Competing for Customers and Capital

The Paradox of Air Transportation

Paul Goldberger’s article Situation Terminal in the April 21, 2008 issue of The New Yorker magazine reminds us that “Airports are essentially machines for processing people, airplanes, automobiles, cargo and baggage.” He also notes the most recent example of the huge impact passenger baggage handling has on airport operations:

… Terminal 5, an eight-billion-dollar structure that was supposed to transform Heathrow from a congested tangle into a place that would thrill passengers with the joy of air travel, all but shut down on its opening day, when a computerized baggage system malfunctioned (p. 132).

In my last post in this series Luggage Forward Flying: How to Restore Passenger Confidence and Carrier Profitability I proposed a radical solution to the baggage handling problem: Removing baggage from the passenger air transport system by shifting it to the express shippers’ transport system:

Suppose all the major carriers were to enter into a partnership with FedEx (NYSE: FDX), UPS (NYSE: UPS), DHL and the other shippers with Luggage Forward operating as the corner stone in a worldwide baggage handling solution. This would remove passenger baggage handling from airports and passenger carriers altogether.

I also reviewed nine of the operational issues associated with that proposal. These nine don't need repeating as they are more-or-less easy hurdles to clear in such a massive change in passenger baggage handling. That post concluded with three deal-breaker questions. Two of these are the focus of this post: (1) Do the package carriers have the capacity to handle the additional volume and (2) Are the scale economies associated with passenger carriers bundling Luggage Forward into their reservation system sufficient to produce affordable shipping rates?

THE PARADOX
The top ten U.S. passenger carriers had a combined market cap of $20.38 billion on April 25, 2008. The top two U.S. package carriers, FedEx and UPS, had a market cap of $104.19 billion. Here’s the paradox of air transportation: Why do investors reward U.S. package carriers with five times the value they assign to passenger carriers? It's not because of revenue differences: American Airlines (NYSE: AMR) had a value/revenue ratio of 0.08 in 2007 compared with a UPS ratio of 1.50.

A LITTLE PERSPECTIVE
On Thursday I ordered a new HP Laser Jet P2015 printer from Amazon.com (NASDAQGS: AMZN). The retail price was $449. I paid just $289.99. The next-day Amazon Prime delivery charge for this 28.9 pound package on UPS was $3.99.  Based on this rate significant scale economies must exist in AMZN’s agreement with UPS as a result of huge shipping volumes.

My printer was picked up at the Amazon facility in Dallas TX at 8:53 on Thursday evening. The next morning I called the UPS toll-free number to ask for a delivery time. The local station called me back within the hour to say that the driver would deliver my package at 1:30 PM on Friday. He actually delivered it at 1:25 PM.

Think about this. Passengers must do a large share of the work in baggage handling: getting the bag to the airport, checking it in, waiting at the baggage carrousel after landing, carrying it to ground transportation and then to the hotel. So passenger carriers could eliminate the need for both paid and unpaid baggage handlers.

AMZN in partnership with UPS can ship that 30 pound printer overnight for $4.  If I’m willing to have my bag picked up at 8:30 the night before my trip and delivered to my hotel at 1:30 the next day, why can’t ARM, in partnership with Luggage Forward and UPS, ship my 30 pound bag for the same $4? With virtually no risk if loss or late delivery.

NO OBVIOUS ANSWER
Both passenger and package carriers are subject to the same forces. As Joseph Weisenthal said in a recent post Airline-In-A-Box:

Few businesses have as many variables and challenges as airlines. They are capital-intensive. Competition is fierce. Airlines are fossil fuel dependent and often at the mercy of fuel price volatility. Operations are labor intensive and subject to government control and political influence. And a lot depends on the weather.

It's true that both passenger airlines and package carriers are capital intensive. In 2007 FDX and UPS had capital intensity ratios of $0.68 and $0.79 respectively. The two largest passenger carriers, AMR and United Airlines (NASDAQGS: UAUA), had capital intensity ratio of $0.80 and $0.83 respectively.

The packages carriers have far less exposure to fuel price volatility than passenger carriers because they rely on indexed fuel surcharges. In 2007 FDX and UPS fuel costs as a percent of revenues were 10% and 6% respectively. AMR and UAUA had fuel costs of 29% and 25% respectively. One might wonder why the passenger carriers don’t also rely on indexed fuel surcharges. Today David Enke posted an interesting answer to this question in To Hedge or Not to Hedge.

