About 24 hours after the Southwest Airlines / Airtran announcement, rampant speculation on who American Airlines should partner with started up.  The truth is, while I can make an argument for them to merge/acquire US Airways, I think they’ll shy away from a merger.  If they do go shopping for an acquisition, I don’t think it will be oriented towards a real “merger” a la Delta/Northwest or ContiUnited. 

There are a couple of targets left.  Alaska Airlines strikes me as one that should interest Southwest, American Airlines and Delta.  I think it’s pretty hard to get a deal done with Delta because of regulatory issues particularly in the Seattle area.  I think it’s pretty hard to for AA to get a deal done with Alaska because both parties have high labor costs and AA just won’t know what to do with the rather unusual operations Alaska performs in Alaska. 

I don’t think anyone is going to buy jetBlue at present and jetBlue’s CEO says they’re going to grow organically.  I would be happy to see jetBlue just get outside of its NY/Florida comfort zone and stop treating the midwest like it has the plague.

Frontier could be an interesting proposition for jetBlue, I think.  Sadly, I also think that Republic Airways is going to hold on to Frontier for dear life given what’s going on in the regional airline world.  Nevertheless, I do think that jetBlue could harmonize Frontier’s service and routes to the jetBlue way and make something of that airline. 

US Airways?  Well, they are the somewhat pretty girl who never gets asked out anywhere except to make some other guy jealous.  Until they get their labor house in order, I think it’s going to stay that way.  Their executive corps, however, ought to be attractive to someone.  Despite all of US Airways weakenesses and their “East/West” style of ops, those guys make money.  There is a lot to be said for that. 

I think they are more attractive for bringing into a new alliance.  Currently, US Airways belongs to Star Alliance but ContiUnited kind of makes them look superfluous.  SkyTeam just doesn’t need them either.  Oneworld aka American Airlines/British Airways,  on the other hand, could perhaps take advantage of them.  The deal would have to be a bit sweet because US Airways, if nothing else, is enjoying a nice “under the radar” ride on Star Alliance right now. 

I can’t think of anyone who could find a use for Virgin America at this point except, well, the Virgin Group.  Even the Virgin Group seems to have a hard time seeing a real value for working with Virgin America.  If they had any money, I would point them to Frontier but I think Republic Airways would just laugh out loud.

The truth is, I think there is suddenly some opportunity out there to start a new airline.  I would look for weak airlines who have major hubs and very little competition.  Some place where business customers and leisure travelers alike are dissatisfied with their current offerings and restrictions.  Some place that has a history of embracing the airline industry and where you can hire experienced people to kick that venture off.  That would be a great place to start something new.  I wonder where such a place might be?

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Regulatory authorities are going to start seeing Southwest Airlines differently as a result of this merger.  SWA has done a great job of characterizing itself as the small underdog.  In truth, it’s a big airline and this merger is going to get authorities such as the Department of Transporation and Department of Justice to see it a bit differently.  SWA flexes more muscle against its own competitors than most realize and this move does eliminate a lot of problems that Airtran was giving it.  Airtran had lower costs and a nice service product and competed very, very well against SWA on major market routes.  SWA will forever be seen differently going forward now.

Southwest’s fleet strategy has always been a popular topic of conversation.  While it’s true that they’ve stayed close to their 737 roots, different aircraft types aren’t unheard of for them.  In the 1970’s and 1980’s, they briefly operated 727 aircraft.  In the 1980’s they bought Muse Air and operated their MD-80 aircraft for a while too.  The addition of the 737-500 was, in some senses, the addition of a different type for them as well. 

Adding the 717 isn’t quite the challenge for them that many think it is.  This purchase grows their fleet from approximately 550 aircraft to 602 737s and 86 717s or 686 aircraft total.  Let’s put that in perspective for a minute.  American Airlines has about 630 aircraft, Delta about 728 and the soon to be ContiUnited will have 700.  Southwest leaps past AA and plays in the SuperLegacy category on fleet numbers.  It will continue to lag behind on capacity measured as revenue passenger miles.  Nonetheless, SWA is a huge player on a global scale. 

There is already speculation about SWA “de-hubbing” Atlanta.  Well, I think the structure  of the routes into and out of Atlanta will change dramatically.  I think we’ll see a SWA-like operation in Atlanta after a period of time.  However, it will remain a “hub” in the sense that will be a major player in the SWA system just like other cities such as Phoenix, Los Angeles, Houston, Dallas, Denver and Chicago.  Those cities are hubs too.  SWA just doesn’t operate flights into their “hubs” like a network carrier does. 

I wonder if SWA isn’t missing an opportunity to reinvent itself with this purchase.  Airtran did many things very, very well and they are a profitable and very competitive carrier.  They introduced Sirius/XM Satellite Radio on their flights.  They were one of the very first airlines to have an all Aircell GoGo Wifi fleet.  Their business class product is popular and upgrades to that business class product were also profitable. 

There are some elements here that SWA could stand to step back and examine.  They aren’t nearly as far from their own business model as they think.  SWA is working hard to attract the business passenger and that business class product might well be worth keeping and even introducing across the fleet.  Southwest is introducing Row44 Wifi (too slowly in most people’s opinion) and now they have an airline that knows how to do it quickly.  They have a unique opportunity to take a look inside the viability of Aircell’s GoGo product and see if they don’t want to reverse course. 

I don’t think onboard entertainment is necessary but I do think the Airtran satellite radio offering is a great value added item on their flights and, again, it’s worth taking a look at.  I don’t want SWA to be jetBlue but the satellite radio quite possibly “fits” within their quirky nature. 

I don’t think many airlines, if any at all, will object to this merger.  It eliminates a lower cost competitor for them and replaces them with someone who has rising costs that are moving closer to legacy airline costs these days.  In addition, the sheer size of SWA and the access it gains to major slot-controlled markets such as NYC and Washington D.C. mean that legacy airlines can now argue that there *is* enough competition in those areas.  I wouldn’t be surprised if Delta and US Airways wanted to revisit their proposed slot swap deal in the near future.

