Today, part 2 in my views on whether or not we’ll see a real “Ryanair” style airline here in the United States.

 

Watch what you fly here.  The most recent LCC entrants here have bought Airbus.  No real surprise as Airbus likes to make a heck of a deal on an aircraft for new airlines in the hopes they’ll have the “in” for future orders if that airline succeeds.  

 

Boeing isn’t too interested in that.  They want to see a solid business plan and a real possibility of success.  What’s more, big orders aren’t the enticement they once were for Boeing.  Boeing got burned on a few of those deals with Ryanair being the most notable since it allowed Ryanair to buy aircraft, fly them for a couple of years and sell them at a profit.  Boeing isn’t going to let that happen again any time soon.

 

Is Airbus the right aircraft?  Yes.  No.  Maybe.  I kind of think not.  I think it is well suited to the jetBlue and Virgin America airlines of this country because they can support that upgraded service product nicely.   That said, those airlines would have done just as well with Boeing aircraft.  In fact, jetBlue went with Airbus because Boeing refused to offer a decent price for a decent order.  

 

But Airbus doesn’t strike me as quite the right choice for an LCC.  They’re a bit higher off the ground, have a little worse operational dispatch rate and don’t always have the best range vs weight ration for certain routes.   Yes, they’re a family of aircraft that offers a range of size that captain can fly across the type range. 

 

Boeing seems better.  Supported here in the United States, you have better access to mechanics, parts and plenty of maintenance contractors to keep you going.  They’re a little bit closer to the ground, a little easier to turn around and have a little bit better dispatch rate.  In addition, their range of capacities is a little bit better for routes and virtually every model has trans-continental capability now without being weight restricted. 

 

The model I would look long and hard at isn’t either of those.  I think a new LCC carrier trying to emulate Ryanair ought to take a serious look at the Embraer 170/190 aircraft.  They’re cheaper to operate and can carry a full load of passengers and baggage although little cargo (which isn’t an LCC’s concern anyway.)  They offer a family of sizes, have a good dispatch rate, offer quick turn arounds, great range, good comfort and great potential for routes requiring frequency and low costs.  It is no wonder that David Neeleman chose them for his new airline, Azul, in Brazil.

 

But you can go used in the US and do pretty well too.  Allegiant Airlines buys used MD-82/83/87 aircraft, for instance.  They MD-80’s are overbuilt, cheap to buy and still pretty cheap to operate.  They have range, good dispatch rates, ease of maintenance and they’re abundant on the used market.   The same is true of older Boeing 737 models (pre Next Generation models) and those are becoming to cheap to purchase as well. 

 

In the end, an LCC needs an aircraft type that is relatively easy to expand into a fleet, keep one class of pilots flying it and which has a ready source of aircraft to augment and/or replace the fleet with. 

 

One type, many sizes should be the rule.   Ryanair uses one size, the Boeing 737-800 and Southwest basically uses one size, the Boeing 737-700 but they can afford to do so.  A new LCC needs operational flexibility and being prepared to use the three basic sizes of either type would be a good thing. 

 

But you can split your types too.  Airtran did this successfully by entering the world with DC-9s, transitioning to Boeing 717s and then growing in capacity by bringing on the Boeing 737.   That worked because while they needed two different pilot groups, the pilot groups could be kept “rational” with the same pay rates.   jetBlue split their types between the Airbus and the Embraer(190) and split their pilot groups pay rates too.  There was risk involved in that but jetBlue avoided that by offering pay rates on the Embraer that were as generous as that being offered other pilots flying mainline aircraft at other airlines. 

 

Find airports that welcome you and that have demand to locations you can serve.  Sounds easy but it isn’t.  In the US, airports tend to be wedded to airlines that have served them for decades.   When DFW opened, it was served by a number of major airlines and each terminal served one or more airline.  Now, DFW has been taken over by American Airlines (nearly 4 of 5 terminals) and does little to serve the needs of airlines who aren’t AA. 

 

Airports need to figure out that putting all their eggs in one basket with a major, hubbed airline isn’t a good strategy in the long run.  Once those airlines have that dominance, they use it to beat airports down on fees and coerce airports into paying for infrastructure the airlines then get to own.  It doesn’t benefit the local economy to have one dominant airline as prices rise and service falls.  This isn’t just true for DFW either.  When airports begin to aggressively pursue new entrants, everyone will win.

 

New and existing LCC entrants need to make a better argument too.  All too often, LCC’s tend to fear competing in those markets dominated by a major legacy carrier and that’s a mistake.  Airtran wasn’t afraid to go up against Delta and it paid off.  jetBlue wasn’t afraid to compete in one the most competitive markets in the world (NYC) and against some of the biggest airlines.  In the past, there weren’t good examples of what an LCC can do for both an airport and a metropolitan area.  Now there is and new LCCs in particular need to use that to their advantage. 

 

Treat your staff well.   Airlines sell a service product and while you may get customers on price, you’ll keep them with service.   Offering strategies to your crews that permit you high productivity and your crew a living wage along with a good working conditions can only lead to your success.   Treat them like commodities and you’ll fail.  Southwest, Ryanair, jetBlue and Airtran get this.  Skybus and Mesa Airlines don’t.  Look at who is making money. 

 

Quality of life is just as important to airline crew and staff as wages.  Airlines that offer good quality life tend to have happy crew flying their flights and treating their customers right.  At the end of the day, it is a lot cheaper to keep a customer than it is to find new ones every week. 

 

Will we ever see a close replica of Ryanair’s model here on a national basis?  Yes, I think so.  Right now, no.  The market is too crowded but that will change again and new airlines will be started again.   US attitudes towards fees and advertising are changing, although slowly.  

 

First we need to see a major airline liquidate or merge with another to reduce capacity some more.  Then we need to see an uptick in the economy that induces people to spend some money on travel again (both leisure and business travel.)   There needs to be a glut of aircraft useable for such a venture (and that’s happening already) and airports need to figure out that it is in their best interest to find space for these new entrants.  That really hasn’t started to happen yet but it may yet still happen.

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Ryanair is certainly the darling of LCC carriers and, to a certain degree, they even kind of outshine Southwest Airlines.  Lots of people look at the US market and wonder about having a Ryanair-style carrier here.  Skybus Airlines (read more about them HERE) was supposed to be the one but tanked miserably and by every appearance, the only people who didn’t expect them to fail miserably was their executive staff.

 

Could such a carrier exist here?  Sure they could.  In fact, I think it already does in the form of Allegiant Airlines (find out more about them HERE.)  Allegiant is all about flying routes point to point using secondary or even tertiary airports and providing extreme low cost prices which are augmented by fees galore.  And they make a considerable profit doing so.

