One recent development with Alitalia is that they are failing more and more (no, that’s not the new) and now governments are getting involved to provide aid (no, that’s not it either) to stabilize the airline for restructuring (nope, not that) and possible acquisition by Air France /KLM (no, that’s old too) is that International Airlines Group objects.

There it is.  IAG led by Willie Walsh doesn’t want that aid going to Alitalia.

And I agree. Alitalia is comically bad in so many ways  and has been comically bad at regaining a foothold in the European market since it’s “takeover” by Air One forced by the Italian government.

Quick question:  Did you know the “old” Alitalia was liquidated?

IAG is right.  The aid is illegal and, more importantly, it distorts the marketplace in Europe.  Alitalia has been unable to succeed legitimately under any guise for more than 20 years.  It’s time to let go and allow the markets to provide an airline to Italy.

I suggest Ryanair be chosen to take Alitalia’s place in Italy.  Afterall, that kind of failure deserves some kind of punishment.

I haven’t done this in a long, long time but Alitalia goes on my Death Watch starting now.  Although this airline has a habit of rising up from the dead, shaking its hands and saying “I’m baaaack!”

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Southwest Airlines has started a countdown to October 13th, 2014, the end of the Wright Amendment and the beginning of Southwest’s ability to fly non-stop to wherever it wants in the continental United States.

Personally, I’m going to treat it as a countdown to my mother’s birthday (which is the same day).

My best guess on flights Southwest launches that day:

• Chicago
• Los Angeles
• Portland
• Atlanta
• Baltimore
• Newark
• Phoenix

I know you’re surprised I put Portland on that list  but I do think it will become an immediate flight.  The fares on that route today are sky high with no competition.  American Airlines flies that route with 4 flights a day and Alaska Airlines has one flight a day as well.  This is a route I feel certain SWA will pick as low hanging fruit unless something happens to that city pair in the meantime.

October 13, 2014 will be a very big day in Dallas.

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No, not really.  From time to time, well, nearly daily really, I see “stories” on Google about airlines or the airline industry thrown about buy companies writing analysis about stocks.

The Motley Fool is one, quite frequently, who does this.

A couple of days ago, I saw a report by a website called Zacks promoting news that the shutdown is affecting airlines but also has a statement that Southwest is affected in its ability to get jets delivered and is due to take on new widebodies.

That’s just bad information on a level that should never happen.

Southwest is not buying widebody jets.  It is buying ever so slightly larger 737-800 jets of which most of 2013 deliveries are supposed to be.

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Last week, Delta CEO Richard Anderson made the comment that there was no apparent effect from the government shutdown on airline business.  While the effect was not immediate, I truly think we’re going to see some down times (again) for the airlines in this country.

Economic uncertainty leads people to defer purchases, travel and seek alternatives to face to face meetings in business.  We have seen this time and time again.  Corporate America’s reaction to the 2008/2009 economic crisis shouldn’t be forgotten by now but it seems to be.

The shutdown introduces uncertainty about our future.  Economies aren’t just driven by the stock price on Wall Street or the unemployment numbers calculated by the government.  They are a kind of living, breathing creature.

And not a smart creature either.  Economies tend to be dumb and emotionally reactive.  They are not nuanced and subtle and they do not act with patience.  One would like to think that they reflect the whole of those participating in them but they don’t.  They just don’t.

So, when uncertainty from a government shutdown is combined with the uncertainty and growing fear that a failure to raise a debt ceiling introduces, I do worry for the industry.

Creatures that are kind of dumb and reactive don’t do well when Congressmen who are veterinarians by trade start making statements that they have “read a lot” about the economy and believe that “nothing will happen” if the nation defaults on its debt.

No, it isn’t emotionally upsetting to anyone when the most financially strong country in the entire world defaults on its debt.

Anyone who wants to vote Congressman Ted Yoho out of office for saying things too stupid for Congressmen to say is welcome by me.  The alternative is that Florida should get exactly what it asked for in electing such person to that office.  Your choice, Florida.  Make it soon.

Congressman Ted Yoho – He’s read about economy and knows what’s best for the United States photo from Wikipedia

Business travel is one of those expenses companies very quickly act to restrain when uncertainty or hard times come about.  You can bet that CFOs and CEOs are already instructing people within their company to curtail expenses, especially travel.