The package carriers actually are more labor intensive than the passenger carriers. In 2007 FDX and UPS posted labor intensity ratios of 39.0% and 63.9% respectively. The two largest passenger carriers, AMR and UAUA, had labor intensity ratios of 29.5% and 21.2% respectively. Southwest Airlines (NYSE: LUV) had half the revenues of United but operated with a labor intensity ratio of 32.6%.

The number of employees per aircraft is a more telling indicator of the package carriers labor intensity. In 2007 FDX and UPS had 432 and 1,587 employees per aircraft respectively. The top two passenger carriers, AMR and UAUA, had 131 and 138 employees per aircraft.

Of course, all the extra people per plane employed by package carriers are required to make sure packages are picked-up and arrive on time. For example, in 2007 UPS had:

• 4,647UPS Stores®
• 1,306 Mail Boxes Etc.®
• 1,000 UPS Customer Centers
• 17,000 Authorized outlets
• 40,000 UPS Drop Boxes
• 1,800 Operating Facilities
• 93,637 package cars, vans, tractors, motorcycles
• 268 jet aircraft and
• 311 Chartered Aircraft

Maybe this is why UPS was able to offer next-day delivery at 1:30 PM!

PACKAGE CARRIER CAPACITY
It’s impossible to calculate what the industry calls the “letter/box” ratio without inside knowledge of package carrier operations. This ratio tells if the package carriers have the capacity to take on passenger baggage delivery. I asked an industry source to give me an opinion on this. Here’s what he reported in an email:

I don’t know their Letter/Box ratio but according to the UPS Q1 2008 earnings report, they shipped an average of 15.1 Million packages per day.   I know FedEx moves less packages than UPS.  I’ve been told that UPS has a smaller Letter/Box ratio than FedEx.

I know that there are approximately 2 Million emplaned passengers (DOT Stat) per day in the US and they average about 2 bags each.  So, we’re talking about 4 Million pieces of luggage per day in the US.  My guess is that the carriers can handle that type of increase. I think it is safe to assume the shippers are not operating at capacity and they could handle a 10-20% increase.

It looks like package carriers could scale up to handle passenger baggage. And based on the AMZN/UPS shipping rate of $4 per bag it seems reasonable to think an affordable express shipping charge could be built into the air fares of passenger reservations systems.

BECAUSE PACKAGES CAN’T WALK
The American Consumer Satisfaction Index (ACSI) was created by Professor Claes Fornell of the Ross Business School at the University of Michigan. The ACSI measures customer satisfaction for over 200 companies in 43 industries. Both passenger and package airlines are included.

FedEx and UPS have had ACSI customer satisfaction scores around 80% in each of the last ten years. In the same period AMR and UAUA have barely broken 60% customer satisfaction barrier. It’s been shown that higher ACSI consumer satisfaction scores are associated with significantly higher shareholder returns.

Some will say high customer satisfaction with express shippers is “because packages can’t walk.” The carriers must do everything with very little customer involvement. Of course that’s true. But it’s also true that almost everything express carriers do is dedicated to delivering packages on time. That’s their specialty.

Wouldn’t it improve consumer satisfaction if passenger carriers took baggage out of their equation? And specialized in transporting passengers? In economics this is called the “division of labor.” An idea famously created by Adam Smith in The Wealth of Nations using "the trade of the pin-maker" as an example. What do you think?

Thank you for visiting. As always your comments are welcome.

~V

Passenger Confidence and Airline Profitability

You may know of Peter Greenberg’s baggage handling philosophy. In a post on solving the lost baggage blues he famously said “There are two kinds of baggage: Carry on and lost.” His comment pokes fun at the airlines’ “mishandled baggage” problem. But there is another option. Must airlines carry passengers' baggage on the same plane?

HISTORICAL PERSPECTIVE
My last post in this series on airline mergers was ‘Power Offers’: Turning Airlines’ Mistakes into Value-Added Services. In it I reported that reuniting passengers with their mishandled baggage cost the airlines $3.8 billion in 2006. That represented about two-thirds of their 2007 profits. And the cost of mishandled baggage is bound to be greater in 2008. The way things are going with fuel prices it likely will exceed worldwide profits. This makes mishandled baggage a major problem. Not to mention the passenger frustration generated by mishandling their baggage.

