Airlines are striving to balance prioritizing passenger health and safety during the pandemic with the need to remain solvent.
On Monday, May 4, Frontier Airlines announced that it would soon offer customers the option to block middle seats for a fee, starting at $39. In the following days, members of the US Congress appealed to the airline’s CEO, Barry Biffle. “Essential travelers are already risking their health, and … should not be penalized with an additional ancillary fee,” one letter stated. They also cautioned that Frontier’s “More Room” option would deter the public from flying. By Wednesday, Biffle rescinded the extra fee, aligning with other US airlines blocking seats for free.
As of mid-September, carriers including Delta Air Lines, Alaska Airlines and Southwest were continuing to limit capacity at no extra charge. United Airlines and American Airlines returned to selling all available seats during the summer. United’s chief communications officer, Josh Earnest, called blocking seats a “PR strategy,” since it doesn’t enable the recommended six feet worth of social distancing anyway. Vistara and Flair were among the carriers that charged customers to block seats throughout the summer.
“Personalization and messaging have never been more important.” – Pramod Jain, Plusgrade
“Either airlines don’t charge for the empty seat, but consequently raise their ticket prices to sustain lower load factors, or airlines charge for blocked seats in order to keep their fares low,” says Pramod Jain, chief operating officer at Plusgrade, which launched a product in July that uses machine learning to target airline customers who are most likely to purchase empty seats. Factors taken into account include: passenger profile (trip history, tier status, social media preferences, purchasing data), route, day of travel, load factor and fare-class configuration.
“The algorithms are optimized to show the right product, to the right customer, at the right time,” Jain explains. “Personalization and messaging have never been more important.” By the end of this year, up to 20 airlines will be offering the solution.
“A blocked seat cannot 100 percent protect against the virus,” Jain admits, adding that it can nonetheless be part of a constellation of factors that generate passenger confidence. Turning it into an ancillary can also make it part of the financial measures taken to help airlines stay afloat. In a July press release announcing the launch of the product, Abigael Wanjiru, ancillary revenue strategy manager, Etihad Airways, is quoted saying, “We expect this to be one of our greatest ancillary revenue generators moving forward.” Over 31 percent of respondents to a survey conducted by Plusgrade said they would purchase Dynamic Seat Blocker on a two-hour flight.
But as the pandemic rages on, some airlines are instead experimenting with dropping ancillary fees – which amounted to 12.2 percent of global airline revenue before COVID-19 hit – in the hopes of attracting customers. United, Delta, American and Alaska have eliminated change fees, while Virgin Atlantic and Emirates are offering free COVID-19 insurance.
With full-scale demand for air travel unlikely to return before a vaccine is widely available, airlines will have to refocus in order to survive. Could online stores, like Singapore Airlines’ KrisShop and Lufthansa’s WorldShop, be the answer? Or perhaps a new cabin class will emerge, giving airline customers the option to pay for extra-stringent cleaning protocols. As the pandemic continues to dictate demand, the need to establish new revenue streams, as well as passenger confidence, are key, so why not tackle them at the same time?
“Stumbling Block” was originally published in the 10.4 November/December issue of APEX Experience magazine.