Airlines Making Billions From Baggage Fees

A huge pile of cash.

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Airlines are making a killing from fees. Last year, U.S. based airlines brought in a total of $4.2 billion from baggage fees alone, according to figures released by the Department of Transportation. That’s a 10% increase from 2015.

Yet according to airline executives, profits aren’t as high as they were in the past, even with lower fuel costs. Airlines reported $13.6 billion in profits total, down 45% from 2015, citing higher labor costs as the reason for the lower figures. Lower passenger fares also attributed to the lower revenue, as ticket sales fell one percent to $124.2 billion.

These lower profits are the main justification for extra fees, not just for luggage but legroom, seat selections, and early boarding to name a few. Airline executives claim these fees allow passengers to choose the kinds of service they want, even though few flyers are fans.

This news comes right as executives from America’s major airlines testified before Congress about their customer service protocols. While this was prompted by last month’s United Airlines debacle, many took the opportunity to vocalize their disdain for airline fees.

William McGee, a former airline executive now representing the Consumers Union, argues that the fees are disingenuous and unfair to passengers.

“We’ve heard a lot about pricing today, about fares being lower than they were 25 years ago,” McGee testified. “The fact is that obscures fees we didn’t used to pay. Every day there are higher and higher fees. Passengers are getting gouged.”

Massachusetts Rep. Michael Capuano agrees that customers are negatively affected by these business practices.

“I go in the computer to try to figure out which flight I want to take. Some charge fees for baggage. Some charge fees for oxygen. Who knows? You can’t get comparable prices,” Capuano said.

As expected, executives from United and American disagreed, saying the baggage fees help keep other costs, such a ticket prices, low.

ESPN Facing Major Layoffs

A photo of an ESPN microphone.

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ESPN is the latest organization to be hit by the digital craze. The sports network is laying off 100 employees this week (mostly on-air talent) hitting every facet of the organization as ESPN is moving toward a mostly digitized medium.

Sources say the decision comes after an increasing amount of costs and decreasing number of cable subscribers have cut into its bottom line. For a network that has spent billions of dollars in deals with major sports teams and events, layoffs are no surprise to anyone. So who is getting hit? Well, some big names at the network.

Yesterday, Deadspin posted a number of tweets from ESPN anchors, writers, and reporters who were given the bad news, some of who worked at the network for decades.

NFL Reporter Ed Werder was one of the first to go.

“After 17 years reporting on #NFL, I’ve been informed that I’m being laid off by ESPN effective immediately. I have no plans to retire,” he tweeted.

“SportsCenter” Anchor Jay Crawford, Big Ten Reporter Brian Bennett, and MLB Writer Jayson Stark are some of the other talent who are now gone. College Basketball reporter C.L. Brown found out about his firing while on vacation.

ESPN President John Skipper noted how difficult this decision was, thanking the former employees for their “great work” and “many contributions,” yet made it clear that the layoffs had to be done.

“Dynamic change demands an increased focus on versatility and value,” Skipper stated, “and as a result, we have been engaged in the challenging process of determining the talent–anchors, analysts, reporters, writers, and those who handle play-by-play–necessary to meet those demands.”

Many of the people laid off were at the end of their contracts and unwilling to take a massive pay cut. The rest of which were bought out of their contracts.

Meet the Unicorn Frappuccino That Everyone is Raving About

A photo of a pink and blue "Unicorn Frappuccino" from Starbucks.

Photo credit: Brian Chow at Flickr Creative Commons.

Starbucks’ new multi-colored drink is a dream come true for sugar enthusiasts and frozen drink lovers, offering an array of colors and flavors with every sip and giving drinkers one sweet-filled experience.

“Like its mythical namesake, the Unicorn Frappuccino blended crème comes with a bit of magic, starting as a purple beverage with swirls of blue and a first taste that is sweet and fruity,” a spokesperson for Starbucks said in a statement. “But give it a stir and its color changes to pink, and the flavor evolves to tangy and tart. The more swirl, the more the beverage’s color and flavors transform.”

This limited edition drink is only being offered from April 19 through April 23, and it’s caffeine free, so coffee lovers won’t be offended by this sugar-filled creation. The Unicorn Frap consists of the crème Frappuccino mixed with mango syrup and dusted with a pink powder and sour blue drizzle. Then it’s topped with vanilla whipped cream and sweet pink and sour blue powder, making it paradise in a cup for all sweets lovers.

