At the heart of the American Airlines/distribution system battles that are raging in the travel industry today is the bottom line of saving money. AA wants to basically distribute for free and cut out all of the middle men. The other central issue is what American (AA) and other legacy airlines feel is the unjust relegation of their precious seats to the status of a commodity. Unfortunately, no matter what AA does, a legacy airline seat, is an airline seat, is an airline seat. For some reason, AA and other legacy airlines feel that by getting control of their own airline seats again and only selling them through their proprietary data pipelines they will stem the tide of having their airline seats sold as, well, an airline seat between Point A and Point B. I am obviously not a trained MBA or airline executive. For me a legacy carrier non-stop flight in coach from JFK to LAX is just that. The differences might be their frequent flier program and my level of membership. However, the seats are all threadbare, a percentage of the reading lamps don’t work, many seat pockets are filthy, some seats don’t recline, entertainment is limited, there is no food to speak of, tray tables wobble, blankets and pillows cost extra and the flight times are more or less the same. It makes no difference whether I buy the ticket from AA.com, Delta.com, United.com, Expedia.com (except for AA), Travelocity.com, etc. The transcontinental seat is a seat, is a seat. It is a commodity — a perishable commodity. Somehow, AA is making the argument that their direct-connect system that eliminates easy price comparisons between airline seats will allow them to “package” their seats. By “packaging” they plan to offer passengers various combinations of extra services that each cost a fee. They already do this. American now allows passengers to pay a fee to avoid possible future fees. Isn’t that nice. For a relatively reasonable price (they don’t tell you until the time of booking) passengers will be allowed to board early, fly standby on the same day of travel and save $75 off the $150 change fee should they want to change flights. Such a deal AA has for you. From aa.com FAQs: Q: How much does the Boarding and Flexibility package cost? A: Pricing for the Boarding and Flexibility Package varies and will be provided at the time of booking. Through bundles like this, marketing geniuses at AA think they can sell more tickets. Of course, included in this marketing matrix is the elimination of as much competition and price comparisons as possible. Where is the benefit to the consumer? AA’s new system eliminates the ability to create tickets that include connections between different airlines. AA makes it more difficult to compare prices when purchasing tickets. AA still hides their fees “until booking” on their website, making it more difficult to learn the total airline transportation prices. Weeks ago I sent emails to AA requesting three benefits to passengers that their new direct-connect program will provide. I still have not received an answer from this airline. I also hear repeatedly that Southwest Airlines does not work through the GDSs. AA envies the Southwest control of their seats and claims that Southwest seats are not a commodity because they are sold outside of the GDS channel. But, AA is learning the wrong lesson from Southwest who carries far more passengers domestically than AA. Southwest is not the top dog because they don’t work through a GDS. In fact back when Southwest started, AA (who used to own the biggest GDS) probably wouldn’t have allowed them into the GDSs for fear of competition (they tried to stop them every other way). Southwest is a winner and makes money, year after year, because they differentiate their product by providing what consumers want — fair prices, on-time schedules, simplicity in fare structure, honesty and great service. AA and the legacy carriers are in trouble because they have lost sight of the consumer in an MBA frenzy to squeeze profits here and there. The GDSs provide one of the most cost-effective distribution methods of selling a complex, multi-part product that exists in America. CocaCola, General Motors or any publisher would love to have the distribution costs of the airline industry. AA’s actions are misguided. Rather than focusing on customers and truly differentiating their product with quality, AA continues with hidden fees, marketing gimmicks and frequent-flier loyalty. At the same time they provide consumers a lower level of customer service and a dingy, second-class, back-of-the-plane product. Customer service is the way to change the perception of AA’s product. Look at service at Southwest. Look at inflight entertainment at JetBlue and Virgin America. Examine the clean and functional cabins at each of those airlines. Those are some examples of how to differentiate your products. I think every passenger who has experienced a transcontinental flight on JetBlue or Virgin America will choose one of those airlines every time they need to fly across the country. I can’t imagine any coach traveler who has experienced excellence in customer service going back willingly (or without the bribery of frequent flier programs) to any of our legacy carriers.

At the heart of the American Airlines/distribution system battles that are raging in the travel industry today is the bottom line of saving money. AA wants to basically distribute for free and cut out all of the middle men. The other central issue is what American (AA) and other legacy airlines feel is the unjust relegation of their precious seats to the status of a commodity.
Unfortunately, no matter what AA does, a legacy airline seat, is an airline seat, is an airline seat.
For some reason, AA and other legacy airlines feel that by getting control of their own airline seats again and only selling them through their proprietary data pipelines they will stem the tide of having their airline seats sold as, well, an airline seat between Point A and Point B.
I am obviously not a trained MBA or airline executive. For me a legacy carrier non-stop flight in coach from JFK to LAX is just that. The differences might be their frequent flier program and my level of membership. However, the seats are all threadbare, a percentage of the reading lamps don’t work, many seat pockets are filthy, some seats don’t recline, entertainment is limited, there is no food to speak of, tray tables wobble, blankets and pillows cost extra and the flight times are more or less the same.
It makes no difference whether I buy the ticket from AA.com, Delta.com, United.com, Expedia.com (except for AA), Travelocity.com, etc. The transcontinental seat is a seat, is a seat. It is a commodity — a perishable commodity.
Somehow, AA is making the argument that their direct-connect system that eliminates easy price comparisons between airline seats will allow them to “package” their seats. By “packaging” they plan to offer passengers various combinations of extra services that each cost a fee.
They already do this. American now allows passengers to pay a fee to avoid possible future fees. Isn’t that nice.
For a relatively reasonable price (they don’t tell you until the time of booking) passengers will be allowed to board early, fly standby on the same day of travel and save $75 off the $150 change fee should they want to change flights. Such a deal AA has for you.

