This month’s One-on-One features an in-depth discussion about Air Travel trends with ExpertFlyer co-founder and president, Chris Lopinto. Shifting competition, oil and airline ticket prices, changing loyalty programs and the pitfalls of new basic fares are covered, as well as insight on business traveler behavior and plans in 2016 based on a recent poll conducted by ExpertFlyer and View from the Wing (VFW).
ExpertFlyer recently teamed up with View from the Wing to take an end of year pulse on business travel. From your perspective, what were the big surprises?
In general, we were really excited about the survey. With View from the Wing’s help, we polled 1,500 of our most loyal top-tier business travelers, as well as readers from VFW. We found some really interesting trends. One of which was the amount of people that actually take alternative transportation, such as Ride Share services, like Uber and Lyft. We’re finding that it’s more accepted nowadays by corporate travel agencies and corporate travel departments. It’s interesting to see that adoption on the business side has happened as fast as it has.
Conversely, businesses and corporate travel departments remain averse to alternative lodging, like Airbnb. I think that the reason is because when it comes to lodging, there’s a concept called duty of care, in which the employer is responsible for the well-being of the business traveler, and as such, they feel more comfortable having them lodge at a traditional hotel that they have more connectivity to or more experience with, as opposed to a rental on an Airbnb-type site.
That is interesting. One might conclude that it probably bodes well for traditional hotels. At least they are maintaining a strong market opportunity on the corporate side, despite losses to Airbnb on the consumer side.
Absolutely. It’s also a wake-up call to hotels that it’s time for them to innovate or they will hurt from lack of business. Eventually Airbnb and their competition will realize that business travel is the way of the future. They will participate in the GDSs and they will get their services up to the level that corporate travel managers expect from regular, traditional hotel chains. It’s going to happen. It’s just a matter of time. The traditional hotel chains need to do something to compete, whether it’s a sub-brand or a new way of treating the booking or what have you. Over the next 5 years or so, we’re going to see a change.
Travel media, including USA Today, SKIFT and others, homed in on some key points of the survey data, particularly American Airlines overwhelming popularity among business travelers. What do you think most contributed to AA’s high ranking among this audience?
We’ve been running ExpertFlyer now for 11 years, and in that time, we have definitely seen that although travelers don’t necessarily always love their frequent flyer programs, American’s Advantage program was always the least disliked. We’ve seen that Advantage has always looked at their frequent flyers almost as partners, not a liability to be managed as some other airlines might. If you go onto the frequent flyer boards, like Mile Point, FlyerTalk or Traveling Better, you’ll always see that people will have a visceral reaction to other frequent flyer programs, but not so much to Advantage. I think the goodwill that Advantage has built over the last 25 or more years has led to that. Now, the flip side of that is, as I’ve said, it’s their game to lose. All they have to do is not screw up and they win by default, compared to what some of their competition might be doing.
AA recently announced changes that will happen later in the 2016 program year; they’re not as bad as people may have predicted, not as good as some might have hoped, somewhere in the middle, maybe, in terms of what the impact and changes will be. We’ll see what happens. As a point of comparison, I once spoke a few years ago to someone in the frequent flyer department of one of their competitors who point-blank said to me that they prefer that their elites not be able to use their elite benefits. When compared to something like that, I can understand why the elites of Advantage would be loyal to Advantage.
Assuming AA’s loyalty program was a major factor for business travelers choosing the airline, do you see competition shifting in 2016 when AA moves to a dollars spent vs. miles flown rewards model?
Not necessarily. In psychology, they say that the benefit of changing has to outweigh the cost of changing something. For someone who’s traditionally loyal to American Airlines to switch to, say, United or Delta, the benefit of doing so would have to greatly outweigh the cost of doing so. If you live in a hub city of American, say Dallas or Chicago or even New York, you’d be hard-pressed to change to begin with, especially considering, in the case of New York, that United pulled out of JFK entirely.
I think Advantage frequent flyers had it very good for a very long time, and the changes, although not necessarily desirable, aren’t the worst in the world. Again, it’s American’s game to lose. If they’re smart about it, if they make incremental changes that don’t show outright disrespect for their existing elite loyal customers, then they should be okay.
With oil prices at historic lows, one might conclude that ticket prices will decrease and hence the expectation from survey participants that they will be traveling more. What else do you see as a factor for greater business travel in 2016?
Just because the oil prices go down and airline profits go up, doesn’t necessarily mean that they’re going to pass it along to the consumer. Mainly because, if you look at the entire history of the airline industry, it really hasn’t made much money, if at all. With every good year that the airline industry has had, there’s been a bad year. Think about all the bankruptcies of airlines that exist and all the bankruptcies of airlines that don’t exist anymore. It’s a feast or famine industry, especially in the last 10-15 years or so. If I was an airline executive, I would hoard as much cash as possible in expectation that oil prices are going to shoot through the roof again.
That being said, the reason why prices have gone down a little bit is because the airlines are now adding more capacity because they’re making a higher profit and oil prices are low. If you add capacity, it holds ticket prices so they don’t go up too high or stay flat. It depends on the markets. In terms of travel trends for 2016, as long as the US economy holds, travel, especially business travel, should hold as well and increase through 2016.
