Fees, Fees and more Fees

February 26, 2010 on 12:00 pm | In Airline Fees | No Comments

I’ve come to accept that we’re going to see lots of fees and a “de-bundling” of services in the travel world and, most particularly, the airline world.  I’m even willing to accept it with good humour at this point.  Indeed, I see advantages to a more “a la carte” system of pricing in the airline world.

 

I still have an objection, however.  These increased fees for checking bags, changing flights, food and drink and even booking online should also come with some new guarantees.  A checked bag should come with an arrival guarantee that is money back if your luggage doesn’t arrive with you.  A fee for changing flights should come with a money back guarantee if, say, you’re bumped from a flight you changed to.  If you’re going to charge a fee for booking online or accepting a credit card, then you should also make a “prompt refund” guarantee if the flight gets cancelled and unable to travel on a different flight.

 

The thing is, passengers haven’t really shown much interest in trying to hold an airline’s feet to the fire and I think I know why.  Frequent flier programs.  You see, the airlines *know* that you’ll stick with them in order to earn points that, by any account are worth at most about a penny a point. 

 

Let’s say you are taking a 2 hour flight to someplace.  Just to be generous, let’s say the mileage is 900 miles earned (and on a 2 hour flight, I would say that is way generous) for each way.  1800 miles or point are earned for completing the trip.  You just earned yourself a reward that at most is worth about $18.00. 

 

Let me ask you something.  Is that $18.00 worth the abuse?  I’d wager that on any one flight where you had trouble with a lost bag, bad food, a changed flight or anything else that we’re now seeing fees charged on, you would happily pay $18 to see that go away.   Would you change airlines for a flight if another airline made a value promise to handle your luggage responsibly or get your money refunded if they don’t if you weren’t earning $18.00 of credit for that flight?  I’ll bet you would change in no time flat. 

 

Indeed, I would argue that legacy airlines are punishing fliers dramatically for trying to earn those points.  This is why Southwest Airlines is getting traction with its “no fees” policies for changing flights or checking luggage.  People are starting to figure out it isn’t worth $0.01 / point to earn “free” trips or “free” upgrades particularly in light of the new fee based systems being implemented. 

 

Sure, an elite frequent flier program participant doesn’t pay many of those fees.  Only, they do.  They pay it in the form of exorbitant prices for fully refundable tickets purchased with a short lead time.  It’s just not necessarily coming directly from their pocket.  It comes from their employer’s pocket.  But there is still a price.

 

Until passengers start choosing airlines based on the real value being provided, airlines aren’t going to change their behaviours particularly with these fees.

Republic Airways Orders 40 CSeries Jets

February 25, 2010 on 12:00 pm | In Airline Fleets, Airline News | No Comments

Republic Airways Holdings, Inc., the parent company of Frontier and Midwest as well as 4 other regional airlines, has ordered 40 new Bombardier CSeries CS300 jets with options for another 40 as well. 

 

The CS300 will seat about 120 people in a mixed class layout and has enough range to fit current Frontier/Midwest needs especially if they select the CS300ER (about 2900 nautical miles range).  It’s an aircraft that really begins to infringe upon B737/A320 territory (especially the A318) and which promises very good efficiency, particularly for the kinds of missions Republic flies. 

 

These are most certainly for the branded Frontier/Midwest network.  They fit the missions that both of those brands are flying now and compliment the existing A319/A320 Frontier fleet as well as the EJets currently flying for both Frontier and Midwest.  The CSeries 2×3 Economy configuration has the potential offer a better product than many airlines offer with their larger aircraft since a passenger has just a 20% of getting a middle seat versus 33% chance on a 737/A320 aircraft. 

 

These aircraft will not fly for the regional airlines serving legacy airlines such as Delta, US Airways or United.  The unions for those airlines will never allow that kind of semi-mainliner aircraft fly on behalf of the legacies.  No doubt Republic look to re-allocate some of their EJets such as the E170 back over to such flying and this purchase gives them more flexibility in the future. 

 

This is  a big order for Republic Airways.  Nominally worth about $3Billion, Republic no doubt got significant discount for being the launch customer of this version (Lufthansa has already ordered the CS100) but it does make me wonder if they can afford the order right now since Republic has spent much of its cash holdings and it remains to be seen if legacy airlines are going to be happy about continuing contracts for regional service with an airline that is now competing with them on a mainline level.  Time will tell since these jets aren’t due to enter service until 2013 and there will likely be some delay added to that rough date.

Kingfisher joins Oneworld

February 23, 2010 on 12:30 pm | In Airline News, Airlines Alliances | No Comments

It’s been announced that India’s airline, Kingfisher Airlines will be joining the Oneworld alliance, probably in about 18 to 24 months.  While Oneworld and Kingfisher are playing this up big in today’s news, it puzzles me and, frankly, I have some doubt as to whether or not it will actually come about. 

