The Interview Issue – July, 24 2008

The Interview Issue – July, 24 2008

Jeff Robertson
Managing Director, SkyMiles
Delta Air Lines

IF
In our opinion, Delta has found the proper way to explain changes to their members. For example, with the fuel surcharge for award flights, that had to be a pretty tough decision. We did our research and see you added fuel surcharges to your employee buddy passes well before the frequent flyers. So all in all, how long did it take to come to this decision?
Jeff Robertson
The concept came up two years ago, as fuel increased and revenue prices went up and up we had to make a decision. When we’re not increasing the amount of miles we require to get an award ticket, it’s a disadvantage to the award traveler in terms of capacity.

It was looked at three times over the past couple of years. All three of those times we said no. When fuel hit $120 a barrel in February we started thinking about this again. We thought of this as well as mileage increases. While we were analyzing this, American Airlines instituted a five-dollar charge for all redemptions and then US Airways came out with a $25, $35 and $50 administrative fee.

While I understand the principle behind why they were doing this to offset the cost of fuel, I didn’t want to go there. When the cost of fuel hit $140 a barrel, I knew we had to do something. The fuel surcharge seemed understandable. If I got a customer letter saying ‘Why did you do this?’ I can explain it very simply, where I can’t explain a $25 administrative charge. I hate this charge (fuel surcharge for awards), but I don’t have a choice.

IF
Was this your reasoning on how you wanted to run SkyMiles?
Robertson
I love working for Delta, we don’t always do what the other airlines do, we think about what is right for everyone.

IF
We were surprised by how soft your fuel surcharge was. In our research, you’re nowhere near the actual cost of the fuel. Did you start with a lower or higher charge before coming to your decision?
Robertson
We wanted to be reasonable and do something that we thought would be understood. We don’t like doing this and putting a larger fee on this would have come across too strong.

IF
It looks like your perhaps future partner, Northwest Airlines, has defined the fuel surcharge a little differently in terms of ultra long haul versus transatlantic versus transpacific, etc. Does something like that cause you to go back and think, ‘did we miss that?’ or ‘we’re just going to stay and let the other guys do what they want to do.’
Robertson
Easy question, it’s about Delta and about SkyMiles. I monitor what the other airlines are doing, I saw the $100 charge transpacific, and I don’t see where we are going to make any changes. It’s Delta’s decision and Delta’s plan has been launched.

IF
Fuel surcharges are really just part of the overall fee mania going on. You mentioned that you were surprised by American’s decision with the online booking fee because it eliminates a way to redeem any award without some sort of fee.

We’re starting to hear lots of questions like, ‘Aren’t credit card companies starting to get a little mad with these programs?’ Because it seems more and more members are saying they earn most of their miles with credit cards and ‘I’m going to write to the credit card company because this whole fee thing just doesn’t seem right.’

Do you see partners starting to look at this whole fee thing and perhaps address it a little bit differently as to the value of a mile and their reward to their customers?
Robertson
As to American, I was less surprised about them putting a fee in place that made every award seat basically have a fee to it — I was more surprised that the fee was placed for customers who book online. I would love our customers to book 100 percent of their award tickets online. Right now about 63 percent of Delta award tickets are booked online and about 37 percent are booked through reservations. If I put a fee for online redemptions, I would be eliminating any incentive to book online and customers instead would be calling the reservations office — one of the most expensive channels we have. That’s why I was somewhat surprised by American’s decision.

As to credit card companies, I would say if you look over the past two to five years, every airline has been selling more and more miles to credit card companies and people are spending more and more on airline credit cards. Airline ticket prices generally had been coming down for many years and therefore the value of awards and the value of miles was going down. I think that capacity cuts in the domestic market is unfortunate and every airline laying off employees and cutting capacities this fall is unfortunate, but from a consumer perspective, the fact that airline ticket prices have risen considerably in the last 6 to 12 months is fortunate for award redemptions, because award redemptions are becoming more valuable. Although there might be a charge here and there on awards or mileage increases that have been put in place, I’m hearing more and more from our customers that the ticket to California that used to be $300 is now $600 so I’m using my miles.

IF
Have you seen an increase in award redemption?
Robertson
Yes. If you look at total redemption historically, it’s relatively flat, the savers and the double mile awards are relatively flat year to year. But where we’re seeing total redemption increase is with the pay with miles. We’re still at about 1,200 redemptions a day on pay with miles. When you take the whole year into account, it’s about 400,000 redemptions out of our 3.3 million award redemption base.