Finally, there is another airline out there that kind of fits neatly into this mix.  An airline that would be as unconventional as a purchase for SWA but which would really be a west coast mirror equivalent of Airtran purchase.  Alaska Airlines.   If SWA is willing to take on integrating an LCC carrier like Airtran, it could take on integrating a sub-legacy carrier such as Alaska Airlines.  Especially one with a fleet type that remains compatible with SWA but which offers even more potential since Alaska Airlines operates a broad range of the 737 family. Such a purchase gives SWA a strong presence in all of the regions in the United States and an opportunity to see how a regional airline (Horizon Airlines) works using a very cost effective type:  the The Dash 8 / Q400.

Filed under: Airline Fleets, Airline News, Airports by ajax
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If nothing else, mergers today give me an opportunity to come up with monikers for them.  While the merger between Southwest Airlines and Airtran is being described as an acquisition, it is a merger with the Southwest brand surviving.  And this is a pretty big bite for Southwest. 

Southwest has made purchases before but never one nearly so big.  Airtran is a pretty big airline and pretty successful too.  Let’s take a look at the questions we all have.

The Boeing 717:  I think SWA will keep this in fleet for a while anyway.  The airplane works well within the Airtran model and I think SWA has been searching for a smaller aircraft it could operate for a while now.  The 737-500 never really worked that well for them and the -600 just had too high operating costs to be worthy.  This aircraft gives SWA an opportunity to play with their mix a bit more and its easy to integrate into scheduling because there are enough for a pilot base and it doesn’t change their flight attendant mix on other aircraft.  I think this aircraft will stick around for  a while and I think that if SWA does get rid of them eventually, we’ll continue to see a smaller aircraft in the SWA fleet a la the 717.

Flying from DFW.  CEO Gary Kelly says the Wright Amendment prohibits them from flying from DFW and so the integrated airline will cease DFW operations.   I can find nothing that prohibits SWA from flying from both airports and if Airtran departs DFW, this is going to be a pretty big blow to consumers in the area.  Airtran provided so much needed competition on some routes from DFW and if those go away, I think we’ll see fares from American Airlines rise astronomically.  DFW needs to explore this with these two airlines.

Union integration:  I think this is going to be a bit tricky.  On the whole, the SWA pilot and flight attendant contracts are much better than the corresponding contracts at Airtran.  If the SWA unions are willing to integrate somewhat fairly,  perhaps this won’t be too much of a problem.  I think those unions will be a bit fussy about bringing over the Airtran crews and I wouldn’t be surprised to see them try to simply “staple” the Airtran lists to the bottom of the SWA seniority lists.  Gary Kelly needs to do more on behalf of Airtran employees in this area and perhaps he will.

Milwaukee:  I think we see routes shrink in this city and fares go up.  Airtran won over Milwaukee and that wasn’t easy to do.  I don’t know if Southwest will succeed as well as Airtran in that market and suddenly I wonder if Frontier doesn’t have an opportunity in this city.  They know how to hold their own with SWA.

Management teams:  Expect to see a few Airtran executives move over to SWA.  Expect most to depart.  Southwest is a pretty insular company but even more so when it comes to its executive corps.  I wouldn’t be surprised if some Airtran executives are working on their “flare” this morning.

International flying:  I think Southwest will maintain the existing Airtran international routes and I think they’ll awkwardly explore ways to expand it in the distant future.  To withdraw it all at this point would be a big loss.

Airtran’s Business Class:  Say Buh-Bye.  Southwest will dump this product quickly.  Southwest never sees the value of business class and I think this will potentially be a mistake.  Airtran’s business class is pretty nice and very attractively priced.  Retaining it even if just for some markets might not be a bad idea.  Think NYC – Washington, D.C. here.

I think this merger will happen and I think it will ultimately result in a stronger airline.  However, I think it will also be very awkardly executed.  SWA does things its own way and always has.  It always stubbornly clings to its own methods and madness and that works pretty well for them.  However, they are a big boy airline now and it wouldn’t hurt to start looking a little more closely at how their fellow competitors are doing things.  I’m not suggesting change for the sake of change.  I’m suggesting that Airtran figured out how to do pretty well with products that are pretty different from SWA.  Others have too.  It’s worth looking at the other guy’s success before you throw out the bathwater. 

Sadly, I think SWA won’t do this and I think SWA will have some labor problems and I think this will take longer and be more awkward than it has to.  I do think SWA is every bit capable of losing some of the advantages that buying Airtran brings.   Like losing a reservations system that knows how to do things like codeshares and international flights.   This is a risky deal for SWA.  One they can conclude and profit from but I think this will be harder to do than many seem to.

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Southwest Airlines has announced a tentative merger/purchase agreement to buy Airtran Airlines for $1.4 billion today and, yes, I was completely surprised.  It’s a bold move and offers SWA huge access to Atlanta and competition Delta Airlines (who I imagine has already opened up the desk drawer and taken a swig of antacid this morning).  It offers more access to the NYC and Washington DC areas, too.   And it brings that international experience to the table as well.

As much as this is about growth and access to new markets, it’s also about eliminating some damaging competition in other markets.   SWA and Airtran are already beating each other up in the North East and in Milwaukee.  It was soon to be only a matter of time before the bumped heads elsewhere too.   This is as much about Southwest elimating that distraction and allowing it to focus on competing with the SuperLegacy airlines.  More tomorrow.

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You’re surprised, right?

The Chicago Tribune has a story on airline objections to baggage fee refunds and how most airlines are reacting to a proposed federal rule that such refunds be available.  The Airline Transport Association says this should be determined by the marketplace, not the federal government.  It claims that mandating such a thing will raise fares on everyone and a determining what constituted a timely delivered bag was subjective at best.

The ATA sounds like a political party at this point.  Actually, it sounds like the Republican party at this point.  No regulation!  No Rules!  No Taxes.  Leave Us Alone!  Get off our lawn!

I’m pretty sure I could determine what constituted a timely delivered bag.  If it is at the baggage carousel available for my pickup in no more than 60 minutes, it’s timely delivered.  (I’ll point out that this is more generous than Alaska Airlines at present.) If it isn’t delivered to me in a timely manner, my fee is refunded in the manner of payment I originally used for such a fee.  

Hey, if you want cake and you want to eat it, be prepared to pay for it.  It doesn’t come free.  It’s time even airlines get that message.  Don’t like the infrastructure such a rule might impose upon you?  Figure it out.  

Airlines earned over $3 Billion with a “B” in baggage fees between June 2009 and June 2010.  I know they love that revenue and I know it’s making a difference in their profits.  Thing is, if you charge a fee for something, you *should* be held to standard of performance.