The idea of ‘Power Offers’ is right out of the pages of a new book by J.C. Larrache: The Momentum Effect. My posts based on this concept have produced some serious thought by readers. For example, a Senior Business Analyst [S.B.A.] for one of the legacy carriers sent an email to me with a lot of really interesting comments on airline services in general and baggage handling in particular. For historical perspective the S.B.A. offered these thoughts:

If you look at the history of airline service, you can go back to a day when airlines HAD to provide as many incentives as possible to get people to use an airplane in the first place.  I think a lot of these services are rooted in the days when air travel was not as reliable, and there was a "risk" associated with it.  Airlines needed to provide a service level that may have been above what was really required.  Once the precedents are set, it's hard to peel back any services.

LUGGAGE FORWARD FLYING
In my last post I also suggested that Continental Airlines (NYSE: CAL) management should explore a partnership with Luggage Forward. Their services could be bundled into CAL’s online reservation system to create a value-added baggage handling option and thereby increase revenues as well as customer satisfaction. It suddenly became clear from the comments of my readers that an incremental step by a single carrier would be too little too late.

In this post I propose a bold bid for luggage free flying: Remove passengers' baggage from the air transport system worldwide. Suppose all the major carriers were to enter into a partnership with FedEx, UPS, DHL and the other shippers with Luggage Forward operating as the corner stone in a worldwide baggage handling solution. This would remove passenger baggage handling from airports and passenger carriers altogether. You should check out the baggage booking technology on the company’s website.

Why propose this bold step? The extraordinary challenges faced by the air carriers demand an extraordinary solution. For now let’s call this a worldwide Luggage-forward Express Shipping (LES) service. And keep in mind the double meaning: LES means more -- less hassle combined with more profitable air travel.

I know it sounds unrealistic to move baggage handling our of the passenger air transport system into the express shipping system. But then again it must have sounded unrealistic to remove mail delivery from the US postal system. Here’s what the S.B.A. from a legacy carrier had to say about this idea when I suggested it to him in an email:

If we started with a clean sheet today, I could see how airlines would save a bunch of money by not accepting personal luggage.  Not only would this save money, but the cargo area of the plane could be used for legitimate revenue generation.  Air cargo is a good business for the airlines, so the win would be twofold - reduced costs, increased revenue.  Plus, by not carrying luggage, the airlines could eliminate a real pain point for travelers.  I admit, there seems to be little downside to it.

Not only would these advantages accrue, but the considerable governmental infrastructure and personnel dedicated to inspecting passenger baggage could be shifted to another pressing need in air travel: Inspecting existing cargo plus all that revenue earning cargo that would replace passenger baggage.

A whole host of questions pop up. The first ones are operational issues. The others are potential deal breakers.

OPERATIONAL QUESITONS
Here are nine operational questions that must be answered as part of the planning process. All of these questions (in italics) were raised in private email correspondence with the S.B.A. cited above. The answers are my own first take on each question.

1)   What about bad weather days? The LES option avoids this problem because baggage never enters the air transportation system. If the passenger doesn’t travel, the bags are returned. If his or her travel is simply postponed, the baggage will be there when the passenger arrives.

2)   Can passengers get their baggage back without paying for the shipment? Yes, this kind of risk can be covered by a “failure to fly” insurance fee built into the price. The fee would be based on the actuarial tables of cancelled flights. It would be far less than the shipping costs themselves.

3)   How does the DOT or the airline track "lost baggage"?  They are no longer responsible for lost baggage. It’s insured by LES for full value in partnership with a top rated insurance company. The cost would be a function of declared value.

4)   How are changes to the contract of carriage handled? The agreement would release the carrier from any contractual liability for baggage handled by LES.

5)   What about itineraries involving multiple airlines? The LES option avoids this problem because baggage never enters the passenger air transportation system.

6)  What if a carrier is not willing to accept this as a standard practice? A consortium agreement in which all major carriers participate would be necessary.

7)  Can’t passengers book their own baggage shipment with one of the express services? Yes, but they could not free-ride – consortium rates would be available only through an airline reservation system.

8)  How would migration from the current model to an LES model be handled? Momentum would need to built quickly in the airlines’ partnership with LES for it to be successful. The technologies are available to support a rapid migration.

9)  Would airlines be stuck with the sunk costs of all the processes built around baggage handling? No, their infrastructure would be sold to governments at fair market value to increase their capacity to inspect cargo.