 

What does it really take to be a Low Cost Carrier in the United States?  First, let’s really define what that is.  Interestingly enough, US Airways uses LCC as its trading identifier on the stock markets.  Is it a LCC carrier?  Not by any definition.  jetBlue and Virgin America both style themselves as LCC carriers but, let’s face it, while they offer great value, neither are a Ryanair style LCC.

 

Southwest Airlines and Airtran Airlines are probably both the best examples of true low cost carriers operating nationally here in the United States.  Allegiant certainly is but they’re still focused much more on the leisure markets and many of the routes they serve compete with quite literally no one. 

 

Skybus failed for a few reasons.  First, they picked a hub that defied rational thought in Columbus, Ohio.  As you can imagine, there isn’t a whole lot of traffic trying to leave or get there.  Hubs don’t work well for LCC carriers.   Focus cities do but not hubs.   If you want to make money as any kind of airline, you had best be offering flights between two places people want to go. 

 

Second, you have to pick between offering frequency and relative value or absolute lowest cost and infrequent service.  You can’t be all things to all people.   Skybus kind of offered high frequency and absolute lowest cost and hoped it would stimulate new traffic.  The problem is, there is only so many people who want to fly between Columbus, Ohio and Greensboro, NC.   You really can’t do that route once or twice a day every day of the week.  Not at any price.  Not with large, mainline aircraft anyway. 

 

Third, just because you can fly to a secondary or tertiary airport doesn’t mean people will go to that airport to use your airline at any price.  Case in point, Bellingham, WA and Skybus again.   Bellingham, Washington is a long way away from most anyone in the Seattle-Tacoma area.   It’s 90 miles from downtown Seattle, 122 miles from Tacoma and it is a tortuous drive in traffic for anyone in that metro area.  Bellingham is convenient to, say, Vancouver, British Columbia but that means crossing a border.   In the case of the SEA-TAC area, you need to be flying from their main airport.   And the lesson is that you have to look long and hard at each area you’re serving. 

 

LCC carriers have succeeded in flying from secondary, smaller airports such as Love Field (Dallas) and Midway Airport (Chicago) and even Long Beach (LA area) because those airports remain highly accessible to a large number of people.  And as both Southwest and Airtran will tell you, sometimes if you want to enter a market, you have to bite the bullet and fly where people want to go.   I take note that since Airtran has decided to defend itself against Allegiant, even Allegiant figured out it needed to change airports in the Orlando area to remain competitive. 

 

Choose your fees and advertising carefully.  The United States is a different place than Europe.  Advertising that is racy or in bad taste doesn’t go well here under the best of circumstances.  It doesn’t matter if you think it should or not.  It just happens to be that way and a new airline is going to change the moral outlook of this country.   Oh, yes, Spirit Airlines has gotten away with it now and then but they remain a minor player and it has possibly turned off as many people as its turned on. 

 

An a la carte fee system (a la Ryanair) is something that this country is completely unfamiliar with when it comes to airlines.  Now, that is changing and it will likely change more but it is an evolutionary thing, not revolutionary and some fees are going to make customers feel burned no matter what.   Skybus’ Ryanair-like approach to charging a fee for even looking in their direction was offensive to customers here in the US particularly when, at that time, no one else had even really dabbled in it.

 

While I do think more a la carte offerings will and should be instituted among airlines, it will be done differently here.  Luggage fees have generated a massive amount of resentment with customers and while they have generated significant additional revenue for major airlines, it has also caused many customers to more carefully consider their options.  Southwest has bucked that luggage fee trend and the results are showing. 

 

There is place for an airline that charges for checked luggage, beverages, meals, blankets and airport check-in.  But the amounts of those fees still have to have some value.  Particularly when legacy airlines already have those fees as well.  Charge more for checked baggage than American Airlines and you run the real risk of turning people off.   We’re really not a true a la carte culture here.

 

Be careful of your publicity.  Ryanair’s CEO, Michael O’Leary, gets away with outrageous statements and even expressing a certain outright hostility to his own customers.   That works in Europe and, in particular, within the UK and Ireland.  Those are cultures who know how to take such statements with a bit more of a wink and a smile.  Here in the United States, it’s a flat turn off.  Our culture is based more on politeness and friendliness.  Bark at your customers or even insult them and they will walk elsewhere. 

 

Tomorrow, Part 2 of this post.

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Since Virgin America began operations, I’ve been watching for something sensible to happen.  There have been a few developments that make sense. 

 

In addition to VA’s initial trans-continental routes, they began to add some West Coast service to places such as San Diego, Las Vegas and Seattle.  This let me increase aircraft utilization since those routes from San Francisco and Los Angeles weren’t 6+ hours but, rather, 2 hour (or less) hops.  And having a bit of network to feed into those trans-con flights made sense too. 

 

But this put them into competition with a few very well established airlines as well.  United, Southwest, jetBlue and Alaska Airlines all operate on the West Coast very effectively and on the same routes. 

 

Alaska Airlines, a legacy airline with a very good full service product started to jump on the anti-VA bandwagon and issued a number of objections to their “US Owned” status to the DOT.  Most likely because VA had a product that competed very well against their full service business class product and that was a major source of revenue.   Alaska Airlines had a lot to lose on some of those routes in particular.  Strangely, United remained pretty quiet and probably because their frequent flier program kept their business customer pretty loyal.

 

Speaking of frequent flier programs, that was another area that Virgin America was a bit lax in and that kind of surprised me too.  They had 2 extra years to develop a strong program and have the infrastructure in place to support it.  It was something that, in my mind, would have made sense since the business customer likes such programs and they had a good trans-continental service product to attract those people.  Instead, it was rolled out a tad late and still lacks much of a partnership with anyone. 

 

Although VA positions itself as a low cost carrier, it really offers a 2 class service product that is comparable to any legacy airline and, in many cases, it is a service product that is much better. 

 

Aircraft are equipped with a two class cabin (first and coach) called, oddly enough, First Class and Main Cabin.  There is a Main Cabin Select product but that’s really access to Main Cabin seats that have a bit more legroom (exit aisles and bulkhead seats) with some of the First Class service product (meals, beverages and premium tv channels are free).  It’s an economy plus plus or semi-business class product. 

 

I believe all airlines could stand to offer more service products through their cabins and this was an area that I thought VA was kind of smart in.  I still think a lot of airlines could stand to differentiate even more but I liked what VA had there.   It was more “business” than “coach” than a lot of airlines’ economy plus products and even competed very well against a similar offering from jetBlue.

