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Robert Moses, New York City's powerful Parks Commissioner from 1934 until 1960, was against commercialism and wanted to end the reign of what he called the "mechanical gadget resort." City planners agreed and began to tear down the remaining amusement parks and replace them with high-rise residential buildings. (Also at Moses' direction, construction of Jones Beach began nearby, designed with 'wholesome' activities and overpasses that prevented public buses from accessing the beach, reserving it for the car-owning classes).

-Project for Public Spaces Website

If you take (or took) urban planning or studies in college, that's one of several stories instructors tell repeatedly. That, coupled with the fact that I grew up traveling the Robert Moses Parkway between Niagara Falls and Lewiston, New York, prompted me to learn more about Moses. He was, and still is in many circles, a hated man. If Robert Moses had his way, a mega-expressway would have cut through lower Manhattan.

I once wrote a paper where I compared Moses to the airline industry. A large portion of the public, particularly "the 99%," despise both and wonder what they'll do next to turn the screws on the masses. I like to think of the world like this: You have the 98.9%, the 1% and the 0.1% most all members of the Seeking Alpha community comprise. As I was booking summer travel yesterday, I came across something that I felt put me in that thoughtful middle ground between the haves and the apparent have-nots.

In this article, I discuss how my experience making airline reservations over the weekend might morph into bullishness towards the carriers who make the types of decisions Moses might have made, albeit for very different reasons.

Gimme a ticket for an aeroplane, Ain't got time to take a fast train. Lonely days are gone, I'm a-goin' home, 'Cause my baby just a-wrote me a letter.

I don't care how much money I gotta spend, Got to get back to my baby again Lonely days are gone, I'm a-goin' home, 'Cause my baby just a-wrote me a letter.

-The Box Tops, The Letter

This summer, my family and I embark on a two-week, three-city journey that will take us from Los Angeles to New York City to Buffalo and back to Los Angeles by plane. For the record, we'll hit Toronto via rental car.

I am a pretty picky traveler. I like what I like and I want what I want. I am willing to overpay for a hotel room because I know I will get the experience I want and reward points that will pay off down the line. I also prefer certain seats on an airplane. Back in the day - like just a few years ago - you had to book early or sweet talk a reservations agent to get an exit row or a perch close to the front of the plane. From time to time, you would not get what you wanted because frequent flyers with loads of miles took precedence. Then airlines started charging fees, usually small ones tacked onto their normal fare, for the "privilege" of more legroom or a prime seat in coach class.

I recall when United Airlines, aka United Continental Holdings (UAL), started referring to this "special" section of the aircraft as "Economy Plus." Correct me if I am wrong, but, at the beginning, they gave you this little something for nothing. Then they started to charge a nominal fee. Fast forward to 2012 - and maybe sooner, as I have not flown United in well over a year - and that's all changed.

As I often do, I searched for fares on Expedia (EXPE) before heading to the airline's Website to book directly. When I searched BUF to LAX, I saw that United's fare was, to my surprise, much less than the other major airlines and even some of the third-rate carriers I would never fly. For this one-way flight with one stop, United was asking $230, where as American (AAMRQ.PK) and Delta (DAL) both came in over $300.

So, I scurried over to United's Website, loaded the fare and updated my traveler information. The next screen, as per normal, asked me to select my seats. Here's a representative example of what I saw:


(Click to enlarge)

Incredible. That $230 fare, all of a sudden, becomes $309 if I want to sit in 21A. To get anywhere in "Economy Plus" I am looking at $275. For the record, that screen shot comes from a flight (not mine)
between Chicago's O' Hare and LAX. The upgrade fee was less on the shorter Buffalo to Chicago leg. I did not take the bait on the short flight, but did on the long haul. Here's how it added up for three passengers:

While it's not quite bait and switch, it's pretty darn close. And I absolutely love it. Finally something that could possibly make me long-term bullish an airline stock. United drew me in with a fare that blew everybody else's away, only to suck an extra $63 out of me per ticket, bringing what I thought was my $230 fare to about $293.