IF
We like how you’ve handled making your partner inventory available on the award calendar.
Robertson
We are proud of that; we only had Delta in November of 2007. As of July 2008, we’ve added Continental, Northwest, Alaska, KLM, Air France and Hawaiian.

IF
That’s a huge increase of available seats on the online calendar.
Robertson
I know — it’s well over 97 percent.

IF
Would you like to touch on your soon-to-be-announced award tiers?
Robertson
Where we are right now is working on the technology plan and we have a date in late August that we’re not quite comfortable with yet. I anticipate a launch sometime in September.

We have talked in terms of what kind of notice we will provide to customers to make them aware of it. It will probably be 30 to 45 days. The reason we’re comfortable with that is because it does two things. First, when you look at the three-tier award structure as a whole it is going to be an advantage for our customers — so we don’t think we need to give a ton of notice. And second, it puts the last seat option back on the table. 25/40/60 miles domestically remains firm. International is still being worked on.

Namrata Patel
Director of Marketing
Red Lion Hotels

InsideFlyer
Your recent re-naming of your loyalty program from Red Lion GuestAwards to Red Lion R&R Club — does this signal a change in your direction?
Namrata Patel
It is actually a culmination. In 2005 we converted multiple brands in our portfolio to Red Lion and spent tens of millions in renovating the hotels. With that, we wanted to make sure that the program is reflective of today’s Red Lion and serves up our brand promise of “Stay Comfortable.” It’s not just a re-naming of the program but a change over of the benefits and the processes of the program. In the sea of loyalty programs we wanted to make sure that ours was easy to use and rich and rewarding for our members.

For example, it’s easy in that we don’t have tiers for redemptions — one free night at any Red Lion Hotel is only 10,000 points. And it’s not just about free nights; we also have other offers like you can redeem your points for a Stay Comfortable bed — which is something our guests really love.

IF
How many properties do you have now? Are you expanding?
IPatel
We have 53 hotels right now and we are expanding with recent additions in Anaheim (Disneyland Maingate) and Denver.

IF
Where are the locations of Red Lion Hotels? Airports, center city?
Patel
We serve both downtown, city center (Seattle, Salt Lake, Boise) and Airport areas (Portland, Seattle). We also have hotels in recreational areas (Kalispell) and university/college areas (Eugene, Baton Rouge).

IF
Average room rate?
Patel
Our average room rate ranges based on city. In smaller markets we average between $75 to $125 while in larger markets we range in the mid $200.

IF
For people who have not heard of, or stayed at a Red Lion Hotel, what can they expect?
Patel
A full-service hotel experience with comfortable beds, genuine and sincere service and all of the amenities to make your stay comfortable. We renovated our hotels so the furnishings are new, the bathrooms are remodeled and the restaurants offer innovative comfort food.

IF
What are you doing to grow your Red Lion R&R Club membership numbers?
Patel
First step is getting the word out. We talk about the program at every touch point whether it’s through our Web site, 1-800 Red Lion or at the hotel. Second, we offer rich incentives to members for joining. Currently we’re doing a promotion where new members get 5,000 points with a stay at Red Lion Hotel.

IF
What are you doing to keep your members interested and engaged in the program?
Patel
One of the unique things we do for our members is having exclusive offers just for them every month. In the monthly e-mail statements we present rich offers like triple miles, free in-stay bennies, and more that are not available anywhere else and not open to anyone else.

IF
We noticed that to earn miles instead of points, not all rates qualify to earn miles and it’s based on the participating hotel. How do members know when the hotel they are booking will earn miles?
Patel
Our qualifying rates are very low. Typically to qualify to earn miles, if a rate isn’t applicable; it will say so in the rate descriptor on our Web site. We will also inform the guest at check-in if they are a member who prefers to earn miles instead of points. The other way to earn miles is to convert points to miles. We have a simple conversion (again, no tiers or a matrix) 8,000 points for 2,000 miles into any of our partner airline programs.

IF
We read on your Web site that points expire if there has been no membership activity within one year — this seems a bit harsh. With your current program, “activity” means hotel stays. Do you have plans to introduce a co-branded credit card or another way to make it easier for members to keep their account active?
Patel
Actually, we recently changed our policy with the launch of the new program. Points expire with no activity after two years and activity means a stay or redemption.