 

First, Kingfisher hasn’t exactly been the most financially solvent airline in a market with 2 other major competitors (Jet Airways and Air India) nor has it exhibited a very rational strategy on choosing its destinations.  It has a couple of trunk routes from India to London and Singapore, a couple of route to leisure destinations in Asia and a domestic network that is reasonably extensive but not overwhelmingly competitive.

 

While I’m sure that Kingfisher offers Oneworld partners AA, BA and QANTAS some feed, it doesn’t appear that Kingfisher itself has the resources to make use of the partners in their home countries.  Their fleet is comprised of A330 aircraft and while they’re scheduled for A380s and A350s, not a person around thinks they’ll actually take up the A380 and the A350 is scheduled for deliveries to start in 2014 but it’s unlikely that those will be on time either. 

 

What also surprises me is that Jet Airways, Kingfisher Airlines major competitor, already had a good codeshare relationship with American Airlines and QANTAS.  Their equipment and services better aligned with Oneworld so I’m puzzled why we are not hearing about Jet Airways joining Oneworld. 

 

There certainly is a need for a Oneworld partner in India and with Air India joining Star Alliance, that left Jet Airways and Kingfisher.  My guess is that they couldn’t make a good enough business case for Jet Airways who enjoys good relationships with SkyTeam members too.  However, if I had to pick between the two, Kingfisher wouldn’t be my choice. 

 

I suppose Kingfisher may work if it wants to be the domestic provider for Oneworld in India.  They do have the domestic network to make that work.  But they will likely become jealous of feeding all that high dollar traffic to AA, BA and QANTAS just to get the domestic traffic in India.  It doesn’t feel equitable.   One thing I’ll say for Oneworld, their partnerships do seem quite equitable for the most part with each partner airline appearing to bring a good strength to the table both domestically and internationally.

Persian Gulf

February 22, 2010 on 3:16 pm | In Airline News, Trivia | 1 Comment

In what is almost certainly a politically motivated move, the country of Iran is requiring that all foreign airlines traveling to and from Iran must show the name of the Persian Gulf as “Persian Gulf” on their moving flight displays instead of “Arabian Gulf” as some apparently do.  Failure to do so may result in aircraft being impounded and flight privileges to Iran being suspended. 

 

The correct, United Nations confirmed, name is Persian Gulf but several countries (Qatar, Saudi Arabia and Kuwait to name a few) on the Arabian peninsula have apparently persisted in calling it the Arabian Gulf. 

 

And you thought Islamic nations in the middle east were unified.  You can read more from Reuters HERE.

Electronic Boarding Passes

February 21, 2010 on 3:18 pm | In Airline News | 1 Comment

Alaska Airlines and its sister company, Horizon Airlines have announced a pilot program to introduce electronic boarding passes into their system.

 

Electronic boarding passes are displayed on a PDA with a bar code that can be scanned at the airport.  Continental began pioneering this technology but Delta and American Airlines have been testing it out at various airports over the past several months as well.  All of the anecdotal reports that I’ve read so far seem to indicate that it has worked well and fairly smoothly with the only comments being that some TSA officers were surprised by seeing one but not unfamiliar with it.

 

What do you do if you cannot get your PDA to display the boarding pass?  You can always get a paper copy by checking in at the airport as well.   Passengers choosing this option aren’t at risk just because of a problem with their PDA. 

 

Alaska / Horizon also introduced their new mobile website at:

 

http://www.flyasqx.com/

 

 

If you’ve tried this technology on a recent flight, your comments on it are welcome.

QANTAS gets rid of First Class

February 18, 2010 on 1:00 pm | In Airline News, Airline Service | No Comments

According to USA Today, QANTAS is eliminating their First Class sections on all but the Airbus A380 aircraft in their fleet.  Going foward, QANTAS will be selling Economy, Economy Plus and Business Class seating.  Certainly this strikes me as pretty smart.  It’s expensive and difficult to chase after first class passengers and those first class passengers are few and far between these days. 

 

Notably, the airlines that have made their business class sections their top offerings are also the airlines that have captured a great deal of lucrative business traffic.  Business class *is* first class if we’re in 1995.  It’s way better than what we called first class in the late 1970’s / early 1980’s. 

 

I’ll also point out that one of QANTAS’ best competitors, Air New Zealand has pursued this strategy for years quite successfully.  Continental Airlines has a very loyal group of passengers and has done quite well with it too. 

 

The number of people who might be upset at there being no First Class offerings on an aircraft can be counted on one hand and certainly don’t offer a very good return on investment when one considers the cost to create the offering on the aircraft and then pursue the customer. 

 

Why are they keeping First Class on the A380’s?  I suspect its for a couple of reasons.  One, they can probably capture some first class traffic on those “capital” routes.  Two, the product is brand new on the A380s and they likely don’t want to have to go through the expense of refitting those aircraft.  Three, the A380 isn’t exactly demanding more space for business class customers right now anyway.   Will it go away?  Probably but only when a refurbishment of the aircraft is called for.

