When you’re flying an airplane and the speed in the air starts to slow for whatever reason, you are actually supposed to push the stick rather than pull up.  Pushing the stick gives you some forward air speed and forward air speed is security for a pilot.

The one thing you do not want to do is nose the aircraft over completely and nose dive into the ground.

Running an airline is a lot like flying an airplane and I’m afraid that Alan Joyce and QANTAS might have just aimed the nose of their aircraft, QANTAS, towards the ground.  

There is such a thing as taking a stand against labor actions and it can be a smart thing to do.  However, grounding your fleet to teach your employees a lesson really is a bit over the top.  Furthermore, hoping that your government will step in and make your employees play nice again is a bit optimistic. 

Oh, the labor actions may get stopped but now you’ve destroyed any good will you might have had as an employer.  You’ve pissed off tens of thousands customers and you lost millions of dollars.  If you are a shareholder or, say, a member of the government, what do you do?

Get rid of the polarizing figure in this mess.  That’s what.  You won’t necessarily fire the board itself but you can make a point by placing them under immense pressure to rid themselves of someone who can’t make a deal.  I think Alan Joyce isn’t long for this world as CEO of QANTAS.

Filed under: Airline News by ajax
2 Comments »

There is a bit of hot talk again about more consolidation among US airlines as a result of American Airlines (AMR) President Tom Horton responding to a question about whether or not they included in such a consolidation.  He replied “Yes, it could.”

Does it mean they’re actively seeking a partner?  No, it does not.

I suspect that Horton’s response was more off the cuff than anything and simply not closing doors on the idea.  I do not think the current management team is seeking that kind of consolidation simply because it really does mean that many of them must go. 

Does it mean US Airways is a suitor to American Airlines?  No, it does not.  Even Doug Parker realizes that American Airlines tends to simply buy companies to shut them down from competing with AA.  He knows that the management isn’t about to give up the reins in a merger of equals and he knows that they are the one airline that has far bigger problems than US Airways.

Mind you, I continue to think that AA could stand a dose of US Airways management.  But a merger doesn’t begin to look attractive until there is a deal with the various labor groups and one can see what the financial impact is of those deals. 

In short, I don’t think there will be anymore consolidation in the near term (12 to 18 months).

Filed under: Airline News by ajax
No Comments »

Southwest and other airlines took a bit of a hit in their fuel hedging over the last quarter due to lower than expected oil prices.  This resulted in a loss for SWA that otherwise would have been a profit and the loss is a paper loss at that. 

In reviewing the company’s performance as well as taking a view on the near and medium term future, CEO Gary Kelly actually sounded downright positive on the whole.   With some emphasis on caution, Kelly seems a positive future for Southwest and says that business bookings have remained stable and revenue growth is downright sweet. 

Good to hear. 

What I haven’t heard yet is a plan for handling the issues a 600+ aircraft airline should be doing with excellence.  For instance, why not illuminate folks on what the plan is for a new reservations system that will accomodate things like, you know, code shares that you have with partner airlines. 

Where will Southwest grow next?  The Airtran purchase is growth but not growth beyond the two combined companies.  In fact, we already know that there will be some contraction as a result of that purchase.  What’s the next Southwest adventure when it comes to routes?

And what is Southwest doing to prepare itself for 2014 in Dallas?  Dallas is a metroplex area with more than 6 million people in its catchment area.  Southwest manages to capture a nice portion of the eastern half, yes.  But in 2014, the gloves come off at Love Field with respect to non-stop flights to destinations in the continental United States.  Southwest will be restricted to operating from 16 gates at Love Field and that is not enough gates to serve everywhere people in the DFW area want to go.   (We’ll talk about this later this week.)

Southwest is an airline that generally keeps quiet until it really is ready for an announcement.  But this is *not* a small airline anymore and there is precious little conversation going on as to how SWA will manage itself in the future.

Filed under: Airline News by ajax
No Comments »

United’s ALPA union has elected a new leader to replace current chairman Wendy Morse.  His name is Jay Heppner and his statements upon winning (Morse didn’t run for re-election) don’t lead me to believe that things will be better in getting the United and Continental pilots to agree to something. 

Heppner sees this as being about a new contract and it is no secret that United’s ALPA see the new contract and integration being about getting big, fat raises.  That’s a non-starter with United and, in particular, it is a bit insulting to the Continental pilots who upon integration, really do lose a bit of power as there are far more United pilots and many are far more senior than Continental pilots.   Continental pilots have largely been smart and pragmatic about the new world order in the airline industry and really don’t deserve to be impacted by recalitrance.