Regarding a co-branded credit card, we are currently exploring various options. We want to ensure that it makes sense for our guests. Again in a sea of programs and a sea of cards, we want to make sure we have the right fit between who we are and what our members want.

IF
We noticed your elite status starts after staying 12 nights (not stays). Can you give us some highlights of your elite program?
Patel
One of the best benefits for our Elite members, in addition to the complimentary breakfast, is that they earn more. Gold member earn 12.5 miles per dollar and Platinum members earn 15 point per dollar. Additionally, Platinums can double dip and earn points and miles.

IF
When did WestCoast Hotels join the Red Lion R&R Club and how has this partnership benefited members?
Patel
WestCoast Hospitality, who owned WestCoast Hotels, acquired Red Lion Hotels from Hilton in 2001 and converted the WestCoast Hotels to Red Lion Hotels the following year. In 2005, WestCoast Hospitality changed the company name to Red Lion Hotels Corporation so that now, we are one brand and everything is under the Red Lion umbrella.

IF
Any new partnerships you can tell us about or partnerships that are in the works?
Patel
This summer, we are launching a brand new redemption travel partner, Preferred Hotels Group, who have 450 worldwide, luxury hotels. So now our members can redeem their miles for stays in Portland or Paris.
IF
Why should a business traveler consider staying at Red Lion Hotels?
Patel
Let’s face it; a hotel is a hotel and most offer similar amenities. What stands out is the experience. Red Lion Hotels offers a comfortable experience with genuine service and we make it easy. For the business traveler, it is about convenience and ease, and the stay experience at Red Lion is just that. On top of that, our program is comfortable and easy, no tiers, no matrix, no mystery. Everything is spelled out and at your fingertips. And the program is rich and rewarding.

Jonathan Miles
Author, Dear American Airlines

InsideFlyer
In your book which came first, the character Bennie Ford or American Airlines?
Jonathan Miles
American Airlines gave birth to Bennie.

IF
So something must have happened to you personally because of how you describe Bennie’s idle talk with fellow stranded travelers. Where are you as a traveler?
Miles
There are two things to note on this. One was a specific experience and the second is the general experience we’ve all become familiar with in the airline industry. I travel a lot and I noticed in the last five years flying was becoming a grueling experience. Not only because of constant flight delays but just the general experience. I understand the need to make a profit, but the way they are going about it strikes me as boneheaded. But with that said, there were lots of overnight delayed flights, lost luggage, but the specific incident which gave birth to Bennie and the book was when I was flying (this was prior to 2001) from Memphis to New York to visit friends. We were supposed to have the standard 45-minute layover in O’Hare; the flight was instead rerouted to Peoria, Ill.

IF
Thus, the inclusion of Peoria in the book.
Miles
Yes, what happened to Bennie is pretty much what happened to me, with some changes in the itinerary.

So we landed in Peoria and were bussed to O’Hare. We get to O’Hare and it’s that nightmare scene similar to refugees — people laying on cots, sleeping on cardboard boxes, which by the way is amazing to me that these people found giant sized cardboard boxes in O’Hare. Of course, there was a convention in Chicago so there were no hotel rooms in the city. You couldn’t even get a rental car. It was this perfect storm of being stranded at the airport.

It was American Airlines and they were blaming it on weather. Of course everyone is grumbling that the weather is perfectly fine in Chicago. So I ended up spending the night and because I’m a smoker I lost all the good spots. I ended up sleeping under a table so I wouldn’t get stepped on.

Everyone was enraged, it was a bad situation and I’m composing in my head this letter to American Airlines about my experience being stranded. My problem was I couldn’t justify the rage — after all, I was only missing one night visiting with friends. But I’m looking around the airport and thinking, ‘Wow, somebody is missing something important.’ Whether it’s a funeral, a wedding or a job interview — and what would that rage feel like? And that’s where Bennie was formed.

IF
That was prior to 2001, so the idea kept rolling around and around. At what point did you start putting it to ink?
Miles
I wrote it originally at the time as a short story, and decided to revisit it to see if it could be a novel.

IF
The title leads you into this experience, but as a frequent flyer we do tend to include our personal lives in our rants to airlines. You really went well into it. But I’m trying to figure out where the Polish part of this came from?
Miles
The idea of the Polish was simply a way to give Bennie something to do besides rant and rage at the airlines. It is too hard to separate personal feeling. These aren’t just flights, they’re journeys to important things. When the airlines screw up, people take it personally. When you miss your son’s birthday or your father’s funeral, it’s hard not to take it personally.