Offering some points or making it incredibly difficult to obtain a refund falls short of a performance standard that anyone would find acceptable anywhere else.

And let me comment on this idea that the marketplace should determine this concept.  Bah!  We don’t have a free marketplace in the airline industry.  We have an ever increasing oligopoly that competes with itself on price but which cooperates in signaling policy behaviors on just about every other subject. 

Even restaurants have to operate within health standards and dry cleaners get to pay for what they lost.  Why should airlines be exempt from this?

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It’s become more and more clear that airlines are going to likely have 3 or 4 basic categories of aircraft.  First, the 100 to 135 seat category with a range that isn’t transcontinental but which allows a full load fly 3 to 3.5 hours maximum. 

Second, the 150 to 210 category with a range that will include trans-continental routes.  This was previously served by the 757 and 767 but has seen today’s 737 and Airbus 320 families take over. 

Third, the 220 to 280 seat arena which includes flights ranging from trans-continental to trans-oceanic including both the Pacific and Atlantic oceans.  We’ve seen the Airbus A330 and 767 and even the 777 in this area and that’ll continue for a bit longer too.  But it will be owned by the 787, 777 and A350 soon enough.

Finally, the very large aircraft on trunk routes that demand high capacity and high-ish frequency.  The 777-300ER, 747 (-400 and -8i) and A380 are the players here.  In the future, we’ll see more of the 777-300ER and A380 than the 747-8i and I think Boeing will have to come up with an aircraft that fits this area better both in economies as well as seat range. 

Nothing much has changed except that the models from Boeing and Airbus are getting freshened or replaced and their ceding the 100 to 135 seat market to Bombardier and Embraer.  The regional jet manufacturers are invading Boeing and Airbus territory and that’s brought along an interesting development. 

We can ignore the Comac efforts to date.  Their plans for a 150+ seat aircraft are just that, in my opinion, plans.  You don’t enter that arena without a lot of experience building something smaller and generally without experience being a partner on similar efforts for a while.  Those aircraft won’t fly, pun intended.

With a couple of exceptions, regional airlines are bringing those new 100 to 135 seat aircraft with them instead of that flying remaining with the majors.  Scope clauses continue to get revised to include larger aircraft and instead of major airlines adopting new equipment to serve those routes, they’re ceding that area largely to their regional airline partners.

The why involves what it always involves:  labor costs.  They can have it flown cheaper by someone else and earn more money.  As that scope increases, however, I do wonder why you would continue to contract that out to an independent airline instead of owning it and its revenue stream.  Why wouldn’t you want to vertically integrate and own that lower cost structure as well as control the service product?

Instead, we see SuperLegacies prepared to sell off their regional airlines and pretty cheaply at that.  Even new-ish ones with pretty low labor costs. 

At some point, these regional airlines are going to see that they can operate their own networks and while they may choose to remain partnered with majors, they’ll also see they can take on more of the risk and much more of the profit available. 

Yes, it’s been tried already a couple of times and while those efforts sputtered at the 50 seat jet level, they won’t necessarily sputter using 90 to 110 seat jets that are coming on line.  Republic may be the first to do it successfully by buying brands and working to build an integrated network while continuing to service partnerships with major airlines, time will tell.  If they are successful, will they one day leave their partnerships with the majors and become a force to content with on their own?

And where does that leave the SuperLegacies in the future?  Will they continue to walk away from the bottom end of flying when it comes to capacity?  Will they continue to cede that work to partner airlines while working to build their long haul flying?  Can they afford to cede that much control on what, today, feeds their networks for that long haul flying?

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Lufthansa has announced a 48 plane order and while that isn’t all that remarkable compared to many aircraft orders these days, it’s an order that highlights two emerging developments in the airline world.  The Lufthansa order is for all Airbus equipment and it isn’t all for Lufthansa.

Some of this order is for its SWISS subsidiary (A320 family and A330), its Germanwings subsidiary (A320 family) and Lufthansa is getting more of the A320 and A330 family for itself.   The Airbus family concept is clearly allowing Lufthansa to take advantage of greater buying power as well as greater flexilibility amongs its various operations. 

Lufthansa can shift equipment to various subsidiary operations as demands change and can reconfigure that requipment relatively easy to meet the requirements of each subsidiary.  While many already knew and predicted this behaviour, it’s really remarkable in that its now become kind of matter of fact for an airline like Lufthansa.

This isn’t something Boeing really offers.  Not yet.  Boeing offers its 737 family, yes.  But it doesn’t have that type transition flexibility between a narrowbody family and a medium range/ long haul widebody family.  Not quite. 

The 787 and 777 will offer reduced transition times between the two types and that’s a good thing.  But there is no such animal between the 737 and its bigger siblings.  In addition, there is no real such thing between the 787/777 and the new 747-8i either. 

Boeing builds a great airliner and arguably they build a more cost efficient airliner in many respects when considering the aircraft and the trip itself.  What Boeing hasn’t yet instituted is a product line that is friendly across all kinds of operations that a large airline might have. 

It’s a core strength of Airbus and, frankly, a differentiator that, I think, will prove itself more and more valuable over the next two decades. 

The 737 replacement is a good place to start.  This will be a family of aircraft designed to meet the needs of airlines from about 150 seats up to 220 seats where the 787 will take over.  The 787 is advanced enough that making the 737 a baby 787, operationally speaking, could offer some additional value to airlines in the coming years. 

US Airlines haven’t exactly gone for this kind of family concept.  Not yet.  Northwest and United Airlines and US Airways all bought Airbus but they bought them without intending to realize the family concept from narrowbody to widebody.  I think that will change.  As we see SuperLegacy airlines develop, I think we’ll see a desire to harmonize more, not less over time.  More on that tomorrow.

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and gets fined for it.

The Chicago Tribune has a story about United Airlines self-reported 3+ hour tarmac delay violations in May.  In short, United diverted some aircraft due to weather problems.  These aircraft were on the “tarmac” for varying times but all in excess of 3 hours.  United ensured these passengers had water, snacks and were offered the opportunity to de-plane.  Then they self-reported this as a 3 Hour Rule violation and later determined that, no, in fact, they had complied.