Filed under: Airline News by ajax
1 Comment »

American Airlines parent company AMR has announced losses again.  This time, despite an arguably very strong industry third quarter, AMR has losses of about $162 million.  $50 million of that resulting from hedging and foreign currency devaluations. 

There is no surprise here. 

Even when CEO Gerard Arpey responds that the carrier is “. . . taking aggressive actions to improve the company’s performance and strengthen its foundation for long-term success.”  He also says:

“We have put in place many of the critical building blocks for a successful future, including a strong network and alliance partnerships, accelerated fleet renewal plans and innovative products and services to enhance our customers’ experience.”

The problem is the stark contrast between AMR and other major legacy airlines’ performance.  In addition, it’s clear that AA’s competitors are not permitting their costs, especially labor costs, to rise and lessen the differences between them and AA.

The other problem is the perception that AA may have waited to long to get aggressive on responding to its problems.  They have allowed labor contracts to fester.  When other airlines dumped fuel hogs, AA waited 2 more years before getting aggressive on fleet renewal.  Other airlines continue to be more aggressive on capacity management.  American hasn’t engaged in developing its international flying aggressively in stark contrast to airlines such as Delta and United. 

I think analysts see a a “perfect storm” of consequences gathering on the horizon.  The only thing that keeps them from howling about it too much is the rather large cash holdings AA still has.  Unfortunately, those just eroded another $163 million which isn’t a trivial sum of money.

Filed under: Airline News by ajax
No Comments »

Southwest pilots have been briefed by management that there really is a Plan B if Airtran and SWA pilots cannot come to an agreement on merging seniority lists.  Plan B is to keep Airtran as a separate entity and that would not be good for Airtran pilots (or other crew.)

There is a perception that Southwest is a friendly and nice company and, by and large, they are.  However, what people often forget is that Southwest is quite capable of making swift, hard decisions in the face of adversity. 

What Airtran pilots’ union didn’t consider is that playing coy on the first agreement and refusing to send it for a vote unintentionally signaled to Southwest that there may be adversity on the horizon.  Indeed, I would imagine that quite a few Airtran pilots are now fairly peeved at their leadership since the first agreement was more beneficial in terms of pay and seniority than what is on the table now.  Southwest’s message to Airtran pilots is this:  the deal doesn’t get better the longer it takes, it gets worse.

What’s the worse case scenario?  Plan B.  The unspoken part of Plan B is that Southwest can slowly diminish the size of Airtran over several years, transfer equipment (i.e. aircraft, gate space, etc) over to SWA and ramp up to take over Airtran flying over the next several years by hiring new pilots and crew that fit within their standards. 

In other words:  Want to keep your job?  Well, after this round of negotiations, the deal is that you get to interview for your job at some point.  If you successfully interview, you’ll join SWA at the lowest run in seniority and at reduced wages.  It will still be one of the most secure jobs in the airline industry but those people will have to reset to the beginning again and earn their way upwards once more.

Is Southwest that cutthroat?  You bet.  Is this a negotiating tactic on the part of SWA?  Yes but it comes with the knowledge that SWA really will act on its Plan B unlike some airlines.   Either way, SWA gets what it wants from the Aitran purchase and the worst case scenario for them is a stretched timeline for achieving all the benefits from the purchase.

Is this a gun held to Airtran pilots’ heads?  Well, no, not exactly.  They’re free to choose their destiny.  However, Southwest isn’t an airline that can be bullied and its pilots’ union isn’t either.  That’s the difference in this situation.  There is nothing to gain by being recalcitrant.   Even if Airtan pilots tried to strike (and remember that that can take years before the National Mediation Board gives permission), Southwest can move in and take on that traffic without much impact. 

What defies my imagination is how Airtran pilots (and other crew) think there is a better deal to be had than getting a payraise, decent seniority and the most secure job available from US airlines.

Filed under: Airline News by ajax
No Comments »

There is a report that Etihad is interested in purchasing the Irish Government’s stake in Aer Lingus.  When the government announced its interest in selling its ownership of Aer Lingus, it said it would do so for no less than 1 euro per share. 

A 25% stake in Aer Lingus doesn’t turn those green aircraft gold, however.   There is the little matter of Ryanair holding an even larger stake at almost 30% of Aer Lingus.  Would Ryanair sell it’s stake?  Yes, it think it would if the premium for the shares was right.  It certainly is the way for Etihad to control the airline quickly. 