Starbucks says its inspiration for the drink came from the Internet, as social media is blowing up with pictures and recipes of Unicorn-themed foods and beverages. Not one to shy away from a trend, Starbucks decided to play along and offer loyal customers something fun and festive before people moved on to something else. Case in point: last year’s Pokemon Go Frappuccino.

Naturally, people have been going crazy and posting their excitement on Snapchat, Twitter and Instagram. It’s safe to say that social media will be bombarded with photos of the drink this coming week, as the frap is expected to sell out.

It should also be noted–although I’m sure it’s no surprise–that the Unicorn Frappuccino is not friendly to those watching their diet. A tall Frap with whole milk comes in at 280 calories, with 11 grams of fat and 39 grams of sugar.

New York Times and CB Insights Name Sandy Miller to Top 100 Venture Capitalists for Second Year

 

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For the second year in a row, Sandy Miller of Institutional Venture Partners has been named as one of the top 100 venture capitalists in the world, according to The New York Times and CB Insights. The list is determined using data analytics focusing on investments, consistency, and reputation, among other factors. Miller is joined on the list by fellow IVP General Partner Todd Chaffee.

In addition to co-founding Thomas Weisel Partners with Silicon Valley investment banker Thom Weisel, Miller has 35 years of experience in venture capital and technology investment banking. He’s served on more than 25 public, private, and philanthropic boards. In his work he has led investments in companies such as AddThis, Constant Contact, Datalogix, OnDeck, Zynga, and many more. He was also a Managing Director at Montgomery Securities, Merrill Lynch, and DLJ, as well as a strategy consultant at Bain. Since 2006, Miller has been a Managing Director and General Partner at IVP. He ranks at #41 on the list.

Todd Chaffee, also of IVP, has been a Managing Director and General Partner since March of 2000. He has more than 25 years of experience with operating and investment, including investments in Akamai, Ariba, Business Insider, Netflix, Pandora, Yahoo, and many more. Prior to his work with IVP, Chaffee was Executive Vice President of Visa, overseeing Visa’s Advanced Technology, Strategic Planning, Corporate Development, and Equity Investment divisions. He ranks at #97 on the list.

IVP was one of the first venture capital firms on Sand Hill Road in the Silicon Valley. Founded by Reid Dennis in 1980, IVP focuses on financing later stage companies and helping with overall strategy to ensure company health.

This is the second year CB Insights and The New York Times have put together this list using CB Insights’s Investor Mosaic Algorithm. The algorithm uses straight data as well as submissions to determine the best firms and individual professionals in the venture capital market. Determining factors include investor exits, network centrality, illiquid portfolio company value, and recency of performance. Putting it all together, CB Insights and The New York Times are able to come up with a list of the current best-ranking VC professionals.

Best Practices for Responding to a PR Disaster

A filing cabinet. One of the files is labeled "disaster recovery plan."

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When it comes to PR disasters, how you respond can be the deciding factor in whether your company sinks or swims. That’s why it’s important to have a plan put in place should a crisis come your way.

Don’t wait until disaster strikes. Take action now.

You should prepare for a PR disaster for the same reason you prepare for a natural disaster: just in case. Regardless of whether or not you anticipate trouble coming your way, you should have all your steps outlined so you know exactly what to do if the situation occurs.

Respond within 8 hours.

This is an incredibly short time frame, which is exactly why statements need to be crafted ahead of time. There should be two statements: one from the CEO and one from an official spokesperson. For smaller companies, just one statement from the CEO will suffice.

While it’s difficult to craft a statement when the circumstances of the situation are still unknown, you should still have a general outline ready. Specifics can be inserted later and you can always make changes to the document. Basically, the last thing you want is to have no plan, no statement, and no clue what to do next.

Acknowledge the situation.

This doesn’t mean admitting fault. It means that you’re aware that the situation occurred.

Let the public know what you plan to do.

The public wants to know what steps you’re going to take moving forward. This can mean cooperating with law enforcement officials, it can mean launching your own internal investigation, or it could mean offering some type of compensation to your customers. The idea is to show the public that you’re doing everything in your power to make things right.

Follow through on your promises.

Following through on your promises is even more important than letting the public know what your course of action is. If you do not follow through on what you said you would do, the public will view you and your company as being untrustworthy.

There are many other best practices that you should implement in order to further prepare yourself for a PR disaster. This article is intended to be merely a beginner’s guide to the subject matter. For more in-depth tips, check out the following books:

Damage Control: The Essential Lessons of Crisis Management
Masters of Disaster: The Ten Commandments of Damage Control
The Four Stages of Highly Effective Crisis Management: How to Manage the Media in the Digital Age

New Self-Healing Polymer in Development

An Asian man running tests in a laboratory.