Delay, Delay, Delay

February 17, 2010 on 6:00 pm | In Airline News | No Comments

American Airlines has pursued a strategy of semi-engagement and delay with most of their employee union groups for several years now.  It wasn’t a completely ineffective strategy for the past few years in that salaries remained the same and with the current economic climate most employee groups haven’t been in the mood to push things.

 

The problem is, most of those employee groups gave up significant wages to prevent a bankruptcy filing and are now approaching 8 years without a raise.  Now the Flight Attendant’s union and the TWU (representing several groups such as mechanics and bag handlers) are pretty much at the end of their patience.  While the economy hasn’t recovered, nor has the employee’s quality of life.  If anything, I would suspect most employees’ have suffered significant degradation of their quality of life.  Particularly in the past 2 years.

 

Accordingly, these employees groups have reached a point where there is little to lose from strike.  To the outsider looking in, it would appear that they have their jobs to lose (via bankruptcy and downsizing) but that isn’t necessarily true.  While AA has suffered large losses over the past 2 years, it also holds a great deal of cash.  Those employees are looking at that cash.  What’s more, to expect employees to simply sit without a new contract and, more importantly, some certainty for the future is rather naive at this point.

 

Both the flight attendants and the TWU have asked that they be released from negotations soon and be allowed to start the first steps towards a strike.  Unfortunately for AA, they’ve got a bit of a good argument for this now.  TWU employees have been negotating since 200 5/2006.  Flight attendants just a tad shorter than that.  It paints the picture that none of these negotiations are going anywhere and the common party to all is AA’s management.  At some point, they will be released from these negotiations to start a 30 day cooling off period.

 

What’s worse is that AA is faced, potentially, with three very strident labor groups asking for release all about the same time and, at this point, with some justification.  It puts them in a bad position to negotiate with any one group and in a position to not be able to operate at all if any of these groups cooperate with each other.  Ordinarily, I wouldn’t expect them to but this time . . . maybe.

 

Both airlines and unions need a better way to negotiate.  It is unfair to the employee groups to be stuck in negotiations for more than 1 to 2 years.  It’s bad for the airline to have incentive to maintain the status quo by delaying and it’s bad for parties’ morale.

Kevin Smith, Southwest and Size

February 16, 2010 on 11:30 am | In Airline News | No Comments

Most everyone is aware of the controversy going on between director Kevin Smith and Southwest Airlines.  SWA removed him from a flight stating they believed him to be too big to fit the seat.  Kevin Smith tweeted and blogged about the issue, SWA has responded a number of times with apologies, etc. 

 

Well, I just read SWA’s Nuts About Southwest Blog post about Kevin Smith HERE.  I have to say that I had decided early on to not report or comment on this because, frankly, my reading of the incident yesterday caused me to believe both were a bit wrong in their actions and responses.  Now, I kind of wonder what’s going on at SWA quite a bit more than I wonder what’s going on with Kevin Smith.

 

You see, one of the very telling things about Kevin Smith’s tweets and blog posts is that he got names.  Names of captains, flight attendants and gate agents.  Another item of interest to me is that no one disputes that he fit into the seat with armrests down and no seat belt extender.  Yeah, he’s a big guy but he isn’t *that* big of a guy.  He certainly isn’t THIS person.  Any of the photos I’ve seen of him over the past 2 days leads me to believe he’d fit just fine on Southwest’s seats. 

 

First, the captain wants him off.  Then, it wasn’t the captain but other staff and in order to expedite the flight.  Huh?  This was an Oakland to LA flight.  It’s not that long.  You seriously want to tell me that comfort was the issue for anyone?  Do you really want to say this was in order to expedite the departure of a flight when he was already seated and no one appears to have complained?

 

I’m not sure if some person or persons are lying at SWA.  I don’t believe that SWA is malicious like this as a corporation.  But someone is either not telling the complete truth or, worse, concealing a hidden reason for these actions. 

 

Southwest has apologized, yes.  Unfortunately, by engaging in this debate, their apology is a bit hollow this time around.  They should investigate deeper, admit any issues whether they had to do with capriciously applied corporate policy or poor judgement on an individual basis.  To me, it just seems as if there is more to this story than is being told completely.  The odd part is that the story has evolved considerably on SWA’s part and not at all on Kevin Smith’s part.  Stranger still, SWA continues to not refute any facts cited by Kevin Smith.

TSA to get access to “Secret” intelligence

February 15, 2010 on 12:00 pm | In security | No Comments

First, read this USA Today article HERE.   It would appear that there is a plan to give 10,000 (or more) TSA staff access to “secret” intelligence for performing their duties better.  On the surface, this decision has some merit in that it *could* guide a professional security agent better on what to look for as a threat. 