 

jetBlue really took things to aother level with their LiveTV offering on their aircraft.  Virgin America took it to yet another level by offering a full entertainment system (including TV) that even allowed shopping and the ability to order food and drink from a menu, thus eliminating the traditional beverage and meal cart services.   The system, called Red, worked pretty well although some reviews had it not always working or in need or a re-boot from time to time.  Such systems do take time to work out bugs and time for staff to learn to work with. 

 

VA also got aggressive and was the first US airline to offer GoGo inflight Wifi on its aircraft.  With accomodations like power ports at each seat and the existing entertainment offerings, this was likely adding whipped cream to the ice cream.  All of their aircraft are equipped with it and Virgin says they’re doing OK with it.  Probably more so than some airlines. 

 

All of these offerings cost a lot of money to both purchase and maintain and VA continued to see red ink as time passed by.  (It is difficult to get a very good picture of VA’s finances because it continues to be a private company instead of a public corporation.)   At one point, rumors that its US investors wanted out spread around and Alaska Airlines filed yet another objection to VA with the DOT who, recently, yet again ruled that VA was more than sufficiently US controlled.  (Read THISfor more info.)   CEO David Cush did continue to speak publicly that their revenues were improving monthly and that he did think VA was edging closer to an operating profit.

 

In fact, VA did manage to eek out a small third quarter operating profit as reported in December which, frankly, surprised a lot of people.  I know I was.  It was a 59% improvement (according to VA) over the previous year’s third quarter and they managed to make it happen in what has been arguably one of the worst economic climates for airlines ever.  This got my attention.  Frankly, the climate hasn’t been good for VA since they started to improvement during those times is impressive, to me anyway.

 

Virgin America is also a bit unusual for the airline industry in that it has a number of women in senior leadership positions.  Their SVP for Inflight Services, VP – Marketing, SVP-CFO and VP – Planning & Sales are all women. 

 

Also curious is the rather interesting Canadian influence in their leadership.  The Chairman of Virgin America is Canadian Don Carty, former Chairmen and CEO of American Airlines.    Frances Fiorello, SVP – Inflight Services has had a long career with Candian airlines such as Canadian Pacific, Canadien Airlines and Air Canada.   Bob Weatherly, SVP of Flight Operations, has a similar Canadian history. 

 

And then there is the American Airlines connection which kind of puzzles me at times.  Don Carty, David Cush, Diana Walke,  and Ross Bonanno each have a history with AA.  Virtually all their senior leadership has extensive with experience with previous airlines.  In fact, after looking into their biographies, it made me realize just how VA might be managing to make it despite all predictions against them. 

 

It’s a strong team with a strong background in successful airlines that, for the most part, have reputations for good cost control and good service products. 

 

Virgin America has been on my death watch for at least a year.  Now, a lot of my inclination towards that has been based on routes.  Yes, they’ve grown and, yes, they’ve added routes.  But they don’t seem to want to really compete except where there is really low hanging fruit against their service product. 

 

They recently opened up routes between, of all places, Fort Lauderdale and Los Angeles and San Francisco.  Obviously they saw some opportunity there but I don’t get what the attraction is in adding those two routes before a lot of other opportunities.

 

VA doesn’t have an East Coast network at all.  They have destinations in NYC, Boston and Washington, D.C. (in addition to the Fort Lauderdale routes) and that’s OK.  Competing on the East Coast is brutal and those three main destinations have enough originating traffic in them that they don’t necessarily need network traffic feeding in on the West Coast yet.

 

David Cush has, at times, talked of adding routes from the West Coast to Chicago but he wants O’Hare airport and claims there are no gates to be had.  This isn’t exactly true.  There are gates but VA doesn’t want to pay the price to get entry to them.   There were, at one point, gates available at Chicago’s Midway airport but VA doesn’t like that idea either. 

 

More recently, Mr. Cush dropped hints of adding a route possibly to Austin or Dallas / Fort Worth.  Most agree that Austin might happen (there is a strong tech connection between Austin and the West Coast) but doubt the DFW possibility. 

 

You see, my problem is that VA seems to be ignoring the possibities in the middle of the country.  With their service product, they could compete very well against AA on routes between DFW and San Diego and Los Angeles.  They could compete well with AA and United on routes between Chicago and Los Angeles and San Francisco.   There is a strong connection between Denver and Los Angeles and despite the back alley fight going on in Denver, it has possibilities. 

 

They’ve by-passed Portland, Oregon which has strong ties to both LA, Seattle and San Francisco and Alaska Airlines, who owns a lot of that traffic has already proven to be susceptible to VA’s service product.

 

Indeed, if you look at their route map right now, they have every appearance of avoiding any destination that is a real hub for a legacy airline. 

 

I can’t think of a market that is more need of a real competitor in service product to destinations on the West Coast than DFW.   Completely dominated by American Airlines, the service product and prices to West Coast destinations is weak and expensive respectively.  Atlanta could stand a bit of competition on routes to the West Coast too.   The same is true for Miami, Minneapolis / St. Paul, St. Louis, Detroit, Kansas City, Cleveland and maybe even Philadelphia and Baltimore. 

 

It’s always a nice strategy to enter airports where the barriers to entry are easy and cheap when you’re getting started.  But VA is more than 2 years old and clearly has a product that, like jetBlue, can compete against major airlines and win.   In any of the major hubs I”ve named above, they are dominated by one or two airlines on those West Coast routes that are flying old aircraft with little new service product and who have much higher costs than VA.  It isn’t going to get easier to compete with these guys with time. 

 

That’s why a part of me continues to view VA with skepticism.  New airlines don’t win by being afraid to compete.   Airtran and jetBlue are perfect examples of airlines who were willing to go up against major legacy airlines and beat them on both price *and* service.   Airlines who weave and duck from their opponents tend to lose.  Skybus was a great example of that. 

 

There are often moments that are ripe for smaller businesses to make a commitment to going against their major competitors and, if you wait too long, those moments go away and never come back.  I’m starting to sense that Virgin America is beginning to lose those moments. 

 

Would I fly VA?  Sure.  I’d love to enjoy their service product.  However, they fly nowhere I want to travel so it is going to be a long time, if ever, that I get to try them.  Would I suggest them?  Absolutely.  At least for now.  They aren’t going to go bankrupt any time soon.  They’ve managed to get past that infancy stage now and kudos to them.  They offer some fantastic prices on their routes and I doubt anyone would be disappointed by flying them.

Filed under: Airline History, Airline News by ajax
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I tend to ignore Virgin America often even when they do make the news.   I’ve had a lot of trouble figuring out what this airline is supposed to be and even more figuring out whether or not they are really going to succeed. 

 

VA has made some news in the past couple of months, though, and I figured it was time to talk about them. 

