For Northwest, it's a whole new business world
- Article by: Liz Fedor
- Star Tribune
- May 26, 2007 - 9:29 PM
When Northwest Airlines entered bankruptcy 20 months ago for a badly needed financial makeover, U.S. airlines were concluding their race to see how fast they could eliminate longstanding amenities.
Reeling from the effects of 9/11 and rising fuel prices, airlines removed everything from pillows to snacks to free magazines in their cabins.
When Northwest emerges from bankruptcy-court protection Thursday, it will face a new battle, one in which carriers are restoring passenger perks, particularly in the first-class and business-class sections that represent a big share of their profits.
Terry Trippler, a Minneapolis airline expert, said the passengers "up front are demanding better services, better meals, better wine and better seating, and the airlines are responding."
At American Airlines, for example, new business class seats are being installed in its 58 Boeing 767-300 jets, metal silverware has reappeared for meal service and the carrier has introduced new wines.
United, which also restructured in bankruptcy, has decided to offer a new "United First Suite" on planes carrying passengers overseas. The carrier said that it will begin introducing the suite, which is 3 inches wider and reclines to a flat 6-foot, 6-inch bed, in the fourth quarter of this year.
United and Northwest have key elements of their business in the Pacific market, and United recently began flying a coveted new route between Washington, D.C., and Beijing.
Entertainment also is emerging as a new battleground.
Smita Premkumar, general manager of product marketing at Delta Air Lines, said Delta will finish installing new entertainment systems on its Boeing 777s by next month. On some Delta flights, she said, "We just launched HBO on demand May 1."
Atlanta-based Delta, which entered bankruptcy on the same day as Northwest in September 2005 and exited from court protection on April 30, initiated a major media campaign this month to showcase the airline's changes.
Delta has been making improvements ranging from installing Nintendo machines at certain airports to keep passengers amused while they wait for flights to the addition of 60 international routes within the past year.
"We wanted to emerge and make a splash about the fact that we are reborn," Premkumar said.
Delta also has added some glitz to its offerings, hiring restaurateur Rande Gerber, husband of supermodel Cindy Crawford, to develop "signature cocktails" for drink offerings on Delta flights.
In contrast to Delta, Northwest has not launched an advertising campaign for its departure from bankruptcy, and it is not yet divulging its plans for product improvements.
Some upgrades ahead
However, Mary Linder, Northwest's senior vice president of corporate and brand communications, acknowledged that some upgrades are in the works.
"During bankruptcy, we conducted extensive research with our customers," she said. "We are now working hard on several product initiatives in response to what our customers told us."
The Eagan-based carrier points out that it has already made some significant improvements for international travelers and passengers who sit in the front of the plane. During bankruptcy, it continued to take delivery of Airbus A330s, which are flown to many international cities and feature state-of-the art entertainment systems and lie-flat seats in business class.
Northwest said the video screens on its A330s in business class are "50 percent larger in size than the screens found in business class on most other U.S. airlines."
In its rollout of the new seats and entertainment systems on the A330s, Northwest was "ahead of the competitors" on international flights, said Matthew Bennett, publisher of firstclassflyer.com.
The first A330s entered Northwest's fleet in 2003, and all 32 long-range Airbuses that Northwest ordered will be in service by the end of this year.
Northwest phased out some of its old planes during bankruptcy, and new 76-seat regional jets will be added this year. Those planes will have first-class cabins.
"Coach is an experience that a lot of people are unwilling to endure," said Bennett, who also would like to see Northwest increase leg room on some of its mainline airplanes.
Beyond investments in new planes, Northwest also has been making other changes. In July, Northwest upgraded its meal program so first-class domestic passengers would have a choice of meals, including vegetarian options.
The carrier last week became the first to allow customers to book flights and conduct other business on the Northwest website from hand-held devices, such as a BlackBerry.
"This is the kind of stuff that we think customers really want," said Al Lenza, Northwest's vice president of distribution and e-commerce.
Not ignoring coach
While much of Northwest's challenge will focus on attracting and keeping its most lucrative customers on international routes and in first-class domestic cabins, the airline also must confront an increased challenge for the loyalty of coach-class passengers from low-fare Sun Country Airlines.
Mendota Heights-based Sun Country has just inaugurated a multimedia ad campaign, and it offers hot sandwiches for its coach customers on its Boeing 737 domestic flights.
In contrast, Northwest still will be flying many domestic passengers on old DC-9s and offers sandwiches only for purchase in coach class on certain domestic flights.
It's unclear whether Northwest will deviate from its strategy of trying to lure domestic coach-class passengers primarily with its scheduling and ticket pricing. But industry observers expect that it will continue to cater to high-end international passengers.
Northwest executives "put money where the returns are," said Robert Mann, an airline consultant based in New York. "That is the sweet spot where the big returns are generated." For example, Northwest said Wednesday that it will aggressively pursue federal approval to secure new flights to China.
In the coming weeks and months, Northwest is expected to give consumers a better idea of what the new Northwest will mean for them.
"Our approach is to fully understand what our customers want," said Northwest's Linder. Then the carrier will "determine the very best way to deliver real benefits."
Liz Fedor 612-673-7709 email@example.com
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