Monday, November 16, 2015

Winners and Losers of Delta’s Decision to Begin Selling Comfort+ As Its Own Fare

Nearly a year ago, Delta decided to go through a branding exercise and rename its products. Economy Comfort became Comfort+ and the product itself, which is centered around offering a few inches more legroom, was improved slightly with free booze and entertainment. Until now, Comfort+ was still just an add-on, you could buy into it by paying for a premium seat assignment. Over the weekend, that changed and Comfort+ is now being sold separately for travel beginning May 16, at least within the US and Canada (more to come later). This is a shift that will be good for some people, but others are going to be pissed off.

It may sound a bit strange to put it this way, but Comfort+ is now a lot like Basic Economy, Delta's no-frills option, from a back-end mechanics perspective. Delta files a bunch of coach fares and then bases pricing for both Basic Economy and Comfort+ off what's selling in coach at the time of the search. With Basic Economy, E class has to be available and fares are discounted off the selling coach fare. Comfort+ now books into W class, but it's a premium over the coach fare (for a somewhat premium product).

All of that is "inside baseball" stuff. All that really matters is that people going to will now be faced with 4 different cabin options instead of 3 (one less if its on a route where Basic Economy isn't sold). It looks like this:

Delta New Comfort+ Fares

For a traveler, the big difference is that the decision to buy up into a better seat will now be done during the flight search and not as an afterthought. Delta must assume this is going to result in more money coming in the door, and that naturally means some will be better off while some will be worse off in this new process. Here's how that breaks down.

Winner: Premium economy travelers on Air France/Virgin Atlantic
For those who are flying Air France and Virgin Atlantic in premium economy over the water and then connecting to/from a Delta flight within the US, you'll now be able to book directly into Comfort+ on the domestic leg. Today you just have to sit in regular coach, so this is a very nice improvement.

Loser: People who buy expensive coach fares
Travelers who bought Y, B, or M full coach fares used to get access to Comfort+ without charge. Now, that's done. You have to buy Comfort+ fares explicitly to get them.

Winner: People who like using miles
Travelers can use now their miles to redeem for travel in Comfort+, something that couldn't be done before. But…

Loser: People who place any kind of value of their miles
…the cost to redeem in Comfort+ seems steep. For example, a one way in coach from LA to Vegas is 7,500 miles but it's 17,500 in Comfort+. Long haul is less painful with coach at 12,500 miles and Comfort+ remaining at 17,500. But it's still not a great value. It also looks like you can no longer pay for Comfort+ on top of an award ticket. So it's all or nothing, which is annoying.

Winner: US government
Since Comfort+ is now part of the fare, it is subject to the US 7.5 percent tax on domestic tickets. That wasn't the case before. So… more money in the coffers for the feds.

Loser: People who like to pick and choose which segments they upgrade
Before, it was simple. You could pay to sit in Comfort+ on the legs you wanted. That meant you could easily do it on a longer flight but not on the shorter flight. Now it's all or nothing. What's worse, on it appears that if you want to sit in Comfort+ on the flight out, then you have to choose it on the return as well. (That's not the case with travel agents, so, good news for agencies?)

Loser: Silver and Gold elites who like specific seat types
Before, Silvers became eligible to sit in Comfort+ 24 hours out while Golds became eligible 72 hours out. That doesn't change, but what does change is the process. Silvers and Golds now have to opt in to be put on the upgrade list. When it clears, they'll be moved up automatically. But what if only a middle seat is available and the elite now has to give up his preferred aisle to get it? That sounds like a bad upgrade.

Loser: Families of elite members
Though elite upgrade privileges don't really change much, there is one big change. Today travelers can upgrade themselves along with up to 8 traveling companions. In this new system, elites can only upgrade one companion. For families, that sucks.

Winner: Travel agents
Most travel agents today cannot pay for Comfort+ seating in their own systems. Now that it's a fare, travel agents can sell it and can see seat availability. That's a nice improvement.

Loser: Travel agents
Though it's not entirely clear from Delta's FAQ, it appears that travel agent bookings will not be upgradeable after purchase, at least not until check-in. That's a meaningful difference versus Delta's direct bookings.

I'm sure your biggest question is… will this cost more? So far, it's mixed. Here's an example I looked up.

Travel Date Routing Fare Comfort+ Upgrade Total Cost
Before Change LAX-IND $158.10 $79 $237.10
After Change LAX-IND $227.10 N/A $227.10
Before Change LAX-MSP-IND $166.60 $59+$29 $254.60
After Change LAX-MSP-IND $257.10 N/A $257.10

As you can see, even on this single route, the price can vary with routing. It looks like those with connections will pay more, and that's particularly annoying on a route like this where you might not have bothered upgrading on the Minneapolis-Indy flight before. And I assume that's the point. By putting this in the fare, Delta can then revenue manage it much better.

For now this is only within the US and Canada, but there will be big issues when it expands into other markets, Transatlantic in particular. Virgin Atlantic and Air France have true premium economy cabins that are sold by Delta in W class. So how will Delta differentiate between Comfort+ (which is most definitely not premium economy) and a real premium economy product when they're both sold in the same class?

Overall, it's hard to say if this is a good or bad change. For some, it's good. For others, it's not. But it gives Delta the ability to better revenue manage Comfort+ and to get it in front of travelers earlier in the booking process. (And now even Expedia will be able to show it.) I can see why Delta wants to do this.

Read the FAQ for full details

No comments:

Post a Comment

Related Posts Plugin for WordPress, Blogger...