The Today in the Sky Blog is reporting that Frontier has rolled out a new pricing model on their website today.   The airline is an all coach service but now they are differentiating that service with the designations “Economy” (primarily a Southwest Airlines emulation but you pay for your luggage), Classic ( a reserved seat and DirecTV and no luggage fees) and Classic Plus (Classic with a snack).  There are other benefits and restrictions with each class.

While I do believe that product differentiation is the way to go for airlines in the future, I’m not sure this is differentiated enough to offer a customer a choice.  Yes, service and amenities grow as you pay more and that’s good but look at the Today in the Sky’s story and examine the pricing.  I’m not sure you are getting enough differentiation for the price differences charged. 

A coach passenger is buying on price, primarily and to make the product differentiated enough to entice the passenger into a higher price requires something substantive.  Is it DirecTV and a snack?  I suspect not.  I suspect that DirecTV is worth about $10 to the passenger and a snack is worth maybe $8.00.   Free checked baggage?  Well, for Frontier that might be a mistake since Southwest, their major competitor, already offers free checked baggage.  They don’t offer more legroom but their other major competitor, United Airlines, does and for a price differentiation that really might be a better deal.

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Also on The Onion is this report about John Madden and his fear of airplanes.

I quote:

“Airliners have a not unreasonable fear that, were John Madden to board them, it would increase their chances of crashing,” said FAA administrator Robert A. Sturgell, reading from the report.

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The Onion, a humour and satire website and newspaper, is reporting on American Airlines and new charges this morning.  Enjoy.

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Runway Girl is reporting today on Embraer’s new slimline seat they are planning to install in the E-170/190 jets.   The new seat will either allow airlines to increase knee to seatback distance for more comfort or maintain the existing configuration and add more seats. 

In short haul markets such as Europe, it will likely mean increased seating density with some E-jets likely having as much as 118 seats.  However, in the United States, it probably will mean increased seat comfort as most airlines are using these aircraft for long stages rather than high density short haul routes.  The longer these planes fly, the less weight they can carry.

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If Southwest gains those ATA slots and they do fly them all in and out of La Guardia, this does send an interesting message to those employees who are presently upset over the announcements of codeshares with both WestJet and Volaris.

You see, the big argument made for those codeshares was that it allowed Southwest to concentrate on its business model but enjoy the expanded business that those two airlines offered to Canada and Mexico.   It was an argument about focus and direction with the Southwest business model.  The employees, some of them at least and most important the pilots, have argued that with near zero growth planned for Southwest, these are routes (the international routes) that Southwest could fly with their own people and metal.

It’s an argument that I can see some truth in.   The flying remains a natural for Southwest.  After all, flying to either Canada or Mexico is not flying overseas.  Mostly it is flying to cities across a border in a manner that is quite consistent with the existing model.  While neither country would necessarily permit Southwest to build a network inside their country, there are plenty of provisions already in existence to fly to destinations in both countries. 

Southwest is perfectly capable of operating a website or websites that serve those countries as well.  Labor costs can’t be an issue because, frankly, they could literally outsource those functions to their two new codeshare partners.  WestJet knows how to turnaround a 737 and while Volaris owns A320 aircraft, they also know how to turnaround an airplane. 

Flying to either country does not require ETOPS aircraft and it doesn’t even necessarily mean overnighting aircraft and/or flight crew in either country.  Flights to either country can be “turns” that see no aircraft left overnight.   However, even if you did want to overnight staff in those countries, it isn’t logistically difficult.  Hotels are in abundance and all your staff need are passports.  Language really isn’t a problem either.  Oddly enough, Southwest flight crew speak English, a perfectly acceptable language for Canada, and I’ll bet that Southwest has plenty of crew capable of speaking Spanish already. 

Now La Guardia Airport does present some challenges that are contrary to the Southwest model.  It is a congested, expensive, weather affected airport with high labor costs and high costs to overnight aircraft.  I would wager that it is quite possibly MORE difficult to operate into and out of La Guardia than, say, Vancouver or Toronto or Monterrey or Gaudalajara.  