I feel for flight attendants, and I sure wouldn’t want to talk to someone like Bennie. It’s not about the flight; it’s about his life. It’s one thing when it does happen. But it’s the airlines making or letting them happen. And they feel like someone is making this happen — and then the anger starts.

IF
You didn’t give much thought into coming up with $392.68, we take it? [The refund Bennie is asking from American Airlines.]
Miles
It’s funny you say that, I just asked my wife about that the other night. I said, ‘Did I make that up?’ And she said, ‘No, you actually did a Travelocity search.’

IF
It sounds like you’ve been in quite a few airports, and in this particular case, you describe O’Hare as the sacrificial goat of travel. Do you have special terms for other airports?
Miles
O’Hare for me has always been the tar pit on my travels. I can’t seem to get through O’Hare without something happening.

IF
Sometimes when people go through an experience like this they write off that airline. That didn’t seem to come out in Bennie’s letter to American. Was Bennie a forgiving guy?
Miles
In order for Bennie to justify his enraged feelings at American he had to justify his life. As he starts doing that he realizes that maybe American Airlines isn’t completely at fault for everything.

I kind of thought of Bennie as almost a Job-like figure, raising his hands to the sky and cursing the fates (the fates being American Airlines), but ultimately we make our own fate in life.

IF
If there were to be a sequel, would Bennie get his refund?
Miles
I toyed with the idea of the last page being a letter from American Airlines.

IF
Was it a long conversation on the publishing side to name American Airlines?
Miles
It was a panic situation. About seven days after we made the deal it went through legal to see if we could use American Airlines. Without American Airlines it’s like removing Burt from Ernie. Legal came back saying they felt comfortable because it fell under what they called the Kinky Friedman precedent (“Elvis, Jesus and Coca-Cola”).

American Airlines did comment and said, ‘We understand it is a work of fiction and we have no comment.’

IF
Was the book always called “Dear American Airlines”?
Miles
Yes, it was always called “Dear American Airlines” — it just came out that way. American made it into the title of the book for three reasons. One, they were responsible for what happened to me, the seed of the book’s plot. Second, American seemed to be the least likely to go out of business while I was writing the book. Third, American has the most iconic name and also the idea that you can look at it in view of American Airlines as plural, as in all the airlines within America.

IF
It turns out the book is funny. Is this your writing style in that you seem to pick out the humor in people’s lives?
Miles
Obviously, a 180-page rant to an airline needs to be dealt with delicately and humor was a way to soften some of that. Bennie is not an inordinately sympathetic character, so the trick was to keep the reader reading through the ranting until you could see that Bennie was a human being and it was all more complicated than it first seemed.

IF
You should be proud, this is good reading. Our last adopted book was Walter Kirn, “Up in the Air”, which is a reverse of yours. It was about 80 percent psyche of the frequent flyer and 20 percent a corporate plot. I think a third of his story I could identify with. I think a lot of readers can identify with Bennie.
Miles
I purposely avoided reading Walter Kirn, who I think is great, but when that book came out, I already had that short story that wasn’t done. When I finished, I thought I would read his novel but then I decided no, I can’t read Kirn’s book now because I’m going to get to a point where I would have had observations about airports and I’ll be slapping my head saying, ‘Wow, why didn’t I use that?’ So I think it’s going to be years before I can read that book.

Also, I purposely made Bennie an infrequent flyer. Most frequent flyers tend to accept it all and say, well, that’s the way things are. I wanted to bring somebody who would not have flown very often, to say, ‘What the heck!’

IF
We like reading about the innocence of a traveler who doesn’t know the jaded side of traveling 200,000 plus miles a year.
Miles
That is what I wanted to bring to the idea, and I also knew a frequent flyer would know better than to write a letter.

IF
What’s the feedback from readers so far?
Miles
I think there are a lot of people picking it up for the premise. I think there are a lot of people who have written or wanted to write scathing letters to the airlines. I think they’re surprised realizing that it’s more about Bennie than the airports. For the most part the feedback has been positive.

But the airline wasn’t the target; the airline in a sense was a device in order for this man to tell his story.

IF
We thought there was a good balance in the story; the title got our attention originally, but we were drawn into the book, and Bennie’s life, through the rant letter.
Miles
It was fun to write and to write a fiction letter.