What is in it for Etihad?  Well, I’m not sure I see the value.  I do not think that Etihad can operate in Ireland using Etihad for a brand.  I do not think that Etihad will have any more luck than anyone else dealing with the dysfunctional groups involved in Ireland’s airline industry.   No one else has had luck so why would Etihad? 

As an investment, it only works if costs can be lowered and management is able to work with the powerful Irish unions.  Ryanair may make a lot of noise for publicity’s sake on this subject but it doesn’t mean they are wrong.   If it’s about slots, even into Heathrow, there are less risky ways to obtain slots.  If it’s about obtaining aircraft, there are less risky ways to obtain those too.  At the end of the day, I don’t see what Etihad wins from this in light of Aer Lingus’ position in European aviation or transcontinental flying.

Filed under: Airline News by ajax
No Comments »

When I think about various labor negotiations going on in the airline industry, I become fairly sure that the issues are fairly close to the same for everyone.   If you ask most people what they want from their job, they’ll generally respond with a desire for their work to be valued more now than 10 years ago, an opportunity to play a role  in their destiny, job security or even just the opportunity to not look over the shoulders for a while.

The order of priority is different for each person, of course, but at the end of the day, it’s about their role being valued.  I could spend days writing about how an airline such as Southwest injects this into their culture but they really are the exception to the rule.

American Airlines is negotiating furiously with its pilots this weekend and I wonder how that has gone for both sides.  I would imagine that for the pilots, the goals are better wages, a retirement that has some security to it, opportunities to rise within the seniority system and leadership. 

For the company, I would imagine the goals are better productivity, fewer obligations to a pension system that is unsustainable in the long run and the opportunity to introduce change quicker in response to a market that changes weekly in this era. 

Ironically, I suspect they are not far apart in their goals but how each perceives a win is probably very, very different.  American Airlines “wins” by being able to announce an agreement that offers them greater flexibility and predictable costs that are now worse than the industry average.  The company must show shareholders, investors and the financial world in general that they have a sustainable operating model for the future or the leadership involved will be asked to leave.

Pilots achieve a “win” very differently.  At AA, the pilots are a very senior group and when you reach a certain age, you want life to be just a little bit easier, not more difficult.  They’ll want better wages, a high degree of certainty when it comes to their retirement and schedules that aren’t so bruising. 

One of the biggest obstacles in this scenario is seniority.  The seniority systems closely ties pilots to the airline and makes it very damaging for a senior pilot to leave the company at any time before retirement.  Those who have tens of years invested in it don’t want to see it gone. 

Seniority systems also tie pilots to flying that they often do not like.  Pilots are humans and some enjoy doing just a few long but punishing international flights and some would actually prefer to spend 2 or 3 or 4 days doing domestic turns but sleeping in their beds more often. 

Even if you didn’t get rid of the seniority system, it would be helpful if pilots weren’t paid by the size of aircraft they fly but, rather, purely on seniority at the company.  The work involved with flying a 777 or an MD-80 is actually really not much different.  It isn’t more work to fly a twin aisle vs a single aisle airliner.  Sometimes it is different work but it isn’t “more”. 

Frankly, it would be to the advantage of safety if we could get more grey hairs flying those domstic single aisle airliner flights.   They’ve been there and done that in more circumstances and know the pitfalls better than any junior pilot does. 

Wouldn’t it be more interesting if a pilot were able to choose his destiny without having to take  a penalty because he or she doesn’t enjoy flying 777s to India and actualy prefers flying from Dallas to New York City and back more often? 

A win here would be to decouple seniority with aircraft type.  Let pilots choose what they want to fly without penalty.  Let them match their preferences to a situation where they feel they have a strength rather than be tightly bound to a style of flying they hate. 

Stop forcing them to upgrade to new aircraft and even from First Officer to Captain.  Does it really matter if a man prefers to stay a senior FO to becoming a junior Captain?  It really doesn’t. 

My suggestion here is that it would be better for both parties to quit trying to hammer square pegs into round holes.  Find ways to let pilots do the kind of work that best fits them without financial penalty.  Instead, ask for more productivity within that work and build schedules that allow pilots to achieve their monthly hours without having to be away from home for 15 to 20 days per month.  Offer incentives for those pilots to live inside their base. 

Make it possible for pilots to live a productive and rewarding life.  The happier and more rested they are from a schedule that does work for them, the more productive, safe and agreeable your workforce will be. 