It also puts Southwest into one of the most competitive markets in the United States and while it does give them access to the business traveler, it does so in a major market where business travelers often expect and even demand creature comforts that Southwest doesn’t offer.   If you have the chance to fly 7 round trips to NYC, what cities do you connect NYC to?  This is mere speculation but I would guess that flights to Chicago’s Midway Airport are a given.  Possibly a flight to either Baltimore or Orlando or Houston or even Philadelphia.   I would actually bet heavily on Chicago, Baltimore, Orlando and Houston.  But even if it was Chicago only, you have, at best, 7 frequencies.  On that route, you would probably need a minimum of 7 frequencies. 

There is something that is unrevealed in this plan.  Certainly Southwest could boost frequencies by obtaining more slots in the future.  Maybe.  But that is historically difficult in a slot controlled airport and a market that rarely sees significant contraction in flight quantities.  It is even more difficult when you are entering a market that major legacy airlines will defend to the death.  No one has any incentive to cooperate with Southwest in making gate space or other facilities available. 

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And, no, I don’t mean Islip on Long Island.  Southwest plans to purchase the operating certificate of ATA Airlines, now in liquidation, and ATA’s 14 slots to operate at New York’s La Guardia Airport.  Even with Southwest’s reputation for surprising the industry, this is a pretty stunning surprise.

Operating into NYC’s La Guardia Airport is contrary to Southwest’s operating model in every sense.  The airport is congested, expensive to operate in and certainly does not offer an opportunity to perform the famous 30 Minute Turn.   The airport (like all airports in NYC) is subject to weather both in the winter and summer and that certainly doesn’t mean on time departures and arrivals.

I actually can’t help but wonder if this is part of a greater plan that may or may not involve a new or existing partner for Southwest Airlines.   Perhaps these NYC slots will be used for limited flights by Southwest to other focus cities as well as offering WestJet and Volaris a chance to connect with Southwest in a huge market. 

There has to be more to this idea than just Southwest wanting to operate directly into NYC.  Look for further developments in this area and don’t even be surprised if it involves a European partner airline as well.

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Using FlightAware.Com, I’ve been able to see some (but I don’t think all) of the government flights from around the world heading to Washington D.C. for the G20 Economic Summit.  So far, I have identified these:

The British Prime Minister on British Airways Flight 001

The Indian Prime Minister on Air India Flight 001

The Argentinian President on Aerolineas Argentinas Flight 1001

The President of the Indonesian Republic on Garuda Indonesian Flight 001

The President of South Korea on Korean Airlines Flight 63

The Prime Minister and his government on Japanese Air Force Flights 1 and 2

The Russian President and his government is on the Russian State Transport Flight 9031 and Russian State Transport Flight 9001.

The Saudi Arabian government is flying in on Saudi Flight 1B

The Chinese government is flying in on Air China Flight 17

The President of Mexico is arrving on Mexican Air Force Flight 001.

No doubt there are others that are not being tracked inbound. The mix of aircraft will include a 777, several 747 aircraft, Airbus A330 and A340 aircraft, a 757, IL 76, IL 62 and IL 96 aircraft from Russia and even a 747-SP (Saudi Arabia).

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The Milwaukee Business Journal reported that Midwest Airlines is being sued for lease payments on two jets and their engines.  Wells Fargo, Inc. is asking for some $82,000 in overdue plane lease payments and Polaris Holding Company, Inc., a GE Capital subsidiary, is asking for $14,000 in lease payments for engines. 

The interesting part of this is that with dollar amounts so low, these two rather large companies felt they had to sue for their money.  Midwest Airlines is backed by TPG, Texas Pacific Group, and other large minority shareholders.   The backers of Midwest Airlines aren’t exactly cash short, even in these economic times.  It makes me think that those two lessors identified something scary in Midwest and decided to get their claims in first.   It is possible that both lessors (financial giants in the credit and leasing industry) are just trying to raise as much cash as possible too.  It still seems suspicious though.

Midwest Airlines remains on my death watch and their prolonged viability is mostly due to vastly reduced fuel prices.

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The Dallas Morning News Aviation Blog is reporting that American Airlines plans to test passenger check in via cellphones and PDAs.  Similar to Continental’s Cellphone / PDA  boarding pass program currently available in several Continental cities now, AA will first test their program in Chicago and then at John Wayne International and Los Angeles International airports next. 

