you think there's going to be more capacity cuts in airlines, so there's going to be fewer choices for flyers.
Brett: I think the airlines right now are just a little nervous to see what's going to happen as soon as summer's over because a lot of the big hit that they've seen has been on the business travel side of things with people not willing to pay the high prices and not traveling as much.
David: Right, premium travel is definitely down. You wrote a post on this recently that it was down between - what, 20 and 30 percent?
Brett: Yeah, it depends. I think I saw, was it United's transpacific revenue I think was down over 40 percent year over year.
Brett: I mean just staggering numbers.
David: And that's where, as a business they often front load the revenue that they're going to generate, is through premium travelers.
Brett: Oh yeah. And that's one of the reasons you see British Airways having so much trouble because they've really been at the forefront of making this an incredible premium traveling experience, and some of their planes are half premium seats.
David: Right, nobody's buying.
Brett: So that's what everyone's waiting for right now is, have we seen the bottom in demand? What's it going to look like in September? And as we get closer, we'll see. And a lot of airlines are proactively trying to fill seats. Southwest had that 30-60-90 sales, which was a really aggressive sale with really cheap fares out there. And I think Delta just launched a sale today. Everyone's kind of throwing out these fall sales already, trying to stabilize their capacity, fill up some of those seats in the back.
But the questions is: Are the business travelers going to be there up in the front to help these airlines make some money?
David: Right, exactly. So if a potential flyer is looking for a cheap fare, how do you suggest they go about it? What's sort of the flow chart for them to go through to find these fares when they appear?
Brett: Well, right now they're everywhere if you're looking at fall travel. I think most of the sales... summer is over for the airlines around the middle of August. And that's when people stop taking their big trips because the kids are starting to go back to school. So, if you're looking to travel between the end of August and about middle of November, before Thanksgiving, there are all kinds of great deals that are out there.
So, what I would recommend is, just go into your favorite site wherever you go and look for airfare, look at a few of them. You can also go to some other deal type sites. Travelzoo will often have deals out there. Even if you go to Orbitz or Travelocity, they'll advertise some of the fare sales that are out there as well, if you want to see what the details are on those.
Brett: But if your time is flexible, there are some great tools out there. One that I always like to use is ITA software. You go to matrix.itasoftware.com. They're the ones that power the Orbitz matrix and they power a lot of different airlines, and they have this great search technology. So you can go out there and you can look for weekend trips. You can give them a long date range and they'll let you slice and dice in different ways. So you can really keep an eye on those really low fares.
David: So instead of searching by a very specific route, you're giving some parameters, you're saying.
Brett: No, you're still telling them where you want to go, but the date range is very flexible. So, if you have the ability to be flexible with your dates and times, then you can find some pretty good stuff out there.
David: You know, I'm always looking for a piece of software that will let me give a date range and my departure airport, and then show me, perhaps, flights to multiple destinations in a price range.
Brett: I think Kayak has something like that now. That was the Travelocity dream maps that they used to have, and I don't think they are around anymore.
David: No, I find the functionality on that to be really horrible.
Brett: Oh really? OK.
David: I was like, the name's nice but it never gave me results that fit the bill. Maybe, it's because it is an impossible question to ask that I always think if the date is there you can assemble it in a way that makes the searcher happy.
Brett: Have you checked out what Kayak has because they kind of collect the data when everyone does their searches so you can put in your departure city and it will show you the lowest fares that people have found from that city to other places and stuff like that.
David: Oh, yeah, yeah, yeah. That's only so for a specific route, right? I usually use Kayak because that's the first place where I go.
Brett: Oh, it is. I think they have it.
David: They know what I don't know.
Brett: I think they have it from one city to a bunch of different cities. I have to go back and look at that again.
David: I'd be glad to check that out, too, because maybe I just got the answer to my question. Maybe, there is one than can do it for me. So, with this decrease in capacity, are fares staying the same? Are they going down? Are they going up? I mean, it seems day-to-day I see different reports on that.