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Self-healing materials have long been something of a Holy Grail for chemists. For those unfamiliar with the term, self-healing materials are materials that, if say broken into two, can rejoin.

It may sound unrealistic, but that’s how our skin works. The trick is figuring out how to do that with artificial matter.

Believe it or not, self-healing materials have been in the works for a while now. Unfortunately, there are a few kinks that developers need to work out before this kind of technology can be brought to market. Humidity, for example, wreaks havoc on such materials since water gets into them and changes the chemical properties. A self-healing material isn’t all that useful if it only works in the desert.

But according to Dr. Chao Wang, who has been working on self-healing materials for a while now, things are looking brighter. He’s developed a material that is capable of self-healing and can conduct ions in order to generate current. It’s even stretchable, so it has a lot of potential uses, like in smart phones or soft robotics. He says he was inspired by Marvel’s Wolverine, known for his “healing factor” which makes him nearly un-killable.

And although the material doesn’t stand up to humidity (not yet anyway) that’s the next goal on Wang’s list. Wang plans to fix the problem by “tweaking the covalent bonds within the polymer itself.” Once he has that figured out, the polymer will be that much closer to being usable in a variety of real-world applications.

Wang uses the example of a smartphone which can repair itself after being dropped. Since the material in question is transparent, this would make for an ideal use. Of course, there are no doubt countless uses for such a material, in manufacturing or in consumer products, which could no doubt help us reduce waste with longer-lasting products.

Virgin America is No More

A photo of a Virgin America airplane in flight.

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Sad news for fans of Virgin America: the airline is all but finished after its recent merger with Alaska Airlines.

Last year Alaska Airlines purchased Virgin America for $2.6 billion, leaving many to wonder what would become of the two different airlines, as Virgin was popular for being flashy, fun, and more young-adult centric. Alaska plans on retiring the Virgin name and logo some time in 2019.

“While the Virgin America name is beloved to many, we concluded that to be successful on the West Coast we had to do so under one name—for consistency and efficiency, and to allow us to continue to deliver low fares,” said Sangita Woerner, Alaska Airlines’ vice president of marketing.

Frequent Virgin flyers can take solace in one thing: Alaska Airlines will be keeping the “flair” that Virgin offered, such as mood lighting, music, and free WIFI and entertainment.

One person who isn’t happy about Virgin’s departure is Virgin America founder Richard Branson.

“With a lot of things in life, there is a point where we have to let go and appreciate the fact that we had this ride at all,” Branson said in a blog post. “Many tears are shed today, this time over Alaska Airlines’ decision to buy and now retire Virgin America. It has a very different business model and sadly, it could not find a way to maintain its own brand and that of Virgin America.”

Starting next year, Virgin’s frequent flyer program will disappear, but members will not lose their status. Current frequent flyers have the option of converting their miles to Alaska’s at a rate of 1 to 1.3 miles, or they can wait it out and have their miles traded evenly when the program dissolves.

The merger between the two airlines created the fifth-largest airline in the United States, boasting 1,200 daily flights and close to 300 planes. Alaska Airlines plans on expanding their market to 21 new cities over the next year.

If You Can’t Beat ‘Em, Buy ‘Em Out

A gleeful businessman with a suitcase full of money.

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It’s not an uncommon occurrence: two companies duking it out in the marketplace, their battle only ending when one buys out the other. Whether it’s GoDaddy buying up European rivals to expand its reach or Billtrust taking its competition, Invoice Connection, out of the game to do away with constant low ball pricing scares, there are plenty of reasons why a company might choose to buy out a rival.

Of course, ideally, the situation is more of an amicable, strategic merger. San Francisco investment banker Thom Weisel is no stranger to this sort of development: his Montgomery Securities was sold to NationsBank in 1997, and in April of 2010, Stifel Financial purchased Thomas Weisel Group.

Montgomery Securities, a privately held investment bank that focused on lucrative IPOs of high tech companies, ultimately became a subsidiary of NationsBank called NationsBanc Montgomery Securities Inc. Weisel continued to serve as the unit’s chairman. This came after Weisel announced several months earlier that Montgomery was looking for strategic partners. So rather than a foundation of anger and distrust, this deal was made based on a desire for compromise.

“The combination of our two companies is a great fit and will allow us to reach our goal of providing one-stop shopping to our clients,” Weisel said at the time.