Passengers will be able to receive a 2D barcode that will permit passengers to clear through TSA security and board the aircraft.  The limited availability of this does suggest, however, that passengers will still be printing and carrying paper boarding passes until these systems dominate airports.

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Airtran Airlines has announced that it will begin charging for the 1st bag checked on their flights starting December 5th (2008) and those purchasing tickets on or before November 11th will not have to pay those fees.  In light of the fact that Delta recently announced its intent to implement such a fee, this really comes as no surprise. 

Clearly a la carte fees are the new model for air travel and while many can no longer be argued against, this 1st bag checked fee continues to rankle many travelers.  It is akin to charging a cafeteria customer for his tray.  However, since most airlines have adopted this fee, it will be difficult to escape it as a traveler.   I even wonder if Southwest will backtrack on its “no fees” campaign in light of the industry direction.   It will become increasingly difficult for Southwest to remain competitive in many markets by forgoing this revenue opportunity that virtually ever other competitor has adopted. 

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Southwest Airlines has just announced a new codeshare with Mexican airline Volaris (partially owned by billionaire Carlos Slim.)  Like Southwest’s codeshare agreement with WestJet, this allows Southwest to gain access to international markets.  With these agreements with WestJet and Volaris, Southwest gets access to all of North America and gets to work with two airlines that have similar (not the same) operating environments. 

I’m quite certain that these new codeshare routes will, in fact, boost Southwest’s revenues (as well as the revenues of these other participants) and I’m sure both relationships will prove to be rewarding in many ways other than just money.  If one airline could operate throughout North America, it really would look very similar to this codeshare arrangement.  

These two new arrangements for Southwest found me pondering how it could be done better than just a simple codeshare.  One way to further integrate without attempting a merger (something all three airline’s governments are very unlikely to allow) would be operating an interchange. 

An interchange was a fairly common tool in previous decades within the United States.  The idea is that two (or more) airlines operate the same equipment on a route that is shared.  One of the most famous interchanges was when Braniff operated the Concorde from Dallas to Washington D.C. where an Air France or British Airways crew would take over and fly the aircraft across the Atlantic to either London or Paris.  At the time, each time the Concorde arrived in Washington, the aircraft would be “sold” to Braniff who would then hang new ownership papers in the cabin and change the registration temporarily for operation in the United States.  Obviously that kind of inconvenience would not be tolerated today between airlines but there really isn’t a reason for it either.

Wouldn’t it be interesting to see Southwest operate such an interchange with each of their partners.  A Southwest aircraft could be used to fly an international interchange between Canada, Mexico and the United States with only crews changing between focus cities for each airline.   For instance, imagine a B737 flown from Toronto to Chicago by a WestJet crew where a Southwest Airlines crew would take over and fly it from Chicago to Houston.  In Houston, a Volaris crew could take over and fly that same aircraft to Mexico City (Toluca) and then turn it around for a return trip.  

The advantage is that customers never have to leave the aircraft and it would therefore permit a more seemless network for transitioning from one country to another.  The only problem with that scenario is that Volaris has an Airbus A320/A319 fleet and while WestJet flies the 737, they are partial to the 737-800 type instead of the 737-700 aircraft preferred by Southwest.   Nonetheless, it does cause one to think about the possibilities that might exist between the three airlines. 

It also points to other opportunities for other airlines.  Codeshares are good and convenient for airlines but they still require a passenger to travel from one hub to another hub and when it comes to international connections, it does force the passenger to often de-plane, clear customs and transition to another part of an airport to continue on to a destination.  Sometimes that isn’t all that painful but more frequently it is a great inconvenience to the passenger and a barrier that many avoid.

With airline alliances relatively stable now, many could choose to adopt similar (if not the same) types of aircraft and offer trans-global interchanges for both companies and their passengers.  It also would allow them to further standardize their service and even possibly take advantage of fleet flexibility between partners.  For instance, what if QANTAS and American Airlines shared a portion of their 787 fleet and allowed it to “flex” between North America and Australia according to seasonal demands?

I suspect there are many more opportunities to be had from both codeshares and, possibly, a new version of interchanges between airlines. 