Because in times of uncertainty, it’s best to hold on to what you have as tightly as possible.

The political stalemate over the shutdown and the debt ceiling is going to be the undoing of 2014 for the United States left to continue much longer.  Whether you approve or disapprove of the Affordable Healthcare Act or not, that piece of legislation was not the law to fight over and put our country at risk.

I personally think that there are far greater issues that could have been debated over than whether or not greater healthcare coverage for all in this country was a good or bad idea.

I also think that the failure to acknowledge that a great deal of our debt resulted from an economic crisis of global proportions and which originated from a fundamental failure to properly oversee and regulate financial markets is egregious on the part of both houses of Congress.

What happened in 2008/2009 wasn’t ordinary by any stretch.  Entire industries which are huge i this country were literally at stake.  Extraordinary times have extraordinary consequences that take time to get past.

It’s beneath the dignity of this country to threaten shutdowns that hurts its businesses and citizens and it’s beneath the dignity of this country to threaten default on debt simply to force a change in a law.

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The Transport Workers Union represents thousands of employees of American Airlines and US Airways (and several other airlines such as Southwest where they recently had an odd scene go down as well).  This union is under new management and they’re just itching to get in the way of themselves.

Most recently, the TWU filed to become a party to the lawsuit the DoJ has filed against the merger of American Airlines and US Airways.  The technical term is intervenor and it means that they want to become a part of the lawsuit as the plaintiff or defense.  In this case, they wanted to be the defense.

US Airways and American Airlines both filed objections to that stating that, in this case, the TWUs interests were fully aligned with the airlines’ and therefore didn’t need representation.  The DoJ objected as well.

The truth is that no one wanted them at the table because who needs a union coming in late to the party on an accelerated court schedule?  Who wants an airline union showing up to be involved in such a lawsuit under any terms.

No one.

So now the TWU wants to be an amicus to lawsuit so it can file it’s opinion.  This is likely to be granted as several other parties are already “interested friends of the court” in this trial.

The TWU has been under fire from other unions.  Most recently, the Teamsters attempted to grab a good portion of their membership away from US Airways and American Airlines and they barely fought them off.

It’s feeling threatened and insecure and its leadership wants to show it can play with the big boys.

The thing is, it can’t.  It can’t even keep its membership all that happy despite a very good deal negotiated for them in the merger.  The TWU is a hot mess and needs to go get its own house in order instead of interfering in issues it has little grasp of.

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Airbus has managed to land an order from JAL for (18) A350-900s, (13) A350-1000s and another 25 options for the A350.

This from an airline which operates the 787-8 and 777 and which has a decades long relationship with Boeing.  This isn’t a shot across Boeing’s bow.  This is a cannonball going through the hull with water spilling into the engine compartment.

JAL is burned by the 787 and is under the control of entrepreneurs who want operational success more than a good deal from Boeing.  Boeing has had years to take care of JAL as a customer.  Even looking in from the outside, JAL appears to not have been given any more consideration than the average Boeing customer.

And the 787 is a pain in the ass to its operators.  Yes, some operators are being overly dramatic but let’s not ignore the fact that not a single operator is publicly singing the praises of the 787 yet.  Not a one.

If there was such a thing as a safe Boeing customer, it was JAL.  This is the signal moment where everyone realizes that Boeing is not only vulnerable in the marketplace, it’s declining.

Boeing had a chance to kill Airbus with the 787 and lost that chance to a 4 year production delay.  Even if you consider all the old-time Boeing people cautioning that the airplane needed to be birthed in its own time, 4 years is one hell of a long delay for a company that, you know, is supposed to know how to build aircraft.

Boeing had a chance to throw Airbus onto the ropes of the ring by announcing an all new 737 replacement family that would cover from 737-700 to 757-200 seating options.  Instead, Airbus won the hearts and minds of airlines with a warmed over redesign of the A320 aircraft.  Boeing had to respond with an aircraft that doesn’t win many hearts and minds of any airline.

Boeing even had a chance to badly hurt the A350’s sales by announcing a 777 upgrade or replacement and, instead, dithered along until that was a bit late as well.