Brett: It is pretty funny, actually, because one minute you hear about fare increases and the airlines have pushed through a couple of fare increases lately. But, generally what happens with the fare increase is fares go up so fewer people end up booking, so thenthey need to stimulate traffic and they put out sale fares. Of course, sale fares are the low fares they advertise that you see all the time in that the increases only apply to the regular fares. If they advertise a sale fare, they can't increase that until the sale is over. So, we are seeing mixed signals. We are seeing general fares go up, but we're seeing some pretty aggressive sale fares out there as well.
David: Cool. So, I mean, on their base fares, their non-sale fares, the rates go up, the fares go up, but when they don't fill up sales start.
Brett: Yeah, that's pretty much how it works for the most part with these guys, and the fact that they can push through any fare increases is good news. But, again, if the fall demand doesn't show up, then we could see some pretty steep discounts. We already are.
David: I would think, too, they're only small items. They say, carrier access rate, their fare is $20 across the board. I don't think that registers with a lot of people.
Brett: Well, it probably doesn't because if the fares go up $20 across the board that doesn't include sale fares, and you might not even notice it. If you're looking at a sale far that's out there you might not notice it. So, I try not to pay much attention on these things anyway. It all depends on where I'm looking to go, and on a route specific basis things could be very different. You could have some routes where there is a ton of competition. You can look at LA to New York where you've got Delta, United, American, JetBlue and Virgin America fighting it out. That's not even including Continental to Newark. And that can result in some pretty good deals out there.
But, if you're going to Indianapolis where I go for Christmas fares-that's where the in-laws are-I was just looking at Christmas fares and they're not great. You know it's completely route specific. So the general, "Oh fares are up, fares are down", it doesn't really help me much until I actually see what...
David: Right, less popular routs it is -- and I do notice from experience -- they are much more difficult. I am from Indiana. I just came back from Indianapolis for a high school reunion and for a family reunion.
Brett: Beautiful new airport there, but it's expensive.
David: It's gorgeous. It's expensive. Sadly when I landed, my flight was delayed getting through Chicago.
Brett: Well that's what happens when you go through Chicago.
David: It was a mechanical failure this time, not weather or just back up.
Brett: Chicago is doing a bit better these days because they have that new runway.
David: Right, right, exactly. I got into Indie at 9:30 and that new terminal was absolutely empty. We were the only flight. That was just ...
Brett: It's way over built.
David: Exactly. I mean it opens up right as the economy is tanking too, so you know.
Brett: Well they were planning that when ATA was growing and making Indianapolis a hub.
David: Yeah, exactly. I had a conversation with somebody at the luggage carousal that had worked with the former governor, Frank O'Bannon, back in the day and he said, "This thing should have been built 15 years ago."
Brett: Yeah. Well it's definitely not good timing. The cost of the terminal was expensive so that makes it more expensive for the airlines to fly there.
David: Right exactly.
Brett: They're already going to have to cut services because the costs are going up for them. I mean it's definitely a cautionary tale to cities and to airports to don't make these palaces. Make something that's functional and certainly you want to a good passenger experience but palaces may look nice but they're expensive and then you lose service.
David: Right, exactly. This is where they hope to stick it to the traveler. Raising your usage fees on a rental car when you get there if you have to pick it up at the airport is one way to try and defer those costs. The airport fees that jus get passed onto the transient person.
Brett: That's the thing; ultimately it goes to the user. There's no other way to do it. They can say they're charging the airlines or they're adding a PS fee, or whatever it is, it all hits you in the end.
David: Right exactly. That actually leads into a good conversation, which is all the ways that airlines and airports raise or increase their ancillary revenue, the money they're making on something other than fares. And these are just increasing exponentially. The one that people are familiar with most now is paying for checked baggage. Let's just go through a list. What are others that are out there that are out there that people should be aware of especially infrequent travelers who would be surprised that they even have to pay for a checked bag?