DEAL BREAKERS?
Here are three questions that speak to the feasibility of the LES proposal:

Express Shippers’ Capacity. Could express shippers scale up to handle worldwide passenger baggage delivery? At first blush it seems likely they could since the top three shippers had combined revenues in 2007 just over $158 billion USD and employed 1.2 million people. That’s nearly $44 billion more revenues than the nine carriers included in my analysis of airline mergers and over three times the number of employees. What’s needed is an estimate of the number of “passenger baggage equivalent” deliveries of these express shippers.

International Consortium. What organization would have the stature within the industry to develop and administer performance standards? IATA is a likely candidate since its mission statement includes helping “airlines help themselves by simplifying processes and increasing passenger convenience while reducing costs and improving efficiency.”

Affordability. Would LES scale economies, coupled with increases in carrier cargo revenue and the elimination of mishandled baggage, drive down the cost of an express baggage service enough to make it affordable when bundled into airline reservations? This is the toughest nut to crack.

With your help I’ll try to provide more substantive answers to these questions in my next post. In the meantime, thanks for visiting.

As always, your comments are welcome.

~V

Full disclosure: I do not hold a position in Luggage Forward or any commercial carrier or shipper. I am not being paid for these posts, nor do I have any prospect for future payments from any of the companies that might be involved.

Value-Added Services

Nicola Clark reported in her article in the December 12, 2007 issue of the International Herald Tribune that the IATA predicts 2007 worldwide airline profits will be around $5.8 billion. Reuniting passengers with their mishandled baggage cost those same airlines $3.8 billion in 2006. And that number is bound to be greater in 2008. It probably will even exceed worldwide profits. This makes mishandled baggage a major problem for airlines.

UPDATE
This post is part of a series on airline mergers that led me to search for ways to improve passenger satisfaction and airline profitability. Carriers are caught between a rock and a hard place. The downward pressure on ticket prices means that earnings don’t increase with market share. As a result scale economies don’t work, so mergers likely won’t solve the problem. For details see my post on Why Airline Mergers Don’t Work.

Late this afternoon Susan Carey and Paulo Prada reported in their Wall Street Journal article that “Delta, Northwest Could Unveil Merger as Early as Tuesday.” I guess the CEOs of these airlines would rather merge than manage. The story goes on the say they “… could go ahead without the support of Delta's 6,000 pilots … leaving negotiations with Northwest's 5,000 pilots for a later day.”

I hope those CEOs read this post and begin rethinking their business model. They might become more creative in managing passengers’ baggage and thereby turn the costly mistakes of mishandled baggage into value-added services. Or simply put, create ‘Power Offers’ through superior baggage handling. That’s a bundle of services which would lead to ‘vibrant satisfaction’ among airline passengers. See Creating Power Offers.

BACKGROUND
Creating vibrant satisfaction among airline passengers is no small feat. Based on J.C. Larreche’s book The Momentum Effect, plus my own 50 years of air travel experience, I proposed that Continental (NYSE: CAL) management create a “Certified Airtravel Valise” [CAV] program. Since CAL offers travel to over forty international destinations, these would be included in the execution of a CAV service.

I explored the first step in delivering this service in my post on Delivering Power Offers. It became clear that Continental management must establish a partnership with the U.S. Transportation Safety Administration’s [TSA] Registered Traveler service if the idea of a CAV were to ever get off the ground. It also became clear that baggage cannot be boarded without TSA inspection. That brought up the need for additional partnerships.

Here I explore partnerships with the FlyClear personalized check-in service and the Luggage Forward shipping service as the second step in executing power offers in air travel. The goal is to create a more engaging travel experience as well as value-added revenue.

CONTINENTAL BEHIND THE CURVE
Today a search for the word “baggage” returned 1,224 hits on Continental’s website. A search for “TSA” returned 36 hits. The phrase “Registered Traveler” returned an empty window that said “! Please Enter a Valid Search.” Doing the same search for Virgin Atlantic returned the following link to a January 30, 2007 press release. Here are some excerpts from that press release:

... Clear® Registered Traveler announced today that Virgin Atlantic Airways will be the first airline to bring Clear to travelers at Newark Liberty International Airport.

"Superior customer service and stress-free travel are two things that our travelers have come to expect from Virgin Atlantic," said Chris Rossi, Vice President Sales and Marketing, North America. "Clear Registered Traveler will serve to enhance the Virgin Atlantic experience."

British Airways (LSE: BAY.L) also has partnered with the FlyClear service.

FLYCLEAR
What do travelers get for enrolling in FlyClear? Here are some of the benefits listed on their website:

• Get through security faster, in under four minutes.
• Don’t worry about unpredictably long lines.
• Access a designated security lane with special benefits.
• Allow our attendants and concierges to help you as you go through the Clear lane.
• Use your Clear card at airports nationwide.

