The FAA has denied exemptions for their 3-Hour Rule at NYC area airports. They replied:
“Passengers on flights delayed on the tarmac have a right to know they will not be held aboard a plane indefinitely,” U.S. Transportation Secretary Ray LaHood said in the department’s announcement. “This is an important consumer protection, and we believe it should take effect as planned.”
” In denying the requests, the Department concluded that airlines could minimize tarmac delays by rerouting or rescheduling flights at JFK to allow the airport’s other three runways to absorb the extra traffic.”
“The Department also noted that it has the ability to take into account the impact of the runway closure and the harm to consumers when deciding whether to pursue enforcement action for failure to comply with the rule and the amount of a fine, if any, to seek as a result of non-compliance.” *
And that is really what I both expected and hoped for as a reply. I am certain the war of words is not over, however.
* These quotes are from the Dallas Morning News Aviation Blog entry which can be read HERE.
Airtran has expressed how happy it is that they did not win their fight to acquire Midwest Airlines a fwe years ago and notes that they are the dominant player in Milwaukee now. My feelings as well. It is sometimes difficult to grow a business because of the capital requirements but it’s also very, very hard to integrate two airlines and it rarely realizes the expected benefits often touted during merger talks.
Bob Fornaro, CEO of Airtran, has also expressed interest in what might be happening with industry consolidation through purchases and mergers and says they want to play a part. However, it isn’t the role you think. Airtran sees those developments as opportunities to pick up assets such as aircraft, slots and routes that may have to be divested as a result of a merger between two entities.
I’m pretty sure that Gary Kelly (CEO of Southwest) would add a “hell yes!” to that.
The airline industry has seen a lot of growth among the LCC carriers (and whatever you think, US Airways is *not* an LCC carrier despites its stock exchange identifier) and virtually all of that growth has been organic. These airlines do the work of identifying good business targets and building the business of the route properly. Each route between two cities is rally a “mini” business of the airline. To build that business requires investment, time and good analytical skills. Maintaining that business requires good analytical skills and agility.
Legacy carriers shun executives from LCC carriers. If I were to take over as CEO of a legacy carrier, I would head hunt avidly among the LCC carriers. Those are the industry executives with the talent and skills to run an airline today. Unfortunately, legacy carriers tend to promote within and stick with their legacy management corps.
It’s been several days of largely no air traffic across northern Europe and the natives are getting restless. Airline CEOs (Willie Walsh) are going on “test flights”, mammoth airlines (KLM) are sending up their cargo aircraft and the UK government is now sending naval ships to get Britons home.
Is it reasonable to have this ban? I really don’t know. I somehow think that there was an overabundance of caution deployed at the beginning and I do think that no country wants to be the one to blink on safety right now either. The log jam is not so much the ash in the air at this point as it is politics I suspect. You have all of western Europe wondering if they should or should not allow flights and everyone knows that if they do and an aircraft runs into trouble, all fingers will point at them.
The disappointing thing about this is that no science has been conducted (to the best of my research) to make a determination if things such as a flight ban are really warranted. No one is doing real atmospheric testing and tracking to make a rational decision on what might be the right thing to do. From what I can tell, no one even seems to be contemplating such a reasonable act and that’s disappointing for the consumers stranded across Europe.
Europe isn’t one country but we have a tendency to think of it as one country. It’s lots of countries each with its own political leadership, aviation agencies and airlines. I don’t think this is going to get sorted out for another 48 hours or more and even then we’re talking about 40% to 50% of the flights getting back on track to start with. This could take another 4 to 8 days afterwards to bring operations back on line completely. All of this is, of course, contingent on that Icelandic Sparkler not erupting with more fury too.
Don’t blame the volcano. Don’t blame the airlines. Blame the political leadership this time.
One friend called me this morning asking for guidance on him getting to Frankfurt leaving from DFW on Saturday. I certainly think his flight has a shot as of today. I think if we haven’t seen flights start to resume by Wednesday morning, it’s time for a backup plan. His backup is to fly to Madrid, catch a connection to Milan and then take a train to Frankfurt. Doable but that’s a long few days of traveling and no assurance of getting out when his business conference is over.
Senator Charles Schumer has obtained “commitments” to not charge fees for carry-on luggage from several major legacy airlines. Read HERE for the entire story.
There are a couple of things I notice. First and foremost is that each airline making the commitment (American Airlines, jetBlue, Delta Airlines, United Airlines and US Airways) each have significant operations at La Guardia or JFK Airports (or both.) Airports in the state of New York and both of which are within Senator Schumer’s power base.