Brett: Certainly. Everyone is charging for the first checked bag except for Southwest and JetBlue, as far as I know. And we're talking domestic travel now. For food, I think people are probably getting use to that, that they have to pay for food now. That's definitely one.
David: That's been several years really. That we cough up for anything is...
Brett: That one started a while back. That was sort of the leading edge of things to come. Some airlines have been much more aggressive than others. Allegiant is a good example. They're based in Vegas. Their basic business model is to bring people from small towns to sun destinations like Florida, Vegas, Phoenix and L.A. They charge you for the usual: checking a bag and all that. They charge you if you want to reserve a seat in advance.
David: [laughter] Awesome audaciousness.
Brett: You can get it for free. Well when you check in at the airport they'll assign you a seat but if you want to look in advance and have it set aside for you beforehand, then you're going to have to pay for that. They also have what they like to call a 'convenience fee'.
David: Ah, that's just like buying concert tickets from Ticketmaster.
Brett: Yeah, the only -- so the way that they like to get around this thing -- and Spirit does this as well -- what they do is they go and, say, if you want to book over the phone or on the Internet, then you have to pay this convenience fees. If you want to go in-person to the airport, then you don't have to pay.
David: So you would be making two trips to the airport.
Brett: Right, you'd have to go in advance and actually do it. And I think --
David: Right. Most people don't live near an airport. They actually have to drive some distance if you're going to have to go to another town.
Brett: Right, yeah. And you know they're not always open at the ticket counter because Allegiant will have one or two flights a day or not even. Sometimes it's couple of flights a week.
Brett: So yeah, it's just crazy. Another fee that, I think, has just gotten way too out of the control is the change fee. On most airlines, now it's $150.
David: Yeah, it just continues to go up, and I mean that is the thing that you do take a gamble if you're buying an economy fare. You're buying into that contract where you're saying I'm not going to change this. But your other option is to buy an open-ended ticket that is so exorbitantly expensive that nobody really would ever choose that option. So you're through with this.
Brett: Well, your other option is to fly Southwest, which doesn't have a change fee.
David: Exactly. And even with Southwest, if you can't take the flight -- what, you get a credit up to 12 months?
Brett: Yeah, you just have to use it in the next 12 months. But they don't take anything away; there is no fees, no cost.
David: They don't punish you.
Brett: Yeah, they don't punish you. So, I mean, I find that to be good. And I don't even have a problem with the idea of a change fee. There is a cost to an airline when you change your mind, especially at the last minute. That's a seat they could have filled and it's not being filled. But $150 is... I mean that's incredibly steep and that's prohibitive for most people.
David: Well, and if you think that if people are traveling -- if it's more than one person traveling and you have to make a change, I mean that's per person.
Brett: Oh, yes.
David: A family with a child; that could end up being $450.
Brett: Easily, easily. And your ticket -- the other thing too is there are a fair number of tickets out there that are less than $150.
David: Right, exactly.
Brett: So you end up just having to walk away.
David: Right, it's better to cut your losses and just rebook at a different time, and not have to pay that amount of money, because even on top of the change fee, you will have to pay price difference for whatever the fare is, for the next flight that you want.
Brett: That's right.
David: So there can be even additional dollars that go in there.
Brett: That's right. And they --
David: And when you're talking about reserving the seat, I know there's also -- Virgin does this, I know some other airlines do this now -- it's the type of seat that you're selecting; you can also pay more for that. For aisle, for -- not business-class, but I mean exit rows, because there's more legroom so they're charging for that.
Brett: Right, they do that for exit rows. They do it for aisles and windows at the front of the plane. JetBlue has their more legroom thing which is actually pretty cheap, relatively. It's like $10 to $20, but that gets you four more inches of legroom. That's at the front of the plane. United has Economy Plus of course, and they'll try and upsell you on that at the time of booking or at the time of check-in.
David: Yeah, if you go -- I mean, the check-in procedure in the United is, I think there are -- last time I checked in on the United online, they'd at least two additional steps where they're trying to upsell you.
