Southwest Airlines is now the number 2 carrier at Denver with Frontier Airlines (as well as Republic Airways flying) dropping to number 3 now.  The good news:  this is more at the expense of United Airlines than Frontier.  the bad news:  dominance is dominance. 

I’m not entirely surprised at SWA’s success at Denver but I do think that, like others, it is a bit surprising that this took as long as it did.  United, Frontier and Southwest have been in a pitched battle for that market for years now.  This was never a battle about SWA beating Frontier.  This battle was about SWA owning market share and pushing out more expensive incumbents.  That would be United.

Frontier never was and still is not big enough to be a real threat to Southwest.  Based on Frontier’s route decisions, they aren’t going to be a real threat to SWA either.  Frontier is looking for low hanging fruit that has little or no competition.  Southwest is connecting focus cities to focus cities region by region and sees Denver as a good place to establish itself on several of those mainline routes. 

If anyone should fear Southwest, it’s United.  You can’t sustain attacks from two low cost carriers forever and stick around.  As the ContiUnited merger plays out in integration, I expect Denver to look less and less important to that airline as a hub.

Filed under: Airline News by ajax
No Comments »

Despite the exceptional record of profitability and growth for Southwest airlines, I’ve often felt that the financial markets do not treat Southwest quite as the airline it is.  In fact, I can’t identify another airline in the United States that has such a record but, despite that, its stock price often is low and my perception is that analysts don’t trust the success.

The Dallas Morning News Aviation Blog has an entry about Standard & Poor keeping a close eye on SWA now that it is about to close on its merger.  There is a belief that this merger will weaken SWA’s financial profile and that SWA will incur greater financial risk going forward.  There is no doubt that this exists as a possibility but it seems to ignore that Southwest’s strengths going into this merger. Strengths that other airlines didn’t have during other recent mergers.

I think Southwest will find it difficult to integrate parts of Airtran.  I think they will incur significant costs doing so and I think they’ll find it more difficult than they are portraying.  All of that said, I also think that SWA is better positioned to consummate this merger than virtually any other airline around.  I think that we’ll see more harmony in the labor integration than we’ve seen in other mergers (even Delta who did it relatively well has been facing union election after union election every since it merged with Northwest.)

The fleet integration has far less risk than what we’ve seen in other mergers.  The pathway forward in rationalizing routes is far more clear than in other mergers and the Justice Department hasn’t identified any conflicts of real concern in this marriage either. 

So why do others get a pass?  Take a look at the share prices of United Airlines since the ContiUnited merger.  Both airlines had significant financial risks and significant labor risks in that merger and, yet, the share price is exceptionally high with a far more cloudy future than Southwest has.

I think Southwest tends to be thought of as a regional player despite its national stature.  And I think it remains difficult for even educated analysts to trust the year after year success that Southwest has enjoyed.  I believe that they feel it is still too good to be true and they continue to wait for the other shoe to drop.  After more than 25 years of financial success, I think it’s time to get over that and value this airline for what it is:  Possibly the most long term successful airline in existence.

Filed under: Airline News by ajax
No Comments »

The National Labor Relations Board has found that Boeing was punitive when it placed the second 787 manufacturing line in South Carolina.   The International Association of Machinists and Aerospace Workers union District 751 filed the complaint with the support of its national union. 

It described this move as coerceive and retaliatory against the union after the union struck against Boeing shortly before that decision was made. 

I’ve no doubt that Boeing did make its decision based upon the effects of that strike in part.  Boeing needs stability and that strike put it at odds with its customers who publicly criticized Boeing during the strike.  However, just because Boeing was uncomfortable with having to make guarantees to the union doesn’t mean it was punitive or retaliatory either.  The truth is, Boeing has probably needed another manufacturing center for the last 10 years. Furthermore, there is nothing preventing union organization at the new manufacturing center.

Things work best when they are in balance.  Until recently, there has been a fairly anti-labor bias going on.  That bias seemed to exist primarily through the President Bush Administration.  With the beginning of the President Obama Administration, the bias seemed to shift rapidly to pro-labor, anti-business.  I’m OK with either shift in general but I have to say that I’m beginning to find the most recent shift going just a few steps over the line. 

Like I said, it’s about balance.  My perception is that we are now “rigging the game” in favor of labor.  Boeing should have the ability to be agile enough to build their aircraft competitively and that should include relocating production to another state if they find their present location and labor climate too difficult to deal with.  Likewise, labor should have the power and option to organize at the new locations and laws governing labor in those new locations.

A lot of labor goes into the cost of building an airliner.  When you start potentially changing the balance of power between labor and the company, you potentially turn a company like Boeing into a non-globally competitive entity. 

And that isn’t something you want to do to a company that can literally change your monthly world trade balance from negative to positive by delivering a few extra aircraft.

Filed under: Aircraft Development by ajax
1 Comment »

It comes as no surprise that air fares are rising again.  They rise every time oil rises in price.  They generally rise out of proportion to the cost of oil and there is a reason for that, too.  