Also notable is that Continental has been quiet. Continental’s operations for NYC are concentrated at Newark Airport located in New Jersey. Well, I also suspect that new Continental CEO Jeff Smisek is sensible enough to ignore the Senator.
Of course they made the commitment. It doesn’t fit within their business model and is impractical for them to try. It costs them nothing to make the commitment and get their name in the news much as Spirit has had theirs in the news since making the announcement that they would charge carry-on fees.
The only people benefitting from Senator Schumer’s diatribes is Spirit Airlines. I leave Senator Schumer out of that equation because the more he speaks, the more it becomes clear that he doesn’t know what he is talking about and that this is more about his name in the press that advocating something for his constituents.
Imagine the good that could be done if he shouted as loudly for redefining NYC’s air traffic area and getting better air traffic control systems in place.
Instead he leads the charge against an airline who has no New York bases and who flies just 14 flights from NYC (La Guardia) to destinations such as Detroit (2 flights), Fort Lauderdale (7 flights), Myrtle Beach (4 flights) and Atlanta (1 flight).
Hard to view them as a threat to NYC area consumers particularly since they offer flights on the NYC – FLL route as low as $60 each way with a checked bag fee of $19 and who *still* allows personal items free on board if they fit under the seat in front of them.
Let me point out that several airlines who he received commitments from charge *more* for checked baggage.
In a BusinessWeek story today, which can be read HERE, I noticed a paragraph that gives some hint as to who wants to be in charge of the new airline if a merger agreement does come about. It says:
UAL, based in Chicago, and Tempe, Arizona-based US Airways are discussing an all-stock transaction to combine the companies, with the smaller US Airways being the acquirer, said the people familiar, who asked not to be identified because the talks are private. The merger would help United steer travelers to international flights from US Airways’ domestic routes, said one of the people.
That sounds like US Airways management being the “lead” group in a merger and, more importantly, Doug Parker as CEO. However, I don’t know where US Airways has the financial capability to be the surviving entity either. (Note: Just because US Airways is the surviving entity doesn’t mean that the name United Airlines goes away. They may well choose to keep that name.) In addition, where does that leave United President John Tague? He is arguably the executive who has best managed United and who is arguably the one to succeed Glenn Tilton as CEO.
Doug Parker and team have done a fairly admirable job in keeping US Airways afloat and viable but they still have unresolved issues with their labor unions at present. Such a merger would mean 3 different groups of pilots who would have fairly strong ideas on which union should represent them and how much they should be paid. The AmericaWest/US West group is the minority group at present but could potentially regain some leverage and power if they could agree with the United pilots. I find it hard to believe anyof the 3 groups would agree with another.
If they really wanted to do this, I suspect they’ll have to give up some substantive group of routes and, possibly, equipment to gain approval. The Washington D.C. area is the trouble point since US Airways has a strong position in Washington, Philadelphia and Charlotte and United has a strong position in Washington as well. I’ll bet Southwest could be interested in paying for routes into and out of Washington National airport but I’ll also bet that UA/US doesn’t want Southwest having a foothold there either.
None of this makes really good sense. If this is a real negotiation for a merger, I don’t see it happening without giving up lots of advantage in Washington which hurts the merger potential. If it is an attempt to bring someone like Continental to the table, I think Continental is smarter than that. That leaves American Airlines and they just don’t seem to like mergers like that. They don’t mind acquisitions but mergers aren’t their cup of tea. However, one could make a case for an AA/US merger that might actually have some benefits similar to the Delta/Northwest merger.
But I seriously doubt AA’s unions would cooperate with a merger like that.
Some analysts see Continental making a bid. I don’t. Merging with United doesn’t give them any advantage they don’t already have and saddles them with labor problems and a fleet that is aging and which doesn’t mix with Continental’s well at all. People keep pointing to United’s position on Asian routes but I would point out that if Continental had the equipment, they could probably siphon off United’s customers without buying the company. Coincidentally, Continental has early 787 positions that could allow them to do just that. I just don’t see Continental going for this.
Midwest Airlines is off my deathwatch. Why? Because it is dead, Fred. Republic Airways has shocked no one by announcing that it will be the Frontier brand that will represent both Frontier and Midwest going forward. See news on the anouncement HERE.
No one will be really surprised by this because at the end of the day, two brands wasn’t going to work with one shared fleet and the Frontier brand is the stronger national brand. In addition, what national recognition Midwest did have has eroded tremendously in the past 2 years. Finally, Frontier was just the bigger airline.
Are the animal spokespersons sticking around? Yes. Not surprising since the person leading the branding now is the person who developed the aninal campaign for Frontier originally. The next new animal will be the badger, an animal icon for the state of Wiscosin.