 

But you first have to have professional security agents and I would argue that TSA does not possess many of those.  Just read the posts at the link HERE

 

Frankly, the last thing we need or want is a large population of TSA agents using such intelligence to refine their justifications for unprofessional behaviour under the guise of “he/she fits the profile we read intelligence about.”  You see, having the intelligence is just one part of the equation in using it.  The other part is having the training and good judgement necessary to use it effectively.  That’s something I don’t think the TSA has proven it possesses given its KeystoneKops behaviour.

AA, BA and IB win anti-trust approval

February 13, 2010 on 3:18 pm | In Airlines Alliances | No Comments

American Airlines and British Airways won tentative US government anti-trust approval  to cooperate closely with each other on routes and pricing.  Iberia Airlines, Finnair and Royal Jordanian are also a part of this package.  The one caveat from the Department of Transportation is that the “partnership” yield 4 slot pairs at London Heathrow airport to other airline(s) that might provide service between Heathrow and the United States.

 

This partnership is still contingent upon EU approval but I suspect the EU will grant it as well. 

 

Is this good for the consumer?  Well, in the long run I suspect so.  There is plenty of competition between the US and Europe in general and frankly I suspect travel to London Heathrow hasn’t been this competitive ever already.   In this case, I think we’ll see some capacity reduction between AA and BA on those US-London flights and that might well be justified.  There may be a few non-stop routes that see fares rise some but overall the general population of the US and the UK will likely find fares pretty reasonable or even unchanged in most respects. 

 

This will be a huge plus for OneWorld members in that they’ll be able to find better coordinated schedules for a variety of destinations throughout Europe and the US.  And it should put OneWorld on much more equal footing with both the StarAlliance and Sky Team. 

 

Of course, Richard Branson finds it all outrageous but, then, if you follow Richard Branson and Virgin Atlantic, you knew that he would already, didn’t you.  (I do think Richard Branson has finally cried wolf one too many times and no longer gets the credibility he might once have had.  One thing is sure, it’s time for VA to start looking for a partnership.)

 

Both BA and AA might moan and grown over giving up 4 slot pairs at Heathrow but both know that 1) those pairs will yield a tidy sum in a sale and 2) they’ll still have plenty of maneuvering room to make lots of money. 

 

I doubt very much either airlines’ unions will be happy about this though.  AA pilots will worry about a reduction of flying on their part which, in my opinion, is only a worry if they continue to fight new ultra-long haul services that AA could use their aircraft on.  This is a real concern given this agreement’s potential to free up 777 aircraft to fly to new destinations. 

 

The real win for OneWorld will be gaining anti-trust immunity with JAL for trans-Pacific services.  With that agreement and this one, OneWorld gets the opportunity to compete with the other two alliances on pretty good footing and they haven’t had that in quite a while.  Both agreements would also make it more attractive for other airlines to join OneWorld now. 

 

I would not be surprised if this development doesn’t suddenly make it a bit more attractive for OneWorld to approach US Airways about joining.  US Airways would make for a very complimentary addition to OneWorld and it would allow them to leave an alliance where they are quite literally relegated to secondary status on all fronts.  In OneWorld, US Airways could offer good domestic service to the other partners and cooperate well on both trans-Pacific as well as trans-Atlantic services.

Snow here, snow there but strangely quiet on complaints

February 12, 2010 on 10:15 am | In Airline Service | No Comments

All around the United States for the past 2 weeks there have been huge snow events and often in places that are not accustomed to accomodating them.  Just yesterday, we got 10+ inches at my house and I think DFW is well over 8 inches.  DFW saw hundreds of cancellations, many delays and lots of entangled airliners all day.

 

Over the past 2 weeks, Washington, DC, Baltimore, Philadelphia, NYC-La Guardia, NYC-JFK, NYC-Newark and several more smaller airports saw true blizzard conditions and snowfall measuring in the tens of inches.  One friend in the Baltimore area reports that Baltimore has seen nearly 7 feet of snow this season so far. 

 

Yes, there have been many more cancellations for each event but there is one thing I’ve noticed.  It’s been strangely quiet on the consumer front.  I haven’t seen people ranting on TV that their flight could have gotten out if they had had just 1 hour more to sit on the tarmac.  Believe me, I’ve been looking for those folks. 

 

Even stranger, despite these terrible events (and, let’s face it, these are once in 20 year events at best), airlines have been recovering their operations with a bit less fuss.  No airline executive has gone on TV ranting that if his company had had just one more hour to sit on the tarmac, they would have gotten more passengers to more destinations.  Believe me, if that had been said in the news media, I’m pretty sure I would have noticed. 

 

No doubt we’ll be hearing about some losses due to these events.  But here is the thing:  those losses were going to occur whether or not the infamous 3 hour rule  was in existence or not.  However, this “terrible” rule has given airlines some cover and, I think, allowed them to make the better decision without pressure to try to carry on.  Or, more importantly, it’s given dispatchers and pilots the cover necessary to make the smarter decision.