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I receive a weekly (usually) listing of American Airline’s Net SAAver Fares to various domestic destinations.  Since my family lives all across the country, I tend to watch for fares to a lot of places in the dim hope I might spot a chance to go visit someone.  (I haven’t for several years.  Yes, years.)

Suddenly, the fares have dropped like a rock.  When I say “rock” I mean like a large boulder heaved off the side of a cliff.  One fare listing offered me the chance to do a round trip (with restrictions) weekend trip to Raleigh, North Carolina (where I could have BBQ with two very good friends) for just $135. 

Yeah, $135.  That trip was more than double that just a month or so ago. 

I could also fly from DAL (Love Field) to ORD (Chicago) for a paltry $120 and I’ve got family in Milwaukee.

If American Airlines is suddenly working this hard to attract customers for weekend flights, something has to have gone wrong with bookings very suddenly.    And if it happened to them, who else is suddenly gulping in fear?

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The Seattle Post Intelligencer aviation reporter, James Wallace, is now reporting the possibility that Boeing’s new 787 may not make its first flight until February or March of 2009.  Citing the 57 day long strike just settled by Boeing, the program is now supposed to be under review.  At the beginning of the strike, Boeing’s 787 program manager had stated that it would be a day for day slip until first flight. 

However, late February or early March is not a day for day slip and I think this news begins to reveal that there are indeed other problems on finalizing the 787 for its first flight.  The 787 is now more than a year past its original forecast for first flight and had been definitively scheduled for a 4th quarter first flight this year.  Prior to the strike, that was expected to be some time in the middle of November, 2008. 

The delays to the program really should come as no surprise since this aircraft involves far more innovative engineering than probably any other commercial aircraft designed in the past 40 years including the 747 and A380.    Still, another schedule slip after re-defining the program schedule and including plenty of time for more unanticipated problems begins to reveal that this is in fact a program in trouble.   At this point, it is safe to say that Boeing is likely to experience a great deal of trouble getting the production ramped up to meet demand. 

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USA Today’s Today In The Sky Blog is reporting this morning that Delta CEO Richard Anderson and Delta President Ed Bastian have been rewarded handsomely for achieving the Delta / Northwest Merger.  Anderson will receive more than $13 Million in stock awards and Bastian receives just over $5 Million in stock awards.  Both men aren’t fully vested in the compensation until 2011.

While I think it appropriate to compensate two men who obviously worked very hard at making this merger happen, I do think this news comes out at the wrong time and I do think the reward is perhaps premature.  The unions involved in this merger, particularly the IAM, will no doubt bristle at this news despite the fact that Delta / Northwest employees will be receiving stock in the new company.  About 5% for the pilots and 4% for most other employees.  

It would have been better to tie this award to milestones for achieving all of the merger.  First, award some percentage, perhaps 50%, for bringing the two companies under one corporate structure.  Second, set milestones based on the full integration of the company such as pilot seniority lists being fully merged, flight attendant senior lists merged, both sides of the company operating under the same certificate, etc.   There isn’t anything wrong with rewarding accomplishments but I feel this job is only half done at best and there should be some strong incentives to complete the work before granting the prize.

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The Milwaukee Business Journal is reporting a quote from a pilot at Midwest Airlines that the Boeing 717 Fleet may be completely phased out in 2009.  The speculation is that all of the existing routes will be flown using Embaer 170 aircraft leased from Republic Airlines. 

On the surface, this seems bad.  In reality, I see a gleam of hope for Midwest.  The Embraer 170 seats almost as many people as the 717 but cost much less to operate and its pilots are paid less as well.   It’s actually a comfortable aircraft to fly and it would quite possibly allow Midwest to fly profitably the remaining routes it has. 

Fans of Midwest Airlines’ Signature Service will no doubt be upset about losing access to that hallmark service but the reality is that it isn’t profitable and was probably retained way too long. 

I continue to wonder what Midwest Airlines wants to be in the future.  A small regional airline with no real connections to any other airline?  That really doesn’t strike me as a recipe for financial success.  They do have connections to Northwest Airlines (Delta) but I firmly do not see them becoming a “feeder” or “connection” airline for them.  Delta / Northwest simply have too many successful regional airlines already under their umbrella and, in fact, Ed Bastian, President of Delta, has already said that Delta expects to pare down the number of regional airlines serving Delta.