Boeing chose to build the 747-8i on the idea that Boeing had customers that would buy Boeing no matter what.   They built an aircraft that in the hearts and minds of customers was 40 years old.  That was refreshed some but which really didn’t fit a need.  They followed the idea that Boeing customers will buy Boeing and since the 747-8 is a Boeing product, it will work out OK.  Billions of dollars have been wasted on that aircraft as well as the time and energy of good engineers.  Imagine what would have happened to Airbus if Boeing had focused those resources on a full 737 replacement instead.

Boeing is losing this game.  It’s losing the game to Airbus and it is going to start losing its game to Bombardier.  Warmed over designs and delay in taking the next bold step is killing that company in ways that will be painful to watch.  This is the legacy of McDonnell Douglas and this is exactly how McD lost the game against Boeing and Airbus.  Exactly how it was lost.  There are no real differences here.

Apologize for Boeing if you want but before you do . . . name one strong decision that yielded immediate and positive results for Boeing in the last 8 years.  Just name one.

I’ll wait.

Filed under: Aircraft Development, Airline Fleets, Airline News by ajax
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United Airlines has announced routes into the fortress hubs of Delta just days after Delta announced flights into UA fortress hubs.  United is adding routes from both Los Angeles and San Francisco to Minneapolis / St. Paul and Atlanta.

Delta previous announced routes from Seattle (which is nearing “hub” status for Delta) to Los Angeles and San Francisco.

First, Los Angeles is actually no ones hub but it is a strong focus city for all.  Los Angeles serves as a major gateway city for airlines and just like New York City, everyone wants to be dominant there.  A few years ago, American Airlines spoke of Los Angeles being a part of its “corners” strategy.  More recently, Delta has been building its operations up there.

Los Angeles won’t be anyone’s hub because it isn’t suited to such operations.  It will, however act as a gateway city with significant focus city operations just as New York JFK and Newark airports serve the same role in that area.

There is a lot of first class and business class traffic in the Los Angeles area and everyone wants a larger piece of it.  Delta is ready to battle it out with United in that market and United is responding.

The two SuperLegacy airlines will trade more and more blows with each other but neither will gain advantage much over the other.  However, both will gain advantage over the smaller airlines in those markets such as American Airlines, US Airways and LCC carriers.

The one airline who can hold their own in those cities is Southwest Airlines.  They are the equal of UA and Delta from a domestic point of view.

These route announcements are just one more sign of the power the two largest airlines both have and which they will wield to gain advantage in the marketplace.

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Unions, particularly American Airlines’ APFA, are now putting pressure on other attorneys general in Florida, Virginia and Arizona to also engage in a settlement on the lawsuit filed by the DoJ.

So far, each is resisting.

I think that will change, perhaps.  Florida really hasn’t got a big stake in this lawsuit and their attorney general may feel the exceptional voice of APFA out of Miami in a short time.  Politically speaking, it’s not wise to go against pay raises for airline employees.  They come so infrequently that it is a major hot button.

Virginia is going to hold its position, I think.  But mostly because they do have a stake in air fair prices at Washington Reagan National.

Pennsylvania is exacting revenge on US Airways for what happened in Pittsburg, in my opinion.  That is a mistake as it could strongly affect how the merged American Airlines will treat Philadelphia in a merger.  But I think there is a deal to be had here and I think that this deal is Doug Parker’s to make.  The deal is to retain Philadelphia as a hub for a certain number of years with a minimum number of flights to be maintained.  Is that a problem?  No, that’s a good hub for US Airways and it should remain a good hub for the merged airline. It costs little to make that deal.

Arizona is protecting its stake as well and this time its with an attorney general who has a less than steller reputation.  The Arizona AG may well find exceptional political pressure applied here too.  Why?  Because pilots and flight attendants for US Airways are desperate for a pay increase and there are one hell of a lot of pilots and flight attendants in Phoenix.

Will the merged company retain its hub in Phoenix?  I think it will.  It has never been practical to operate a hub in Los Angeles or San Francisco.  Delta operates a profitable and beneficial hub in Salt Lake City.  United has Denver and Dallas is too far from the West Coast to be well positioned.  I think Phoenix stays although in a revised configuration.  Again, this is Doug Parker’s domain and he and his team should begin applying pressure and working with their unions to achieve a deal here.  I actually don’t think that the Arizona AG will  mind smiling and reversing his position if he sees his political fortunes dim with pressure.