 

Despite a rule that every airline employee said was bad, the system is working better under these conditions than it has in years and years.   Passengers are checking before they leave for airports and seeing the flights cancelled.  Are they disappointed?  I’m sure they are.  Few people aren’t disappointed to have to delay a trip whether it is for business or pleasure.  But they aren’t massively inconvenienced by traveling to the airport for a flight that will be cancelled but which hasn’t been cancelled yet because of the eternal optimists at airlines.   They aren’t sitting on aircraft for hours wondering if they’ll ever take-off.  They even aren’t returning to gates only to discover that they can’t get a hotel room and they can’t get back home.  That’s the stuff that infuriates passengers.  If it was really important that they leave, many took advantage of the airlines’ offer to switch flights with no fees or penalties and got out early. 

 

In other words, yes, consumers have been inconvenienced by the cancellations but they appear to be much *less* inconvenienced than they were in previous years during similar events.  Consumers understand why flights get cancelled when 20+ inches of snow is falling. 

 

More important, I suspect flight crews are being disrupted less (I didn’t say they weren’t being disrupted, just less) and from the way the airlines are recovering their operations and moving passengers again, I suspect many airline ops people are less stressed out and, perhaps, even a bit pleased at having a smoother, more sustained ramp up once the weather is over.  That *can’t* be bad for airlines even on the bottom line.

 

The 3 hour rule hasn’t been a travesty and it is clear it has helped all involved.

TSA detains backpacker

February 11, 2010 on 10:15 am | In security | 1 Comment

Dave Davies of the Philadelphia Daily News has this story on a college physics students HERE.  Nick George was detained last August in Philadelphia for several hours because he had arabic flash cards and his passport had been stamped in the Sudan, Egypt and Jordan.  He backpaced in the Sudan and Egypt and attended a semester of college in Jordan.  You see, Nick George is studying arabic and actually hopes to use this knowledge to assist our government.

 

George readily admits that he probably warranted a second look and didn’t object initially.  It was when he was detained, handcuffed for several hours and questioned snidely by both local law enforcement as well as the FBI that it became a bit intrusive.  After several hours, it was determined he wasn’t a “threat”, given a ticket for the next day and moved along without further explanation.

 

Read the story.  Look at this man’s photo. 

 

I think you’ll find that it stretcheds credulity (a word that I’m beginning to think is beyond the TSA’s vocabulary) that this person would require detainment for several hours after the initial “second look”.  Frankly, it points to a bias in the TSA (and law enforcement in general) that reflects ignorance and borderline racism.  But, then, we already kind of knew that, didn’t we.  See these posts HERE and HERE

 

Once again, we have strong evidence of a problem with the TSA in general and in Philadelphia in particular.  What concerns me greatest is the obvious appearance of ineptitude in actually guarding against terrorist acts.  These reactions on the part of the TSA showcase a group of people who are acting as if they are actors in a TV drama rather than as real world, professional security officers.  I cannot fathom why we, US citizens, might find this acceptable anymore as it does put us at greater risk every day.

US Airways, Delta and airport slots

February 10, 2010 on 2:00 pm | In Airline News | No Comments

Some time ago, US Airways and Delta Airlines came to an agreement to “swap” slots between New York’s La Guardia Airport and Washington DC’s Reagan National Airport.  Delta would get a large number of slots in New York and US Airways would get a smaller but more important number of slots in DC.   Each airline would get to consolidate their power in the city they’ve chosen to be a power player in. 

 

This required regulator approval from the Department of Transportation and the DOT finally issued their ruling on this.  They were OK with it only if each party sold a number of those slots in the respective markets.  And they preferred that the slots go to “slot needy” airlines (i.e. airlines who have no slots at those airports or who have an extremely limited number of slots.) In other words, the DOT wasn’t completely comfortable with just how consolidated each airline would become in each market. 

 

Both airlines expressed dismay and offered that they wouldn’t necessarily go through with the deal if those were the conditions.  Both felt that the consumer was losing out on improved benefits in those markets.   Oh, and of course this is the fault of the Obama administration according to some pundits. 

 

Now, the airlines don’t want to give up those slots to the slot needy because it potentially allows a toehold into two markets that have been very difficult for LCC carriers to find access to.  Southwest Airlines, for instance, only managed entry into the La Guardia market by buying the assets of defunct ATA.   jetBlue would love access to Washington National but there has been no real opportunity there either.  Frankly, both Delta’s and US Airways shuttles between NYC and DC would be pretty threatened by a jetBlue operation running between those two cities and Boston. 

 

Frankly, I’m glad the DOT put those conditions on this swap.  First of all, no consumer ever benefited from an airline consolidating its position in a market.  The benefits airlines speak of are things like connections to other destinations, through ticketing to other destinations, etc.  The benefits are *not* better prices.  Ask people how American Airlines is doing in Dallas ever since Delta withdrew from the market. 