As for Stifel’s acquisition of Thomas Weisel Partners, the all-stock transaction, involving more than $300 million, definitely sweetened the deal. And while Stifel did basically buy Thomas Weisel Partners out, Stifel made the purchased investment bank a fairly autonomous subsidiary with Weisel himself a co-chairman of the board.

Unfortunately, not all buyouts are this smooth. Flint Lane’s Billtrust, an electronic and paper billing service aimed at plumbing, electrical, and lumber supply wholesalers, suffered from years of bitter rivalry with Invoice Connection, a rival company who consistently went after Billtrust’s clients by offering much lower prices.

Still, Lane wasn’t going to let the simmering animosity affect his business decisions. He met with Invoice Connection co-founder Earl Beutler, and on June 6, 2011, the two companies signed a letter of intent for Billtrust to buy out Invoice Connection. The deal closed in September of that year.

The world of mergers and acquisitions is, at least in theory, a realm of utmost professionalism. Companies make decisions about expanding, partnering, and buying based on the market and what’s best for each individual business. But there’s always the cutthroat underbelly, where sometimes the best solution to the problem of competition is to…well, buy it out. No matter what unpleasantness may (or may not) occur during the actual handoff, the positive outcomes are usually worth it: the subsequently formed businesses are stronger and can offer their clients more services and opportunities.

So in the end, having a rival might not be such a bad thing after all.

Print Media Isn’t Dying

A picture of a typewriter with the words "the end" printed on a piece of paper.

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For a while there, everybody was concerned that print media was going extinct because people were reading newspapers and books online. That’s turning out to be a false alarm though, as several studies have shown that physical books are experiencing a resurge in popularity.

Newspapers, which have been seen as struggling in the digital age, are also doing fine (at least in the United Kingdom, anyway). According to a recent study, print newspapers are more popular than their digital counterparts, with readers spending 89% of their time with print editions and only 4% and 7% with web and mobile versions.

Other studies have shown that in Germany, print newspapers are 38% more likely to be used as a weekly news source than the web, while in the U.K. that number is only 13%. The authors of the British study think that German readers could spend even more time with their print papers. So while not everybody is reading print newspapers, or maybe newspapers at all, those that are seem to prefer print.

What this tells us is that digital technology hasn’t been as “disruptive” as we’d thought (disruptive in this case meaning that it would kill print media). The people lamenting the death of print media have mostly been people who were slow to embrace digital media in the first place. But there’s no reason that print and digital media can’t coexist, since they serve different purposes for different people.

Could print media eventually die out? Sure, but that’s still a ways down the road. In the meantime, it’s here to stay.

What does that mean for publishers, whether that be books, newspapers, magazines, or comics? It means that they need to pay attention to the way readers actually engage. Better than wasting their time trying to find ways to hinder digital media, they should find ways to work with it, or to find audiences that prefer print products they already make. Adaptability, and paying attention to what’s actually happening, is key here.

Study Shows That People With ADHD Add Value to Business

A clipboard that reads "ADHD." There are several prescription medications and medical devices surrounding it.

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There are numerous traits associated with entrepreneurial success, including risk taking, passion, persistence, and time commitment. But these traits are also associated with something else: ADHD. Most of us are used to hearing ADHD discussed as a problem, making it hard for students or workers to focus. But that’s only because we’re used to discussing ADHD in the context of structured environments that expect the same thing from everyone.

New evidence gathered from an international study found that, “some of the symptoms of ADHD resemble behaviors commonly associated with entrepreneurship—in a positive sense.” Some of the symptoms even had “a decisive impact on the subjects’ decision to go into business and on their entrepreneurial approach.”

These symptoms include impulsiveness, which allowed the study participants to make decisions without getting bogged down by details and concerns. Additionally, their boredom with their jobs often led them to start their own businesses. Hyper-focus allowed them to hone in on a task and really go after it, which contributed as well to their high activity level. But all of these pros could just as easily become cons, such as when impulsiveness makes it difficult to focus on routine tasks like bookkeeping.

It’s worth nothing that not all ADHD participants were successful, and sometimes their businesses failed, but so do a lot of business, regardless of who starts them. What this study does is gives us a new light in which to look at both entrepreneurship and ADHD, which should help us develop better understandings of both.

The markers by which we measure the success of a business might not be telling us everything about what makes a successful business, or who should start one. And by finding these connections to their symptoms, we can take a more positive look at ADHD as something other than a problem. It’s not something that needs to be treated or cured, but something that people need to learn how to make work to their advantage.

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