CNBC
- American Airlines wants to get better at offering travelers more expensive airfares after they book.
- American and other airlines are trying to grow revenue as fuel costs climb, taking a bite out of profits.
- Most American Airlines customers are already opting to pay higher fares to avoid the cheapest seats, called basic economy.
American Airlines wants to improve its upsell game.
The largest U.S. airline is exploring ways to sell travelers a pricier seat with more legroom, a free cocktail and other perks, even after they book their trips.
Air travelers this year have shown they're willing to pay higher fares for more comfort on board, by buying seats in business class or more expensive coach seats with more legroom and amenities kits, airline executives said during earnings calls this month.
It's welcome news for airlines as they scramble to grow revenue after a surge in fuel costs, generally their second-biggest expense after labor, took a bite out of profits during the third quarter. American reported record revenues in the third quarter, which includes the busy summer travel season, but said its profit fell by 48 percent, as it took a hit from more expensive fuel.
American Airlines, for its part, said its cheapest, most restrictive basic economy fares that force passengers to board the plane last, do not come with free seat selection or allow changes, are working as planned: Travelers are paying higher fares to avoid them.
American last month lifted a ban on overhead bin access for those basic economy tickets, a move that brought its bare-bones fares more in line with Delta's. Don Casey, American's senior vice president of revenue management, said on an earnings call Thursday that about 60 percent of travelers considering basic economy are buying up to the higher main cabin fare, "much better than we expected."
The airline now wants to better pitch Main Cabin Extra fares, which offer coach travelers a few extra inches of legroom, a free alcoholic beverage and a dedicated overhead bin. The airline is working to improve that next year, to make it clear that those options are available both to travelers who book on American's site or app or online travel agencies.
The surcharge for Main Cabin Extra seats varies, but it can top $100 each way on transcontinental flights.
"We haven't yet built out our infrastructure to able to push offers out to customers effectively and between time of booking in the time of check-in," Casey said on the earnings call. "That's a big window where we can customers to increase our revenues even more than we've been able to do it."
Other airlines are taking similar approaches. Spirit Airlines, for example, sends travelers emails about the declining availability of its premium seats at the front of the plane and is working with gate agents to try to sell these more expensive seats to travelers in the last minutes before they board.
It's welcome news for airlines as they scramble to grow revenue after a surge in fuel costs, generally their second-biggest expense after labor, took a bite out of profits during the third quarter. American reported record revenues in the third quarter, which includes the busy summer travel season, but said its profit fell by 48 percent, as it took a hit from more expensive fuel.
American Airlines, for its part, said its cheapest, most restrictive basic economy fares that force passengers to board the plane last, do not come with free seat selection or allow changes, are working as planned: Travelers are paying higher fares to avoid them.
American last month lifted a ban on overhead bin access for those basic economy tickets, a move that brought its bare-bones fares more in line with Delta's. Don Casey, American's senior vice president of revenue management, said on an earnings call Thursday that about 60 percent of travelers considering basic economy are buying up to the higher main cabin fare, "much better than we expected."
The airline now wants to better pitch Main Cabin Extra fares, which offer coach travelers a few extra inches of legroom, a free alcoholic beverage and a dedicated overhead bin. The airline is working to improve that next year, to make it clear that those options are available both to travelers who book on American's site or app or online travel agencies.
The surcharge for Main Cabin Extra seats varies, but it can top $100 each way on transcontinental flights.
"We haven't yet built out our infrastructure to able to push offers out to customers effectively and between time of booking in the time of check-in," Casey said on the earnings call. "That's a big window where we can customers to increase our revenues even more than we've been able to do it."
Other airlines are taking similar approaches. Spirit Airlines, for example, sends travelers emails about the declining availability of its premium seats at the front of the plane and is working with gate agents to try to sell these more expensive seats to travelers in the last minutes before they board.
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