Midwest? I am sorry the Midwest brand is gone now if only because Milwaukee is my birth town and I always felt that the people working for Midwest really did put something special into their airline. It wasn’t the cookie for me. It wasn’t the large seats. It was the nice people. When you called to make a reservation on Midwest, you got a very friendly and very knowledgeable person. That had a lot more value to me than a cookie.
Unfortunately, an airline based in Milwaukee isn’t a recipe for success. An airline based in Milwaukee and using Kansas City as a focus city isn’t a recipe for success either. I do wish Midwest had gone over to Airtran. While the brand would have been gone still, I believe the people working for Midwest would have been appreciated more.
With the Frontier brand sticking around, I do hope we’ll see a return to a more focused and innovative Frontier identify that, in my opinion, has been muddied quite a bit already. That Frontier was competing very well in Denver and could continue to compete well so long as we see its unique offerings come into focus again.
US Senator Charles Schumer is shouting out against fees for carry-on bags today and, if anything, he sounds sillier than Secretary LaHood. Senator Schumer is threatening to introduce legislation prohibiting charging fees for carry-on luggage. Read about it HERE.
Both of these gentlemen haven’t really studied up on what Spirit Airlines is doing and if they had, I suspect they would not have managed to stuff size 11 feet into their mouth. I would say more but I prefer to refer the Honorable Gentleman from New York to my post on Sunday shown HERE.
With the news that US Airways and United are in merger talks, the subject of mergers and industry consolidation among US airlines has been reheated to a high temperature again. For the past several years, there has been a lot of talk about the need for consolidation among airlines in the US in order to return to profitability and there are many advocates (such as Doug Parker and Glenn Tilton of US Airways and United respectively).
New fees seem to have brought in additional revenue but no one can seem to really claim that it has changed the equation for earning a profit for airlines. Advocates say these new fees are helping airlines find a path back to earning a profit and I certainly think that experimentation with these fees isn’t over.
Oil is always a frequent component of profitability. Soaring oil prices just two years ago nearly brought several airlines to their knees but also brought huge profits to other airlines who engage in hedging their fuel costs. I don’t think anyone would disagree that a more stable oil market would not only benefit the airlines but a lot of other industries. The wide oscillations of fuel prices have brought a big element of uncertainty to many parts of the economy.
I’m not sure consolidation is really the answer, however. Frankly, I think one big mistake of the 1990’s and 2000’s is that we have permitted airlines to go through bankruptcies (some multiple times) and reorganize themselves rather than being more insistent on a liquidation or two. It’s politically difficult to do so because liquidating a large legacy airline means tens of thousands of people suddenly becoming unemployed.
Yes, the airline industry is a network business to a large degree and network businesses can do better if they grow larger and capture more market share. I question how viable that is over the long term without restructuring other legacy costs as well. I think it is a nice, immediate answer and certainly offers short term (2 to 5 years) gains in share prices but there are other issues that need to be decided as well.
Seniority is king in the airline business and I’ve really come to believe that that is a huge obstacle to health for many airlines. Airlines have to compete on price in the market place but are not allowed to compete on salaries in the employment market place. Union contracts based on seniority are killing many airlines. Mind you, that isn’t to say that airline employees don’t have legitimate issues too, they do.
Airline employees are expected to quite literally work for poverty wages for years before starting to earn a real family supporting wage and then finally make it to a level for their last 10 or 15 years of work careers where they earn extremely generous wages for the exact same work that a junior level employee does for a salary that is unable to provide modest life. This disparity has to stop. Entry level wages should be higher and senior level wages should be lower. Airline crew should be able to move between airlines without having to re-set to the lowest wage scale again. We have enough airlines in this country that it is somewhat absurd to believe that a strike at one major airline threatens the national economy. It doesn’t. Airline employees deserve to be able to agree on a contract in a much more timely fashion. Failing to do this results in an even greater tenacious hold to seniority since it is the only thing that raises wages.
LCC airlines have managed to remain profitable and grow but only by keeping their business model flat with respect to equipment and staff. This allows them to keep productivity high and prevent creeping wages based on a structure that makes weight and distance the prime factor in pay. Actual work loads and skill sets are secondary in paying flight crew.
No, I’m not sure we need more consolidations and mergers and, frankly, I don’t think such things would substantially raise airfares given that LCC’s are pretty adept at spotting opportunities and entering markets. Virtually the only thing that keeps them from certain routes is legacy airlines holding monopolies on airport space or slots. Even then, those LCC’s are very good at looking for ways around those problems to gain a foothold. Notice how vigorously Delta and US Airways are trying to keep Southwest Airlines from gaining more slots in NYC?
