By Benjamin Katz, Alison Sider and Mike Cherney
Airlines are resorting to a new tactic in navigating the
pandemic-inspired collapse in travel: They are giving seats
away.
Alaska Air Group Inc. ran 48-hour sales in August and September,
offering an entire three-seat row for the price of a single ticket.
Europe's biggest airline, budget carrier Ryanair Holdings PLC,
offered 2-for-1 specials for flights through mid-December.
Southeast Asia's AirAsia brand earlier this year sold "unlimited
passes," allowing customers in some markets to travel as much as
they wanted for a few months.
The deals can drum up demand and get travelers comfortable with
flying again. They are also keeping at least some cash coming in
the door, as airlines keep much of their fleets parked. Alaska Air
usually runs 10 to 12 big promotions a year; it has recently been
offering three a month.
Alaska Air was already keeping the middle seat open for social
distancing. Its buy-one-get-one-free offer allows a pair of
passengers traveling together to get their own row for the price of
a single seat. On days when the Seattle Seahawks play at home, the
airline, which is based in that city, offers discounts of as much
as 40% depending on how many touchdowns quarterback Russell Wilson
makes. Overall during the third quarter, Alaska said ticket prices
were down 17%.
"We're seeing we're able to stimulate demand in a way we weren't
sure we'd be able to," said Natalie Bowman, managing director of
marketing and advertising.
Carriers' priority has been to drop prices low enough to fill
the few planes they are still flying to a level at which they can
simply break even, said Mark Simpson, an aviation analyst at
Dublin-based Goodbody Stockbrokers.
Return trips on full-service airlines over Christmas from New
York City to Nashville are going for as little as $71, instead of
the usual $300 or so, according to Scott Keyes, founder of the
price-tracking website Scott's Cheap Flights. Round trips from
Chicago to Las Vegas, which usually sell for $350, are selling for
$81, he said.
"Airlines are having to do the unthinkable and slash fares on
the peak travel dates," Mr. Keyes said.
Executives at Southwest Airlines Co. and American Airlines Group
Inc. said recently there are signs that fares may be climbing
again, at least for last minute bookings on some flights.
Recent rises in Covid-19 infections in the U.S. and Europe could
threaten that, though. European carriers have already started
cutting back flying plans for the end of the year.
In the U.S., some airline executives have said they've seen some
ebbs in demand but remain cautiously optimistic as Thanksgiving and
Christmas bookings are holding up.
Discounters are better positioned to afford to give seats away,
analysts said, because so much of their revenue comes from extra
charges, like luggage fees and food. Buy-one-get-one-free seats can
pay off if the extra passenger spends money on those extra
services, even though the seat is free.
"It's likely that the person who comes for free will drop some
money on the flight," said Geoffrey Weston, head of Bain &
Co.'s EMEA aviation consultancy business.
Ryanair, Europe's answer to Southwest, has rolled out a stream
of specials during the coronavirus crisis, including its first-ever
2-for-1 deal in September on 1,600 routes through December. It has
marketed several 24-hour, 50%-off tickets specials, and a 48-hour
promotion in which it placed a million seats on sale for EUR5,
equivalent to $5.80, each.
AirAsia's "unlimited passes," each selling for about $100, let
fliers choose between domestic destinations served by its Thai and
Malaysian airlines, and international destinations at its long-haul
AirAsia X brand. The airlines sold more than 200,000 passes, and
500,000 seats have been redeemed to date, said AirAsia.com Chief
Executive Karen Chan. AirAsia expected passengers on average to
redeem the passes between three and five times, though some
passengers have used the pass more than 20 times.
Airlines have been finding other ways to keep fliers engaged
with their brands while bringing in a little cash. Singapore
Airlines Ltd. is converting parked A380 super jumbo jets into
restaurants. Its first batch of lunch reservations, for two days of
sittings, sold out in 30 minutes, prompting it to add two more
days, as well as dinner, the airline said. About half the seats in
each 470-seater aircraft were made available to diners, to adhere
to social-distancing measures. Costs range from about $40 for an
economy seat and meal, $235 for business class and about $475 for a
suite.
"It is engagement with our customers that remains our primary
objective, " said Karl Schubert, a spokesman for Singapore
Airlines. No further restaurant sittings are being planned at the
moment, he said.
Taiwan's EVA Airways Corp. has created one-day "aviation camps"
with three tracks: pilots, flight attendants and airline catering.
Each camp includes guided tours of training and operations
facilities, with participants able to fly a simulator, put out a
fire in a mock cabin or learn how to prepare side dishes. The camps
are being held every weekend from mid-October through the end of
January and range in price from about $100 to $350.
Write to Benjamin Katz at ben.katz@wsj.com, Alison Sider at
alison.sider@wsj.com and Mike Cherney at mike.cherney@wsj.com
(END) Dow Jones Newswires
November 01, 2020 05:44 ET (10:44 GMT)
Copyright (c) 2020 Dow Jones & Company, Inc.
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