 

I don’t mind airlines merging and growing bigger but I do mind airlines carving out domains in certain markets with regulatory approval.  Those markets aren’t monopolies to be granted.  And in those two particular markets, there isn’t exactly a limited number of customers available. 

 

In fact, in those two markets, LCC carriers have been shut out largely by large, legacy carriers who have “sat” on their slots rather than give them up or sell them.  It is quite literally to their benefit to operate a slot pair with a 40 seat RJ rather than to give the slot up because the introduction of competitive fares from LCC airlines who might get a toehold will literally decimate their yields in those markets. 

 

But keeping competition away and even allowing airlines such as Delta and/or US Airways to consolidate their strength in such markets is tantamout to providing artificial support to airlines who have cost structures that are no longer viable in most of the United States.   I do wonder what the anti-Obama administration pundits have to say about this kind of government support for legacy airlines? 

 

The truth is, we need to distribute *more* of the wealth in those slot controlled markets, not consolidate it.  We need other airlines encouraged to enter those kinds of markets and provide solid competition on routes that are held in a stranglehold grip by legacy airlines.  That is what will benefit the consumer.

Azul

February 10, 2010 on 9:13 am | In Airline Fleets | No Comments

Take a look at what David Neeleman’s Brazilian airline, Azul, looks like:

 

 

Embraer has a real winner with the E190/195 jets.

Oneworld Wins

February 9, 2010 on 8:55 am | In Airline News, Airlines Alliances | No Comments

It’s official, JAL is staying inside Oneworld and the folks at American Airlines can relax on that front.

 

The only thing that surprises me about this announcement is that it was done this quickly. I thought it would take a month or more for the airline to come around. That said, it was a smart move for two reasons.

 

First, the last thing JAL needs to be doing right now is agonizing over an alliance. Their problems were not going to be solved by being in the right alliance. They were going to get solved when the executive leadership started focusing on cutting jobs, slashing costs and rationalizing the routes. The new JAL Chairman and new president apparently decided to move that issue of their plates and get on with the real work.

 

Second, it’s a smart move because there were big anti-trust issues involved with a lashup with SkyTeam and Delta. The US government signaled as much a couple of weeks ago when it told Japanese negotiators for the new open skies treaty that approval for anti-trust agreements already applied for was not a “done deal”. By staying with Oneworld, JAL gets to preserve its alliance infrastructure, benefits from revenue guarantees for the next few years and has the time to focus on restructuring itself rather than wasting their time on fighting an anti-trust battle in the US.

 

One thing that has become clear from this fight. American Airlines has emerged as the leader of Oneworld. The other major partners, Cathay, QANTAS and British Airways, didn’t really step up in the way you would expect of such a partnership. Yes, this was a fight based in the US but those 3 airlines stood to benefit but didn’t really work terribly hard to win the fight on behalf of AA. Look for AA to become the Oneworld leader and the airline that starts setting the direction for Oneworld for the future.

 

That could be good or bad. Good because Oneworld really hasn’t had much leadership from any airline to date. However, American Airlines has to set a direction that other airlines want to follow and one that benefits everyone in the alliance. If they don’t take up the leadership reigns, look for Oneworld to melt away in 5 years or less.

Escalator Crash

February 7, 2010 on 9:36 am | In Trivia | No Comments

This was brought to my attention this morning.

epic fail pictures
see more Epic Fails

Yeah. Probably not the best choice for an airline.

Labor and the improving situation

February 6, 2010 on 12:51 pm | In Airline Service | No Comments

It would appear to me that a few airlines are heading for a second set of problems just as their economic situation is improving a bit.   Several legacy airlines have employed  a strategy of delaying negotiations and keeping the dialogue open without really resolving things among their employees.   American Airlines and United Airlines have been particularly bad at this.

 

Southwest, on the other hand, recognized a need to continue to have settled relationships with its employees and made quality of life as much as pay a big issue.  The same is true of a few other, newer airlines.

 

I really believe that offering better quality of life possibilities is the way to get these conflicts resolved.  Everyone focuses on pay but the issues such as health care, time off, flight benefits and even fatigue are the things that can be resolved to the benefit of both sides and lead to more productivity and less conflict (which leads to distractions in running the business.)

 

Healthcare is a big one.  It’s expensive and among airline crew, very much needed.  While companies see it as expensive, in many respects, it isn’t.  $10,000 worth of healthcare per employee can be worth $20,000 in salary and lead to much better loyalty, happiness and productivity.  While it is difficult to tie this to direct savings elsewhere, there is no doubt in my mind that relieving employees of this worry would lead to much better labor relations.

 

Think about how tired *you* are after flying just one long trip in a day.  Imagine how it must feel if you’re “working” 2 or 3 trips in one day.