IF
If American Airlines had responded to his letter, have you given much thought as to how the book would have played out?
Miles
I thought about that a little bit, but I realized that as far as the larger plot, it was more about whether he would make it to his daughter’s wedding. I did hesitate if I could turn out a novel from one letter.

Michael Schutzbank
Director Loyalty for
Star Alliance Services GmbH

InsideFlyer
What’s new with Star Alliance?
Michael Schutzbank
There are always new things going on at Star Alliance. We launched our 21st member airline, EgyptAir on July 11th. That means that members of any FFP within Star Alliance will have another reward option available for travel.

We are always looking for ways to make the life of frequent flyers a bit easier. In the middle of July we launched our latest product, Auto Doc Check. The product, a never before attempted bit of software, electronically verifies the documents needed to travel internationally. Today, when you are traveling internationally, you must check in with an agent at the airport to verify that you have all the required documents, visas, etc. and the agent has to review a set of sometimes conflicting and complex rules for what is and is not allowed. With our Auto Doc Check product, the agent can quickly verify the validity of the specific travel documents. And when fully deployed, you will be able to check in via self-service kiosks at the airport and simply scan your documents for verification.

We are also hard at work on our next two Star Alliance Connections projects. For those readers who are not familiar with our Star Alliance Connections concept, we have dedicated staff using a purpose-built computer application that helps ensure that passengers and their luggage make their connections. Dedicated staff are able to monitor all incoming Star Alliance flights into a hub that have passengers connecting to any one of our member airline flights. If the inbound flight is delayed for any reason, the Star Alliance team is able to meet the passenger and get them to their connecting gate and we do the same for their checked luggage. In some Star Alliance Connections Centers, staff members are also able to rebook passengers if their flights are completely missed. Using our computer tools and dedicated staff we have been able to dramatically increase the number of customers that make their original booked connection and arrive at their destination with their luggage.

IF
The big news for frequent flyers is that Continental will be joining the Star Alliance. Can you tell us a little about what needs to take place before this becomes reality?
Schutzbank
I must tell you that we are all very excited about the Continental news. From a frequent flyer perspective this is great news. However, this will not happen from one day to the next. First, Continental will leave SkyTeam, which will happen in a coordinated manner and takes a certain amount of time. The exact timelines are currently being worked out. The second part is they have to join Star Alliance, which means they need to complete and implement 78 requirements for membership. Within the 78 are many loyalty related requirements, such as those that allow for automated FFP accrual and redemption.

IF
How long do you think the process will take?
Schutzbank
The Continental news is too new and the first conversations are just starting, hence we cannot give a concrete timeline at present.

IF
Any other new airline members in the works that you can tell us about?
Schutzbank
I hope you understand that I cannot discuss prospective membership of an airline until they have been formally invited to join and that is usually followed by a press release. As of now the only carrier that has been invited to join the alliance is the new Air India, the merged airline of Air India and Indian Airlines. I will say that we anticipate additional announcements over the course of the next six to 12 months.

IF
What is the difference between a full Star Alliance member carrier and a regional member?
Schutzbank
Regional membership is a category for carriers that determine they do not need the full global reach of the alliance but rather focus the attention in a specific geographical area of the world. There are different requirements for sales and marketing activities and the like between full and regional members. However, from a frequent flyer perspective, there is no difference at all between a regional and full member of the alliance. Members of any Star Alliance FFP can earn and redeem miles on all flights within the alliance whether they are operated by a full or regional member.

IF
With so many airlines from so many countries, communication must be a challenge. Can you tell us a little about how Star Alliance decisions are made?
Schutzbank
Star Alliance is an absolutely fascinating place to work. I am privileged to chair our loyalty group, which is comprised primarily of the heads of each of the member carrier’s FFP. We have about as diverse a group as can be assembled with just about every geographic region represented along with distinct religious, ethnic and cultural diversity thrown into the mix. Our common thread is wanting to do the best for our FFP members and that common bond actually allows us to move forward with a fair degree of speed given the circumstances. The other important piece of information that few of your readers will know is that we are a completely democratic alliance wherein each carrier has one vote and all votes are equal.