It would be great to see both unions and airlines think outside of the box on these issues.  Find a way that makes both sides happier with their circumstances.  Refuse to give into inflexibility.  Be fair and trade a happier life for more productivity.  Ask for opportunities for “fence off” a portion of flying to test different work models and find those that do work for both.  Experimentation is what both sides need and it will offer the chance for both sides to try something new without having to commit to a change for years and years. 

Identify styles of flying and group them into schedule groups that pilots can bid into.  Pay pilots a wage based on seniority but not on aircraft size.  Pay pilots a bonus for living at their base instead of commuting.  Pay another bonus for taking on productive schedules.   Offer the opportunity to go fly the same aircraft in a very different setting for a limited period of time so that pilots can explore what works for them without having to make decisions that could affect them and their families for years. 

Find a way to make your people happy and you’ll find that the “costs” involved with that are far less than the costs that come from cranky pilots who are forced into demanding more money just because they feel so trespassed on by being made to fly schedules and aircraft they do not enjoy.

Filed under: Airline News by ajax
No Comments »

Just when you think that nothing will move at American Airlines except at a glacial pace, there is a hint of movement.  American Airlines and its pilots union, APA are engaged in intensive meetings and AA has expressed a desire to the Allied Pilots Association to conclude negotiations this week. 

No, you didn’t read that wrong.

The desire is a good thing.  However, temper that with the fact that we don’t really know how good the lines of communication are between AA and the APA.  Just because desire exists doesn’t mean that one side or the other is prepared to be satisfied with what is offered.  But it’s nice to hear it expressed.

The APA has called a board meeting for this weekend in order to be ready to respond to anything arising out of the negotiations. 

Of course, as soon as APA President David Bates communicated with the membership, the dysfunctional portion of the APA got itself fired up immediately by speculating that several board members would refuse to attend the board meeting to deny a quorum.  Others insisted that the APA and AA are miles apart in any deal. 

I criticize AA quite often for not concluding new deals with its labor.  I’ll continue that criticism until its lethargic pace changes.  However, I’ll also criticize the Allied Pilots Association for acting like a pack of sophomore girls in high school.  It’s distressing to see the sabotage that takes place from time to time by the “hard liners” who firmly believe the best pilot’s salary is what the CEO makes + $1.   Sabotage in the form of insulting the people at ALPA who have made their resources available to assist negotiations.  Sabotage in the form of open and insulting criticism of its (somewhat) newly elected leadership.  Sabotage in the form of not attending board meetings to deny action on items. 

That doesn’t gain you what you want.  Actually, it works in the company’s favor as it simply delays an increase in salaries and/or benefits that would result from a new agreement.

Filed under: Airline News by ajax
1 Comment »

With the heat up on American Airlines’ financial situation as well as the strict scrutiny its share price has gone through, the old dog called merger has started to pop up again. 

The truth is, financial analysts and investors want to see something more happening at American Airlines.  Something that goes beyond “we’ll stay the course with our fixed strategy and hope other airline’s costs rise to ours before our money runs out.”   That really is what has been communicated thus far. 

There is a new culture at some airlines.  It’s a culture of fiscal responsibility that is fostered by airlines leaders such as Richard Anderson (CEO of Delta) and Jeff Smisek (CEO of United).  It’s the idea that a stready return on investment is necessary for airlines going forward.  It is refreshing and it does seem to help as a basis for decision making at airlines.  Enough so that they’re starting to convince me that capacity discipline really will continue in the United States.

On the surface, it would appear that American has the right executive leadership to execute that strategy.  It’s an airline that has a strong reputation for financial management and one would expect that they would lead on this subject.

However, as much as I do think the strategy has value, it ignores the human element of airlines.  We all too often talk about the capital requirements for airlines and the huge amount of cash flow necessary to keep operating and even the huge labor component.  What we don’t talk about is the people.

At the end of the day, airlines are made up of people.  It is a labor intensive business and it requires many different kinds of people and it continues to be an industry that generally grabs you and holds onto you once you work for an airline. 

To drive those tens of thousands of people into the same direction and achieve success requires a bit more than being a good numbers man.  It requires a certain vision, a certain charisma and the ability to get people to follow you. 

American Airlines hasn’t got that.  It’s got a clinical, almost detached view on its labor and leadership that continues to ignore the human component to their success.  

What investors and analysts want to see is some revolution, not evolution.  Steady is the course has simply seen debt rise, cash holdings drop and angrier employees.  Those who know airlines, know that that is the precursor to a long, ever quickening drop into failure. 

You can manage those pennies all you want but if you can’t get your people to turn an aircraft quicker or your pilots to work more productively or get your staff to treat customers better, you’ll still fail.  Even analysts know that. 