The Department of Transportation hit them with a $12,000 fine for wasting their time.  $6000 paid now and $6000 to be paid if there are future violations of this nature. 

“United’s misreporting of this data wasted valuable Department resources,” said the Department of Transportation

I would offer that someone needs to smack the DoT on the back of the head for raising a storm about something that can and will happen when a new rule is introduced.  I don’t think it’s a perfect world and I realize that bureacracies can act oddly when presented with rules but anyone at the DoT with good sense should have floated the idea that this just be allowed to fade away.  The amount of the fine is trivial for both sides.  However, it was an arbitrary and petty way to behave towards someone trying to comply with a new rule.  It is also a great way to earn the enmity of the public in this kind of rule making.

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American Airlines parent company, AMR, shares have dropped based on analysts projecting larger losses for the full year of 2010 than originally expected, reports Bloomberg BusinessWeek.

Yes, AA isn’t projecte to earn a profit this year.  They will, instead, improve their performance over last year.  Or, to put it bluntly, survive and hope.

No one who follows the airline industry thinks that airlines are a great way to earn money.  Investing in airline stocks can be because that is about buying low and selling high which continues to be possible in the airline sector for some unfathomable reason. 

Even though it’s possible, you have to wonder why anyone would purchase the stock of an airline that already is the size of a SuperLegacy when it comes to revenue and network but which consistently underperforms compared to any other airline it directly competes with.  Make all the execuses for AA you want in the area of labor costs, not going bankrupt, etc.  At the end of the day, they appear to be just very good at surviving.  There were a few other airlines that were rather good at surviving.

TWA and Pan American come to mind. 

Yes, AA has labor cost problems and an older fleet and those get in the way of earning those pesky profits.  As time goes by, it seems to me that AA has managed to be very good at holding onto large amounts of cash and manuevering from one crisis to another.  However, they don’t seem to ever really solve their problems, do they?  They’ve got labor negotiations that have gone on for 4+ years now.  The issues surrounding those labor negotiations were a known value all the way back in 2003.  They have a  fleet that most in the business would have pointed out the liabilities of all the way back in 1999. 

It’s not that AA executives are bad.  They aren’t.  But over time one has to question if they’re good enough for the way the airline world is operating today.  Is following the AA way a successful model for the future?  Is it wrong to expect them to earn a profit at least when their industry competitors are?  Even if it isn’t as much unit profit? 

How much longer do the AA board of directors and their shareholders wait for performance that at least indicates movement that at least generally points in the same direction as the industry?  I would argue that it’s time to wonder if it isn’t time to think out of the box before AA is managed right into a nasty little corner without any options.  It’s  at least time to perform a objective analysis of whether or not to stick with the current team.

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Spirit Airlines has decided to do an Initial Public Offering (IPO) of stock and thinks the value will be about $300 million. Spirit is currently privately owned by a number of high profile investors who, it has been said, are ready to cash out of their investment. 

Does this mean they don’t like it?  No.  Their investors are venture capitalists and by their nature, they look for an exit once an investment has been successful.  Spirit has enjoyed that success and according to this story in USA Today, they make a good case.

Their aircraft utilization has risen from an acceptable 9 hours per day in 2006  to 13 hours per day.  They are now earning over $30 per passenger in ancillary revenue vs just $5 in 2006.   They’ve also managed to earn a profit for each of the last 3 years in what has been arguably the worst climate possible for airlines.  While they have had an initial loss for this year, blaming it on higher wages and fuel costs, expect another profit for the full fiscal year. 

Spirit isn’t an airline I would typically fly but I will concede that they have found an untapped market following what is almost a Ryanair+ business model.  They’ve lowered base fares dramatically and earned good revenue from “unbundling” their services and while many don’t like what they’ve done, their relatively full aircraft and annual profits point to the fact that many are happy to take the deal.

Spirit outlines their intent to retire debt and fund growth from this IPO and to do that, Spirit is going to have to branch out from their Florida/Gulf/Caribbean marketplace and attempt operations in other parts of this country.  They’ve done well with their Caribbean focus and I expect they’ll look for other cities to take advantage of that strength.  Perhaps in Texas or California.  It is interesting to me that they’re about to start service from Chicago O’Hare to Las Vegas and that’s their market:  inexpensive fares to leisure destinations.

Whether you like their approach to airline service, you can’t argue against their success and they do have a solid business case going forward.  They also face some risks going forward like any airline.  As they age, their labor costs will go up, for instance.  As they succeed in their various “fees”, other airlines will likely adopt some of their practices.  But Ryanair has an aging labor force and they continue to do well.  Other airlines in Europe have adopted Ryanair-like strategies.  Ryanair is still succeeding because they’re still executing their strategy better than anyone else.  Spirit has that same potential.

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There is a rumour that Sun Country Airlines may be in play for being purchased / merged with another airline.  Candidates suggested are Delta, Airtran and Southwest Airlines.

Delta?  Never gonna happen.  They don’t need Sun Country and they don’t need the regulatory headaches that a Sun Country purchase offers.

Airtran?  Kind of doubt it.  Airtran has been avoiding direct competition with legacies lately and they’ve got that area of the country covered with their operations in Milwaukee.  In addition, Aitran isn’t a 737-800 operator and doens’t need that headache at present.

Southwest?  Now that’s a marriage.  One that I suggested at the New Year in this post.  Mind you, I don’t think it will be for the weekly flights to London.  The fleet is compatible and despite concerns over it being entire leased, it’s a good fit and allows SWA to start 737-800 ops just that much sooner and on routes that are that much more lucrative. 

It also offers MSP gates and more opportunities to fly more places.  In fact, it offers just the right kind of opportunities:  international flying.  Southwest Airlines recognizes that international flying is something that they need to consider.  However, it involves an area of expertise that just isn’t at SWA and within their business model.

Sun Country offers that ready-made expertise and to a variety of destinations.  With that experience, SWA suddenly has the ability to go to Mexico and Canada which are already a part of its codeshare work (and where is that codeshare with Volaris, by the way?).  But the experience in the backend, reservations, visas, handling foreign currency, etc. is all offered with a Sun Country purchase. 

It’s a ready made solution for growth but it has one risk. Union agreements.  And Sun Country has a lof of employees who feel that Sun Country was never given an unfettered opportunity to grow.  Whether that’s true or not, it’s an obstacle.  If SWA can convince its unions to offer senior merging on a date of hire basis, it might work.  If SWA’s unions insist on a purchase being “stapled” to the back of the seniority list, it’s unlikely it will work.