 

Virgin America began as a concept annunced by the irrepresible Richard Brandon (founder of Virgin Atlantic and the Virgin Group) and it went through quite a few iterations before it launched.  It changed its announced name from Virgin USA to Virgin America, for instance.  Ownership structure was fiddled with several times to meet US restrictions on foreign ownership of airlines.  Business leaders changed and their original CEO, Fred Reid, was eventually removed to satisfy the DOT and gain permission to launch. 

 

Their approach to finding a home was weird to me and kind of reflected a European viewpoint that led me to believe they weren’t necessarily looking at the US market properly.  After leading a kind of competition to find a home, Virgin America settled on San Francisco as its “operations” home and New York City as its “corporate”  home.   Neither location struct me as particularly wise because NYC and California are expensive places to operate and they’re no more representative of the United States than a lot of other locations.

 

While they went through the start up process, Virgin America faced a lot of criticism from other airlines.  Flatteringly, it was quite a bit more than many startups have received over the years.  On the surface, the objection was always to the perceived foreign ownership of Virgin America.  My own sense was that other US major airlines saw another potential jetBlue starting up and given jetBlue’s success, yeah, it would worry a few airlines. 

 

Strangely, at the end, some of the loudest objections came from Continental Airlines who, from my point of view, had the fewest reasons to fear Virgin America’s competition.  Continental had a strong 2 class operation that was highly favored by businessmen for both its service, comfort and frequent flier program.   From my perspective, American Airlines and United Airlines had the most to fear from this upstart’s trans-continental plans.   Even jetBlue had some reason to be worried since VA’s product most closely competed with jetBlue’s and had the biggest chance of nibbling away at jetBlue’s customers.

 

I think the biggest concern from existing airlines was that, once again, a well financed 2 class airline was entering the market that had low labor costs and brand new efficient aircraft.  Startups always have low costs because the airline industry is based on seniority.  A new airline with all new employees quite naturally has some of the lowest labor costs but that does change over time and it really depends on the airline on whether or not those costs rise dramatically or not. 

 

jetBlue has been able to keep its labor costs relatively low by being pretty good at taking care of their employees, for instance.   By having such low costs, airlines like jetBlue and VA, are able to compete very hard on those trans-continental routes that are many airlines bread and butter. 

 

When VA agreed to remove CEO Fred Reid from the operation after no more than 9 months of operation after the certification was awarded, they had to go find a new CEO.  Now, Fred Reid never had the kind of reputation that I would expect an operation like VA to need or want.  Formerly of Delta, Fred Reid performance at Delta was mixed and he certainly wasn’t a charismatic leader which I thought would help VA quite a lot in the US.  Richard Branson’s kind of bravado has never played nearly as well in the United States as it has elsewhere in the world.

 

My thought was that VA would seek a more personable, charismatic leader who would not only have a strong airline background but who would also be a good public figure for this venture.  VA, apparently, felt otherwise and found their next CEO at American Airlines in the form of David Cush.  

 

Mr. Cush certainly fit the bill when it came to having a strong airline background.  He had 20 years of airline experience in a wide variety of positions and a great education too.  The thing is, Cush did it all at the most conservative of airlines, American Airlines.  Huh?  Yes, Cush had youth going for him and he does present himself rather well but it still didn’t mesh in my mind.

 

I suspect VA’s investors, most particularly its US investors, wanted someone who had a very strong financial background and who understood just how important it was to preserve cash and operate with strong controls in place.  They had, after all, funded VA with more money than had ever been put together for an airline startup in the US when VA began.   He did most recently work as Vice President of Alliances and Chief of Sales for American and this hints at Mr. Cush’s ability to access corporate clients.  With VA’s transcon strategy, this kind of made sense.

 

Virgin was so delayed in getting permission to start up, it leased several of its delivered Airbus A320 aircraft to the late Skybus Airlines.  When they did begin to operate, they were hindered in fully starting up operations because some of those aircraft were occupied until Skybus failed miserably. 

 

But . . . operate they did.  Finally in August of 2007 and fully 2 years delayed, they began flights between San Francisco and NYC and Los Angeles and NYC.  This wasn’t a bad start in that they were connecting major business centers with lots of traffic but it didn’t allow them to really get high utilization of their aircraft and pricing on those routes has always had lots of competitive pressure so they lost lots of money operationally. 

 

Every airline loses lots of money in its first months and years.  Airlines really operates lots of small businesses.  Each route is really its own business and it takes time to grow those routes into profitable operations and it takes varying time to do it for each route.  It is an investment that takes time to go profitable and much more time to provide a good ROI (return on investment.) 

 

VA was off and running and I was still scratching my head.  There were still many parts to this airline that defied rational thought in my opinion.  Tomorrow, more on VA and its service and routes and where it is today.

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It has been 2 weeks since the Underwear Bomber made his attempt to take down a Northwest Airlines A330 en-route from Amsterdam to Detroit.  In that time, we have seen all manner of posturing by the public, government officials and pundits as to this serious security lapse.   My last comments on this are HERE.

 

Since my last comments, I’ve been appalled by a number of people’s statements on this issue.  I’ve been appalled by former Vice President Dick Cheney making political hay out of this.  I’m deeply disappointed at the criticisms and obstruction on the part of Senators Jim DeMint and John McCain with respect to the TSA and its nominated leader, Erroll Southers.  I’m deeply disappointed by President Obama’s administration in describing this as a terrible failure in our security. 

 

The most sensible writing I’ve found on this topic is by Bruce Schneier (which can be read HERE)  and probably because, yes, it agrees with me.  That doesn’t necessarily come easy from me because while I’ve respected Mr. Schneier’s opinions and while I do feel he is dead on right about these security issues (and has been for a long time), I also think he oftens shouts about these issues too loudly. 

 

But he’s right.  This wasn’t a failure in security.  Certainly the terrorists didn’t win either.   Mr. Schneier is correct in pointing out that our security reduced this attempt to a near certain failure. 

 

For the past week, all I’ve heard and read about this issue is that we’re enacting measures to counter an attempt like this in the future.  Well, in some respects, yes, we should do that.  However, many people, including me, Mr. Schneier and others, have pointed out that terrorists, in particular Al Qaeda, *rarely* if ever make the same kind attempt twice.  So, looking for a Nigerian with PETN sewed into his underwear while carrying a syringe on his person is almost certainly going to fail us.

 

Yes, the public does expect something to be done.  And it should.  It is even entitled to see something being done.  Doing something doesn’t mean doing anything.  It means doing something that really does improve both the real and perceived level of security we might experience when traveling.  The biggest part of the problem in this whole debate is that despite excellent security already going on, the public does *not* feel that it either good, real or substantive. 