The saga of the conflict between Southwest and WestJet continues with Southwest implying that they’ll consider direct competition with WestJet on flights from the US to Canada if the agreed upon codeshare falls through. Many speculate that Southwest is just blustering and that they’ll never fly those routes themselves. A frequent flying friend who has made many trips to Canada and through Canada asked me if I thought they would ever really do it.
I do.
First and foremost, this isn’t Southwest Airlines of 1989. This is Southwest Airlines of 2010 and a very different beast. If you had predicted to people that Southwest was going to institute flights out of NYC’s La Guardia airport in 2006, almost no one would have believed you. Guess what?
Second, Southwest has something that not a lot of airlines have. Employees who relish competion. When this initial codeshare was announced, some of the loudest opposition came from Southwest employees. They recognized that flights to and from Canada could easily be flown by them rather than another company. The pilots were particularly peeved about that and made it known during their contract negotiations. But all employees saw that the company could and, perhaps, should fly those flights themselves. Most also rightly recognized that similar flights to Mexico probably weren’t as easy to do for SWA and were, at best, a long term goal. My point is that SWA employees are very aware of their capabilities and very motivated to succeed as a company.
I think that in the 2 years since this codeshare pact between Southwest, WestJet and Volaris were announced, even Southwest management has realized that they can do more and try more and succeed. That said, Southwest is also an honorable company and I feel certain that their preference is to work out differences and continue with the initial plan. Don’t mistake that for SWA being afraid though.
I think they’ve made some mistakes in the past year. I think delaying the codeshare as a result of re-prioritizing IT upgrades was, in hindsight only, a mistake. However, given the dire conditions SWA was facing when they made that decision, perhaps it was the right decision at the time. Remember that WestJet didn’t have to face those same economic problems at that time, already was experienced with flying internationally and it is somewhat disingenuous to act as if they’ve done all their work while their partner is lagging behind. WestJet knew what it was getting into when it made that agreement.
Southwest recognizes that future growth is going to come from entering markets that previously they avoided. That isn’t abandoning their model, it is accepting that the future is different. As a function of entering these kinds of new markets, there will be new challenges for them and they’ll make mistakes. They have made some mistakes. That said, they’ve also stayed true to themselves and not allowed their mistakes to drive themselves into more mistakes. Indeed, they are quite humble about internally acknowleding their mistakes and not too proud to reverse course and make something right or at least not repeat a mistake.
So, yes, I do think that SWA can and would enter into Canadian markets. They have a number of focus cities where that would make imminent sense for them such as Detroit, Chicago, Baltimore and even Seattle and Denver. They could change the NYC – Toronto market if they found enough slots at La Guardia to start flights on that route.
Southwest’s real business model is about earning a profit consistently. If adding routes to Canada can be done a consistently profitable basis and it yields profits that are better than other opportunities, they’ll do it remarkably quick.
Personally, I think this WestJet spat will get worked out but I think that will happen at the chairman level rather than the presidential level.
I just saw this report on a New York Times blog HERE today. To summarize, supposedly people writing this blog have had it confirmed by insiders that United and US Airways are in merger talks. Mind you, this wouldn’t be the first time this rumour has gone out although it has been some time since I’ve seen it.
It would make sense on several levels. I’ve always thought that those two companies were more compatible than United and Continental both from a fleet point of view as well as a hub point of view. It would definitely have some challenges in front of it as a merger in certain markets (Washington D.C. for instance) and labor issues that exist at both companies would kind of worry me about getting a real deal done.
I also wonder at who would run such a proposed entity. Doug Parker of US Airways hasn’t shown much interest (if at all) in being second fiddle to anyone else in any proposed mergers. United’s Glenn Tilton would likely be amenable to stepping up to a non-executive Chairman role or leaving altogether but there is a firm “second in command” at United in John Tague serving as President already and who likely expects to rise further with some real justification. Since he and Mr. Parker are essentially contemporaries, they would definitely be in competition with each other to get the top executive job.
Spirit Airlines has announced new fees for carry-on luggage. Yes, carry-on luggage. If you want to know who the *real* Ryanair Airlines is in the US, it is Spirit. If you’re a member of their $9 Fare Club and pay for your carry on online, you’ll pay $20 for a carry-on bag. If you don’t book your bag online but pay for it up to the ticket counter, you’ll pay $30. If you don’t belong to the Fare Club and have to pay at the gate, it’s $45.
Mind you, Spirit also charges $19.00 for 1st bag *checked* too.
In general, I disapprove of baggage fees for any 1st bag but in Sprit’s case, I’m OK with it. Why? Look at their air fares. If you play their game, you still save an incredible amount of money on their flights. Only fools pay additional fees on their airfares that make the total cost approach other airlines.
