Why Airline Perks Are So Disappointing | CNBC Marathon

Why Airline Perks Are So Disappointing | CNBC Marathon

Introduction (00:00:00)

  • In 2002, 613 million passengers flew out of U.S. airports, compared to over 850 million in 2022.
  • American Airlines prepares up to 15,000 meals a day at Dallas Fort Worth International Airport, with the help of robots, for over 800 daily flights.
  • Airport lounges are becoming more accessible, leading to overcrowding issues.
  • Airlines are investing in adding more space and comfort on board.

Why It's Becoming Harder To Get Into Airport Lounges (Published October 2023) (00:00:46)

  • Airport lounges offer amenities like open bars, unlimited food, spas, gyms, and art installations and are becoming increasingly popular, with over 3,200 lounges worldwide.
  • Many airlines restrict lounge access for domestic flights, but first and business class tickets typically include lounge access for international travel.
  • Branded credit cards from major airlines and financial institutions offer lounge access as a perk.
  • Airport lounges were initially exclusive and invitation-only but became more accessible in the 1960s and transformed into immersive luxury experiences after airline deregulation in 1978.
  • The rise in air travel and changes in travel patterns have increased the demand for lounges, leading to overcrowding issues.
  • Airlines are exploring reservation systems and digital waitlists to manage lounge access.
  • The pandemic caused a $35 billion loss for U.S. airlines, but pent-up travel demand has led to a surge in premium travel.
  • The trend towards premiumization in the airline industry started before the pandemic and has continued to grow, with a focus on premium seats and services rather than economy seats.
  • Delta Air Lines announced changes to its SkyMiles program, causing customer backlash due to a shift in focus from frequent flying to spending requirements.
  • Basic economy flyers with Delta will lose lounge access starting in 2024, following similar moves by American and United Airlines.

Why Airplane Seats Are Getting Big And Fancier Again (Published August 2023) (00:11:10)

  • Airlines are investing heavily in premium seating, with premium revenue expected to make up 35% of total revenue for Delta this year.
  • Premium economy seats are becoming increasingly popular, with Emirates reporting over 160,000 customers purchasing these seats since their introduction last summer.
  • Airlines are upgrading their cabins and designing new premium seats with features like doors, privacy wings, wireless charging, and even showers to attract customers.
  • Economy seats have shrunk in size over the years, while cabin configurations have changed to include more classes like basic economy, economy, extra legroom, premium economy, business, and first class.
  • Airlines carefully consider factors such as cost, passenger comfort, and maintenance when selecting seats for their aircraft.
  • Airlines are investing in premium seat offerings due to increasing demand for privacy, stowage, productivity, and comfort.
  • Airlines are redesigning seats to provide more privacy, with features like sliding doors and winged headrests.
  • Economy class seats make up the majority of seats on aircraft, and airlines are focusing on providing comfort and amenities such as power outlets and tablet holders.
  • The demand for air travel is expected to grow in the coming decades, requiring an estimated 22,000 new aircraft by 2041.
  • Airlines are focusing on providing more premium products to enhance the passenger experience.
  • Flat beds are becoming more common on single-aisle planes, such as the A321 XLR/LR families and some 737 Max fleets.
  • The goal is to create a seamless travel experience from the passenger's home to the aircraft, incorporating features found in automated homes and advanced cars.

How American Airlines Makes 15,000 Meals A Day (Published September 2023) (00:24:24)

  • Airlines are experiencing a surge in demand with record-breaking passenger numbers, prompting investments in automation and larger catering facilities to reduce delays.
  • Ancillary revenue, including services like baggage fees and seat upgrades, has witnessed substantial growth from $42.6 billion in 2013 to nearly $103 billion in 2022, while airlines keep their food revenue confidential.
  • Airlines prioritize cost-cutting measures, partnering with catering companies and reducing food options to increase profits.
  • Elaborate meals served in the 1950s gave way to a decline in meal quality as air travel became more popular and serving food became more complex.
  • Airlines have shifted from operating their own flight kitchens to partnering with catering companies, resulting in limited food options.
  • The aftermath of 9/11 and the subsequent decline in travel led airlines to cut back on food services as a cost-saving measure.
  • While some airlines have reintroduced meals, many charge for food in economy class, treating it as an add-on item similar to baggage fees and seat upgrades.
  • Airlines maintain secrecy regarding the cost they pay caterers for each meal, but they make a significant profit on the meals they sell.
  • International flights, particularly in first class, offer more elaborate meals due to higher ticket prices.
  • American Airlines invested $100 million in a new state-of-the-art kitchen in Dallas, the largest catering facility in the United States, to enhance its food offerings and cater to customer preferences and destinations.
  • Airlines face pressure to provide authentic dining experiences and constantly refresh their menus to avoid monotony.
  • The growing demand for food due to increased travel poses a challenge in overcoming the negative perception of airline food.
  • Airlines utilize food as an incentive to attract customers and differentiate their products, but class divisions within airplanes can lead to disparities in food quality and amenities.

Why Wi-Fi On Airplanes Is So Bad (Published July 2023) (00:32:48)

  • In-flight Wi-Fi quality varies among airlines and flights due to limited capacity and hardware issues.
  • Satellite-based internet is becoming more prevalent due to its broader coverage and fewer obstructions compared to cellular towers.
  • Airlines are investing heavily in upgrading their Wi-Fi systems, with some spending over $1 billion.
  • Demand for Wi-Fi on flights has surged due to the prevalence of smartphones and the expectation of internet access everywhere.
  • Airlines now need to provide Wi-Fi for hundreds of passengers streaming movies and using multiple devices simultaneously, creating significant bandwidth challenges.
  • Some airlines offer free Wi-Fi, while others charge a fee.
  • Delta aims to retrofit its entire fleet with free Wi-Fi by the end of 2024.
  • JetBlue has offered free Wi-Fi since 2013 and believes it contributes to customer satisfaction and repeat business.
  • More satellites are being launched into orbit, which will improve the capacity and reliability of in-flight Wi-Fi over time.
  • Viasat 3, along with other technological advancements, is working to make in-flight Wi-Fi more reliable, consistent, and capable of handling the increasing demand.

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