Brett: Yes, they try and selly you the priority boarding and security line and... I don't remember what all.
David: Well, priority boarding and seat selection, and I think also a day-pass to their...
Brett: Oh, the Red Carpet Club, yeah, sure.
David: Yeah, to the Red Carpet Club, to the executive club.
Brett: I mean here's here's the reason we're seeing a lot of this. While people say they hate fares -- or they hate fees, I'm sorry -- they don't vote that way with their wallets. So people are really price-sensitive when it comes to booking tickets, and they will book the cheapest one they find, but they don't -- a lot of times, don't end up looking at the total cost of the trip.
David: Right. They don't blink and they go, oh, 20 bucks to upgrade my seats, OK I'll do that.
Brett: Yeah, and that's why airlines like Ryanair, they love giving out these penny seats because they know if they can just get you in the door, like, oh, it's cheap, you got them in the door, well, then you can sort of get them to pay for everything along the way. And it's really not enjoyable as a customer, it's really a pain when you just have to keep whipping your credit card out every five minutes for something different, but --
David: And you need to put an entry into your ledgers so you can keep track of your total cost.
Brett: Oh, yeah. And it's such a -- it's very inconvenient, but it's consumer behavior. The airlines are just responding to the way that people act because they're having trouble getting fares high enough to cover the costs without taking things apart, like they're doing here.
David: Well, that's a good point to end on actually. It's a two-way street. Airlines are in a business to make money and they're going to try and make money off of their customers. It's the customers who have to make the choices that are right for them. And if they continue to behave in a way where if they have these ancillary revenue generators and people are paying into them, why would they stop?
Brett: Well, that's right. I mean, there are two things that I would think about with that is, first of all, with the airlines, if you look at how much it cost to fly across the country 50 years ago, you were looking at, in today's dollars, around $2000.
David: Right, they are artificially deflated fares today.
Brett: Yeah, so fares have absolutely plunged. And people have this glamorous vision of: Oh, everyone was being served filet mignon and they had more legroom than you could count. Well yeah, and the tickets were expensive.
Brett: So the airlines have really -- they've tried to do what they can because fares are low and the demand is there for those low fares, but they have to make money on those low fares, and so trying to take these bits and pieces out, that's what they're doing. But the other thing --
David: Right. Well, they're trying to survive.
Brett: They're trying to survive. And the other thing just for customers in general is, it's really hard to know the total cost of the ticket. Most places you go, it tells you the fares. It doesn't let you say I need this many bags, I need this, I want this kind of food, I want all this. So, it's a lot extra work for the customer, and until someone really comes out with a more comprehensive way to look at that, it's not going to be that easy for customers to figure it out.
David: Well, I mean to the airlines credit, booking online, you want to keep all those extra costs off a single page.
Brett: It will, sure yeah. The lower your fare looks upfront, you're --
David: Yeah, that way it doesn't register with the consumer until like, oh a little step here, a little step there. OK, well, it's time to end the talk.
David: Actually it was a great conversation and I could continue it forever. I have more notes to talk about. So we'll schedule this again. There's the Passenger Bill of Rights that just came out of the senate committee, the --
Brett: Oh, that one. You want to get me started on that one.
David: Loaded, yeah. Tons of things that are always going on; in-flight WiFi, and see how that's going, if that cost is actually working out for the airlines and for air [inaudible 25:28].
Brett: Yeah. It's the next cutting line.
David: Yeah. Oh, Brett, thanks a lot for the conversation. This has been the conversation with Brett Snyder who is the founder and writer of crankyflier.com. That's also his twitter name; you can follow him on there.
Anything you would like to close with?
Brett: No, I think that's it. I just -- you teased me with all these other topics I was ready to go on. [laughter]
David: Well, it's the hook to get you to come back.
Brett: Anytime, thanks, David.
David: OK. Yeah, it was great talking to you, bye. [Theme music]
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