V Australia and Delta Airlines have been fighting to enjoy anti-trust immunity with a mutual capacity agreement on routes between the United States and Australia.  So far, regulators are unconvinced that this would be a good thing for consumers and see it as an opportunity to gain market share only. 

To a degree, that’s true.  V Australia and Delta Airlines are the new boys on the block when it comes to US/Australia routes.   Their direct competitors are QANTAS and United Airlines who enjoyed near monopolies on those routes for years.  In addition, the lion’s share of the market belong to both of those airlines today as a result of their strong alliances (Oneworld and Star Alliance). 

I was glad that new competitors entered that market and I think we need more competition than just two airlines who want to behave as flag carriers.  On the other hand, I never thought that those routes could stand 4 competitors either.  Allowing an agreement between V Australia and Delta will help preserve the competition, I think, more than harm it. 

Both airlines promise not to reduce flights between the two countries and I believe that is true.  Instead, I think we would see the aircraft redeployed on other routes between the two countries to provide more coverage to both nations.  This would be a good thing.

In light of QANTAS’ move to switch its route to Dallas / Fort Worth from San Francisco to link up better with its Oneworld partner, it’s time for the regulators to calm down and get their assurances and allow Delta to make this partnership happen. 

If anything, a link up between these two airlines could result in better service for consumers.  V Australia can feed passengers over to its Virgin Blue domestic market whereas United Airlines has no such partner in Australia.  Since many of the objections come from Australian regulators, one must assume that there is some unequal treatment towards QANTAS going on here. 

I think reality will set in and we’ll see this agreement approved some time soon but not without certain guarantees and I think the two parties will have to make a move to show that they don’t want to harm QANTAS too much at the end of the day.

Filed under: Airline News by ajax
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Trans States Holdings,  a regional airline holding company operating the Compass Airlines (newly acquired), GoJet Airlines and Trans States Airlines, has firmed up its order for 50 Mitsubishi MRJ regional jet aircraft and has options for another 50 aircraft.  This is a huge order for Mitsubishi who has just one other order from ANA for just 10 aircraft (15 options).

In fact, one has to wonder about the viability of the MRJ if it doesn’t soon gain a few more orders.  The 70-90 seat aircraft promises everything else that other new regional jets are promising.  This aircraft is using the Pratt & Whitney GTF engine for meeting its performance goals as well.

This aircraft has risk in it.  This is the first Japanese developed airliner since the YS-11 in the 1960’s and while Japan does have a nice aerospace industry serving Boeing (and Airbus to a lesser degree), it has little experience in building whole aircraft on its own.  In addition, the Pratty & Whitney GTF engine is still an unproven engine in the eyes of most people.  It may well perform as promised.  Then again, it may prove to be a maintenance nightmare too.

Trans States order is a bit of a vote of confidence but I also wonder at their plans for these aircraft.  They’ll obviously be used for 70 seat flying on behalf of a variety of airlines but that only becomes possible if more airlines’ pilots unions permit more 70 seat regional jet flying.  Ask United how that is working out with the Continental pilots.  American is doing no better with American Eagle either. 

It’s a gamble for both parties and both need a win in this deal.  If this airliner doesn’t work out, Trans States may well be finished as a company.  If Trans States is unable to deploy these aircraft into flying for various airlines, Trans States may well be finished as a company.  If Mitsubishi doesn’t land more customers soon, there may not be a business case to continue developing this airliner. 

I’m not sure the MRJ is big enough.  It seems to me that the right size airliner might be more along the lines of the Embraer 190/195 and CRJ900/1000 as it would attract airlines who need a smaller aircraft for mainline flying.  There is a lot of uncertainty among regional airlines in the US at present because there are fewer customers to fly for and those customers are squeezing their partners even more today.

How many new regional jets do we need?  With Russia, Japan and China all working on similar aircraft to compete with two other companies who have a mature product (Bombardier andEmbraer), it would appear all of these new aircraft are, at the least, somewhat at risk.  Russia’s Sukhoi SuperJet actually looks more “right” for customers than the MRJ since it has more lift and range.  China’s effort is an exercise in learning how to build a plane more than a real commercial effort to succeed.

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