From aa.com FAQs:
Q: How much does the Boarding and Flexibility package cost?
A: Pricing for the Boarding and Flexibility Package varies and will be provided at the time of booking.

Through bundles like this, marketing geniuses at AA think they can sell more tickets. Of course, included in this marketing matrix is the elimination of as much competition and price comparisons as possible.
Where is the benefit to the consumer?
AA’s new system eliminates the ability to create tickets that include connections between different airlines. AA makes it more difficult to compare prices when purchasing tickets. AA still hides their fees “until booking” on their website, making it more difficult to learn the total airline transportation prices.
Weeks ago I sent emails to AA requesting three benefits to passengers that their new direct-connect program will provide. I still have not received an answer from this airline.
I also hear repeatedly that Southwest Airlines does not work through the GDSs. AA envies the Southwest control of their seats and claims that Southwest seats are not a commodity because they are sold outside of the GDS channel. But, AA is learning the wrong lesson from Southwest who carries far more passengers domestically than AA.
Southwest is not the top dog because they don’t work through a GDS. In fact back when Southwest started, AA (who used to own the biggest GDS) probably wouldn’t have allowed them into the GDSs for fear of competition (they tried to stop them every other way). Southwest is a winner and makes money, year after year, because they differentiate their product by providing what consumers want — fair prices, on-time schedules, simplicity in fare structure, honesty and great service.
AA and the legacy carriers are in trouble because they have lost sight of the consumer in an MBA frenzy to squeeze profits here and there. The GDSs provide one of the most cost-effective distribution methods of selling a complex, multi-part product that exists in America. CocaCola, General Motors or any publisher would love to have the distribution costs of the airline industry.
AA’s actions are misguided. Rather than focusing on customers and truly differentiating their product with quality, AA continues with hidden fees, marketing gimmicks and frequent-flier loyalty. At the same time they provide consumers a lower level of customer service and a dingy, second-class, back-of-the-plane product.
Customer service is the way to change the perception of AA’s product. Look at service at Southwest. Look at inflight entertainment at JetBlue and Virgin America. Examine the clean and functional cabins at each of those airlines. Those are some examples of how to differentiate your products.
I think every passenger who has experienced a transcontinental flight on JetBlue or Virgin America will choose one of those airlines every time they need to fly across the country. I can’t imagine any coach traveler who has experienced excellence in customer service going back willingly (or without the bribery of frequent flier programs) to any of our legacy carriers.

http://www.worldmate.com/travelog/2011/01/12/airline-seats-as-commodities/

If digital marketers would run airlines, planes would be falling out of the sky

Not a day goes by without a digital marketer complaining about their flying experience: delays, cancellations, lost luggage. Sure, flying is no fun. Being treated like a herd of sheep , forced to sit in cramped quarters – well, I don’t have to tell you the sordid details.
Running an airline is a complex venture.
It’s about maths and probabilities. An aircraft seat is the most perishable product of any commodity going: Once the aircraft takes off, the seat is empty, you’ll never recover it again. It’s gone forever. You have to deal with the economic climate, gazillion of vendors, thousand of employees, circumstances you can’t control (Weather, political environment – you name it).
Considering this complexity, it’s a miracle that United Airlines had an on-time performance of 91.4% in November 2010. (Yes, I know, they are padding the schedule. Still.) It’s amazing that only 1 in 8,000,000 aircrafts crash.
Running a campaign and Social Media initiative is complex, too.
But, it can’t be compared to the complexity of running an airline. And, how many things are going wrong each and every day? Wrong creative, creative that misses the target, trafficking nightmares, planning horror scenarios, failed banner campaigns, wrong success metrics for SEM campaigns, sub-par SEO, failed Social Marketing initiatives, mini sites more focused on showcasing the agency, not conversion, and, and, and…
How come we have these high expectations for complex enterprises (airlines, automotive companies, hotels) but we don’t expect the same from our work? Why do we live with all the things that are going wrong in our own area of expertise but tend to complain about minor problems of other businesses, using our Social Media bullhorn?
I’m all for constructive criticism. I’m for helping companies improve the customer experience. (And I’m not defending airlines at all. There’s a lot of work to be done on their end.) But we have stop feeling entitled to complain about every little detail. Or even use our “status” in the Social Media world to force companies to deal with us.
Too often, it reminds me of the boy who cried “wolf”. When the real wolf finally showed up, nobody listened.


http://www.bateshook.com/tag/perishable-commodity/