December 11, 2005

BYO at 30,000 feet

This is old news, now, but I still can't get over the way that Air Canada has gutted its service for economy passengers.

I ranted about this at great length earlier, but Miriam since brought to my attention a New York Times letter to the editor which echoed some of my thoughts ... and how I do like it when my thoughts are echoed! ;)

Prof. S. Abraham Ravid from Rutgers Business School wrote in on June 9 to complain about the across-the-board deterioration in airline service. Here's the money quote:

"The airlines apparently think that customers are neatly divided into two separate groups: business travelers, who have no budget constraints and will pay a ridiculous price for a flat bed and a glass of wine, and 'leisure travelers,' who will gladly camp on the floor to save 50 cents on the ticket."

In addition to expanding the meal cuts to more flights, Air Canada is now charging $2 for a pillow and blanket ... which you can then keep. This is mind-boggling on many levels. Of course everything has a reason at the new Air Canada. The pillow-and-blanket scheme is more hygenic (and, really, why reuse when you can dispose!), while the new weight restrictions and charges for heavy luggage will help cut fuel costs.

Meanwhile, Air Canada CEO Robert Milton was recently named CEO of the year by Globe and Mail/ROB Magazine. Why?

"In a speech delivered only weeks after Air Canada's CCAA filing, Milton warned that airlines clinging to business models conceived in the 1970s or earlier would become the industry's "walking dead." Air Canada, he vowed, would not be one of them. With the grudging co-operation of workers and bankers, he would reinvent the airline. Yes, by wiping out $8 billion in debt and more than $1 billion in annual labour costs. But just as important, by changing the fundamentals of airline management -- from the way tickets are priced and sold to the renewal of Air Canada's fleet of aircraft and the creation of an entrepreneurial corporate structure that forces each of ACE's units to act as independent, profit-driven entities. "Robert recognized the emerging international market two to three years before it started kicking in," says Brett Ingersoll, managing director of Cerberus Capital Management LP, the New York-based hedge fund that invested $250 million in ACE and owns an 8.5% stake in the company. "He picked the right strategy for 2005, 2006 and 2007 back in 2003. He nailed it."

I always thought Robert Milton was an interesting character. His fascination with planes intrigued me, in that I felt he was part of a slowly dying breed -- the CEO who was seriously obsessed with the product or service his or her company offered. The opposite of the CEO-for-hire, the MBA "general manager" type who would run Kodak one year, RJR Nabisco the next, and The Gap the year after that.

So there you have it. Robert Milton, who must have loved the airplane-spoon-feeding game when he was a baby, is now all grown up and CEO of the year. And you? No peanuts for you.

Posted by anatole at December 11, 2005 11:44 PM
Comments

Another in the list of indignities -- Air Canada doesn't offer bereavement fares within North America because "our web prices are so good". Which utterly ignores the fact that the reason people need bereavement fares is because the travel is urgent and unpredictable, so one often can't get the good fares because they're sold out by the time you book.

Westjet, on the other hand, offers them and makes it easy to get them, change them, or cancel them.

Posted by: Aven at December 12, 2005 08:25 AM

This past summer I a friend of mine's grandmother died, we were out in Calgary and she had to go back to Oakville for the funeral. I called Air Canada first and got the story that they don't do bereavement rates and so I called WestJet who quoted a bereavement rate of something like $500 (and said there was no better price available last minute)! I called Air Canada back and spent quite a while going over options with an incredibly helpful rep who managed to squeeze my friend on a flight leaving in three hours for just under $300. (Basically, the rep was able to quote it as if we were booking months in advance, the seat would have been empty otherwise considering the plane was 'about to leave' and they knew it wasn't for business so they don't mind side-stepping the differential rate system quite so much.)

Rather surprising...otherwise AC really annoys me. The lower baggage weight restrictions is awkward when living internationally and trying to move stuff out there.

Mike

Posted by: Mike at December 15, 2005 07:25 AM