Tennessee is just mad.  It’s mad about Memphis and that AG is actually politically isolated.  There is no deal here, in my opinion, but I also think their opinion and participation amount to nothing in the lawsuit.

Time will tell but right now the lawsuit proceeds, deals are being made and the US Department of Justice has little maneuvering room at present.  The DoJ will say that the fight is in the courtroom and isn’t a popularity contest.  They would be right about that but when your support abandons you over time, few people want to go into a courtroom and be your friend.

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Southwest Airlines has terminated the captain who flew the 737 that was crashed at La Guardia airport some months ago.  This was done, according to SWA, after an intensive internal review of what happened.  The First Officer flying that day is being re-trained.

The Southwest pilots union has expressed their disappointment at the termination in such a way as to make me believe they barely found enough energy to do their unionly duties and object to a pilot’s termination.  In other words, I think the union really didn’t mind this one.

Southwest and Southwest’s pilots have exceptionally high standards and these guys work very hard to be the best of the best in their business.  By all accounts, they don’t tolerate fools.  It sounds like they don’t want to tolerate this one and that’s OK.

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Once again, it is rumoured that KLM-Air France may be in the running to merge with Alitalia of which it already owns 25%.

Once again, Alitalia is unable to financially succeed on any level despite its own government propping it up in anyway possible.  This is an airline given every advantage in its marketplace and which still fails regularly.

Italy is already posturing itself to show what an outrage it would be for a flag carrier to be taken over by French and Dutch.  But this time those who have money in the airline have signaled that they may find Air France-KLM to be attractive enough to be worthwhile.  Curiously, it was those same people who “rescued” Alitalia from Air France-KLM’s hands.

The merger will probably happen.  It probably will result in the Italian government wringing its hands mightily and trying to extort concessions like guaranteed full employment for all the Alitalia employees for the next 10 years.  Something silly like that will be demanded.

It won’t happen.

The difference this time is that Italy is in a very precarious financial position and has a particularly weak (OK, weaker than usual) government.  It won’t be able to stand up to powerhouse participants in the EU such as France and The Netherlands.  Countries that currently provide a fair degree of solvency to Italy.

But that doesn’t stop me from wanting to plead “Dear Mother of God just complete this merger and erase Alitalia from our memories for once and all time.”

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Norwegian Air Shuttle has had a giant fit of impatience with Boeing over its inability to pound their 787 aircraft on a daily basis.  Accordingly, Norwegian has returned at least one 787 to Boeing claiming its unreliable.

Norwegian’s CEO is notoriously outspoken and the airline likes to drive its aircraft like any good LCC carrier would.  Hard.

Can the 787 be operated the same way a 737 is?  I actually think not.  And certainly it would be unwise for an airline to do it so early in its operation of the aircraft.  It takes time to learn a fleet and understand what needs to be done to keep the airplane flying.

What needs to be done to keep a 737 flying is well known.  What needs to be done to keep a 787 flying is still somewhat unknown.  The 787 will be able to keep a hard schedule in the future but today . . . not so much.

As much as I think Norwegian is being overly critical and dramatic over this aircraft, I also think that Boeing continues to have an engineering problem with the aircraft.  That is that they continue to fight fires and continue to miss quality control as a part of the process.  That was understandable at one time but it’s 2013.  This aircraft has been flying for some time and, more importantly, has already experienced several critical problems.

It’s time for Boeing to get a CEO in place who understands what it means to deliver a product to customers that customers both want and can use.  Right now, the 787 is what the customers want but they can’t use it yet.

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Frontier Airlines has been purchased by someone new and the world has barely noticed.  Republic Airlines is selling its Frontier subsidiary to Indigo Partners for $36 million in cash and $109 million in debt assumption.

Indigo Partners is headed by Will Franke, a founder of America West and most recently involved with Spirit Airlines.

Indigo Partners will focus on completing the transformation of Frontier into an Ultra Low Cost Carrier which it has most recently done with Spirit.  If you think Spirit Airlines was aggressive, I expect Indigo to force even more aggressive behavior into Frontier.