 

Time off is important too.  All too often, airline crew are seen as having lots of time off because of their schedules.  What isn’t often observed is just how much recovery is required after flying 2, 3 or even 4 very long days in a row.  It takes a few days to recover from the kind of grueling schedules that are required to stay profitable.   Restructuring trips so that employees can maximize their pay while working and, at the same time, have enough time off to recover and be ready for their next set of trips will lead to better quality of life. 

 

Flight perks are a very demoralizing area for many airline employees now.  Yes, they get to fly free . . . when there is space available and, let’s face it, there isn’t much space available these days.  That makes people feel as if those perks’ value has been greatly diminished and, in many respects, it has.  Airlines would be better off to scrap unlimited “free” travel and, instead, offer a limited set of guaranteed positive space benefits.   There would be a great deal more value in the employee being able to count on being able to use those benefits *when* they wanted to use them as opposed to having to live in a state of uncertainty as to their plans.  Modest guarantees have much more value than unlimited perks dependent upon space  being available.

 

Why not allow an airline employee accrue a guaranteed space ticket much like most of us accrue vacation time?  Work so many flight hours, get a guaranteed space ticket.  Let them carry the benefit on the books as long as they like so they might “earn” enough benefits to take their family someplace.   Award them a business class seat at various anniversaries but not at 5, 10, 15 and so on years.  Do it every 3 years of service. 

 

Pay is important and its time for airlines to start looking for a different way to pay their crew.  The pay for most airlines has become too complex and, frankly, rewards seniority far more than the work provided.  30 years ago, flight attendants weren’t expected to make a 30 or 40 year career out of flying.  They generally flew as much as 10 or even 15 years and then quit.   That allowed a great deal of turnover in seniority that became arrested in the late 1970’s. 

 

The truth is, a senior flight attendant for a legacy airline (and by senior I mean 20+ years) is generally able to hold schedule in a city he or she wants to be domiciled in and fly a relatively easy schedule while making a good salary. 

 

By easy, I mean that flight attendant might fly one or two legs a day, maybe spend one night away from home and fly another one or two legs before being off for 3 or 4 days.  A junior flight attendant may be flying 3 to 5 legs a day, staying away from home as much as 3 or 4 nights and have just 1 or 2 days off before doing it again to earn a salary that, frankly, isn’t very much a living wage.

 

Pay and productivity aren’t matched very well.  Airlines need to pay not by the mile and size of aircraft but, rather, by something like the number of legs they fly in a day and the number of nights away from home they endure.   Airlines want more productivity but there is a disconnect from that with the current seniority system. 

 

Keep the seniority systems for allowing a flight attendant to choose their schedule.  But make the pay for a grueling schedule rewarding and the pay for a light schedule less rewarding.  You’ll find senior flight attendants taking on the hard, difficult trips to earn that pay and you’ll find them doing a great job of handling it by virtue of their experience *and* their reward for hard work.

 

Most of all, take care of your employees.  Make it easy for them to get something to eat and drink between trips.  Make it easy for the gate agent to have a brief respite between serving 2 flights.   Find ways to allow more cross-functionality between jobs at the airline so that employees want to help each other get through the day faster and happier as opposed to protecting their jobs. 

 

I don’t see airlines like American and United trying to take care of their employees.  I see them looking at their employee base with contempt and hostility.  After 30 years of this, it’s time for everyone to take a breath and work out something that works for both sides. 

 

If this isn’t done, legacy airlines will find themselves being held hostage via strikes just as their situations have improved.  The worst thing you can do is to starve a person and then when you have all the food, fight them for it.  At that point, the starving person has nothing to lose by fighting and everything to gain.

Frontier, Denver and Newport News

February 5, 2010 on 2:24 pm | In Airline News, Airline Service | No Comments

Frontier has announced some new flights recently but there is one that caught my eye for two reasons.  One, I know and use the Newport News / Williamsburg Airport and, two, that’s one strange route.

 

Now, the Newport News / Williamsburg airport is a secondary airport for the Norfolk area but it is really only convenient to a small portion of Norfolk and those living on the peninsula between Norfolk and Williamsburg.  (Anything much past Williamsburg is more conveniently served by Richmond International Airport (RIC).   

 

Understand, I think Republic/Frontier clearly saw something to the route because they’re putting an E-190 jet on it first and plan to upgrade it to an A318 later.  However, it puzzles me as to what they saw since there are exactly ZERO non-stop flights between those two areas at present.  Sure, I would imagine there is some connecting traffic via AA and United Airlines through both DFW and ORD but there just can’t be much or one of those two airlines would have something working on that route by now. 

 

This one just doesn’t make much sense to me.  There are no obvious business ties between the two cities and even the military contractors that have offices in both cities don’t have much business that is shared between the services in those two cities.*   Yes, Norfolk is a big military area but it is primarily a Navy/Marines area where Colorado is primarily Air Force.  Newport News / Williamsburg is a nice airport to fly into if you’re going to that side of Norfolk or anywhere on that side of the bay.  I like it because I visit family in Williamsburg and its just a 15 minute drive from there to the airport compared to nearly an hour to Norfolk (ORF) or an hour or more to Richmond (RIC).  I’m glad for Airtran serving it but while I do see the connection for Airtran, I don’t see it for Frontier. 

