It's a good article, available here. I found these paragraphs to be particularly interesting, as they highlight the dichotomy between low-cost and premium airline passengers when it comes to entertainment:

Absolutely. But the article also points out that the LCC's provide more comfortable cabins.

Once my CO upgrade record went to 0 for 26, I switched to B6 primarily based on the far greater comfort of their coach cabin.

(I recently received my first upgrade on CO since Feb 2005, but this was on an $1,899 ticket so I'm not sure it was a huge coup...)

But the point is that traditional airlines like UA and DL are addressing their coach product and spending money to make improvements, while CO's management continually downplays the need for any changes with comments such as "customers don't care about IFE."

I'm just a little worried about the long-term imlpications for CO as the rest of the industry passes them by.

I found this to be particularly interesting:
Recently?!? Wasn't that, like, 8 years ago? Or have they made some meaningful enhancements more recently?

Quite a few of us are aware of your rather unenviable upgrade (or lack thereof) record.

I don't think they're standing still. They're installing AVOD on the international 752 aircraft and I'm sure more is in the works.

How is UA improving its coach cabins?

Yes, this is only a small part of the fleet, though.

Also, the recent statement concerning 2nd qtr earnings made it clear that very little money will be set aside for infrastructure improvements and capital investments at least through 2008.

Perhaps I used the wrong tense. The first improvement was UA+, a huge bonus for ff's and anyone able to shell out $40.

The most recent improvement was UA PS, which provides passengers in all cabins with much greater comfort on transcons (certainly compared to CO's 737's with 40" of seat pitch in FC & industry-minimum 31" in coach).

There are two problems with this. First, most customers won't pay $40 more each way for more space. They'll complain until the cows come home, but they will always go for the lowest price. Second, the money for all of these improvements needs to come from somewhere. Sure, JetBlue has a wonderful IFE system, but it's free. There is no added revenue there. People will not pay for it. People don't fly one carrier vs. another in coach because the IFE is better. If the customers don't want to pay for improved IFE then the cost for it has to come from somehwere else. That's not likely to happen at Continental. It makes no business sense. It *does* make sense to put AVOD into the premium cabins. They need to do that to remain competitive. Premium customers bring in real revenue. So, the systems being installed in the premium cabins will mre than pay for themselves.

What can I tell you? I have personally shelled out $40 to fly E+ on UA. I realize i'm only only passenger.

Regarding IFE I respectfully disagree that passengers don't care about IFE. In an informal poll of my jetBlue fellow passengers virtually everyone agrees that the PTV is a huge factor in their decision to fly B6 vs another airline.

You can also look at the numerous threads here on FT Continental, the number of complaints that are directed at what is seen as CO's lackluster IFE offerings.

As far as it not bieng a source of revenue, it may not be a profit center per se, but if it's getting customers on the plane in the first place, it's simply a cost of marketing the product. And if CO loses customers to B6, or any other competitor, then the opportunity cost of not investing in improved IFE can be tremendous.

I realize that CO is flying virtually full without these amenities. What I'm concerned about is a couple of years down the road when CO's competitors have gained a huge leg up by investing money today in better quality in-flight amenities while CO was taking that money and, instead of investing it, reporting it as profit.

I can probably assure you that if the B6 flight were $20-40 more than the other airline, most of them would have foregone the PTV and taken the cheaper flight.

I think the difference in fare that would throw them to another carrier is quite a bit less than even your $20 minimum per ticket. The overwhelming majority of customers have one thing in mind when booking air travel -- price. After that comes price, and then comes price.

You forgot about cost.

JJ,

I know that is the accepted gospel in the airline industry, but the fact is that B6's fares have increased pretty dramatically in the past 6 months. While their LF's are down 1-2% points, they're still packing them in.

On virtually any itinerary out of NYC, with at least 1 week advance purchase, you can find cheaper tickets on other carriers. In fact, even before the B6 fare increases, they were rarely the least expensive option.

Again, my informal surveys of my fellow B6 travelers demonstrates that most of them shopped around on the web, understood that there were less expensive option and still selected B6. The reasons I hear over and over: 1. The comfort and 2. The PTV.

About three weks ago I flew NYC-Houston. I flew ATA because CO was exorbitantly expensive ($800 +). While in HOU I ran into a family from NJ and we struck up a conversation about airlines. It turns out the father is CO Plat. He and his family were flying ATA for the same reason as me (CO was way, way too expensive).

But he also told me that his airline of choice is now B6 because of the legroom and the PTV. I asked him if I would fly B6 if another, less comfortable airline were a little less expensive. "Absolutely," was his response.

Not scientific, but the LF's on B6 I think demonstrate that, with the information revolution, it is possible that the old gospel about the commodity value of airline travel may be shifting...

Thanks for the feedback. I missed the article, but will go and dig it up.

In fairness to Continental, they have been successful in surprising people when expectations are low. I do think that management is focused on profitability right now--and fixing that balance sheet--since it would give them a great competitive advantage. I have to believe that they are concerned about their product and will invest in it in early '07.

Thanks for providing and except from the article (the link appears to be dead). I have to agree that for most passengers, price and price alone determines if they'll buy a ticket. For those up front, it's differentiation. The challenge for an airline like Continental is that there might be as many as 10% of people in coach that decide on factors other than price. The big question is how to you keep those passengers happy while treating them like the other 90% of coach--the fodder!