Will it work?  On some level, I think so.  I think it will be a long while before we see an airline such as Spirit or Allegiant, however.  Frontier has to divest itself of its bases and reorganize itself into greater point to point flying.  It also must find that high density sweet spot that is so necessary for.

Frontier flies 138 seat Airbus A319 (it also flies the A320) and Spirit flies a 145 seat A319.  In general, Spirit flies with even less seat pitch than the already now constrained Frontier flies with.

The market for ULCC carriers in the US is limited.  I think there has been some growth but the idea that ULCCs will explode across the country is somewhat silly to me.  The distances that are flown here compared to Europe where ULCCs do thrive is considerably less.

It’s a lot easier to tolerate a 29″ seat pitch when your flight lasts an hour on average.

Frontier will likely survive and succeed and I put that prediction out there based on Indigo Partners’ success in investing in these kinds of airlines.

Hardly anyone noticed the announcement though.

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2nd Update:  The Judge in this lawsuit has also decided that the Department of Justice won’t get its requested stay and has to litigate the case on time.  It’s not a good day for those serving as plaintiffs in this case.

UPDATE:  Greg Abbott has announced a “settlement” in which the Great State of Texas will get what it wanted by legal agreement.

In other words:  American Airlines put in writing the promises it has already made long prior to the lawsuit nonsense.  AA will continue to serve 22 communities in Texas for at least 3 years.

The fact that the press conference was held at American Airlines facilities speaks volumes about this “settlement.”  I would imagine that AA just barely let him call it a settlement for face saving purposes.

The Dallas Morning News says:  “Abbott denied that political considerations played a part in either joining the lawsuit when it was filed Aug. 13 or deciding to withdraw now.”

(more…)

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US Airways and American Airlines want to know two things from the Department of Justice.

First, they want to know the details of what the Justice Department did in evaluating four previous airline mergers in the past decade.  The DoJ doesn’t want to give up this information and says what they did in the past is not relevant.  Only the current market conditions are relevant.

It’s true that the law says that mergers must be based on the hear and now essentially.  However, how that evaluation is done is another story altogether.  The airlines will try to make the case that by changing the “how” of evaluating mergers affects they outcome.

And they would be right.  One item that has been glaring to all since this nonsense began is that the DoJ chose to evaluate airport pairs rather than city pairs and dismissed the market power of LCCs altogether in that evaluation.  I think that US and AA will (rightly) make the point that in changing how an merger was evaluated, they changed the perception of the effects and therefore the DoJs suit has no merit since it did not use accepted practices that have provided analysis for mergers for a substantial period of time.

In other words, evaluated with the methods and tools, the US/AA merger would pass scrutiny because of the market conditions that would be uncovered by these methodologies.

Second, US and AA want to know who the DOJ talked to in evaluating this merger.  The reasons here likely have to do with two things:  They want to know the source of bias in how the DoJ chose to evaluate this merger and I suspect they think that some other airline or airlines were attempting to torpedo the merger.

What’s that?  You are shocked?  Shocked that some other airline may be attempting to arrange a clumsy backdoor outcome in the airline industry?

I’ve thought about this for 3 days.  I think that US and AA are on to something here.  And I think that it is jetBlue and/or Delta who may be playing that game.  If I put money on things, I would guess that Delta likely spoke unfavorably using its recent experience in doing its deal with US Airways over New York City (La Guardia) slots.  I think that Delta used its experiences with the DoJ during that last deal to color the market dominance picture with the DoJ.

I also think that Dave Barger decided to take advantage of a moment to portray jetBlue as a poor, underfed, uncared for LCC who never has advantages over anything.  Mostly because jetBlue would love to have some dominance at Washington Reagan National.  Take note of the fact that CEO Barger recently opined that US/AA ought to be made to give up all the AA held slots at Washington Reagan National if a merger is allowed.

I do believe that Washington Reagan National should be required to be “opened up” a bit by slot givebacks by both airlines.

I also think that any airline with greater than 50% dominance at any slot controlled airport should be required to lease out or divest themselves of slots to get under that 50% control.