And here's a link to a list of the seventeen U.S. airports and hours in which the Clear Lane service is available now. How does one become a registered traveler?

Clear’s simple, two step enrollment process begins online.  Applicants create an account and fill-in basic biographic information.  Then, applicants must go to a Clear enrollment location, where our attendants will verify two forms of government-issued identification, and capture a photograph, your fingerprint images and your iris images. This information is used to allow you access to the designated Clear lane at the checkpoint.

As of March 31, 2008 Clear had signed up over 127,000 people nationwide for a fee of $100 (plus a TSA application fee of $28). I’ve applied for a Clear Pass myself. It's easy.

The FlyClear service could be a compliment to a “Certified Airtravel Valise.” Attendants and concierges might sheppard first-class baggage through the line without the passenger if a proposal by CAL and Clear were approved by the TSA.

LUGGAGE FORWARD
Another option mentioned in my post was the use of express shipping by FedEx (NYSE: FDX) or UPS (NYSE: UPS). It turns out the market is way ahead of me on this one. A specialized point-to-point shipping service for air travel baggage already exists. It’s called Luggage Forward. Here’s what the company says about this service:

Shipping luggage ahead to your destination creates a true luxury travel experience. Luggage Forward can send luggage to your hotel, cruise ship, golf course or vacation home within the United States, Europe, Asia, South America, Australia or virtually any other destination. Forwarding luggage allows you to save time at the airport by avoiding the long check-in lines and skipping the wait at the baggage carousel.

In short, your baggage never enters the air travel system so it hardly ever gets misplaced or lost. Here’s how Aaron Kirley, a founder of Luggage Forward, has described The Growing Lost Luggage Problem:

When you relinquish your luggage to the airline agent at the check-in counter, the luggage begins a complicated journey to the belly of your plan. The conveyor system is owned and operated by the airport. Airlines pay terminal fees to cover the cost of baggage handling and the TSA regulates the baggage handling process. Although the airlines are responsible for your luggage, they have little control over the TSA’s baggage handling process and therein lies one major point of failure. 

What’s the list price of Luggage Forward services? If you’re traveling with a large family the price can add up pretty quickly, even if you use the economy rates. The March 26, 2008 MSNBC report on why “Weary travelers bypass hassles of checking bags” found that:

When Adam Kolodny took his wife and four children on a ski trip to Colorado, it cost him $1,200 to ship eight large bags of ski equipment and baggage round trip through Luggage Forward. But compared to the mess it would've caused at the airport, the price was worth it, said Kolodny, a 45-year-old resident of Great Neck, N.Y.

Today, a refundable coach-fare from JFK to Denver through Minneapolis on Northwest (NYSE: NWA) for two adults and four children runs about $8,000. That $1,200 luggage shipping charge amounts to a 15% premium. Traveling with four children and eight large bags of ski equipment plus luggage that would seem a bargain to some passengers.

Though Luggage Forward may not offer the deep emotional engagement that a Certified Airtravel Valise program could create among first-class passengers, it suggests a way for Continental to deliver a power offer to coach-class of passengers as well. The combination might reduce the costs of mishandled baggage while enhancing revenue.

VALUE-ADDED SERVICES
Should CAL management explore partnerships with FlyClear and Luggage Forward? Either or both of these services might be bundled into CAL’s online reservation systems to create a variety of value-added baggage handling options and thereby increase customer satisfaction, reduce the costs of mishandling baggage and increase revenues. We used to call this a "win-win" proposition. A 'power offer' by another name is just as powerful. What do you think?

Thank you for visiting. As always, your comments are welcome.

~V

Delivering a Power Offer

Continental Airlines (NYSE: CAL) should explore partnering with the U.S. Transportation Safety Administration [TSA] as part of a larger effort to increase passenger satisfaction. But they better act fast because Virgin Atlantic and British Airways (LSE: BAY) are way out front on this one.

In my last post Creating Power Offers I suggested that Continental should take more responsibility for handling the baggage of first-class passengers. The objective of a ‘Power Offer’ is to create ‘vibrant satisfaction’ among Continental's first-class passengers.