At the recent New York Times Travel Show, Pauline Frommer warned about new basic fares from a number of airlines in 2016, indicating that inflexibility and draconian restrictions, such as not being able to pick your seat or change your flight will make these deals, deal-breakers. Does ExpertFlyer offer a way around these impediments?
Well, this new concept of bargain basement fares, which offers just a physical seat on the plane, is geared towards the most price-conscious of consumer and it’s interesting how the airlines market lack of choice as a feature. For some travelers, that’s fine. That’s what they want. It works for them, they know exactly what they’re going to take and they just want the cheapest way to get in the seat and that’s fine.
Ultimately, if the airlines don’t position it properly or try to use it as a way to lure people in, saying “This is the cheapest fare. Oh, but by the way…” then there’s going to be backlash. They have to be careful to walk that line between offering this really bargain basement fare for those who may want it, but not pretending that that’s a normal fare when doing price comparison. The airlines really don’t like their product to be commoditized. In other words, they don’t want everyone to think it’s the same even though they all equally get you from point A to point B safely. In that respect, it is a commodity. Where they can differentiate is with what they call the “hard part.” The seat, the Internet, the on-board experience. How nice it is. Do they give you a snack? Do they give you a soda? Things like that.
That’s where this unbundling comes in where everything that used to be included, like snacks, blankets, a soda, being able to get the seat that you want at the time you’re booking is now separate because they’re making too much money with this unbundling now. With all that being said, that’s why a service like ExpertFlyer is very useful because it gives that transparency that some airlines want to take away from their customers. We show all the published fares, we show what their rules are, what their restrictions are, and what their prices are, very simply, in an unbiased manner. In this way, you are empowered to know what the story is before you go to the airline website and book a ticket. We’re not trying to take away the booking experience; we don’t want to do that. We don’t want to be a travel agent. We feel that, especially nowadays, having a source of unbiased information, especially with fares and seats, is so important to consumers.
In the event that there are one or two people out there that really don’t understand how ExpertFlyer works, walk through an example, a simple example, of how one would use ExpertFlyer.
One of our most popular services is called Seat Alerts, where basically, we’ll let you know when a more desirable seat becomes available versus the one that you may already have. So let’s say you’re stuck in the middle seat for whatever reason. We can keep an eye on the seat map for your flight and let you know when an aisle seat or a window seat becomes available. Say you’re with a traveling companion and you couldn’t get two seats together. We’ll let you know when two seats together become available. We can do that for you very easily, because you don’t have the time to do it yourself.
The other popular feature that we have is Award and Upgrade Searching and Alerting. As part of our pro service, we allow you to very easily search for award and upgrade inventory from 70 or so different airlines. It’s not meant to replace the pricing on airline websites. We don’t want to replace the fact that you have to go to an airline website to book your award ticket or process your upgrade. The idea is that we can quickly show you, “Okay, this flight has award inventory and this one doesn’t, and there’s three left on this flight, or one on this flight,” but more importantly, we have alerting. Such that, let’s say, as is common nowadays, there are no awards available, or there are no upgrades available. You can tell ExpertFlyer, using our Flight Alerts feature, to keep an eye on a particular flight or flights, and let you know when an award opens up, or an upgrade opens up.
Basically, it’s services and data in a more transparent way that you won’t find on any other website. It’s meant to go beyond just what the cheap ticket is made to be. It’s “how do I get there better?” How do I plan it better using transparency of data that traditionally only travel agents have been able to have access to in a way that empowers me, the frequent flyer?
Are Seat Alerts free?
Yes. We have a free version which allows you to have one active seat alert at a time, using the any seat, any window, or any aisle options. You can use our more advanced options or have multiple seat alerts active at one time for 99 cents per alert, which is nothing compared to the value that you get for it. If you want more features and more alerts, we have our Basic and Premium services. If you just wanted the simple case of getting out of the middle seat on your next flight, sign up for our free service and create a simple Seat Alert for free. The app is available for iOS and Android devices.
Any final comments on what to expect from air travel in 2016?
I think we’re going to see more airlines competing for the front of the cabin passengers. They put a lot of effort into making their business, first, and now business first, two separate things, and now premium economy products better. As a matter of fact, we heard an announcement from American Airlines not too long ago that they’re going to be introducing a separate premium economy cabin on some of their international flights, which is a relative first. Usually, it’s more of a section within economy. This is going to be interesting to watch. Hopefully, some of that trickles down to the back of the bus, where airlines realize that their economy passengers should be valued too and again, like I said before, compete on the hard product, not just make people feel like they’re in a cattle car on the train.
There used to be six major US airlines not too long ago. Now we’re down to four. There’s less competition. They’re making money; they’re making a profit even if they don’t try because the cost of oil is low. Like everything, it goes up and down. The party is not going to last forever. Those airlines that laid the groundwork now to treat their customers as partners and not as burdens, will reap benefits when things get tougher again and oil prices go up in the future. To the flying customers, I say, vote with your wallet. Send the message to the airlines that you want to be treated well no matter where you sit on the plane, and understand that the cheapest ticket doesn’t necessarily offer the most value. Don’t be afraid to vote with your wallet and to make your voices heard with the airlines.