But, hey, I’m a radical compared to the DoJ.

There is a hint of clumsiness in how the DoJ has gone about this over and over.  And it does smell of influence.  I also expect that, by now, US and AA have been told off the record of such discussions by those closer to the DoJ investigation.  If there has been influence, we’ll find out in a short while.  The airline industry has never been known for its ability to finesse anything.

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AMR and US Airways each filed their response to the Department of Justice lawsuit and you can find all manner of references to it online yourself.   The theme is what is important.

The DoJ and many anti-trust experts say that the law says a merger must be evaluated in the context of “now” rather than on the history of an industry.  In other words, while a merger between Delta and Northwest may have been “good” for consumers in 2008, that has no bearing on an American Airlines / US Airways merger in 2013.

The two airlines have indicated they feel otherwise and I’m inclined to agree because it’s those other mergers that have set the stage for the market conditions today.  Each airlines’ responses give a hint as to how they will defend themselves in court in the near future.

Both airlines make the case that the DoJ context for evaluating the merger was wrong in that by evaluating airport pairs and doing so on a connecting basis runs contrary to reality.  I agree.  In fact, time and again we have seen that the airlines with hierarchical superiority on a route (non-stop flights, one-stop flights, two-stop flights, etc) are the ones who tend to dominate on a route.  For example, on a route such as DFW to LGA (Dallas to New York City), the airlines with non-stops will carry most of the traffic whereas the airlines with just one-stops and two-stops will simply follow the prices set by the non-stop airlines.

Put another way, comparing one-stop conditions to non-stop conditions doesn’t yield a rational picture of the market.  These two airlines really want that to be the prevailing view because when it comes to where they directly compete on non-stop routes, there is a very tiny amount of overlap.  I think the airlines have a good chance of causing this to be the relevant view in this trial.  It passes the “sniff” test.

The second theme is that the airline industry spent approximately 30 years in a condition that prompted serial bankruptcies, mergers and conditions that found the airlines unable to deliver a consistent financial performance no matter who the airline was.  The question asked is why would the DoJ wish to perpetuate conditions that might financially advantage individual consumers but which is unsustainable as an industry?

They aren’t wrong.  I myself wondered if the airlines would ever be able to find some steady state in which to not only operate in but earn reliable profits in.  They have managed this admirably since 2009 or so and it has gotten a bit better.  Airlines earn profits despite a very weak economy and continuing oil shocks.  This is what we want.

And let me point out that no airline is running around and earning egregious profits at anyone’s expense even today.  Not a single one of them is ExxonMobil earning billions of dollars in profits each year.

I think that to make the argument that mergers continue to be needed to ensure a healthy industry is going to be more of a struggle.  Presumably attorneys and experts who are far above my pay grade will find a convincing way to do so.  I am skeptical not because I think it is an unworthy argument.  I am skeptical because I think it is an argument that doesn’t address anti-trust law very well.  It’s not a “consumer” argument in the eyes of most although I would argue that a healthy and competitive airline industry *is* best for the consumer even if prices are higher than they were in 2005.

Finally, they are clearly going to talk about markets in both domestic and international terms.  Here is where the arguments get very strong.  When they break down the market shares domestically, they rightly point out that the combination of these two airlines hardly ripples the market shares.  Southwest is the biggest airline domestically and has been for years.  The  merged US Airways and American Airlines won’t challenge them for dominance.

While you are chewing that over, let’s go to the international side of things and consider that not only do the airlines have to compete against each other on routes but that they also have to compete against other international airlines who, fairly frequently, enjoy lower costs than those same US airlines.

I like the domestic and international market arguments a lot because they embody clear, relatively easy to understand facts.  They are truthful and pass a lot of sniff tests.  This is where the DoJ made its biggest mistakes because it decided to “create” a picture of where the consumer was impacted that was based on carefully chosen criteria which ignored other, substantially mitigating facts.

This is where the lawsuit is won, in my opinion.  These are the facts that one should hang one’s hat on and they have the additional benefit of being very true.

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There is a reason why I’m writing this today.  It’s because a newspaper has printed story about Norwegian Air Shuttle grounding their 787 aircraft.

