American Airlines and its Wi-Fi Internet service provider, Aircell, say they hope to introduce a new entertainment option for passengers wishing to stream movies or TV episodes on their laptop, tablet computer or smartphone while in the air.

American is testing the service and plans to introduce it later this year if tests go well and the Federal Aviation Administration signs off on it.

What passengers will pay hasn’t been determined. But American says the price will be “very similar” to what people pay for pay-per-view movies at home. Amazon and iTunes, two popular pay-per-view channels, typically charge $3 to $5 for a movie and $1 to $3 for a TV episode.

Customers who want to buy a movie or TV episode won’t be required to pay for Internet access to see them, which could make the pay-per-view option attractive. Aircell, which markets its in-flight service under the “Gogo” brand, charges $12.95 for a day of access ($9.95 for 1.5 hours to three hours; $4.95 for up to 1.5 hours).

“If all you’re interested in is watching a movie, this is a better choice,” says Doug Backelin, American Airlines’ manager of in-flight communications and technology.

Aircell uses an air-to-ground technology to transmit data, but the video service won’t use that pipe for its pay-per-view service. Instead, the entertainment will be stored in a server on the plane to ensure that the Internet speed for other passengers won’t be slowed, Backelin says.

To read the full story: USA Today

American Airlines and online travel company Expedia on Monday put an end to their three-month old dispute, reaching an agreement that returns the Fort Worth, Texas-based airline’s flights to Expedia and Hotwire.

American and Bellevue, Wash.-based Expedia Inc. announced the agreement in a joint statement but did not disclose the terms.

American, which is owned by AMR Corp., has been trying for months to lower the commissions it pays online travel sites for each ticket booked. In December, it stopped selling tickets through Orbitz as part of the push. A week later, Expedia removed American from its listings in an apparent move of solidarity.

The airline and Orbitz have not resolved their differences and American’s tickets are still absent from that site.

To read the full story: Yahoo! Finance

A traveler searching two of the four largest online travel agencies, Orbitz and Expedia, is not going to find any listings for American Airlines flights — at least for the moment.

That is because American is in a standoff over the fees it must pay to list its flights with the agencies. And while that is the immediate reason for the dispute, a broader issue is at stake: how American’s tickets are displayed and marketed to travelers.

American has developed direct connection distribution technology — which Orbitz and Expedia have refused to adopt — that could change the way it displays and sells tickets. Rather than displaying fare listings based primarily on schedules and prices, American’s technology eventually will customize offers to a traveler’s individual needs. So, during booking, the site will display fees charged for more legroom, priority seating or whatever else the passenger prefers, thus enabling American to promote options that could generate more revenue.

To read the full story: NY Times

American Airlines has begun a limited test of the retail concept. It is selling Heathrow Express train tickets on London-bound flights, and it is offering in-flight Internet access and items from SkyMall — the glossy catalog that has had a reserved space in the seatback pocket of airliners for 20 years — on 165 airliners.

“We wouldn’t invest if we didn’t feel comfortable it would provide a fair rate of return,” said John Tiliacos, managing director of onboard products for American Airlines.

“Given where we find ourselves as an industry, financially it behooves us to identify every source of revenue we can identify.”

Other airlines declined to talk on the record about their plans, but nearly all the major carriers acknowledged that they were working on expanding retail offerings.

Whether air travelers will open up their wallets once the aircraft pushes back from the gate remains to be seen. But Michael Levy, a marketing professor and the director of the Retail Supply Chain Institute at Babson College in Massachusetts, expects that they will.

“Look at what’s going on in airports,” he said. “Anytime you have customers who are captive, who have nothing better to do, they’ll shop.”

Passengers can learn about products for sale from seatback advertisements, brochures and announcements by flight attendants and gate agents, as well as on airline Web sites and through social media. Finding the right mix of products is important because if an airline offers the wrong items, it could irritate its customers.

In the past, customers could browse the SkyMall catalog, but placing an order could be done only after the plane had landed. With the addition of what SkyMall’s president, Christine Aguilera, calls “a cash register in the air,” sales can be completed on the plane. “These are some of the greatest consumers on the planet,” she said.

The job of selling falls to flight attendants, and some in the United States have already expressed concern. In a letter to American Airlines, the Association of Professional Flight Attendants wrote that sales commissions with SkyMall or any other vendor must be negotiated as part of the labor contract with the airline.

light attendants at other airlines are also worried that retail commissions may be used to replace salaries, according to Corey Caldwell, a spokeswoman for the Association of Flight Attendants. “If airlines are encouraging flight attendants to participate in selling of products and services, it needs to be done when the flight attendant has completed safety and security activities onboard the flight.” Ms. Caldwell said. “It’s definitely a proceed with caution type of thing.”

Currently, the average amount a passenger spends with an airline after purchasing a ticket is $1, according to statistics prepared by GuestLogix. At Ryanair, by contrast, Mr. Cawley said customers spend on average about $15.

But even if airplanes begin to resemble retail space, Mr. Cawley of Ryanair insisted that its business was transportation.

“The single most important thing is selling the airline ticket,” he said. “All the ancillary sales flow from that.”

http://www.nytimes.com/2009/11/17/business/17sales.html?_r=1&adxnnl=1&adxnnlx=1258549392-y3zxxo1dRd2SS9uSJVR1lQ