In a twisted way, Spirit’s fees kind of make more sense to me. They’re unabashedly charging for the right conveniences and with scaled levels. It is hard to argue against that approach.
Will other US airlines adopt this approach? Maybe. Frankly, it may well be the more sensible approach to fees but if you do see an airline adopt this, you’ll see them lower or eliminate their 1st checked bag fee I suspect. Airtran could be a good candidate for this approach perhaps. I suspect the legacy airlines may avoid it as it targets their favorite customers: the business traveler. I definitely see Ryanair taking this challenge on in the near future. It fits perfectly within their strategy.
On April 16th, Republic Airways will unveil its choice of brand going forward to use on both Midwest and Frontier Airlines flights. Does anyone here think it won’t be Frontier?
On another note, here is a video shot from inside a QANTAS A380 showing a tire blowout and subsequent fire during a landing in Australia.
Southwest Airlines issued THIS press statement on April 1st in response to WestJet’s comments on forming a codeshare agreement with Delta. The part that really catches my eye is this:
“A codeshare between WestJet and Delta, as indicated in media reports, could be inconsistent with the agreement presently in place between Southwest and WestJet.”
It’s not good when one party is responding to the other in the press. One would presume that someone at SWA attempted to find out what is going on at WestJet and was either ignored or given no substantive information. Ordinarily, SWA doesn’t really play things out like this in the press. Clearly a message needed to be sent.
And the message does clear up some things with respect to SWA. Apparently there has been communication and agreement going on between the airlines in this partnership and apparently SWA is on schedule (at least internally) to start this codeshare. Well, that’s good news.
A little context on WestJet’s part. Their CEO, Saretsky, is brand new in the job and made his comments before officially becoming CEO on April 1st. Their former CEO, Sean Durfy, is relatively young and relatively new in the CEO position (about 2.5 years). I’m beginning to wonder if there is some dissatisfaction with the leadership of this airline on the part of the chairman (and founder), Clive Beddoe. I’m also wondering if Saretsky wasn’t speaking a bit out of turn when indicating a preference towards Delta rather than Southwest.
I also question whether WestJet can really be bought off by the world’s largest airline with an offer of a few New York City slot pairs and the promise of some feed into the Canadian network of WestJet. The more I think about this, the more it occurs to me that Delta quite likely is already flying to most destinations it requires in Canada via connections in Salt Lake City, Minneapolis/St.Paul, Detroit and New York City. In other words, is Delta playing WestJet in order to make Southwest uncompetitive in New York City and is WestJet really that naive?
Southwest’s announcement also seems to indicate that they’re willing to press on to Canada and why shouldn’t they? With the IT upgrades done, there really isn’t a reason why they can’t start flying to quite a few destinations in Canada and no reason why they can’t do it as economically as they would any US destination. I’m sure we’ll hear more about this relationship in the coming weeks.
The Dallas Morning News ran THISstory on Wednesday about new cooperation between American Airlines and jetBlue. In short, the two airlines will swap slots at JFK airport (AA to *gain* 12 slot pairs) and Washington Reagan National Airport (jetBlue to *gain* 8 slot pairs) and start cooperating (interline agreement) on flights where they do not compete.
It will become possible for a passenger in Burlington, VT to fly jetBlue to JFK and then seemlessly transfer to American Airlines to fly to London Heathrow airport. This is a good thing for both airlines. AA gains the opportunity for more feed into its major trunk routes (not flown by jetBlue) and jetBlue gets feed for its more obscure routes not served by American or American Eagle. These feeds will take place both at JFK and Boston’s Logan Airport in the Northeast and, most importantly, these “complete” flights are only available via American Airlines at the present. jetBlue doesn’t have the capability to offer such things yet.
Both airlines get to increase their potential strengths at airports where they want to compete harder and it’s a deal that is much more likely to happen with the FAA’s blessing than the Delta/US Airways deal currently under proposal. The deal also likely works to keep an airline such as Southwest Airlines or Airtran marginalized at those three airports without appearing to suppress all LCC competition since the deal is with jetBlue after all. This is smart.
However, it greatly disappoints me that jetBlue has taken this route. It isn’t unprecedented since jetBlue is already cooperating with airlines such as Lufthansa (who owns 17.5% of jetBlue) and Aer Lingus but it is disappointing because it shows jetBlue willing to be a 2nd tier partner with a legacy instead of building upon its own successes. Can you really see jetBlue adding flights from the NYC area to destinations in Texas or Chicago now? That would be highly unlikely.