 

The public is right, too.  At the ground level, we observe too many Keystone Kop events taking place.  Just a few days ago, we shut down one of the largest airports in our country and inconvenienced thousands and thousands of people because a TSA security guard left their post.  Just walked away and allowed a man to enter the sterile gate area unchallenged.  Read about the most recent developments in that HERE and HERE.

 

The TSA says it takes responsibility.  Really?  Frankly, I don’t care.  The TSA and its guards should be one hell of a lot more responsible and professional than that at any time.

 

What is appalling is that TSA video cameras weren’t recording and it took 80+ minutes for the TSA to notify the NYNJ Port Authority (who runs the airports) of the breach and then they had to rely on Continental Airlines’ cameras to try to figure out what happened.   Spokeswoman Ann Davis of the TSA said:

 

Davis said Monday that although the TSA was unable to locate the man, any threat he may have presented was eliminated “by rescreening everyone and re-combing the airport to make sure he didn’t introduce anything to the environment or hand anything off to anyone.”

 

I have an answer.   Having to clear a terminal and re-screen thousands of people and delay untold numbers of flights does not lend credence to the idea that the TSA has a handle on these issues.  It just doesn’t.  Don’t take responsibility for it, do something about it.  Do something real and tangible.  The TSA should be deeply ashamed and shunned for such a lack of professionalism.  Right now, they look like a pack of huckleberries and that is not good.  It gives terrorists the idea that something *is* breachable.

 

Lack of professionalism, good judgement or proper perspective is missing from other quarters as well.  Take this opinion piece by Steve Danyluk on CNN which can be read HERE.  

 

Pilot Danyluk (A first officer for a major US airline) reckons that an emergency alert should have been sent out and a major effort should have been put into action upon this act taking place.  He’s outraged that he learned of the event on his iPhone after flying a 6 hour flight and landing. 

 

That is absurd.  First, there was no evidence whatsoever that this was a coordinated attack.  You should respond in Danyluk’s desired manner if there is such evidence but there was absolute zero evidence that this was a coordinated attack.  None.  Too those who say you can never be too safe, I respond, yes, you can.   To have responded in such a way would have been like presuming an entire neighborhood was under attack after one house experienced a burglary.

 

Second, I wonder what Pilot Danyluk would have done if he had been alerted.  Neither he nor his captain can leave the cockpit and wander among the aircraft searching for suspicious people.  His cockpit door is hardened in such a way that it would probably take more than a fire axe to breach it.  His cabin crew are not the best trained security staff to identify and secure a suspicious person (and I have plenty of that evidence coming up.)   The best thing he could have done was fly his airplane to its destination.  He did that. 

 

Third, an alert would have prepared him no more for an explosion.  Even if he had experienced an explosion, he certainly couldn’t do anything about it any earlier.  And if he had experienced an explosion, he would have been very busy getting that aircraft under control and pointed to a safe landing location.  

 

The truth is, it takes a pretty big bomb to take out a commercial airliner.   Oh, it could have severely damaged the aircraft and possibly hurt or killed someone but the likelihood of someone having enough explosive and a good enough detonator to wipe an aircraft from the sky with our current security in place is extremely statistically insignificant. 

 

Take the example of the DHL Airbus A300 being hit in Baghdad in 2003 by a surface to air missile.  You can read an account HERE.   A large, twin engined, wide body aircraft that had just taken off from Baghdad executing a special rapid climb procedure and fully loaded with fuel was hit by a surface to air missile that was *designed* to take out aircraft and  they still made it to the ground.  Yes, the recovery was due to the professionalism of the pilots and some prior knowledge of how to use differential engine thrust to “steer” the airplane (as a result of the THIS incident) but this aircraft was hit by a flying bomb traveling more than twice the speed of sound with a 6lbs  warhead with a high explosive impact fuse designed to fragment upon impact and survived relatively in tact.  You can’t carry that kind of thing in your underwear. 

 

I understand why Pilot Danyluk is “furious”.  He’s a type A pilot and type A pilots think they can always do something about something.   It’s a nice thought but there really wasn’t anything for him to do that he wasn’t already doing  provided he was following standard security procedures while in flight.   He can stomp his feet and write opinions on CNN all he wants but it does NOT mean that security failed him or anyone else.

 

It isn’t just pilots.  Well, it is pilots (still) but it is also flight crew, ATC and even NORAD. 

 

It would appear that a man became “unruly” on a Hawaiian Airlines flight from Portland, Oregon to Hawaii on Wednesday.   The captain decided to turn back to Portland (probably because it was just as easy to go there as anywhere else) and suddenly the flight is being “escorted” by F-15 fighters scrambled up by NORAD. 

 

You can not make this stuff up.  Read about this incident HERE. 

 

Can’t be too safe, right?  Wrong.   What is notable about this news story is that this aircraft returned to Portland, dropped the passenger off into the waiting hands of the FBI who, after a short while later, determined that no laws had been broken and released him.    This is very suspicious and sounds much more like a flightcrew having a hissy fit over a grumpy passenger rather than someone who was acting in a manner that justified a 90 minute diversion and meeting the aircraft with FBI. 

 

Certainly it would appear that sending F-15 fighters (and spending thousands of dollars) to escort this diversion was a bit foolish and wasteful. 

 

The best security in any situation including on an aircraft is using good judgement.  Good judgement is not “better safe than sorry” but, rather, assessing a situation for what it is rather than what it isn’t.  

 

The pubic will begin to perceive that we have good security not when things like these events don’t happen but when how we handle them becomes professional, efficient and proactive.  We have a decent defensive security process but what we don’t have is a uniform, professional example of it in the most public of representatives, the TSA. 

 

Leaving all good sense and judgement in the closet and overreacting to events like this serve absolutely no good purpose and even weaken security in the long run. 

 

I welcome comments on this post.

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USA Today’s Today in the Sky blog is reporting that Mesa Airlines has filed (voluntarily) for bankruptcy reorganization today.  Read the story HERE.

 

I can’t say that I find this surprising in any big way.  Their financial situation has been somewhat dire for a while and their stock prices positively abysmal.   In many respects, Mesa is the perfect example of  a company that is rough on its employees, rough on its customers and abrasive in its own PR.   That really isn’t a recipe for success in *any* industry.

 

Mesa operates flights for Delta, United, US Airways and under their own grand in Hawaii as go! airlines in partnership with Mokulele.   They fly the CRJ100/200 (47 aircraft), the CRJ700/900 (58 aircraft) and the Dash 8-200 (12 aircraft).  With a desire to shed aircraft from their fleet, my guess is that they’re wanting to rid themselves primarily of the CRJ100/200 aircraft primarily and mostly by breaking leases.