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I sometimes enjoy the obscure routes one can take to save money going someplace.  I have family in the NYC area and flights from DFW to EWR (Newark) are generally very expensive.  You see, this is what happens when you let one airline dominate the non-stops between two large business cities. 

But I’ve always been surprised at just how cheap you can fly to Philadelphia from Dallas.  Stunningly cheap.  In fact, you can fly into PHL from a lot of places cheap.  As a result of some flight research a few days ago, I discovered you can fly from Portland, OR to Philadelphia for as little as $137.  That’s cheap. 

Well, if you are traveling for leisure and on severe budget, you can fly to PHL and take 2 trains to NYC.  Surprisingly, they aren’t too expensive (about $6 and $16 respectively to take me from PHL to Hoboken, NJ in about 2 hours.)  And you get to take a train which is a pretty low impact experience all in all.   You can do it similarly to Baltimore / Washington, D.C. but I’ve found that you usually can find reasonable air fare to D.C. from most cities. 

It’s an option for you bargain hunters out there.  I’ll seriously consider it the next time I want to visit NYC.

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Southwest Airlines’ flight attendant union has come to a tentative agreement on introducing the larger 737-800 into the SWA fleet.  By all I can see, this is a reasonable agreement  and reached in what has to be nearly an all time record time even for SWA.  When this originally came to light a bit over a month ago, there was rampant speculation (even on my part) that SWA made this public in order to cajole a recalcitrant union.  Now, the agreement has been reached and SWA is still working with their pilots who, if anything, should have even less of a problem agreeing to the addition.

So what was the fuss about?  Perhaps this once it was what the flight attendant union said it was.  They were contractually obligated to talk and they really saw no large obstacle to making it happen.  This just doesn’t feel like there was a real conflict brewing.  Suddenly it feels like the pilots might be hemming and hawing over this. 

Actually, I doubt even that.  Perhaps SWA and its unions will have complete agreement in a few weeks and make their order with Boeing.  No one yet has found a reason why adding the -800 is a bad idea for SWA.  Yes, there will be a slight change in the number of FA’s on these aircraft and, yes, it will add a slight level of complexity for managing scheduling.  However, the benefits are bigger and this potentially gives SWA a chance to find out if they’re ready to go to another level in the future.

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Now we have a picture, although somewhat fuzzy, of the WTO findings against both Boeing/USA and Airbus/EU that frankly brings me to a different conclusion than some.  Without going into the complex findings on both sides and we really don’t have a public ruling on the EU claim yet anyway, we can begin to see the disparity come into focus slightly. 

The disparity comes in two forms.  First, the value of the violations.  Most conventional wisdom saw about $20 Billion in various subsidies that the EU and/or Airbus would need to remedy over time.  More important, it was a fairly loud condemnation of certain practices that will require fundamental restructuring in the EU to accomodate.  In other words, the Airbus business model, at first glance, will have to change pretty substantively. 

The first analysis of the WTO claim against Boeing and the US is a bit different.  The value of the violations is somewhere in the rough vicinity of $5 billion with about $2 billion of that already remedied by Congress.  The real kicker is that remedying these violations doesn’t require a fundamental business model change. 

The EU is already positioning itself to call, once more, for negotiations on this subject.  A number of US and EU based analysts predicted a need for negotiations on this.  I’m going to go out on a limb and say that I’m not so sure the US will be that interested in negotiations.  The incentive to negotiate usually comes from two parties having a roughly equal interest in having something settled.  At first glance, that doesn’t exist here.  Boeing takes far less of a hit by simply sucking it up, making the remedies and continuing their stance that the EU must take care of their own house.  It puts them on the high ground both politically as well as in a business sense.

I think the US/Boeing will likely make some nominal objections to the WTO ruling but I suspect they’ll breath and comply and then press their case even harder against Airbus.  The EU and Airbus will fight, kick and scream about changes on their own ends.  I think political leaders from the EU, in particular leaders from France and Germany, will press their case directly with our President and other members of our government.   While I do think there are some in our government (mostly Republican oriented members) who will be willing to negotiate, the truth is that it is not politically smart to engage in that over  here. 

We have an economy that is staggering still.  We have a population of 350 million people that our government has a responsibility to and most of those people are entirely unconcerned with the health and welfare of European nations who, quite frankly, have been rather snide and ineffectual during the global economic crisis over the past 2 years.   For Europe, the chickens have come home to roost and the crowing is going to sound awfully loud in the mornings.

In the long run, making those changes actually benefits Airbus.  Bringing them into a market driven business model as opposed to a subsidy driven business model will bring tangible benefits such as real profit and revenue.  The political leaders of the EU are the ones who really have to take the hit.  Airbus has been a huge jobs program for many of them and there will be a lot of fallout if and when Airbus leans itself out.

I think this will affect the KC-X tanker bid as well.  Secretary of Defense William Gates has repeatedly said that subisides shouldn’t play an issue in this award.  In fact, he may well be right about that.  However, right and what is politically smart are frequently entirely different things.  With this conflict on subisides receiving new light and a more clear picture forming, there will be massive political will being exerted towards a US based award and that means Boeing.

I think the KC-X tanker award gets pushed away from a November award.  With it scheduled so soon after mid-term elections, the wise thing will be to take stock of who will be in power and measuring the responses to each potential award.  Given that, I suspect this award will definitely push until January and potentially gets pushed until March of next year.  

Boeing needs to win this on merit this time.  A delay makes that more possible rather than less possible.  It allows emotions to settle and a rational decision to be made rather than a politically reactive decision.  They’ve lost this award twice now.  Once through corrupt practices and once with a bad set of requirements.   They can’t afford a third loss because of political winds shifting after an emotionally made award to them.  Play it by the book, offer the best price and make certain that your bid fully describes the work and realistic delivery. 

This latest (confidential) WTO ruling isn’t going to settle everything soon.  There will be appeals and counterclaims for a few more years.  However, it does put Boeing on higher ground and if they’re smart, they’ll refrain from crowing (too much) and get to work on selling aircraft.