It would appear that jetBlue has decided the status quo is good enough instead of challenging other airlines in new markets as was their mandate and focus when starting the airline. It’s a safe play and even profitable in the short term but it limits their ability to compete and deliver new service in the long term. Now it sounds as if their strategy is to be more like Alaska Airlines (friend to many, enemy of very few) and a lot less scrappy like Southwest, Airtran or Frontier/Midwest.
Two days ago, the new CEO of WestJet stated that WestJet would be pursuing a code share agreement with Delta with the potential to implement this either before or in place of their existing agreement with Southwest Airlines. Several reports tie this in with the proposal to give WestJet some slots at (5 pair) at La Guardia Airport in the Delta/US Airways slot swap deal currently being discussed.
First, I continue to be skeptical that there will be an agreement between Delta and US Airways for this major slot swap between La Guardia and Washington National airports given both the FAA’s and Department of Justice’s attitude towards this deal. Other than Delta and US Airways, no one is thrilled about the idea of Delta and US Airways getting to “pick” their competition by granting these slot swaps to airlines who aren’t poised (and never really will be) to compete with these two legacy airlines. If a deal does go through, I expect it will look different than the current proposals and it will involve a transparent auction of these slots to a high bidder.
Nonetheless, this is a bad announcement for Southwest airlines for a few reasons. First and foremost, the thundering silence that continues from Southwest since this announcement was made sort of indicates they were as caught off guard by this as anyone. It isn’t good for such a large airline to appear as unprepared for this development as they seem to be.
Second, the original deal between Southwest and WestJet is part of a 3 nation alliance between Southwest, WestJet and Volaris, all airlines operating in the tradition of being LCC carriers and all with a model similar to Southwest’s own. Southwest was clearly the leader in this alliance and it appears that it’s delays in getting themselves positioned to start this alliance have hurt this agreement. Acting like the 800lbs gorilla and then not getting the job done in time doesn’t make you appear to be an agile player in the airline community.
Southwest has said the delays came from making other changes a priority within their IT system. Whilethere are some changes such as new business class options, none of those changes to date are the kinds of things that should have delayed such an alliance for a year or more. No other airline would have taken nearly as long to integrate into that kind of alliance and that points out problems with Southwest’s IT system. Southwest is accustomed to going it alone on their systems (they do not, for instance, participate in a global reservations system) andhave done so for nearly 20 years. Now, that departure from industry norms is starting to hurt them apparently in being unable to make these kind of changes and integrations in a quick and agile fashion.
Third, Southwest’s image of leadership among LCC carriers is further hurt by this. Many founders of LCC carriers have pointed to Southwest as their inspiration for how to run a modern airline. No doubt that this is true but it also points out that these 2nd and 3rd generation LCC carriers have become more responsive to both their customers and the potential for new business than Southwest has managed. Losing that image of leadership is a bad thing for Southwest both externally and internally.
Making substantial partners wait to engage in a strategic alliance that, by all accounts, should be very beneficial as well as ground breaking is neither smart nor a good show of leadership. Canada really only has 2 airlines capable of entering into an agreement like this and the last thing you want is to annoy the 2nd largest airline of Canada into exploring options with a heavy hitting airline such as Delta and its associated alliance, SkyTeam. Volaris may prove to be more patient but you have to wonder if they aren’t asking themselves if there is another partner in the US who might be interested in them. A partner such as jetBlue or Virgin America or even the Republic Airways two-headed beast, Frontier/Midwest.
This doesn’t mean that a wholesale change in leadership is called for at Southwest but it may well indicate that it is time to find ways to become a leaner, more agile competitor. The days of simply having to show up and winning customers are over. Witness the competition that SWA is seeing in new markets such as Denver and Milwaukee. In this industry, winners attack and grow rather than ponder and play it cautious.
I’ve had a few people ask me about NextGen air traffic control over the past couple of months wanting to know what it is and if it really is the silver bullet to current problems so I thought I would take a few minutes to give a cursory description of what it is and why airlines want it. This is part 1 and we’ll have part 2 tomorrow.
The FAA has tried to find and implement a new system of air traffic control for 20 to 30 years now. Airways were crowded in the 1960’s and 1970’s and all parties knew it was time to find better methods of controlling aircraft. Contrary to what is often read in general news media, the current system is not 1950’s technology. The basic system of controlling aircraft was introduced in the 1950’s, the technology has evolved and been improved a number of times over the past several decades. That said, the issue with the technology is that in our modern microchip world, our current ATC technology is still kind of rooted in the mainframe era. You can go only so far with a system and the technology that supports it before you need to transition.