Of course, as an investor, this made me run straight to the SEC's Website. No, not to complain. I am a stock geek. I wanted to see if UAL's most recent annual report contains any color on this strategy. Itdoes:

Additional Revenue-Generating and Cost Saving Measures. We offer, and intend to offer additional goods and services relating to air travel, a portion of which will come from "unbundling" our current product and a portion of which will come from goods and services that we do not presently offer. The revenues that we derive from these products and services, which are generally referred to as ancillary revenues, typically have higher margins than that of our core transportation services and are an important element of our strategy to sustain the profitability that we achieved in 2011 and 2010. The "unbundling" of our current products and services, as well as our additional value-added products, offer customers flexibility and choice in selecting the products and services they are willing to purchase. Additionally, we expect to continue to invest in technology that is designed to both assist customers with self-service efficiently and allow us to make better operational decisions, while lowering our operating costs.

That got me thinking about several other sectors and stocks that I follow closely. Bundling versus "unbundling" is a big deal for consumers and companies in areas such as media and telecommunications.

The American public seems to loathe the cable and satellite companies as much they do the airlines. Unpack what seems like an emerging reality, however, and this vocal and complaining majority might want to rethink its stance. United appears to be turning on its head the very thing that people hate about cable and satellite television packages. Many folks want them "unbundled." Why should I have to pay for Lifetime, Bravo and the Cross-Stitching Channel when all I watch is ESPN and Playboy?

On the other side of the coin, we think we get a deal when Verizon (VZ) or another telco bundles together services such as landline, wireless, Internet and hyped-up television. As much as we love that type of bundling, we certainly dig Apple's (AAPL) brand of unbundling. The company single-handedly fixed a problem for music lovers everywhere when it strong-armed the music industry into letting consumers buy just about any song from an album for a buck rather than having to pay out for the entire LP.

But, United - and I am certain other airlines have or will follow suit -now take the practice of unbundling to an extreme. And, based on what the company says in its annual report this uptick in what it charges for "Economy Plus" is only the beginning. Part of the excerpt from above deserves another read:

We offer, and intend to offer additional goods and services relating to air travel, a portion of which will come from "unbundling" our current product and a portion of which will come from goods and services that we do not presently offer. The revenues that we derive from these products and services, which are generally referred to as ancillary revenues, typically have higher margins than that of our core transportation services and are an important element of our strategy to sustain the profitability that we achieved in 2011 and 2010.

No pun intended, but the sky truly is the limit. And, while the socially liberal side of me cannot help but have visions of Robert Moses, the fiscally conservative investor side thinks UAL could be on the right track.

The company has already brought new meaning to the idea of "classes" not only on an airplane, but in society. For whatever reason, I am "lucky" enough to be able to drop $189 without thinking twice so my kid can have a more comfortable seat on a 4-hour flight. It almost makes me sick when I consider that some people work harder than I do and can barely put food on the table. But, I digress.

Take it a psychological step further, though. You do not have much money. You scraped together enough cash to fly across the country to visit family. You come across this all-time good deal from United, only to discover that the all-time good deal comes with strings attached. You have to sit in the relatively loud and noisy back of the plane, with up to five inches less legroom, with the rest of the people who cannot afford or refuse to pay an additional $63 or $189 for something the "greedy" airlines used to give away for free.

Again, that brings up some internal conflict for me. But it also shows that United is attempting to turn the airline experience into something that is, at least partially, aspirational. If they get as creative as I think they should, they've, without even knowing it, taken a page out of high-end retail and Apple's playbook. They have something that, all things being equal, anybody can access, but the more you can pay, the higher quality experience you receive.

UAL thinks this strategy is an "important element" in its "strategy" to stay profitable. If properly played, I think it could turn into a relative windfall and, maybe more importantly, make the airline industry less sensitive to oil prices (UAL paid an average of $3.06 per gallon for fuel in 2011, up from $2.39 a year earlier) and broad economic hiccups. While I am not prepared to jump in just yet, I do have my eyes on UAL deep ITM January 2014 calls going forward.

Source: 1 Reason To Put Airline Stocks On Your Long-Term Radar