 

It’s also notable that both United and Delta have worked to end their relationship(s) with Mesa and Mesa is currently in litigation with Delta over the attempt to break the Delta contract.  The Delta contract was operated by Mesa subsidiary using ERJ-145 aircraft (numbering 34) and Delta sought to terminate the contract on the basis of poor performance by Mesa.  Mesa contends the real motivation behind breaking the contract was to cut capacity rather than performance. 

 

With this new development, I do wonder if Mesa hasn’t just become a candidate for being purchased by another airline.

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The Dallas Morning News Airline Biz Blog has THIS story on Continentals’ new CEO, Jeff Smisek, deciding to give up his salary (and other bonus compensation) until Continental earns a full year profit.  Smisek is not asking anyone else to give up their salary but is doing this as a good faith investment turning Continental around and setting an example for its employees.

 

While some are already calling this window dressing since Continental is set to earn some kind of profit in 2010, I think that is a very cynical viewpoint.  Smisek is setting an excellent example for Continental employees and continuing a kind of tradition in that area that dates back to Gordon Bethune’s tenure as CEO.  In addition, he *is* going to give up that compensation, at the least, for probably 12 months and that is probably compensation worth in excess of $1 million.  No one does that as just a stunt.  Particularly when other airline CEOs are likely going to be earning well in excess of that for the next year.

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I found this video of what appears to be a little Christmas show in Lisbon’s airport put on by TAP Portugal employees.

 

 

The best part?  Seeing people smile, laugh and move a bit to the music.   I’d love to see some good humour during holiday travel.

 

Update:  My bad.  It seems good humour in US airports *is* possible.  I found this on the blog ThingsInTheSky.com :

 

 

This little lovefest apparently took place in Newark’s airport while one of the terminals was closed and passengers were re-screened.

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Supposedly, if you are flying American Airlines and  you are on a GoGo WiFi equipped flight, you can use the code “UpInTheAir” for free access.

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Airtran has decided to make Milwaukee an important crew base and is now using the term “hub” when talking about its Milwaukee operations.   You can read more details about this HERE.

 

Initially, 50 pilots (B737) and 50 cabin crew (737/717) will be based in Milwaukee but expect those numbers to grow over time.  Why?  Because not only is Milwaukee a good place to connect flights to other destinations, the market between Milwaukee and many cities is one of good yield.   There is a reason why airlines are starting to fight it out there. 

 

It also offers a relatively inexpensive place for crew to live in, an airport that endures weather very well and customer base that has long been neglected by most airlines.  There are a number of experienced flight crews in the MKE area that should be available for hire including pilots who know how to fly a 717.  

 

This latest development is just one more reason why I believe Airtran’s route between Milwaukee and DFW to be flown by SkyWest will quickly move over to a mainline aircraft such as the Boeing 717.   It’s also worth noting that air fares between MKE and DFW have already dropped with Airtran “buying” the business even before direct flights have been initiated.  With service not expected to start before April 2010,  it’s clear that Airtran intends to dominate that route and, unlike other airlines, Airtran isn’t afraid of going head to head with a major airline such as American Airlines.

 

According to the story . . .

 

In Milwaukee, AirTran now operates a line maintenance station, regional human resources, sales and community relations staff, and an airport station consisting of more than 200 customer service agents and other personnel. With the additional crew members added with the establishment of the new bases, the airline’s total Milwaukee payroll is estimated to be more than $11.5 million per year.

 

That’s a big commitment to the Milwaukee area and I do wonder how Republic will or will not respond with Midwest Airlines in that city.   Midwest is hardly even a brand anymore since it flies none of its own aircraft.  Republic Airways owned Frontier Airlines is flying 5 Airbus A319 aircraft (configured with Frontier seating) and Republic is directly supply another 20 E-170/190 aircraft for other routes. 

 

Republic has moved about 200 maintenance and 100 customer service jobs from Frontier’s Denver but if Airtran continues to enlarge its operations and compete strongly with Republic in that city, one wonders how long it will last.

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Let’s talk alliances before anything else.

 

There is a huge battle taking place over who gets to have Japan Air Lines (JAL) business.  The financially struggling airline has suddenly become a hot property and American Airlines (OneWorld) and Delta Airlines (SkyTeam) are fighting over JAL like it’s a supermodel.   Both airlines are offering hugely attractive financial packages to JAL and I suspect the poor airline has no idea of who to nod their head towards. 

 

Ultimately, I think JAL will stay in Oneworld.  There is more at stake here than what is offered as a financial rescue package.  Japan is still a very nationalistic country and keeping the identify of what is, for most purposes, its flag carrier will be important.  It has a solid relationship with Oneworld and American Airlines and compared to the risk of joining with SkyTeam and the possibility of being a second tier player in that relationship, JAL has a safer bet with Oneworld. 

 

In addition, I don’t think JAL can afford to wait for anti-trust immunity to act with airline partners and it won’t have to by staying with Oneworld. 

 

The Middle East:

 

I continue to think that the major international airlines (Emirates, Qatar, Etihad) of the Middle East are more at risk than they claim.  Yes, they’ve experienced phenomal growth and, yes, they continue to purchase aircraft like a 5 year old buys candy but what’s next for them and their route systems? 

 

The Middle East doesn’t offer a good connecting point for North or South America.   Airlines in North America can reach their markets non-stop with existing aircraft and why would a passenger choose to connect via an airport in the UAE (United Arab Emirates) when they can fly non-stop at a competitive price.  Better service product won’t attract these customers.  

 

There is very little business between South America and Africa, India, The Middle East or Southeast Asia and, so, South America isn’t a place that could serve as a growth area for those airlines. 

 

Emirates, Qatar and Etihad have succeeded by offering a hub between Europe and the Middle East, India, Southeast Asia and (to some extent) Australia/New Zealand.  However, even European airlines are adding longer range aircraft and are able to reach each of those destinations non-stop  more and more with the exception of Australia and New Zealand. 

 

In addition, each of those airlines is bankrolled to some extent with oil profits and the uncertainty of those profits and the uncertainty of other investments in the Middle East has to raise the risk for that continued bankrolling.   I don’t see any of these airlines failing in the next year but I do see them perhaps deferring orders and re-organising their fleets. 

 

India: 

 

What a catastrophe!  No airline in India will do well for now and there has to be some consolidation in this market in the near future.   Kingfisher and Jet Airways are both excellent candidates for takeovers and, perhaps, they are excellent candidates for each other.  Kingfisher bet on Airbus by ordering A330 and A340 aircraft first.  Their A330 fleet doesn’t quite have the range it really needs to expand outside of its current markets and the A340 was a terrible choice for long range flights.  So much so, it got rid of the aircraft on order. 