IF
Can you describe the process of adding a new member airline?
Schutzbank
The process can be initiated by any of our members who — based on an existing bilateral cooperation — proposes a carrier for membership. More often, airlines approach Star Alliance and investigate membership options. In any case, internally the Star Alliance staff performs an analysis of a carrier using a proprietary matrix that scores over 100 key aspects of the carrier and assigns a score or rating. The results are then shared with the members’ executive alliance management. It is their decision whether an alliance membership of a carrier shall be pursued. Once the green light is given, formal discussions with the carrier will commence. If those are successful, the final agreements are presented to the CEO of each carrier for a yes or no vote. Decisions on new members must be unanimous so all carriers must vote yes. Following a yes vote, we announce the new member.

IF
Right now, members of nine programs can upgrade on 12 of your member carriers with the upgrade program. When do you expect all member carriers to participate fully in the upgrade program?
Schutzbank
Very soon, but not soon enough for me.

For the one or two InsideFlyer readers that are not familiar with Star Alliance upgrade awards, it is a first of its kind FFP award that lets you use your miles to upgrade on a flight operated by a carrier within the Star Alliance. We talked to frequent flyers and of course the ability to upgrade was something they all felt very strongly about. So we built a system that lets you upgrade across the alliance, seamlessly, easily, with a confirmed upgrade.

You are correct that we have nine programs but that represents the FFPs of 11 of the 12 carriers involved in the project so far. The others will be joining within the next 12 months or so. There are significant challenges that we had to overcome to launch the product and we continue working to enhance its value.

IF
What are some of the challenges you are facing in setting up the Star Alliance upgrade awards?
Schutzbank
We could write volumes on this subject. I guess the best way to begin is to give your readers a bit of insight into airline systems. I am sure they have all heard about reservations systems. Within the U.S.A, a typical RES system is an all-encompassing system that handles all of the airlines’ reservations, inventory, ticketing and airport handling functions. However, outside the U.S.A., many of these systems are separate. With the Star Alliance upgrade awards product, we need to “talk” to each carrier’s systems in order to properly process the upgrade request. This process has proven to be extremely difficult and is a first in the world attempt to link this many complex systems with a single product. When you request the upgrade we have to find your reservation on the operating carrier’s reservation system, validate your upgrade request, check to see if there is inventory available from the inventory system, change the reservation, and depending on how long before departure the upgrade takes place, update the information in the airport check-in system. All of this happens in a matter of seconds.

But as complex as that development was, it was the exceptions that caused all sorts of problems. If a customer upgrades and then cancels the trip, the upgrade has to be cancelled and the miles put back into the customer’s account. That means we had to develop a mechanism whereby when a travel agent cancels the segment, a message is automatically transferred back to the FFP. Nothing like that had ever been attempted before on an alliance basis. The key to remember is that the Star Alliance upgrade awards product is completely automated so we had to devise a way for systems that have never “talked” to each other before to communicate with a high level of accuracy, so you can imagine the technological challenges that presented. Now that we know it works and generally works well, we have two dedicated teams working on the project. The first team is building the infrastructure to support our remaining members so we can get them up and running in the near future and the other is working on some major enhancements.

IF
Why are upgrades not possible between certain participating carriers, i.e. KrisFlyer members cannot use miles to upgrade on Air New Zealand, Scandinavian Airlines and United? And United Mileage Plus members cannot use miles to upgrade with anyone.
Schutzbank
Technology is a wonderful thing when it works but a huge headache when it doesn’t. United launched Star Alliance upgrade awards for Mileage Plus members back in 2006 but after a year of dedicated work on both the UA and Star Alliance sides, we just could not get the product to an acceptable level of delivery. So about a year ago we agreed to switch off the product for Mileage Plus members. We have made some major enhancements and we believe we have fixed the problems we had with UA, and we are currently testing the system. If it works satisfactorily, I expect UA Mileage Plus members to be able to upgrade in the next six to eight weeks. I am also happy to report that all issues have been resolved between Air New Zealand and Singapore Airlines so members of KrisFlyer can upgrade on Air New Zealand flights and AirPoints members can upgrade on Singapore Airlines flights.

IF
How do frequent flyers redeem miles for Star Alliance upgrades?
Schutzbank
Our upgrade awards are another alliance product brought to you by your FFP, so each FFP has their own procedures for requesting the award. Some carriers have a Web based product, some only via the service center and some have both. Whatever the rules are for award redemption from your FFP apply to Star Alliance upgrade awards.

