Today we look at airplane boarding, which has reached the point of ridiculousness. The boarding process used to focus on speed; now it seems to work to stratify passengers. We also examine changes in airfares and service levels once passengers get on planes. These purchasing decisions allow another opportunity for airlines to slice and dice their passengers. Finally, we read about a study that shows Airbnb is making inroads into hotel income. Obviously, Airbnb is giving travelers something they like.
Here’s why airplane boarding got so ridiculous
How did we reach the point where passengers seem to fight to be the first to board? It may be because of paid checked-baggage — more people want to save by bringing more onto the plane rather than paying the checked baggage fees. It may be because boarding priority can become something that airlines can charge for — in other words, make more money. It may be because passengers want to feel “more exclusive.”
One thing that happened was that airlines discovered that boarding by row in reverse numerical order, while intuitive, is one of the slowest possible ways to board an airplane, because people bunch up trying to use the same bins and squeeze into the same rows at once. Even boarding in a random order is about 30 percent faster than boarding the old-fashioned way.
But there’s no need to be strictly random. If airlines don’t need to board back to front, they might as well hand out early boarding in a way that helps them make more money. As I’ll discuss below, they have increasingly settled on a boarding order driven by social stratification, but if you look back at the coverage of the first wave of boarding changes, airlines were focused on a different imperative: finding the fastest possible boarding method, so planes can spend less time at gates and more time in the air, making money.
They might have stuck with that aim if it weren’t for the other change, which has to do with the fight for overhead bin space.
U.S. airlines find low-cost way to unlock new riches in coach
While boarding a plane is a way to slice and dice passengers, airlines are now slicing and dicing based on airfare and services. Passengers know that for years they have been paying different prices for the same seats. Now airlines are offering new classes of services where they can add yet more airfare levels.
Travelers pay prices that are broadly double — and sometimes triple — economy fares. And here’s the brilliant part from an airline’s perspective: In adding this cash-generating cabin, they incur only modestly higher costs without siphoning affluent travelers from their posher cabins. U.S. airlines are rushing to add the offering, which was pioneered by international rivals.
“Anytime you can get paid double for something that doesn’t cost you double to produce, that’s a pretty good place to be for any company,” said Seth Kaplan, editor of trade journal Airline Weekly, noting that the premium cabin “doesn’t take up twice the real estate, the food doesn’t cost twice as much.”
Here’s how much Airbnb is lowering hotel prices and occupancy
A study has shown that Airbnb has had a significant effect on hotel prices. Plus, that effect is now affecting luxury hotels as well as bargain accommodations. The big questions are why. Some point to the lack of regulation. Others say that hotels ceased to serve the family market that was searching for affordable lodging for family groups of four and more. Yet. other visitors are not interested in the bling of brand hotels — something closer to home is preferable.
…every 1 percent increase in the number of Airbnb properties decreased the average revenue per room by 0.02 percent. Although this impact seems small, consider Airbnb’s phenomenal year-over-year growth rate when measuring the company’s impact on hotel room revenues. Accordingly, every time Airbnb’s supply doubles — which is its average yearly pace since inception — hotel revenues fall 2 percent.
While it’s hard to convert this into dollar amounts, given the statistical nature of our analysis, we crunched the data on New York City and found that total potential hotel revenue lost to Airbnb may have totaled $365 million in 2016 alone.
The impact on average room prices and occupancy rates was similar but smaller. Room prices fell 0.003 percent to 0.03 percent for every 1 percent increase in Airbnb supply, while hotel occupancy declined by 0.008 percent to 0.1 percent.
Charlie Leocha is the President of Travelers United. He has been working in Washington, DC, for the past ten years with Congress, the Department of Transportation and industry stakeholders on travel issues. He was the consumer representative to the Advisory Committee for Aviation Consumer Protections appointed by the Secretary of Transportation from 2012 through 2018. He also served on the Consumer Advocacy Subcommittee of the Transportation Security Advisory Board.