 

Now, Kingfisher has a few A350 and a few A380 aircraft on order for deliveries starting in 2014.  While it could desperately stand to have the A350 now, I don’t see how it can wait until 2014 for the aircraft.  I also seriously doubt it will ever take up the A380 both because of cost and an inability to fill the aircraft enough for regular flights. 

 

Jet Airways also has a great service product but bought too big of an aircraft for the routes it needed to compete on.  Jet Airways purchased the 777-300ER when it really needed the 777-200ER/LR for the international routes it proposed to serve.  Now 4 of the aircraft are leased to Turkish Airlines and 3 are going to Royal Brunei leaving just 3 for Jet Airways. 

 

Both Kingfisher and Jet Airways have a great service product and good networks across India and neighboring countries.  They would be better served by merging and using one brand for their national service and another for their international services.  Kingfisher for India and Jet Airways for international service. 

 

The Far East:

 

China has a lot of problems coming to roost with the inevitable decline in their economy which is heavily dependent on North America and Europe.    Look for some consolidation in this market.  I do think that Chinese airlines face potential issues from government mandates to purchase indignenous aircraft being developed now.  There is little chance that the aircraft being built will be competitive internally or externally.  At least for this first round of development.

 

While JAL is suffering and ANA (All Nippon Airlines) isn’t performing that great at present, I see no major changes in the Japanese markets.  This is an area that will bounce back but only after a long fight.    The same is true for Korea. 

 

Oceania: 

 

Australia will be interesting to watch.  I’m tempted to guess that the status quo will remain in most cases.  The competition between the US and Australia only continues to grow more fierce and something has to give.  I still think that United Airlines may well be the airline to withdraw from this market and only because of the rather unique market relationship formed between Delta and V Australia (and Virgin Blue). 

 

 QANTAS will continue to own a large piece of all air travel from its home nation and they could be helped along with some deliveries of the 787.  At some point, QANTAS must grow and growth means a lot of long and thin routes to be added. 

 

South America: 

 

I don’t think there will be any major news from this continent over the next year.  LAN will continue to succeed by operating smart and honest.   Brazilian airlines will continue to fight things out but there is enough international business for each of them and their real threat comes from Azul on a domestic basis. 

 

Look for Azul to consider adding a larger aircraft to its fleet and don’t count Boeing out on that deal.   It would be easier for David Neeleman to add the Boeing 737 to his fleet in Brazil because he could outsource maintenance more easily. 

 

Aerolineas Argentinas:  Well, what can I say?   This disaster is much like the country itself.  It won’t go away but it won’t perform either.  No outside airline will consider taking it over after what happened with Grupo Marsans’ ownership.   They lack an appropriate fleet for their flying, a strategic plan for stabilizing their revenues and no clear plan for future growth.  But the Argentinian government also won’t let them go away.  It is a matter of national pride.

 

LAN Argentina is growing in Argentina but somehow I remain skeptical that it will be allowed to succeed too well.  Why?  For one reason, the government of Argentina owns Aerolineas Argentinas and it has a vested interest in that airline earning money.  For another reason, LAN Argentina is owned by the LAN Group of Chile.  Look up how Chileans and Argentinians feel about each other.

 

Colombia and Venezuela: 

 

Avianca Airlines has joined hands with Grupo Taca and I suspect that will be a good thing for both airlines.  Avianca could benefit by the exellent managment of Grupo Taca and Grupo Taca could benefit from greater access to South American markets.   Its almost certain that the two will harmonize their fleets and service products for greater economies while maintaing the two identies for greater acceptance throughout Central and South America.

 

Venezuela:  All airlines erode further due to the increasing interference of the Venezuelan government and, more specifically, Hugo Chavez.  I lost hope for Venezuela’s airline industry when they forced Conviasa (in partnerhsip with Iran Air and originally using an Iran Air 747-SP) into a route between Caracas and Tehran with an intermediate stop in Damascus.  This is the ultimate in “this route makes no sense.”  If the government can do that, then they’ll do other things to damage the industry.

 

Europe:

 

The European continent’s airlines are hunkered down just as much as the US based airlines.   There isn’t much to be expected in Europe for the next 12 months but let’s look at it anyway.

 

British Airways is kind of the American Airlines of the UK.  They’ll always somehow manage to survive and generally pretty well.  They have their own labour troubles but, again, they seem to be capable winning these for now.  British Airways needs to cut costs a bit more so I wouldn’t be surprised at some order deferrals and/or hastening the exit of the 747-400. 

 

The one airline I continue to wonder about in Europe is Lufthansa.  While they have a good service product and an excellent reputation, they also seem to have some weaknesses.  Lufthansa continues to purchase weaker sisters in Europe such as SWISS, Brussels Airlines, Austrian Airlines, Lauda Air and, now, BMI.  

 

20 years ago, this would seem reasonable in that European countries were pretty nationalistic.  Now, not so much.  Yes, there are some pockets of nationalism that exist but I wonder at maintaining so many different brands, fleets and networks now.  It would seem that the brands could be pared down to 2 or 3 mainline airlines and 3 to 5 regional airlines.   BMI wasn’t an airline that was succeeding in any great way and what does Lufthansa get for their purchase?  I see little of value.   I don’t know that BMI gets Lufthansa an entry into the UK that is of any more value than the Lufthansa brand itself.

 

I also wonder about their fleet.  They have a large fleet of A340 aircraft serving medium to long haul routes and that cannot be very efficient or profit enhancing.  Yet, Lufthansa has made no real move to correct this problem.   Their one major aircraft order in the past several years was for the four engined 747-8i.  They have no orders for the 787 (although Boeing would no doubt happily accomodate them with early delivery positions) nor the A350 (and I’m certain Airbus ould love to add them to the order book as well.) 

 

This puts Lufthansa into competition with British Airways who has moved towards operating more twin engine, long haul aircraft (777 and 787) as well as KLM/Air France (777).   Yes, they do own some A330 aircraft but their true long haul equipment is the A340 and 747.

 

KLM / Air France:  Not much here.  I don’t see an order for aircraft coming from them unless Airbus magically announces a GE engine for the A350-1000.  Otherwise, I seem them holding their cards close to their vest and waiting to see what happens in Europe.

 

The BA/Iberia merger:  I never saw the attraction myself.  It’s a low rent copy of the KLM/Air France union and I suspect there are many issues to resolve before the two really combine.   Personally, I think the odds of this merger actually taking place is, at best, 50/50. 

 

 Their alliance with AA over the Atlantic will continue to be a strong issue for the US Justice Department.   The BA/AA strength on the US/UK routes and the the IB/AA strenght on the US/Spain routes is really a bit too much.   I think the DoT/FAA is willing to let this alliance go forward but I think the DoJ is going to speak loudly and force a request for concessions.   Concessions that I think, this time, BA and AA may meet with some negotiation.