Doug Backelin
Manager Inflight Communications and Technology for
American Airlines

Dave Bijur
Director of Strategic Airlines Solutions, Aircell

Editors’ Note:
American Airlines is the first airline to launch Aircell’s inflight Internet broadband service on its 767-200 aircraft. Users of the service will be able to access the Internet and VPNs through all WiFi enabled laptops, PDAs and portable gaming devices. The aircraft is equipped with power ports in every seat in first and business class and sporadically throughout the coach cabin (you can see the diagram of where the ports are in the coach cabin at www.insideflyer.com/link/?1044). We recently spoke with Doug Backelin of American Airlines and Dave Bijur of Aircell about the new service.

InsideFlyer
At first, the Aircell’s Internet service will only be offered on transcontinental Boeing 767s. Are you going to eventually add inflight Internet to all of your fleet?
Doug Backelin
The service is going to be offered on American’s Boeing 767-200 aircraft, which primarily fly transcon routes — JFK to LA, JFK to San Francisco. There’s also one JFK to Miami flight per day and one to Bermuda, but it doesn’t apply to Bermuda because that route is over water.

We are undertaking a three to six month test with Aircell of the service and we’re going to be testing the technology, customers’ evaluation of the service and whether customers are actually using it. After the evaluation period, American Airlines will make decisions about moving forward with other fleet types.

IF
What kind of studies have you conducted to know that passengers want inflight connectivity?
Dave Bijur
We’ve done a lot of research about what passengers are bringing on the plane, what devices they have and what kind of things they like to do on the plane. One of the mottos we’ve adopted at Aircell is life goes on between take off and landing and we came up with that based on what people want and what they do.

Forrester Research conducted some really good research earlier in the year that indicated that inflight Internet is the number one amenity passengers want and if it was offered, they would consider taking a flight that is a little less convenient for them or left an hour later than they wanted to depart, for example. Similarly, some are willing to even pay a little more for a ticket. So in an environment like this, where things are as competitive as ever in domestic flying, American’s advantage of being the only airline to have inflight Internet is very important.
Backelin
We at American Airlines are constantly talking to our customers. We have ongoing dialogue with our customers about all types of products and services and certainly they have expressed to us the desire to remain connected and productive during flights. And I think there is a strong, pent-up demand for this service. I saw a very interesting thread on FT.com just this week with lots of postings about the service coming up so we watched that very closely.

IF
How long have you been working to put this together for passengers?
Backelin
Since 1999 (laughs). That’s a joke and the truth. When I got a job with our in-flight products group, this was my first assignment. We were part of the Connexion by Boeing effort several years ago and when that fell apart after 9/11, our executive committee asked us to continue to look at the marketplace, talk to our customers, evaluate the technology and come up with plans for going forward when it made sense. Aircell’s product makes sense and we’re very happy to get underway with a trial with them.

IF
What was the biggest hurdle you’ve faced?
Backelin
From our perspective, we’re the launch customer of the service with Aircell. Being the launch customer, we’ve had a lot to work out in terms of defining the service and coming to commercial terms over how to provide the service. It’s been a good process and Aircell has been a fantastic supplier to work with and we’re really excited to get going.

IF
How are you letting customers know about the service?
Bijur
The two companies have been working very closely for several months to promote it. Gogoinflight.com is a Web site we have up right now and American has more information at aa.com/gogo. In addition to that, in airports like LAX, San Francisco or JFK, you’ll see billboards and other media advertisements that we’ve developed to start raising awareness of the product. And then there’s a lot of blog interest and viral communication on the Internet, which is positive.

IF
Gogo does not allow voice calls. Are you ever going to allow voice-based functions or continue to restrict the service?
Backelin
We are focusing on a data only service, which will enable passengers with WiFi enabled devices to connect to the Internet, use email and VPN services. The FCC prohibits all airlines in the U.S. from offering cell phone service. And Aircell is going to make voiceover IP calls unusable.

IF
Have you considered adding a monthly or annual price for the service for frequent flyers?
Bijur
Yes, we’ve given that consideration. For the time being, we’ve got just the one pricing plan. The fee is $12.95 for long flights of three hours or longer, and $9.95 for shorter trips.

IF
Do you have any plans to give free or reduced Internet access to AAdvantage elite customers?
Backelin
We’re going through a trial and I think we’ll look at that at the end of the trial to see where we are with the service overall. There are many different pricing plans that we’ll be looking at and different incentive plans, but we’re going to go through the trial and see how it goes and then make a determination about other options.

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