Except they didn’t.  The detail of the story simply outlines that twice Norwegian has technical problems with their brand new 787s causing them to cancel a flight.

This happens like . . . with absolute certainty with new airliners entering an airline fleet.

The aircraft weren’t “grounded”.  Not even briefly.  They went technical forcing a flight cancellation.  That’s it.

Now, it is common for media to over-blow airline events and I almost always ignore such stories these days because their just silly.  You could devote a whole blog to debunking such things and that’s not how I want to spend my time.

But in this case, I will.  Why?

Because that story was in the New York Times website titled “Airline in Norway Says It Briefly Grounded Dreamliners”.  This story was written by someone named Nicola Clark.  On the New York Times website, it says this about Nicola:

Nicola Clark has reported on French business for the International Herald Tribune since 2001, covering a number of industries, including aviation, banking and media. She received an Aerospace Journalist of the Year award in 2007 from the World Leadership Forum for her writing about the Airbus A380 crisis. After earning a masters degree in international affairs from Columbia University in New York in 1993, she worked for news agencies in New York, Tokyo, London and Paris covering financial markets.

So, here is my deal:  This story was stupid.  It covers an airline having a couple of technical problems with an aircraft which is not news.  This is never news.  This isn’t the news that should be reported.  It sure isn’t the news that should be reported by someone who has evidently been recognized as “Aerospace Journalist of the Year” from something called the World Leadership Forum.

I realize that the title of that story could have easily been done by an editor who is also stupid.  But writing a story about an aircraft having a couple of problems just as every other aircraft experiences from time to time forcing a couple of cancellations is atrocious journalism.

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Delta Airlines has announced an order for some Airbus aircraft and before anyone signals that this is the end of days moment for Boeing . . . relax.

Delta today is comprised of Delta yesterday and Northwest Airlines of yesterday as well.  Northwest Airlines was a big user of Airbus aircraft.  The organization does have a great deal of experience operating Airbus aircraft now.

Furthermore, no airline of Delta’s size can afford to continue to buy from one single supplier and be responsible to both their company as well as their shareholders.

And who says Airbus builds a bad product?  I sure don’t.  Delta has learned that the A330 works very well for them sitting between their 777-200 and 747-400 aircraft.  Part of this order is a “top up” of the A330-300 type to the tune of 10 additional aircraft.  Delta has (10) Airbus A330-200s and (20) Airbus A330-300s already and an additional (10) A330-300 aircraft sounds, to me, like Airbus is growing some capacity at the top end of their fleet.

The A330-300 is their second largest aircraft seating-wise, believe it or not.

And Delta ordered (30) A321 aircraft as well.  This is an airplane that arguably most US based airlines will be buying as it has been identified as a 757 replacement on certain missions.  Given that just 30 of them have been ordered, I suspect that the A321 offers a better replacement than the 737-900ER  in certain missions likely requiring more density rather than range.

No airline can afford to skip Airbus at this point.  Likewise, no airline should skip Boeing either.  Each manufacturer has viable products that can meet needs.  Aircraft manufacturers can no longer offer delivery positions that make it possible to stay in one product family.  Well, not easily anyway.

Filed under: Airline Fleets, Airline News by ajax
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British Airways has announced its intentions to start a London (Heathrow) to Austin, TX flight initially flying 5x a week (all but SAT and WED) going to daily later in 2014.  This new flight will start early next year and I’m pretty sure it marks the very first trans-Atlantic flight for Austin.

No, this won’t be using a 777 or a 747.  It will be done with a 787-8 and it is a perfect example of what the 787 allows an airline to do. If British Airways can make this route successful at all, it will yield more revenue than asking American Airlines to bring the passenger to Dallas or United Airlines to bring the passenger to Houston.

But there are implications for the vaunted alliances and, in this case, Oneworld.

Why is it in an airline’s best interest to remain in an alliance and even a trans-Atlantic joint venture if it can simply deploy the right sized aircraft to the route and pick off all the low hanging fruit.

There are also implications for airlines who have not adopted the 787 in any great numbers.  Some airlines continue to view the 787 as a 767 when, in fact, it isn’t.  If all you ever needed was a 767, you would probably be better off buying a 767 from Boeing new (they still offer them).  The 787 can do 767 missions but the genius of owning one is that it can also provide exceptional flexibility and provide more opportunities for profit than the 767 ever had a hope of providing.