Creating vibrant satisfaction among airline passengers is no small feat. None the less, guided by Professor J.C. Larreche’s new book The Momentum Effect (plus my own air travel experiences) I proposed that Continental management create a “Certified Airtravel Valise” [CAV] program:

Whenever the carrier’s first-class travel partner flies to any domestic destination, his or her CAV flies on the same plane (without inspection) and is delivered to the hotel or other venue where the passenger is staying. This saves schlepping it from baggage-handling to the taxi and on to the hotel.

On the return trip the CAV is picked up at the hotel by the carrier and loaded on the flight to his or her local airport.

Since CAL offers travel to over forty international destinations these also should be included in the delivery of a CAV service.

MIXED RESPONSES
It’s fair to say the responses to my proposal were mixed. One comment from a world-traveling physician said:

Something that's worked for me well was, if at all possible, to keep a set of clothes, toiletries, etc , (permanently) at the frequented destinations. At one point, I was 'commuting' to Tokyo from NY almost every other week. … once I got a taste of this 'distributed clothes cache' idea, it became so seductive that I have ended up with caches in San Francisco, … Chennai (India), Geneva and London. … it may also make sense to create these caches 'locally': my Chennai & Geneva caches were, for instance, built mostly from purchases in India/Switzerland.

The comment from an airline pilot took a different direction:

The airlines have absolutely zero say in creating passenger enhancements to clearing security. The TSA has been entirely intractable in permitting any changes to ease the pain & no matter how much the airlines care, the TSA will do what it wants to do… The TSA certainly is not going to automatically permit bags with no positive control to board aircraft.

DESIGN vs. EXECUTION
At the end of my last post I concluded that it’s easier to define than to execute a power offer. Here’s what JC says about the difference in his book:

The principal difference between design and execution relates to where the two activities are conducted. Although design must, of course, be externally focused to be successful, the process is largely internal, where the firm has control over the variables. On the other hand, execution happens in the outside world, where unexpected reactions and events can make a mockery of the best laid plans and force rapid reengineering of offers that once appeared perfect. The first step in execution is to ensure that the design is properly implemented as originally intended, but that’s only the first step (p. 134).

As I see it, there are two critically important external issues to be addressed if Continental management were to consider executing a Certified Airtravel Valise program. These are:

(1) Understand the policies of the U. S. Transportation Safety Administration with regard third party participation in the boarding process.  If it can’t be done, as the airline pilot suggested above, forget about it.

(2) Explore the possibility of partnering with other companies that already provide supporting services. Since our world-traveling physician found the idea so seductive, there must be companies that already provide solutions to parts of the process.

In this post I address the first issue: partnering with the TSA. Next week I’ll follow-up with the second issue by exploring other supporting partnerships.

REGISTERED TRAVELER PROGRAM
On January 10, 2008 the TSA published an extensive report on its efforts to partner with the private sector in providing enhanced air traveler services, including check-in and baggage handling. The report Registered Traveler Program Standards is available online. The introductory paragraphs that appear on the website summarize its objectives:

The Transportation Security Administration and private industry developed the Registered Traveler (RT) program to provide expedited security screening for passengers who volunteer to undergo a TSA-conducted security threat assessment (STA) in order to confirm that they do not pose or are not suspected of posing a threat to transportation or national security.

The RT program is market-driven and offered by the private sector with TSA largely playing a facilitating role. TSA is responsible for setting program standards, conducting the STA, physical screening at TSA checkpoints, and certain forms of oversight. The private sector is responsible for enrollment, verification, and related services.

Notice that physical screening at TSA checkpoints is necessary even for registered travelers:  baggage cannot be boarded without TSA inspection.

Among the services the TSA is supporting in partnership with their sponsors and service providers are:

(1) dedicated or integrated check in lines and lanes;

(2) enhanced customer service for RT participants, such as divesting assistance, concierge service for luggage, and parking privileges; and

(3) discounts for service or concessions.

The RT program has been in development for several years. Yet few carriers have committed to it. The report cited only four airline participants at the time of its publication in early 2008:

Air France (operating out of Terminal 1 at JFK);
AirTran Airways (operating out of central at LGA);
British Airways (operating out of Terminal 7 at JFK);
Virgin Atlantic (operating out of Terminal B at EWR); 
Virgin Atlantic (operating out of Terminal 4 at JFK).

A TSA PARTNERSHIP?
Partnerships cost little and ancillary revenue from services that formerly were free is not the road to vibrant passenger satisfaction. Should CAL management explore partnering with the TSA to create its own Registered Traveler program? What do you think?

Thank you for visiting. As always, your comments are welcome.

~V