Negotiations to settle this between the EU and US are unlikely if not for the reasons stated earlier in this post, then for world political reasons.  Several countries have emerging aerospace industries that will be encroaching on Boeing / Airbus territory.  They want a seat at the table and a negotiation between the US and EU over this doesn’t afford them much say in how they can advance their interests.   Boeing can best fend off that encroachment by continuing to take the most free enterprise approach it can in this market.  The move above board they are, the more the US can advance their interests and access to markets from this point forward. 

Boeing can, however, appease some of those countries by working even harder to bring those companies into partnership with Boeing.   One of the best actions to take would be for Boeing to draw those companies in both manufacturing as well as marketing partnerships that are profitable for both sides.  The first company I would approach is Embraer despite Embraer’s lean towards Airbus at this time.  Embraer has the most mature product line and it’s a natural fit to slide into markets in partnership with Boeing and just behind the Boeing product line. 

But I wouldn’t ignore Russia and Japan either.  Russia knows how to build aircraft and with just the right nudge, they could be a very effective partner for Boeing.  They could potentially even be a low cost manufacturing center in a decade.  They are the only other country outside the US and the EU to ever build large aircraft successfully.  Japan offers great engineering resources and manufacturing skills that embody the kind of quality control that is a must.  If Japan had built hose 787 horizontal stabilizers, we would have never heard about quality problems on them.   That’s a lesson learned for Boeing.

Yes, everything has a way to go yet but Boeing suddenly looks a lot better today than it did a month ago as a result of the preliminary WTO ruling.  The picture isn’t in perfect focus yet but it did get much more clear.

Filed under: Airline News by ajax
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Two days ago, I took exception to a post made by the very popular blogger, The Cranky Flier, over statements made about the 3 Hour Rule.  The dialogue taking place over there highlights the biggest problems with arguments being made for and against the 3 Hour Rule.  Too many judgements are being made on both sides on the basis of incomplete data and emotional arguments rather than facts.

The FAA argued that tarmac delays were dramatically down versus a slight increase in cancellations and, I agree, crowing about it just a bit too much.  Cranky argued that the “slight increase” was in fact a 20% increase and there was an emotional reaction to that.  The problem is, no definition or data is being given for really measuring the impact of the rule on cancellations or the impact of the rule on people. 

Most of the original arguments made for a 3 Hour Rule were derived from exceptionally rare events.  Even when you considered those events in a seasonal context, they were vastly outside the norms.  Indeed, you might have been able to say that 3+ hour delays occurred infrequently enough to be considered statistically insignificant.  What we do know is that if your population of events is large enough, you’re going to have a few that occur far outside the norms. 

Further, we reacted emotionally to the conditions people sat through on many of those flights and really only to the subjective reactions on the part of people who spoke to the press.  We never heard from the person who just sat on the plane quietly for 7 hours and thanked his lucky stars he finally arrived home and got off.   That person doesn’t play well on CNN. 

I do think that there is an argument to be made for limits on the basis of health and welfare of individuals on flights.  I do not think it is wise to hold people on a MD-80 for 8 hours except in the case of major emergencies.

There are health issues to consider such as the close proximity and contact that occurs between a wide variety of people in that environment.  Air quality is another.  Sanitation is also a serious one.  Food and water is really a strong factor as well.  And let me point out that we will divert an entire aircraft to an unscheduled stop when someone is having a medical emergency.  There should be a discussion on how we value the health and welfare of people in these situations.  And just because 4 people want to go at all costs doesn’t mean that rises above the needs of 4 people who have serious health conditions that could well be impacted by a prolonged stay inside an aircraft. 

We should carefully evaluate anything we hear in the media about cancellations as well.  Should we be giving full weight to the person who had a flight cancelled and who suffered a 24 hour delay vs the other 10 people who had a flight cancelled and suffered a 5 hour delay?   Is a businessman’s need to get to the next meeting superior to the mother’s need to get her 2 young children off a plane because of health considerations?  The truth is, I don’t have black and white answers to questions like that but it would be good to see a debate on issues like that.  We, as consumers, should see a bit of argument on both sides and get a more complete picture before we start judging these moments purely on our needs at that particular moment.

As far as the data goes, we don’t know what the impact of this rule is.  We aren’t measuring the impact by the number of people per 100,000 travelers who are getting their flights cancelled specifically because of the 3 hour rule.  We know that cancellation rates go up and down.  Those cancellations can be caused by seasonal events, bad airline operations or, frankly, just a bad week of equipment failures at a particular airline (I believe it was AA who recently saw not one, not two but three 767s go INOP in a single day).  We do know that the overwhelming majority of flights never come close to spending 3 hours delay on the airfield.  Seriously, we do know that.  We know that the frequency of occurrence for delays going past 3 hours prior to the 3 Hour Rule was negligible by any standard. 

What I believe (which is different than objective fact) is that we also have a need for some kind of rule governing those instances that did fall outside all of the norms and which were not caused by major acts of god or major emergencies.  As Doug Parker said, the airlines did this to themselves in many respects.   There were enough instances that we, as a nation, found unacceptable given the particular circumstances around the event.  Airlines and airports didn’t deal with those situations considering what might be humane but instead were making objective decisions based on operational and financial data. 

Objective data and objective decisions are, generally speaking, good to have.  However, we live in a world with human beings who are very subjective creatures.  Yes, you really do have to give consideration to that. 

Statistically speaking, an increase in cancellations that sees a rise from 1.18 percent to 1.43 denotes an exceptionally slight increase from an objective point of view.  The FAA was right.  However, the FAA failed to consider the number of people who were potentially impacted by that slight increase and Cranky was right to point out that these incredibly slight increases do have an impact on a rather large number of people.  By Cranky’s math, that slight increase potentially affected 150,000 more people.  Are we satisfied with the idea that more people than the new Dallas Cowboys Stadium can hold were materially affected by a cancellation?  Well, we can’t even make that judgment because we don’t know all of the “why” behind each cancellation. 

But I think we can agree that it isn’t anything to brag about when 150,000 more people were affected by cancellations.  If nothing else, it is in appropriate to reduce people, human beings, to that kind of statement.

At some point we all should start acknowledging that our airline transportation system is imperfect and cannot delivery you to your destination 100% on time without any cancellations.  If you travel by air, you are going to be affected by a combination of factors virtually every time.  It’s time to be a bit more reasonable in our expectations.