American won’t engage in a merger with its current leadership.  However, CEO Gerard Arpey won’t stave off a coup with his present course either.  There will come a time when the board will decide new leadership is necessary.  It will happen rapidly and it will be a result of a sudden consensus view by the board that they’ll be held responsible for further failure.  I would argue that that set of circumstances may be closer than Arpey & Co thinks.

While I don’t think a merger is on the horizon, I do continue to wonder what the executive team at US Airways could do with American Airlines.  They’ve worked wonders with enormous challenges and a disadvantage to virtually every other legacy airline.  They’re reponsible to providing a return on investment and they seem to have figured out how to please customers better every place improvement was called for.

Filed under: Airline News by ajax
No Comments »

Southwest Airlines CEO Gary Kelly is now openly predicting that SWA will see as much as $1Billion in revenue growth as they restructure the Airtran Atlanta hub into a more traditional Southwest focus city.   Airtran currently operates a traditional hub and spoke system in Atlanta.

Airtran’s model as an LCC carrier was really a hybrid.  It did operate primarily a hub and spoke system and it also used focus cities and even did a little point to point flying.  Airtran did what they had to do to compete with Delta, earn money and to do it by perenially being the little guy in most markets.  Absolutely nothing wrong with that.

Southwest is right, however.  Operating a traditional SWA focus city is the right thing to do because it serves the greater good in the SWA system as well as focusing on the customer that yields the most *profit* rather than the most revenue.   More importantly, SWA has some horsepower to offer that premium customer that Airtran doesn’t have.  More connecting flights to more destinations, primarily.

I’ll miss Airtran’s business class and I’ll miss their style of business.  It worked for me very well and I’ve flown them many times.  Even Gary Kelly admits that SWA expects to see some business travelers move to Delta as a result of the changes in service product.  After reflecting on this for several weeks, I think this is, at the most, a trivial issue. 

Why?  Because SWA actually offers a great service product.  The seating is good.  The flight crews are good.  The business traveler can accomodate themselves with priority boarding.  No, it isn’t a “first class seat” but neither was Airtran’s really.  Airtran offered an economy business class seat, in my opinion.  You didn’t get the same perks that legacy airlines offered with their first class.  You got a better seat and a few free drinks.  That’s it. 

Southwest can compete with that.  More importantly, if you’re a business traveler and you’ve chosen Airtran, I would guess that, most often, you’re an entrepreneur or work for an entrepreneurial company that places a premium on appropriate spending for travel.  If so, Southwest fits that role just fine.  I’m very skeptical that there are very many traditional frequent flying businessmen who are using Airtran.  Delta fits their needs better.

I look forward to seeing what SWA does in Atlanta.  I look forward to seeing new connections as a result of Atlanta becoming a SWA focus city.  It should work very well not just for Atlanta residents, but travelers from the entire southeast region.

Filed under: Airline News by ajax
1 Comment »

QANTAS is going to ramp up its flights between Dallas / Fort Worth and Australia from 4X weekly to 6X weekly and then daily.  The move to 6 times a week comes in January and QANTAS will go daily in July of 2012.

Why?  Because the flight works and work well for a variety of people.  The flight duration from DFW to Brisbane is essentially the same as it is from the West Coast (is there much of a difference in an hour more duration when we’re talking about 15+ hour flights?) and it affords a connection in a city that is uncrowded vs many West Coast cities.

The real deal here is feed.  American Airlines must be feeding a ton of traffic to QANTAS and vice-versa.  This is one benefit in the Oneworld alliance that does work. 

It’s also why I’m skeptical of Emirates doing very well in DFW.  Emirates has no relationship with any airline in the DFW area.  Furthermore, DFW airport is exceptionally dominated by American Airlines.  Without a codeshare and/or interline agreement with AA, I just don’t see much feed going over to Emirates. 

As for Origin and Destination traffic between DFW and Dubai . . . forget about it.  As for connections to the Middle East, India and Africa, let’s take a look.

Dallas isn’t an oil city.  That’s Houston.  Dallas is banking and real estate and software.  There are ties to India but you can get there just as conveniently or more so via the airlines already giving you frequent flier miles.  I think the lure of frequent flier miles is silly but I won’t argue against the fact that they are a major driver for most fliers.  Africa?  Again, there just aren’t many ties from Dallas to that part of the world.

Now, as for air cargo traffic, I see that this might work.  But at the end of the day, you still have to fill those 777s with passengers to succeed.