While I do think Midwest Airlines can make some money flying the E-170, I still don’t think they have a viable long term strategy for success.  They stay on the death watch for now.

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Delta / Northwest is not only big with respect to the number and type of airplanes they have, they are also big for the number of hubs they are currently operating.  Conventional wisdom continues to bet that some of those hubs will be closed or rationalized just as it bets that the airline fleet will be reduced.

My guess is that there really won’t be a reduction in hubs of any real significance with the exception of two.  This new airline has two hubs in close proximity, Memphis and Covington/Cincinatti, and each serves similar markets.  However, rather than being combined into one, I suspect that Memphis will likely be de-emphasized into a “focus” city with more connecting traffic routed through Covington/Cincinatti.  The yields in each city are very good but Covington/Cincinatti is by far the city with the best yields.  Memphis is likely to remain as a focus city because it is a good gateway to the central midwest section of the US.

All other hubs in the US such as Atlanta, Minneapolis / St. Paul, Detroit, and Salt Lake City have the airline as a dominant carrier and there is no reason to combine any of them with respect to the routes they serve. 

Now, both airlines operate significant flights from gateway cities such as Los Angeles and New York and it is quite likely that the airline will work hard to combine some flights going to the same cities.   For instance, flights from the New York area going to the same destinations in Europe will be combined to raise the load factors on the equipment being used.  However, Europe presents an interesting problem because Northwest has been in a close relationship with KLM and has used Amsterdam as a “hub” to connect to other cities in Europe.  Delta, on the other hand, is used to flying direct flights to a variety of cities in Europe without a hub or close partner.  I suspect the relationship with KLM will be reduced so that Delta can raise the loads on its own flights to smaller European cities.

Northwest comes to the table with a hub in Tokyo, Japan and they have 5th Freedom Rights to pickup and carry traffic from Tokyo to other cities in Asia.   On the surface, that would appear to be a very valuable asset.  However, the value of that arrangement was far greater when the political climate in Asia was much different and the range of aircraft made it more convenient to fly to a central hub.   Today, it can be much more profitable to fly direct to a variety of Asian cities using newer, long range aircraft such as the Boeing 777 and the about to be introduced 787.  I have no doubt that the Tokyo hub will be retained in some form because the yields from traffic originating in Tokyo to other Asian cities is still well worth the effort but I suspect that there will be a renewed emphasis on point to point flying as things evolve in the new airline.

The thing most likely to change at Delta’s hubs will be the aircraft equipment.  With a wide variety of equipment to choose from, it would be unsurprising to see a shift of long haul aircraft between the hubs in order to improve yields, load factors and even to explore new routes.  That will be done slowly and carefully so that Delta doesn’t have to service too many different types of aircraft at each hub.  Once again, aircraft being used at various hubs to service various areas will probably be rationalized.  It would be unsurprising to see A330s shifted to longer South American and African routes with B767-400’s moved to trans-atlantic routes originating in MSP and DTW. 

Los Angeles will probably see a greater concentration of 747 aircraft being used on trans-Pacific flights.  New York and Atlanta will probably see 777 aircraft moved in for long range, point to point flying to destinations in India, South America and even Asia.  

At present, Delta has 4 different types of long range aircraft in the 747, 777, A330 and 767 with another on the the way (787).   Since Delta already operates GE powered 777-200ER/LR aircraft, they’ll likely place an order for some 777-300ER aircraft and use those to replace the aging 747 aircraft.  That will reduce flying by one type.  The A330 aircraft will be retained until a fleet of 787-9/10 aircraft can be purchased and then the A330 will likely be let go.   Delta’s 767-400 aircraft is fairly new but it will probably suffer the same fate as the A330 in being replaced by 787 aircraft in the future.  Suddenly, two basic types with 2 sub-types between them can service all the long haul routes and, at the same time, offer some harmony at each hub. 

I do wonder if Northwest’s 787 orders will be switched from Rolls Royce engines to GE GEnx engines.  That would permit Delta to operate two basic aircraft types that would use the same brand of engine and engines that share some basic design philosophy as well. 