On the other hand, it’s time for airlines to start acknowledging that as well.  One of the biggest causes of uproars over these kinds of situations is an airlines propensity to expect us to adhere to a byzantine set of rules governing our options when traveling while allowing themselves all manner of leeway for those same events.  Airlines want a $20 fee to check a bag but they don’t want to refund that money when they don’t perform.  However, when you miss flight due to a large traffic jam or weather event, you’re often expected to pay penalties and change fees for being affected by something outside your control. 

Not even Las Vegas has a better rigged game than the present US airline industry.  That is what is driving the perception that airlines are abusing people.  And I think it’s manifesting itself in reactions to the more outrageous although exceptionally infrequent events such as a long tarmac delay.  A little more balance between the airline and its customer is called for in my opinion.

Is it right for the government and/or the FAA to regulate some of this behaviour?  Absolutely.  Airlines are using public airways and other public infrastructure while serving the public.  They benefit from a great deal of government investment and expenditures.  The government is not created by the businesses for the businesses.  It’s here for the citizens.  The people who vote and who are ultimately and individually responsible for this nation.  That said, it doesn’t mean that the regulation and oversight needs to be hamhanded or political either.  However, just like no human being or airline is perfect, neither is government. 

Let’s be a bit more realistic about our expectations for all parties involved in this subject area.

Filed under: Airline News, Airline Service, Airports, Frequent Flier, security by ajax
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A few days ago, I was asked to help someone put together a multi-stop itinerary from Portland, OR to Chicago to NYC to Portland.  A quick check of travel sites revealed a pretty good price of $525 all in from Delta.  The problem was multiple stops at Delta hubs in Minneapolis, Detroit and/or Atlanta.  Each segment had a stop and each stop was a not too short layover, too.

So I started looking for alternatives.  Now, this person wanted to fly into Newark’s airport for the NYC part for convenience and that makes alternatives a bit more difficult.  But they were traveling into NYC on a Saturday night or Sunday morning and that makes La Guardia go from “ugh” to possible.

After a few minutes, I found flights on Southwest Airlines for PDX to Chicago Midway (MDW) that were more than reasonable.  Then I found very reasonable flights from MDW to NYC (La Guardia) on Southwest too.  Finally, Continental offered a nice one-stop to Portland via Seattle for an extremely reasonable price.  All in, those tickets added up to about $530.  Best of all, only one connection was necessary and it was an easy one in Seattle. 

The traveler would also be able to take advantage of SWA’s no bag fee policy saving them about $50 as well.  In fact, by that accounting, suddenly the fare difference was $575 plus taxes for Delta and a bunch of bad flights on bad aircraft vs $530 on SWA and Continental on good flights with nice aircraft.  Their overall travel time was shortened by hours and their convenience and price went up.  It’s good to look for alternatives and it’s very wise to remember Southwest Airlines when you’re planning your trips.

One odd note:  I discovered that Delta really dominated flights from MDW to other destinations such as NYC-LGA and NYC-EWR but only as connections to their hub cities in Minneapolis, Detroit or Atlanta.  At least by price they did.  But the connections ranged from barely OK to “what the hell are they thinking”.  And suddenly it dawned on me why ContiUnited decided to give up those slots at EWR to Southwest. 

ContiUnited doesn’t fly from EWR to MDW non-stop.  In fact, I couldn’t find a connection on either airline to that airport.  They do, however, have a strong schedule to Chicago’s O’Hare airport.  By giving those slots up, they virtually assured that SWA would fly in competition with Delta to Chicago rather than ContiUnited and do it very competitively.  In other words, they got the attack dog to go after their biggest competitor in the NYC area. 

Is there some potential for competition on ContiUnited routes?  Sure but it is pretty limited since SWA flies to secondary airports where they (ContiUnited) are (mostly) strongest.  They’ve already seen that SWA has a limited effect on their pricing under those circumstances.  And, as I’ve already said in an earlier post, they already know how to compete with SWA in the circumstances where they might directly compete.  Best of all, they made the DoT very happy to offering a big chunk of slots to SWA instead of trying to pull a Delta and parcel them out to tiny players.

And that makes me wonder why Airtran never used its EWR slots to fly to Chicago where they already had a presence.  Their business class product would have fit nicely with the value oriented, entrepreneur flier between those two cities and offered great convenience between downtown Chicago and Manhattan.

Filed under: Airline Fees, Airline Service, Airports by ajax
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Video of airliners doing crosswind landings never fail to fascinate me.  They are, in my opinion, one of the best examples of airmanship going on in a commercial airliner.  Here are some videos taken of the 787 doing its tests in Iceland.

Filed under: Aircraft Development by ajax
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The FAA has proposed new rules to govern rest for pilots and I’m sure it will set off considerable debate.  I haven’t read the proposed rules in detail but the highlights didn’t really encourage me.  In fact, I don’t think fatigue is being addressed in those rules very well at all.  Instead, I think the perception of the problem is being addressed.

Pilots aren’t just fatigued because the number of hours they work in a day.  They aren’t fatigued because we only require 8 hours of rest period between duty time on successive days.  Both of those conditions do contribute, yes.  But one of the hidden problems has more to do with how a pilot has to manage his or her life with respect to their career.

Mind you, we aren’t requiring 8 hours (9 hours in the new rule) of sleep between duty periods.  Just rest.  Rest being largely defined as “do what you gotta do to get your stuff done and get some sort of sleep.”  A pilot entering a “rest period” still has to eat, bathe, tend to family obligations, etc, as well as sleep. 

In addition, many pilots have to commute to their duty stations.  A pilot assigned to New York City for duty may be commuting in from Topeka, Kansas.  That means to make a duty start time of 8am on a Monday, they probably left mid-day the previous day, flew to NYC, went to a “crash pad” or hotel room, had some kind of meal and some kind of sleep but then got up as early as 5am to make an 8am duty time.  That doesn’t allow for much rest much less *quality* rest.

If we’re going to have new rules, it would seem to be better to craft rules that allow for quality rest on a regular basis.  That doesn’t mean every night necessarily but it does mean more frequently than every 7 days too.  We need rules that, perhaps, govern how much time you can spend commuting in the 24 hours prior to your duty time.  Do we really want pilots spending 8 hours in a day to get to their duty station and then put them on the job for as much as 8 hours of flying and 12+ hours of duty time? 