It will be fun seeing their aircraft here just as it is seeing QANTAS 747s here.  And if the 747 is doing *that* well between DFW and Australia, it’s quite possible we’ll see an argument made for some of those flights to be served with an Airbus A380 (which should be able to make the hop to Australia east to west without Brisbane in the equation.)

Filed under: Airline News by ajax
No Comments »

Chilean regulators have tentatively approved the LAN / TAM merger (which is really LAN buying TAM) with the usual provisions and conditions that frequently come with these deals.  The big one is that LANTAM must pick one airline alliance to go forward with. 

Right now, that means choosing between Oneworld or Star Alliance.  LAN is associated with Oneworld and TAM is associated with Star Alliance.  The choice means that one or the other kind of gets shut out of South America so the stakes are big.

Expect both alliances to make captivating pitches for being the winner and both will likely promise exorbitant revenues (via guarantees) to the airline group but who is the best choice?

For LANTAM, either could be good but I think Star Alliance might look just a little bit more promising in terms of synergies.  Oneworld won’t be shut out with a fight but you have to evaluate that alliance on performance and its “majors”.  American Airlines, British Airway, QANTAS and Cathay Pacific run that group and none of those airlines is the picture of health or innovation.

Star Alliance might offer more synergies, more partners and, more importantly, more money going forward.  It’s an alliance that works well and which is more egalitarian in its treatment of smaller partners than Oneworld.

On the other hand, Oneworld fits the Chilean portion of the airline very well already and several partners service Brazil with high frequency too.  If LANTAM is smart, they’ll extract promises to cooperate and a seat at the big boys’ table.  That would give them the leverage they need going forward.  If Oneworld appears unwilling to acknowledge them as a player, you can bet that Star Alliance will be happy to make room for them.

Filed under: Airline News by ajax
No Comments »

Over the past several days, we have seen quite a ride for American Airlines’ share price.  There has been rampant speculation that the decline in share prices were due to the higher than average number of retirements at the end of September.   Some think the pilots “know something” and are sure there is going to be a bankruptcy.

I am by no means high on American Airlines.  To the contrary, I think they continue to act as if their problems are being fixed or are not that severe and I think the executive leadership is approaching irresponsible in certain areas. 

That said, we’re also talking about a company that has enough unrestricted cash to live unconstrained for another 4 years.  That doesn’t spell bankruptcy.  The pilots don’t know anything special and, frankly, they probably know less than many. 

But I do think this reflects the frustration and negative emotion that many feel about this company.  I think there is a sense that there are growing missed opportunities to come out alive and healthy.  I think many people have looked for a reason to dump their shareholdings and they finally found one that works for them. 

But I also think that I’m tempted to buy up AA stock right now because not only do I think they survive in the near term and not only do I think they won’t enter into bankruptcy, I think their share price will climb considerably over the next year from where it is today.   Because everyone likes a deal and right now AA stock is a pretty good deal.

Filed under: Airline News by ajax
No Comments »

I am ordinarily not anti-tax in virtually any form.  The truth is, I believe that we get one hell of a lot for our taxes in this country compared to virtually any other country in the world.  In general, I believe that we need to raise taxes in many areas to meet our obligations in the next several years.

That said, I’m wholly unamused at the latest proposals for taxes on air travel.   On the one hand, we know that air travel requires an expensive infrastructure and that needs to be paid for.  I don’t think anyone  would argue any differently.  Furthermore, it is an infrastructure that needs reinvestment to modernize many parts of it.  That means it is only going to be more expensive to sustain for a while.

What I object to, however, is placing the bulk of the burden upon air travelers alone.  You see, it isn’t just air travelers who benefit from the air transportation system.  Everyone in this country benefits from it and often a great deal albeit somewhat indirectly and that means everyone should be paying a portion of its costs rather than just those boarding the aircraft.

Taxes that sustain the air transport system should be crafted in such a way that we all share some proportionate burden of the costs.  Air travelers should, perhaps pay a bit more than the guy who never flies but that exists today in the form of current taxes and fees charged.  But don’t tell me that the burden shouldn’t also be shared by some of these people:

1)  Private aircraft, particularly private jets, who consume a disproportionate amount of resources with respect to air traffic control and airports.  Look up how much it costs to handle a Cessna Citation jet at a major airport vs a 737.  Now consider that a Cessna is essentially using the same amount of resources that a 737 uses.  Starts to look a little cheap for the Cessna, trust me.

2)  How about the flower farmer who uses the air transport system to ship his flowers to market every day of the week?