NextGen really is two things. First, it’s a re-envisioning of how we control aircraft. In other words, we’re talking about re-inventing air traffic control and we’re able to do that because of newer, more modern technologies. Before going farther, you have to imagine first that any system we use is not similar to a highway system because not only are we concerned about direction and speed, we have different altitudes to use too. It’s more like layer upon layer of highway systems.
The old system (and by system, I mean methodologies for controlling air traffic) was conceived in an era where our knowledge and technology allowed us to navigate with a fair degree of precision for that era but which still required a fairly large dose of margin of error to make it safe. Under the old system, have a system of “points” that pilots can navigate to and upon reaching those points, they then navigate to the next point they need to go to. When they create a flight plan, it is a plan that states which points they’ll fly to (within the rules of planning) and at what altitudes and speeds they’ll do it at. It is a kind of multi-dimensional connect the dots plan. Ever see the actual flight path of your aircraft and wonder why it looks a bit convoluted and twisted? It’s because pilots are flying along airways from point to point rather than from departure to destination direct.
Let’s say a pilot for an airline wanted to fly from Chicago to Los Angeles. Currently, the pilot cannot simply take off, flight at an altitude of his choice and fly directly from Chicago to Los Angeles. Instead, he takes off, flies to a point that is on or close to a routing that leads him in the *direction* of Los Angeles and he continues to fly from point to point to get to Los Angeles. As he gets closer, he flies with more precision to the airport by navigating to points that lead him to Los Angeles. Flying to these points is essentially done by “homing in” on radio broadcasts from beacons at these points and through direction from air traffic controllers who are “tracking” his flight via radar.
Neither the radio nor the radar paint a very precise picture. There are many seconds delay in the radar that paints the picture of the aircraft and where it has been and where it is going. If there is, say, a 15 second delay, that amounts to a lot of error. It doesn’t sound like a lot but consider that these aircraft are traveling at 530mph. That aircraft is traveling 0.15 miles / second and in 15 seconds, it has traveled nearly 2.5 miles. In 30 seconds, it has traveled nearly 5 miles. In just one minute, it has gone 10 miles. This explains why we currently require so many miles of separation between aircraft in the air. When you hear about aircraft being required to stay 5 miles away from each other on the horizontal, it probably sounds excessive. When you consider that an error in knowing where you are that last just 30 seconds, you may well lose all of that separation and suddenly run into another aircraft.
We’ve developed some systems over time that mitigate these risks such as TCAS (pronounced TEE-CASS) which stands for Traffic Collision Avoidance System. This allows two (or more) aircraft to announce where they are to other aircraft and to decide if these two aircraft are on a collision course. If they are, one system tells its pilot to “dive” and one tells the other to “climb”. The problem is, aircraft have accurately know where they are for this to work.
For the most part, they do. Airliners use a complicated set of gyroscopic inertial navigation machines. These sophisticated machines sense movement direction and speed and if they know where they were before they started moving, then they can tell where they are as they travel. Again, the problem is that the precision of these systems is measured in miles rather than feet.
I found THIS short story on Republic Airways and noticed the elevation of a Frontier executive to VP in charge of branding and marketing. Ian Arthur, the man who oversaw development of the animal campaign(s) at Frontier has been put in charge of branding and marketing for Republic’s two branded airlines: Frontier and Midwest.
Republic plans to unveil a new “face” for these two airlines blending the “best of both” airlines together. Quite a few people may hope for something with Frontier’s flair or Midwest’s comfort but I think a third thing is going to happen.
I suspect we’ll see a harmonization that relies on commonality for aircraft and that means Frontier probably returns to more of a traditional 2 class model and Midwest see its brand go away both in name and colors. Republic uses its fleet of regional jet aircraft to augment these airlines and they can’t afford to configure either to fit a highly distinguished brand.
I suspect LiveTV might well go away because I’m skeptical that Republic wants to fit that product to their E-170/E-190 fleet. What I really suspect is going to happen is we’ll see the Frontier name but the brand turned into a vastly more generic experience for passengers.
The Dallas Morning News Airline Biz Blog has THIS entry. Continental wants any exemptions granted by the DOT for the 3-Hour Rule to be extended to the entire NYC airspace area (JFK, EWR and LGA airports essentially) claiming they are to interconnected and interdependent and one problem at one airport potentially causes problems at another airport. There is some truth to that. What is spoken is that airlines haven’t decided to be a part of the solution to those problems.
What this really is about is just undermining the rule with exemptions. Get one foot in the door on that issue and you’ll likely undermine the entire rule with more and more exemptions. The New York City area is just the best place to start as it has the best conditions for claiming a need right now. Take note that airlines want government off their backs (to semi-quote Jeff Smisek of Continental) but have not implemented restraint on their parts nor have they sought an industry solution to the overly congested NYC area other than to ask for a “NextGen” ATC system. The NYC area has been congested since the 1960’s. I’ll point out that airlines didn’t want the government off their backs post September 11th.