The tricky part of managing all of these hubs for Delta will be the domestic fleet which is comprised of Airbus A320 series, Boeing 737 series, DC-9 series and MD80/90 series aircraft.  Because it is more efficient to perform maintenance on a domestic fleet that keeps the aircraft close to a maintenance center, I do wonder which hubs will get which aircraft.   Both Airbus and Boeing offer good choices for domestic fleets in the A320 and 737 series.  The DC-9 fleet is old and will be retired over the next couple of years so it isn’t a factor.  The MD-80/90 aircraft isn’t exactly old but it does become somewhat of an orphan and they don’t offer the fuel effiency that the A320 and 737 offer.  It’s quite possible that Delta will retain both the A320 and 737 series and simply order more of both until they can choose a next generation domestic fleet type from Boeing or Airbus.   I do believe that the MD80/90 fleet will be selected for retirement in the next 2 years. 

The exciting part of this merger will be watching the decisions that Delta makes about its new future. 

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The US Justice Department approved the merger between Delta Airlines and Northwest Airlines today.   The two companies will now begin to work on executing the combination as quickly as possible and it should culminate with a combined operating certificate in 1 to 2 years. 

In the meantime, Delta and Northwest have already made a great deal of progress towards completing the merger.  The executive team has been selected, agreements with pilots have been obtained and each company has been working pretty hard towards merging the culture of each airline together.  While no doubt there are bumps in the road still to be encountered, this particular merger shows great signs of being accomplished with relatively little strife. 

Flight Attendants are targeted for being a trouble area.  Delta’s flight attendants are non-union and while there have been a few votes over the years to unionize, all have failed pretty soundly.  Northwest’s flight attendants are unionized and have been characterized as even miitant.  Delta’s CEO, Richard Anderson, has urged that everyone work together and while his stated preference is for no further unionization (and he has backed that up by being very willing to negotiate differences), he also has said that he and the rest of the executive team will abide by whatever vote there is.  It is likely that the flight attendants will have a vote after the merger is officially executed and it is likely that it will be in favor of unionization since a combination of Northwest’s flight attendants with the minority of Delta flight attendants in favor of a union would win any vote.

While both CEOs of each airline have professed that such a diverse fleet of aircraft will permit them to “right size” aircraft to a particular route, it is highly likely that the fleet will be pared down over time.   Northwest’s youngest aircraft are manufactured by Airbus and Delta’s fleet is comprised entirely of Boeing products.   Certainly both major aircraft manufacturers will see an opportunity with this merger and both will be pitching their mainstay aircraft lines, the Airbus A320 series and the Boeing 737 series.  With an gentleman’s agreement in place between Delta and Boeing that gives Delta preferential delivery slots, this is Boeing’s opportunity to lose.

A good guess is that, initially, the Douglas DC-9 fleet will continue to be eliminated and bases for the Airbus A320 and Boeing 737 fleets will be established at selected hubs.   It is possible that the Airbus A330 fleet will be phased out in favor of more Boeing products such as the new 787 of which Northwest already has a significant order on.  The 747 fleet will most likely be phased out over time in favor of the 777-300 and which Delta already owns in the 200ER/LR version. 

The combination of these two airlines will form the world’s largest airline both by revenue and traffic.  This will even dwarf American Airlines by a significant degree.  However, because of industry contraction and the obvious economies and advantages to be gained by constraining capacity in markets that the new Delta will be dominant in, it is likely that the airline will actually contract both its fleet and, to some degree, its employees.  However, major layoffs of any significant numbers are very unlikely and most contraction is likely to be done through natural attrition.

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American Airlines has just announced its intention to drop minimum mileage accruals for non-elite AAdvantage members.  Here is the emailed announcement:

Dear ,

Effective January 1, 2009, we are discontinuing the minimum mileage guarantee for non-elite status members for flights on American Airlines, American Eagle^®, AmericanConnection^®, oneworld^® member airlines, AAdvantage^® participating airlines as well as rail service and codeshare service booked under an AA flight number.

With this change, customers will earn AAdvantage miles equal to the actual distance flown or the applicable percentage* of the miles flown, and any associated bonuses will be calculated accordingly. Similarly, elite status qualifying miles and points earned for travel on eligible flights will also be based on the actual miles earned. AAdvantage Executive Platinum^®, AAdvantage Platinum^® and AAdvantage Gold^® members are exempt from this change.