3)  How about the citizens of metropolitan areas who get to host headquarters of Fortune 500 companies because they do have good access to the air transport system?  There is a direct economic benefit to those people that isn’t often shared by them.

Three good examples of parties who don’t share a proportionate burden of the costs to sustain that system. 

It’s easy to continue to levy taxes against the paying passengers of airlines.  Politically, we know they have no choice but to pay in most instances.  We don’t really care about the direct demand impacts to airlines (and any airline can tell you just how quickly a $10 increase in a fare can affect demand) because airlines, for some reason, are horrifically bad at political lobbying in our governments.  In short, we can get away with it and few people with political power can object.

But that doesn’t make it right.

Filed under: Airline News by ajax
1 Comment »

US Airways and its pilots union, USAPA, got a hearing to discuss what US Airways says is an illegal work slowdown.   In that hearing, the judge pretty much agreed with US Airways and told USAPA to cut it out and get their membership in order.   What the judge actually said was:

“USAPA and its members, agents, and employees, and all persons and organizations acting by, in concert with, through, or under it, or by and through its order, are enjoined from permitting, instigating, authorizing, encouraging, participating in, approving, or continuing any interference with Plaintiff’s airline operations, including, but not limited to, any slowdown, strike, work stoppage, sick-out, work to rule campaign, or any concerted refusal to perform normal pilot operations in violation of the RLA, pending a hearing on the permanent injunction.”

Beyond that, the judge also ordered the union to make a concerted effort to communicate to its membership that such activities were illegal and punishable. 

This is where USAPA wants to pay real close attention to things because it was the APA (American Airlines pilots) who got hit with a large judgement against it for the very same kinds of actions in the 1990s.   There is ample precedent here and it will be the pilots who pay for that kind of judgement against them. 

So here is my question:  When does USAPA quit acting like children and get to work representing and, more importantly, *leading* its membership to a unified seniority list and a new contract with US Airways?  What’s the plan?  When does action take place?  Right now, if USAPA got its act together and started down that path, union members *might* see a new contract by 2015.   That’s only 10 years after the merger.

Filed under: Airline News by ajax
No Comments »

Even though Southwest Airlines believes in LUV, they do not, apparently, believe in excessive public displays of affection.  Actress Leisha Hailey and a companion were removed from a flight recently after passengers complained of a kiss. 

How bad was that kiss?  Who really knows.  Should she/they have been removed from the flight?  Probably not. 

Here is the thing:  You can err on the side of caution when it comes to safety but it would be wiser to err on the side of tolerance with respect to many other things such as dress and non-threatening behaviour.  Do I think Southwest discriminates against gays?  No, I don’t.  They have an excellent record there. 

But I do think that there appears to be a focus on anything outside a fairly rigid norm and that might need to be relaxed a bit.   Here is the thing:  I don’t expect Southwest to put up with lascivious behaviour on their flights and I don’t expect them to put up with grossly inappropriate clothing.  I think a reasonable person knows just where those lines are but Southwest has had just a few too many incidents related to people’s behaviour that, at the end of the day, incur no real harm.  Do we really care if two women share even an enthusiastic and somewhat lengthy kiss?  Probably not.   More importantly, is Southwest prepared to act exactly the same way the next time husband and wife or boyfriend and girlfriend share a kiss?  Because I’ve seen more than one energetic kiss shared between such at Southwest gates and on their aircraft.

As for the actress . . . I don’t find her tweets all that funny either.  The militant tone isn’t necessary and its undignified.  By all means, be outraged if you believe you’re wrong.  But show a little more dignity while you’re at it.  Throwing out threats and accusations in real time makes you look like a child and like you deserved your treatment. 

I honestly don’t know if the acrtress’ behaviour was inappropriate or not.  Frankly, that would have to be one hell of a kiss to have crossed a line.  It’s possible it was.  It’s equally possible that some passenger(s) and/or flight attendants need to focus a little bit more on what’s important in life and a kiss isn’t it.  Minding one’s business is an important business skill as well. 

Both parties look bad in this and both should look bad.  Rather than reviewing the incident and, once again, standing by your people, Southwest needs to review whether or not it needs to communicate a better set of standards.

Filed under: Airline News by ajax
No Comments »

Emirates Airlines is going to launch non-stop service between Dallas / Fort Worth and Dubai February 2nd of 2012 using Boeing 777 aircraft and I’m a bit surprised. 

While this fits in with Emirates strategy to be a carrier for the world, I question whether or not the power of American Airlines has been fully considered.  Yes, Emirates has had quite a bit of success competing against other Oneworld alliance customers.  Yes, Emirates offers a world class service product.  No, Emirates is not a part of an alliance and the DFW area is a network hub for the entire region.