Flexibility, we’re learning, is a key component to earning profits at airlines.

I believe that Delta Airlines has shown great restraint and excellent analysis in how it has so far managed its fleet in almost every respect.  The one area I did not believe to be smart was their deferral of 787 aircraft. Tying their fortunes to continued use of their 767s will impact their ability to be flexible and entreprenurial on a global scale.

Likewise, I believe that we’ll see United Airlines start to truly exploit the possibilities of their 787 aircraft in the near future and that will provide competitive intensity to Delta Airlines that we have not yet seen so far.

Filed under: Airline Fleets, Airline News, Airline Service by ajax
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US Airways and American Airlines have gotten what they have asked for and will be going to court quickly over their lawsuit filed by the Department of Justice to “kill” the merger.

The trial will start on November 25 and likely last about 2 weeks.  There is a massive amount of discovery that must take place between now and then.  The quick trial makes this the airlines’ trial to lose at this point.  They must have all their ducks in a row to make this work for them.

There is a key maxim to go by in trials:  He who is prepared most often wins.

Believe it or not, even when the stakes are this high people sometimes show up unprepared.

I think the merger chances went up with this trial date but let’s understand somethings here:

1. This is a very high stakes poker game in which a settlement would be extraordinary.
2. The government’s case is weak based on all modern historical standards by which anyone would testify.
3. If the government loses this case, consumers are actually kind of harmed but it will have not achieved any givebacks from the airlines for Reagan National
4. Political pressure in this case will be enormous.
5. Factual data will rule here, not emotional arguments.

The airlines need to be very sure to show up over-prepared at this point.  This is their case to lose now and acting as if the argument in their favor is self-evident will result in the Department of Justice walking away with a win.

You cannot possibly be over-prepared for this case.

It’s time for the airlines to stop the bluster and outrage and get to work.

And will someone remind Doug Parker that the fat lady hasn’t sung yet?

Filed under: Airline News by ajax
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As predicted, the US Department of Justice is asking/demanding/pleading for more time to prepare its case against American Airlines and US Airways.  In fact, their arguments go against precedent and seem to indicate that they may well suddenly realize that their initial arguments in their complaint are pretty weak at best.

American Airlines and US Airways want an early November court date.  The indicate they are prepared and ready to go and want a speedy trial.  They well should be in light of all the due diligence and preparation being done for a merger.

They rightly recognize that a delay could result in serious impacts.  More and more delay is simply likely to impose an outcome on the two airlines that the US DoJ wants without a trail which is to stop the merger due to untenable costs that result from being in limbo and questioned in the markets.

The US DoJ’s arguments for a March 2014 trial date are . . . not good.  We need more time because this is a big merger and, well, we need more time to stop these evil airlines.

I actually think their memo language hurts them, I really do.  Emotional arguments don’t play well with judges.

I also think that their strategy was to kill the merger with the filing of a lawsuit.  When that didn’t work and, to the contrary, resulted in a big backlash, they went to the delay tactic knowing that it would impose financial burdens that couldn’t be tolerated indefinitely.  I think their strategy is transparent, in fact.

The DoJ, in its pleading, says:

“Plaintiffs’ proposed trial-ready date of March 3, 2014, with trial starting thereafter at the Court’s convenience, would leave four months for party and non-party document discovery and fact depositions, a month for expert reports and depositions, and then a month for pretrial motions and briefs.”

The airlines’ response is that the DoJ has already enjoyed free, unfettered access to such discovery, expert reports, etc in investigating the merger in the first place.  They aren’t wrong either.  When airlines decide to merge, they lift their skirts for all at the DoJ to see.

In light of the 4 previous mergers over the past 10 years, America West/US Air, Delta/Northwest, United/Continental, Southwest/Airtran, I would argue that not only should there be a vast, significant body of research but also a vast significant body of precedent to use in a court case.

Oh, wait.  There is.  But if you use it, the DoJ loses in the first day of a trial.

That must be why more time is needed.  Creating fiction always takes more time than fact.

Filed under: Airline News, Mergers and Bankruptcy by ajax
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