This bothers me for 2 reasons. One, undermining the rule is just bad policy right now until you’ve had an opportunity to operate under it. You make a much better case for these exemptions if you can show both the operational and economic impact of them. Two, it’s a distraction for the airlines. It bothers me that airlines have allowed themselves to become distracted by fighting this rule instead of planning for its impact and getting on with their business. There are other, very important problems for many of these same airlines to solve such as labor contracts, equipment purchases and even fuel hedging.
Let’s face it, most all of these airlines asking for exemptions are airlines that could stand to be focusing more on solving other problems that shareholders are impacted by to a far larger degree. Shareholders haven’t really been given much by legacy airlines in terms of real value for their investments.
You can fight this PR battle in the news like this and lose and Ithink the airlines will lose this one. Now, they’re not in the habit of losing much anymore as they’ve have asked for and received a great deal of consideration from the government over the past 10 years. Unfortunately, there really isn’t much good will left out there for airlines and we now have a very different government in place.
It’s interesting to me that a group of airlines such as ours can spend so much time, effort and energy fighting something like this but won’t come together and make a concerted industry effort to lobby for a real implementation of better ATC control.
I might be wrong but I really don’t think there is much tolerance left for an industry that has received as much consideration as the airlines have who hasn’t tried to be a part of the solution. And despite all promises to the contrary, airlines really haven’t solved the kind of problems that the 3-Hour Rule has been put into place to solve. For almost ten years the industry has said that this is a problem that is better solved internally. If it had been solved internally, we wouldn’t be focused on solving this problem still (or not nearly to the degree it currently plays a part in public debate.)
A healthy airline would, at this point, be making contingency plans and figuring out how to operate profitably within this constraints rather than hoping to win a PR battle. Watch who decides they have a dog in this fight and then look at their financial performance and labor relations. It should be an interesting story.
Sun Country Airlines has announced plans to fly weekly service from Minneapolis / St. Paul to London (Stansted) this summer from mid-June to mid-August. You can read their press release HERE. This service will include both first class and coach seating on a 737-800 aircraft. Yes, that’s right. A 737-800 aircraft is being used.
No, it isn’t a Boeing Business Jet in disguise. Sun Country is planning to have an intermediate stop in Gander, New Foundland in each direction. That’s right, we’re back to offering service comparable to 1959. Actually, that’s wrong. The original 707s used on such services were considerably faster than the 737-800.
Believe it or not, this service is being sold for $798 not including taxes and fees. Taxes and fees could add well over $200 to $300 more to the price. No real bargain there. Did someone at Sun Country have a dream that Delta wasn’t offering enough service to London and a Beefeater comes along and suggests London Stansted as an ideal airport to use? London Stansted is 45 miles to the city center of London and lacks a tourist friendly connection between the airport and city center as well. Believe it or not, the CEO of Sun Country justifies this choice by mentioning potential connection opportunities with Ryanair.
Come to think of it, is this Sun Country’s way of announcing they are for sale?
USA Today/AP has THIS story about Frontier mechanics who are represented by the Teamsters union going to court to enforce a contract. Republic wants to move maintenance to Milwaukee (home of the other branded airline they purchased, Midwest) and it has offered to move mechanics from Denver to Milwaukee to do this maintenance. The mechanics and their union claim their contract specifies the maintenance will be done in Denver and they’ve gone to court to see who is right.
The worst part of this isn’t the move in my opinion. The worst part is that Republic has apparently told the mechanics that anyone who moves to Milwaukee won’t be in the union. Why is this bad? Well, for one, even the courts aren’t fond of union busting via mergers and bankruptcies. Another is that Milwaukee is, itself, a very unionized city still. I’m not sure you want to get a reputation for being anti-union in such a city where you’re still attempting to court customers as the “home town” airline.
Republic may even get away with this move but it also attracts the attention of unions and they may now face unionizing attempts at their “core” airline unit(s). While unionizing attempts aren’t nearly as successful as they once were, they continue to be a bit more successful in the airline world which is heavily unionized and where those belonging to a union almost universally do better with respect to pay and benefits. Yes, Delta is somewhat the exception here but I fully expect them to become much more unionized in the future as well.
Are unions inherently bad? No, they aren’t. Bad union contracts are bad. Antagonistic relationships with unions is generally bad. And in the political and economic climate that many workers exist in today, unions really don’t look so bad anymore.
A couple more moves like this and I’ll move Republic onto my death watch.
