Buyers Weigh NWA Priority Coach Seat Surcharges

Less than a month after Northwest Airlines began testing extra charges on certain priority seat preferences in its economy class, travel buyers are assessing policies and determining whether they will pay on behalf of their travelers for such options.

While the concept has been discussed in the industry for years and has even been in place at other carriers—including Air Canada and Virgin Atlantic—so far no other U.S.-based majors have offered a facsimile of the program. However, recent surveys indicated that premiums on such seats could become more common.

Travel buyers are split on whether the initiative will generate additional airline revenue or if their companies would reimburse travelers who pay extra for more legroom. However, according to a National Business Travel Association survey, most travel managers contend that "a la carte pricing" would make corporate travel policies, expense reporting and auditing procedures more difficult.

Northwest Airlines last month launched an "open-ended" test to see if travelers would pay a premium for reserved aisle and exit row seats. It is testing its Coach Choice concept on 5 percent of its U.S. seat inventory, allowing customers to reserve such favored assignments 24 hours prior to departure for $15 per flight.

One week after launching Coach Choice, however, a Northwest spokesperson said not all 5 percent had become available for the test, as the carrier is honoring all existing seat assignments, which can be issued 90 days ahead of departure. The carrier still is offering about 65 percent of its exit row seating at no additional charge.

WorldPerks and SkyTeam Elite members can access the service 36 hours ahead of departure. NWA said the new offering is available only through its Web site or at checkin kiosks. Such seats will be free of charge if no others remain.

"It is not available on certain regional jet aircraft or on international itineraries," the carrier said on its Web site. "Coach Choice seats are being phased in over time, so availability may be limited for the first two months after launch on March 14."

"If we have a situation where a customer is at the gate and hasn't been provided with a seat assignment and it's time for departure, we're not going to say, 'We only have two left in Coach Choice, you have to pay,' " a spokesperson said.

One week into the program, the carrier said the response has been favorable and many passengers are paying the premium for better seats, largely through its Web site.

Air Canada offers advance seat selection for $12 per trip, including connections, on certain fares and Virgin Atlantic on transatlantic flights will give customers bulkhead and exit row seats for $75 on flights less than 10 hours and $110 for flights more than 10 hours. The fees are per leg of the flight.

Meanwhile, some have likened the program to United's Economy Plus product, which comprises seats at the front of the economy cabin that offer about 5 more inches of legroom. However, a United spokesperson said the comparisons between Coach Choice and Economy Plus are not apples to apples. United said it reserves the seats for premier status members, passengers who pay for a full-fare coach ticket, those who purchase a membership in the Economy Plus program or, in some cases, travelers whose travel managers have contracted access to the section.

"On the day of departure, if we have extra seats in Economy Plus, when someone checks in they get the option to upgrade to the Economy Plus section," a United spokesperson said. "There is a fee ranging anywhere between $24 and $99, one-way. Depends on how far you're going."

Continental CEO Larry Kellner last month said the carrier is not planning on following Northwest in its test. "I disagree with the tactic Northwest took," he said in New York before the American Business Forum on Europe. "We don't charge for upgrades. We save that for our most loyal customers."

However, some travelers are willing to shell out a few extra bucks for a few extra inches. Global distribution system owner Amadeus in a survey of 1,000 travelers released last month showed that even the price-sensitive leisure segment would be willing to pay "extra for amenities that would make their flight more comfortable or convenient."

"Amadeus found that that travelers are not just looking for a low fare—they want choices, and are even willing to pay for amenities and options that will enhance their flying experience," said Chris Barnes, vice president of e-commerce sales for Amadeus North America. "Consumers are not always looking for the lowest price; they are looking for the best price that fits in line with their travel needs."

As airlines seek to generate additional revenues, Amadeus gauged what travelers would be willing to pay for: 40 percent would be willing to pay more for the choice of inflight entertainment including movies, sitcoms or video games; 31 percent would be willing to pay more for guaranteed overhead storage above their seat; 30 percent would be willing to pay more for food from a menu and 25 percent would be willing to pay more for priority baggage handling.

If corporate travelers value paying for better seat assignments, many would foot the bill themselves, according to data taken last week from an NBTA survey. Of 89 travel managers polled, more than half said they would not reimburse travelers who pay for seats. However, nearly 32 percent said they might pay for a few more inches for some travelers or on certain flights. Nearly 12 percent would pay for all travelers on all applicable flights.

Like many amenities, travel buyers said that if such practices stick at Northwest or extend to more carriers, preferential seat selection would become a point of negotiation. Nearly 80 percent said they would negotiate for discounts on such programs.

Although some carriers said they would not follow, about 40 percent of travel buyers expect seat selection at a cost to become the standard among carriers.

Although Northwest considers the Coach Choice initiative in test mode, the carrier later this year will look to expand it. "Coach Choice will be introduced on flights between the U.S. and Canada, Mexico and the Caribbean in summer 2006. Transpacific and transatlantic Coach Choice is under consideration."

A Northwest spokesperson likened the program to paying higher prices for certain hotel rooms. "You can have a situation where the square footage and the furniture in the room is the same, but they're getting one price point for city view, mountain view, garden view, partial ocean, full ocean, and the customers are valuing those different things. Everybody's in the same property, everybody's getting basically the same thing, but customers value where they are in that property."