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Now that it is 2010, what can we expect?

 

Unlike this time last year, probably not much.  There was some momentum for change last year that really doesn’t exist this year.   Airlines will continue to fight to hold their own in the marketplace and with the reduction in capacities, even the worst of the lot will likely cling to life this year.

 

North America:

 

Major airlines of North America have made all the changes they can and all are managing their businesses and cash very closely right now.  I don’t expect much, if any, change to develop in the next 12 months but let’s take a look anyway.

 

American Airlines has some labor issues to address but with the current economic climate, they have been getting away with their efforts to defer those issues.  Labor unions would like to push a few issues with American but they’re smart enough to realize that now isn’t the time.   Most likely they’ll continue their face saving efforts at making a point with their members but I don’t expect any real labor action at this airline this year.  Perhaps, if things get better, we’ll see some movement in the 4th quarter.

 

United Airlines, my least favorite legacy airline, has similar issues that American has with labor but, again, those labor issues aren’t likely to see much movement either.   I suspect that United will continue to move more of their flights over to regional airline partners because its worked (for now) and their customers will find themselves on more and more regional jets.  Since price is the prime driver for customers right now, they’ll accept that move and hate the flights as much as they always have.

 

Delta/Northwest should see more of its operatioins combined and, possibly, a unified single operating certificate by the end of the year.  That doesn’t mean much for their customers since Northwest aircraft are being painted into Delta colors at a furious rate.  The service product is already being harmonized to a fair degree and it’s a good one already. 

 

I don’t see any major aircraft purchases and I remain interested in whether or not they’ll keep their 787 orders.  There has been rumour and innuendo that they won’t but I kind of think they will keep them.  Their 767 fleet is old (except for the 767-400) and I can’t think of a reason why you wouldn’t want to have the 787 begin filling the role of those aircraft.  I’ve wondered if their hints aren’t just an opportunity to get Boeing to get interested in offering a better deal for more aircraft. 

 

US Airways needs two things in this next year.  First, they need their pilots to get together and start operating as a single group.  As dangerous as it is to try to interfere with a union group, I wonder if US Airways won’t wade into the problem in an attempt to have a final resolution.  Certainly they could argue that they’ve been patient enough. 

 

They also need to manage their cash very, very closely.  Cash is blood to an airline and US Airways has a bit of risk in this department.  Should cash holdings be depleted more, they’ll have to start seeking that merger partner again and no one appears interested in marrying with them.  This is another reason it needs resolution for its labor problems.   That said, I don’t see US Airways disappearing or filing for bankruptcy again. 

 

Continental Airlines has felt the hurt this past year and its unlikely to feel much better this year.  Their business model depended a bit more on business class travel and the economy hurt that demand the most.  That said, I can’t imagine a better group of managers for keeping that airline on track through the rest of the downturn.  Things will hurt and belts will be tightened a bit more but I don’t see the service product changing.   When the economic downturn does really turn the corner, Continental will be better placed to succeed than many. 

 

Despite their recent move to the Star Alliance, I do *not* see Continental getting any closer to United Airlines whatsoever.

 

Low Cost Carriers / Regionals:

 

Southwest Airlines continues to manage itself to the tune of its own drummer and the results of their long(er) term thinking are showing left and right.   They’ve managed to make solid overtures to business clientele in areas that, I suspect, count more day in and day out.  

 

I don’t see a merger partner in the future for them except,  possibly, for Sun Country Airlines.  For some reason, I see this as a real winner for Southwest in that it gives them space and routes in Minneapolis / St. Paul, a labor group that is accustomed to delivering Southwest style service and which can be harmonized into the Southwest labor groups relatively easy.  There is no rumour of this purchase but Sun Country has its own problems and it’s a match that fits the Southwest acquisition model. 

 

I think Southwest will remain persistent in its Denver expansion and will work hard to create a network in the upper midwest states of Wisconsin, Minnesota, Illinois and Missouri.   The wild card, in my mind, is the Washington D.C.  area and the NYC/Boston areas.   Shuttle type service is what Southwest knows very well and I wonder if they won’t try very hard to organically grow their flights in these areas.  If so, Southwest needs to find an “in” at Washington Reagan airport.  To do this, they would need to buy a shuttle operation from US Airways and/or Delta.  Perhaps US Airways will be interested in such a sale if their cash holdings erode more. 

 

Frontier/Midwest/Republic:   I don’t know what happens here.  Midwest really isn’t an airline anymore.  It really isn’t even a brand anymore.  It’s a name for selling tickets.  Frontier remains an airline and a brand and Republic seems to want to continue caring for both.  Since Republic is managed by very smart people, I kind of think that they may look for a way to wind down the Midwest name over the next 12 to 18 months and make Frontier the primary airline.   A tasty cookie isn’t a good reason to keep the Midwest name around.

 

Airtran deserves some applause.  This airline has managed to grow itself some, find new markets and earn some money during one of the worst downturns in the airline industry.  

 

Their move into Milwaukee has succeeded and promises to continue to succeed.  Milwaukee is a loyal city, to be sure, but it is a city that appreciates value even more.  Airtran has managed to offer great value, good service and appeal to a city that just a couple of years ago was kind of anti-Airtran.   The one obstacle in their way is the arrival of Southwest, another airline very good at offering value and appealing to the Milwaukee kind of customer.   I think Airtran has the upper hand but they are by no means the sure winner in this market.  Southwest may be able to beat them with frequency.

 

Virgin America keeps showing up and usually right after I become convinced they’ll disappear.  I still don’t know what this airline does best and I still don’t see them as being a scrappy enough operation to fight their way into the cities it needs to be in.   Virgin continues to dance around Chicago (claiming they can’t get space but if they wanted it bad enough, they could).  Their product would servce cities such as Dalllas, Denver, Houston, Chicago, Atlanta, Baltimore, Philadelphia, and, perhaps, Cleveland/Cincinatti very well.  

 

Instead, they added flights from the west coast to Fort Lauderdale and talk about adding service to a Texas city such as Austin.  This is too timid.  The CEO, David Cush, seems afraid to compete against his old employer (AA) and that is a shame since they have a very competitive and attractive trans-continental product.   I would speculate on VA being bought by another airline but . . . why?  They just don’t have much there and seem to have little interest in exploiting real advantages that they do have.   Maybe they’ll just run out of money and get shut down.

 

Alaska Airlines has felt the heat from Virgin America but they continue to do pretty well with their little airline and they continue to do it without being aligned with a major.  I don’t see much changing for Alaska Airlines.  They’ll continue to be a scrappy airline with good service to a limited number of destinations.  And, somehow, that seems OK when it comes to Alaska.

 

Next up, the world.

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