Maybe pilots shouldn’t be allowed to spend more than 4 hours commuting to their job on their duty day and no more than 6 hours commuting the day before their duty day.  I’m certain there is a number to be found that would help reduce real fatigue. 

How many hours someone can work in a particular day is important, yes.  But how many hours they can work in a week and how many hours they spend commuting back and forth to their job is even more important.

These new rules were spurred by the Colgan Air crash in New York State.  Fatigue was cited as a contributing problem.  Let me point out that those pilots had commuted coast to coast and their “rest” was garned by sleeping on the aircraft they were commuting on and in pilot “quiet rooms” at airports.  That’s not rest, that’s a holding action at best.

Filed under: Airline News by ajax
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USA Today has THIS story on a new seat from Italian company Aviointeriors and it makes me cringe.  The seat system is considerably narrower in pitch and built so that a person sits more on top of it than into it.  Like you would sit in a saddle.  From the photos, it appears that the seat height is higher affording a longer “drop” for ones’ legs.  Call it a hybrid between a conventional seat and “standing room” concepts that have been bandied about.

Before anything else, let me say that I see a number of issues that might make it challenging to get such a seat certified.  How the passenger sits in a seat is a safety factor as is how they may be impacted by seats in front of them and behind them.  And accomodating that passenger so that the seat itself doesn’t injur them in a crash is also quite the challenge.  So, I don’t think this is something we’ll be seeing in the next few years. 

However, the fact that seat manufacturers are posing this design ideas kind of scares me.  One look at that seat and my knees cried a little moan of anguish.  I would find such a seat a very difficult thing to accept even on relatively short duration trips.  But clearly the seat manufacturers are hearing something from their potential customers if they’re going to spend time creating such concepts.

Low Cost Carriers not only drive ticket prices, they also drive aircraft design.  They purchase a large portion of those single aisle aircraft available and they want to pack in their passengers.  It would appear that seat manufacturers are starting to explore the idea of how pack in more passengers. 

Scrunching in even more humans on existing aircraft is a long way off, at best.  There are way too many regulatory hurdles at present but the market has driven even regulatory change in the past.  People are exploring ideas on how to fit more passengers on aircraft and the latest round of concepts look absolutely horrific to me.  But I might be horrified, in part, because I’m starting to see a glimmer of reality in these designs.

Filed under: Airline Seating by ajax
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It was just shy of 8:15am and I was pulling into the parking lot of my company.  A company where I, as a senior manager, was in charge of our all our daily operations.  I was actually a bit annoyed because I was arriving 15 minutes late that day and I strongly believed in showing up exactly on time.

Each day, on the way to work, I was in the habit of listening to the National Public Radio news broadcast on our local public radio station.  Those who know me, know just how important it is, to me,  to get to listen to that twice a day. 

Moments before I was about to get out of the car, the news broadcaster, Carl Kasell,  who read the news on NPR suddenly stopped speaking, struggled for a brief moment and then said he had news just put in front of him that a small aircraft had just hit the World Trade Center in New York City.  When Carl Kasell hesitates and stutters, you stop and listen.  He is a consummate professional in his job.

I’m somewhat sad to admit that my first reaction was “It finally happened.  All that air traffic in the NYC area and now a commuter aircraft has run into a building.”  In fact, I assumed it must have been foggy or a day of low clouds and someone had made a bad mistake.

I went inside to my office, said hello to everyone and then shut my door to make business phone calls and read email in privacy.  Oblivious to what was unfolding in New York City and Washington D.C.

About 45 minutes later, my head buyer burst into my office and asked if I was aware that the world was crashing down and on fire.  She used those words and since she was ordinarily my most stable employee, that got my attention and I asked my friend who stood accusingly in my doorway what was going on.

“Planes just hit the World Trade Center and now it’s falling down.  And the Pentagon is on fire.”

That struck me like a 5lbs hammer. 

I came out of my office and we all turned on radios and even a TV (the benefits of working for a company that did direct sales of consumer electronics) to get news.  It was hard to get, actually.  Our phones were silent but you couldn’t get a phone line to call out either. 

I had had a new T-1 data line put into our office just a month earlier and when I couldn’t get any news websites to come up on my computer, I assumed the connection was bad until I realized I was still getting email.  All the news websites were flooded with traffic.

It took us a good 2 hours to settle down.  Unlike some companies, I kept our staff at the office and kept us together.  We really didn’t get any work done.  I pretended to attempt to merchandise for our Christmas catalog but I was just listening to radio and searching websites for any news I could.  Our phones were quiet and no customers were emailing us to ask where their new telephone was.  I thought it was important for us to stay together.  It seemed like if I sent everyone home, we would be weaker and more susceptible to what was going on. 

We did finally leave around 4pm.  I went home, made dinner and watched the news.  After a couple of hours, I went outside on my patio to sit and reflect without the news in my ear.  After about 5 minutes, I realized that it was silent outside. There was no aircraft traffic, there was no car traffic.  Ordinarily, even a quiet evening in my neighborhood is filled with noise from cars and other activities.  That night it was just silent. 

My phone rang after about an hour.  It was a friend from Australia calling to see if I was OK.  I pointed out that what was happening was in New York and Washington, not Dallas.  They explained that they knew I traveled on the spur of the moment frequently and they were worried I was up there or even on one of the aircraft.  Strangely, I got several more phone calls from friends outside the country that evening asking the same questions.  Friends from Russia and the UK and Canada. 

By that evening, I had already told several friends that hijackings will never be treated the same again.  I said things like “The rules have changed” and “The gloves are off”.  I knew air travel would never be quite the same and it isn’t.  Today, an attempted hijacking would be met with resistance by any and everyone.  Back then, the standard operating procedure was to cooperate and get the plane on the ground.  But hours later, I knew that wouldn’t be the case ever again.

Those moments that cause us to know them by where we were when they happened seem to come only once in a generation at most.   That was my generation’s “Kennedy moment”, if you will.  It was for anybody in the United States that day.   Now you’ve heard my story.

One of the most compelling parts about the events of September 11, 2001 is that there are so many different and interesting stories to hear.  I would like to hear yours.  Please comment to this blog entry and tell me where you were on September 11, 2001 and what your impressions were.

Filed under: Airline News by ajax
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