How do you compete against American Airlines who possesses a world class network in this region when you have no alliances or codeshares to provide feed from that same region at that same airport?  Furthermore, how do you compete against an airline with arguably one of the strongest frequent flyer programs known and in a city where the entire frequent flyer concept was invented?

I don’t think American Airlines will necessarily respond to this flight with flights of their own to that region.  They don’t need to.  Travelers from this area can get to any point they want in the world via American Airlines either non-stop or through connections as good or better than what Emirates can offer with the possible exception of the Middle East itself.

DFW isn’t really an oil region.  Yes, we have ExxonMobil here with their headquarters and even Halliburton.  Those are headquarters and not operations.  The ties that DFW has to the Middle East are tenuous at best.  The ties that DFW has to Africa are almost non-existent. 

Perhaps Emirates can succeed with a single flight per day.  However, that flight isn’t a real threat to AA or Oneworld.  for areas that do have ties to the DFW region, there are already better, direct flights on American or Oneworld partners.  Europe is well served.  India is well served.  The Far East is well served.  And you can fly QANTAS direct to Australia.

When Emirates started service to Houston, that made sense to me.  There are strong ties to areas between Houston and what Middle Eastern and African regions Emirates serves.  This one doesn’t have a very good argument on its behalf. 

Regardless, it will be fun to go to DFW airport and photograph an Emirates 777 landing.

Filed under: Airline News by ajax
No Comments »

There has been lots of speculation about American Airlines filing for bankruptcy over the past 2 weeks.  Partially because of Moody’s downgrading their outlook on AA and partially because AA’s own labor is opening asking the question.

Are they looking at bankruptcy in the next 12 months?  No, absolutely not. 

In 18 months?  Probably not. 

But the speculation highlights my favorite pet peeves about American Airlines.  They aren’t realizing the Wonderful Synergies they projected from relationships with BA/IB over the Atlantic nor with JAL over the Pacific.  And they’re acknowledging that at this point.  Those immunity agreements didn’t enable a torrent of new cash.

They continue to have severe labor issues and they are severely hamstrung with labor agreements that do not provide for any increased productivity.  On the current path, labor will eventually win the right to strike and I have no doubt that they will.  If and when that happens, it’s the end of AA as we know it.

Despite their aircraft orders, there doesn’t appear to be much impetus to rationalize their capacity and match aircraft to demand.  Notice that all the aircraft ordered essentially upscale their routes and provide lower seat costs as a function of having more seats.  The problem with that strategy is that YOU HAVE TO FILL THE SEATS.

And American isn’t filling seats nearly as much as it should and this surprises me not at all given that they aren’t a very nice airline to fly.   Who wants to pay a premium to fly on airline that provides less of a service experience?  Their competition offers a better aircraft, competitive routes and more flight attendants that smile. 

Those new aircraft don’t really being to change the fuel equation for several more years either.  They are late into this fleet by at least 5 years at this point and other airlines have got a fair advantage over AA in comparable aircraft. 

American won’t be going bankrupt any time soon but that doesn’t mean people shouldn’t question American.  There is no coherent plan to bootstrap this company back to realistic profitability.  Right now, the plan hinges on failing joint operating agreements across two oceans and a new(er) fleet arriving . . . someday.  AA hasn’t communicated any more intentions than that and they have no shown no aggression towards solving their fundamental cost problems.  That should alarm quite a few people at this point.  It’s not bankruptcy but it’s an alarmingly familiar pathway to it that we’ve seen in a number of other legacy airlines.

Filed under: Airline News by ajax
1 Comment »

It’s pretty rare to find a reason to write about Icelandair but they’ve made it possible by announcing their intention to fly to Denver in the near future.  Icelandair will offer non-stop flights on their 757 aircraft between Denver and Iceland’s capital, Reykjavik.  The flights will be offered Monday, Wednesday, Friday and Sunday.

 Denver to Iceland is doable in the 757 but a non-stop flight to Iceland isn’t *that* attractive to many here in the United States.  However, Iceland is likely going to offer some nicely priced flights connecting to Europe is my guess. 

Why Denver?  I have no idea of the official stance on this but it’s notable that Icelandair has cooperated with Southwest Airlines in Baltimore in the past and Southwest does have a strong presence in Denver.  So far, no official mention of cooperation between the airlines has been mentioned.

Filed under: Airline News by ajax
No Comments »