 

There are plenty of connections serving DEN-PHF but they all funnel to flights from Atlanta or Charlotte (Delta/Airtran and US Airways respectively).  Those flights are all on small RJ’s and the fares, frankly, don’t seem to offer a whole lot of yield either.  Prices for a late February flight with a Saturday overnight stay are as low as $205 ranging up to about $240 (for any flight someone would realistically take.)  That doesn’t suggest a lot of yield available. 

 

I’d love to know what Frontier saw that made it seem such a smart move.

 

 

* I work for a major first tier Defense contractor myself based in Richardson, Texas.

Schedules

February 4, 2010 on 1:04 pm | In Airline Service | No Comments

The Middle Seat Terminal Blog had THIS post today regarding schedules and schedule padding.   The question was, are airlines cheating when they pad their schedules to improve their on-time rating?

 

From the point of view of a consumer looking at their on-time rating, it might be a cheat.  Frankly, I think there is little value as a consumer to look at an airline’s overall on-time rating.  Now, it does help to see what the rating is for a particular flight and/or similar flights through FlightStats.com.  But even then I would take such information with a grain of salt.

 

There are too many variables involved to make your choice on the basis of an on-time rating.  You have to consider the cities involved, the time of year and weather, the equipment being used and even what impact severe weather at another hub might be having on a route.   For instance, Dallas might not be badly impacted by weather much at all at any time of the year but what if Chicago is and the equipment used for a Dallas originating flight comes from a flight between Chicago and Dallas?   What is a flight was being served by equipment with a poor dispatch rate such as an ERJ-145 and suddenly gets replaced with newer and better CRJ-700’s?   

 

Schedules should be evaluated for whether or not a particular flight will get you where you want to go at the time you want to go.  Period.  Smart consumers will now that leaving themselves 30 minutes connection time at a hub will result in lost baggage and/or missed connections. 

 

But are the airlines cheating?  No, not really.  Frankly, airlines needed to adjust the block times for routes for years before it really got done.  Block times, the time a flight leaves a gate to the time it arrives at its arrival gate, are important and they have grown considerably.  Airports are busier than ever. 

 

I can remember that a DFW to ORD flight in the mid 1970’s used to take right about 2 hours in block time.   Today, it’s about 2 hours, 45 minutes.  That reflects the arrival of hub operations, crowded airports and very old infrastructure in place.   It’s amusing to me that some trans-continental flights are now calling for as much as 7 hours transit time.  That’s as much time as the last prop airliners were doing it in the late 1950’s. 

 

Rather than calling it cheating, I’d say that “padding” isn’t padding.  It’s getting real with reality for the first time in quite a while and that means consumers can count on the airline doing what it said it would do which makes the entire experience more pleasant.  However, that kind of reality scheduling will go on only as long as it receives some scrutiny so its good that someone such as journalists are reporting those rates on a regular basis.

Strike Breaking

February 3, 2010 on 12:00 pm | In Airline News | No Comments

The Dallas Morning News Aviation Biz Blog has THIS STORY on how American Airlines has notified the FAA that they may train management employees to serve as flight attendant crew in the event of a strike.  This move is likely a response to the APFA statement recently stating that they’ll move to ask the NMB (National Mediation Board) to declare an impasse, the first real step towards a strike.  I also consider it a move by AA to rattle its sabers just a little as well.

 

The airline did this once before in 1993 in anticipation of a strike by flight crew and while that strike ended somewhat disastrously for both parties and only with the intercession of the President, something did occur to me.  It worked poorly last time for two reasons.

 

First, AA was unable to fly a full schedule resulting in lots of cancellations as well as congestion on other airlines.   AA made preparations but it really didn’t put its heart into that attempt at strike breaking.  Second, the service component was abysmal.  Employees had been trained to serve in the more important safety roles but not the service roles.

 

It occurs to me that this time, it could work a lot better.  There is very little service component compared to 1993 for one.  Second, if they managed to keep their planes in the air, this could dramatically dampen labor unrest among the rest of the airline. 

 

In addition, American’s operations are more diversified now and I  kind of wonder if their operations aren’t modeling just how to combine flights and keep passengers moving for a while.  A strike would still be a disaster for both parties, in my opinion, but I kind of doubt that either party is going to back down.  AA’s flight attendants are notoriously militant and have been kind of spoiling for a strike for over 10 years but I don’t think there are many flight attendants who could withstand a very long strike financially. 

 

Moreover, AA has pretty good liquidity but that will start disappearing in a large cloud of smoke if there is a strike.  Their liquidity is what has kept financial analysts and investors off their backs.  Lose that liquidity and you’ll be looking at regime change real quick.

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