The new policy will apply to non-elite status members traveling on or after January 1, 2009, regardless of when the ticket was booked or purchased. Flights flown on or before December 31, 2008, will continue to accrue AAdvantage miles under the current policy. For more information, visit AA.com/AAdvantage.

Thank you for your business. We look forward to seeing you onboard soon.

Sincerely,

Rob Friedman
President
AAdvantage Marketing Programs

What does it mean?  Not a whole lot for most people.  Most flights are more than 500 miles and therefore accrue actual mileage.  For Texas based fliers to regional cities, it means you accrue actual mileage instead of a minimum.  However, most people who might be annoyed by this are actually Elite AAdvantage members and therefore *will* accrue the minimum. 

 

All in all, it’s just another mild erosion of another frequent flier program.  Some airlines have already implemented this program (US Airways for instance) and some have done so in a modified form. 

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The Fort Worth Star Telegram Sky Talk Blog has written about the APA pilots union representing American Eagle Pilots now has a new contract and there are a few things of interest to me.  First, this contract got negotiated in almost absolute silence.  There was no real posturing in public and neither side managed to say inflammatory things to the press. 

Second, the instructions to the APA (Allied Pilots Association) negotiating team was to obtain real life improvements to the pilots quality of life and work.   Increased flexiblity (for pilots) and other tangible but not necessarily measurable changes were obtained but no salary concessions were given.  American Eagle got a contract amendment that apparently satisfied both sides needs.

Now, American Eagle pilots are not overpaid to begin with but they are well paid and they do have a pathway to upgrade into American Airlines’ mainline system which is a bit unusual for a regional airline.  American probably did not need to obtain wage concessions but I suspect that they wouldn’t ever mind paying less too. 

The really striking thing about this development is that American Eagle pilots apparently realized that there were no wage gains to be made but they *could* obtain a better quality of work life.  Such concessions from American Eagle may have cost them little or nothing to give.  Both sides won.

This is in direct contrast to the Allied Pilots Association representing American Airline mainline pilots.  These guys have decided that there need to be “givebacks” and that their world is severely impacted by executives who won bonuses.  Personally, I do agree that awarding bonuses to executives when the company has *not* financially performed nor rewarded its lower level employees is wrong.  Very wrong. 

However, if AA pilots think that there is room to give back $3 Billion (yes, that Billion with a “B”) in wages, they are kidding themselves.  If they think there is room give back $1 Billion, they are kidding themselves.  I suspect they could gain quite a bit of work life improvements themselves if they were willing to offer some concessions on productivity. 

And they face yet another problem.  In This Blog Entry, I describe the history of how pilot compensatioin began and why it is a problem today.  American Airline pilots realized that with the announcement that AA is buying new Boeing 787 aircraft, the old model might not fit for compensation.  You see, the 787 is considerably lighter (as a function of its high carbon fibre reinforced plastic construction) than it would ordinarily be.  Much lighter.  A very dim light has come on over their heads and they have begun to realize that, perhaps, pilot pay should be based on criteria having to do with something other than weight and distance. 

You see, the new 787-9 aircraft are capable of carrying almost as many people just as far as a 777-200 but with a lot less weight.  The pilots will want compensation equal to or at least close to a 777 pilot and they’ll begin to look for justifications for that.  Those justifications will inevitably lead to a discussion on all pilot pay because future aircraft such as the 737-RS will also likely be constructed in such a way as to offer the same capacity at less weight as current generation 737 models.  

For once there will need to be a rational agreement on how to pay pilots that involve new measurements instead of the ones in use for 80 years.  This is an opportunity for AA to obtain some sort of deregulation on the cost side of the equation and set new negotiating precedents for other union relationships in the future.

Filed under: Airline Fleets, Airline News, Deregulation by ajax
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USA Today’s Today in the Sky blog has a story about Airtran now offering upgrades to business class (space available of course) after a passenger has boarded the aircraft.  This is smart for a few reasons.  One, it’s one more opportunity to get that revenue.  Two, passengers may well be much more motivated to buy that uprade if they see the seat.  Three, passengers may well be much, much more motivated to buy that upgrade upon discovering that economy is full.

Filed under: Airline News, Airline Seating, Airline Service by ajax
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