One reason air fares are rising a bit more rapidly this time compared to 3 years ago despite oil prices being somewhat less still is that refiners are actually charging more for the refined fuel than they did a few years ago.  Believe it or not, airlines don’t have quite the pricing power people think they have when it comes to the pump price of their fuel.  It’s my observation that the only one who makes money when oil prices are volatile are the oil companies who sell refined products such as fuel. 

Airlines actually did a pretty good job of spotting their dilemma and bidding the air fares upwards rapidly.  As someone formally educated in economics, it fascinates me to watch air fare volatility due to sudden rises in costs.  Unlike many other “free market” areas in the world, the air fare world operates with more “freedom” and more “anti-competitive” moves than you get to see in most industries. 

It works like an auction.  One airline generally “bids up” airfares with an increase and waits to see if other airlines match them.  Airlines can’t cooperate on prices but they can signal each other.  A fare increase is a question that reads like “Can we all raise prices and get along?”  The response is whether or not other airlines raise prices as well.  Another airlines or a few airlines may well raise their prices, too and generally after a few days, usually not more than a week, we know if they’ll stay there.  Sometimes several airlines raise prices but the price increase fails because one airline doesn’t agree. 

Generally speaking, it’s the major and nationwide airlines that get to set prices that way.  It’s the smaller, low cost airlines that can defeat those prices on specific routes but it is rare for those smaller, low cost airlines to set a price increase nationally. 

Southwest Airlines has often been the spoiler in fare increases.  SWA is a lot more “national” than most realize and it manages its costs a bit better than most, too.  In addition, that airline is willing to work from slimmer margins than most.  But in this most recent season of rising air fares, SWA hasn’t played the spoiler very often.  It has a few times but SWA has actually become a leading indicator as to air fares by agreeing to those rising prices far more often than it historically has.

Over the past 3 months, airlines have agreed to these increases far more than is usual.  Why?  Consolidation.  There are three SuperLegacy airlines left and one “national” LCC carrier and one legacy remain as well.  There are no upstarts remaining that can push air fares down and those who are setting prices all have costs that are closer to each other than has been the case in a long time. 

Good for the airline industry?  No, not really.  There is less competition and the competition that remains actually has a reduced incentive find savings elsewhere.  Good for the consumer?  No, not really.  Higher air fares lead to people reducing their travel which has other implications for the travel industry.

Filed under: Airline News by ajax
No Comments »

If you fly enough, you’ll have a bad experience on an airline.  It is inevitable and one bad experience does not describe an airline’s ability to delivery service.  Too many people judge airlines on one experience, in my opinion.

Social media can be similar.  One bad rant does not describe an airline.  However, one bad rant does have the potential to become the story.  Recognizing that, many airlines have adopted social media departments to help control the story.  I’m fine with that because why shouldn’t an airline be able to defend itself?

However, then there are the airlines who adopt social media solely to try to control the story and those airlines are missing the picture when it comes to social media.   Participating in the story is just one half of the objective to social media.  The other half is responding. 

In the social media sphere, it’s about quick and timely answers with real solutions.  Some airlines have figured that out, some haven’t.  Some airlines who have figured that out still slip and fall from time to time.  That’s the nature of the game in social media. 

It’s about risk.  Social media is about accepting a certain amount of risk in letting your social media department respond with a certain freedom accepting the idea that vetting an answer or only permitting non-responsive answers isn’t going to promote a good image.  Instead, airines who do this well accept the idea that you cannot always make a bad story go away even when you do answer appropriately.  Think Kevin Smith and Southwest Airlines.

Now we have This Rant about American Airlines.  American Airlines doesn’t possess the kind of corporate culture that succeeds in social media.  The first word of advice I would give them is that if you cannot empower your social media team to make something happen, stay out of social media.  Lame responses really are worse than no response and, what’s more, they give your competition an opportunity to poke at you. 

What this gentlemen describes, I’m sad to say, is far more common than it should be.  His experiences are exactly what I have experienced over and over again.  They are the reason why it is a better bet for me to fly SWA or Airtran or Continental with a connecting city than it is to get on AA to fly someplace non-stop.  The really insulting part of it is that if you are flying from an AA hub, you more than likely are paying a higher price for that non-stop flight. 

Furthermore, these kinds of experiences including the social media Twitter response point up to just how little AA does value its customers.

Filed under: Airline News, Airline Service, Airline Social Media by ajax
No Comments »

This past week, analysts chastised American Airlines for what they perceive to be lackluster capacity control in light of rising fuel costs.  What they want is a tighter market for airplane seats and for fares to rise even more.   Airlines began reducing capacity by removing inefficient aircraft from their fleets either temporarily or permanently and put plans for new routes (i.e. growth) on hold.  This resulted in higher fares and, frankly, some pretty remarkable turnarounds for airlines.

In fact, it worked so well, analysts became instant fans.  The problem is, such capacity discipline is, in part, dependent upon the entire industry practicing it.  As you can imagine, it doesn’t work too well when one airline is reducing capacity and another airline adds it right back.  It works when the entire industry is facing a sudden change in market conditions that affects all of them equally.  Sudden, unanticipated rises in fuel costs are a good example of that.

But it isn’t the solution for the airline industry in terms of long term profitability.

There are solutions to rising costs that don’t involve reducing or restricting capacity.  Airlines can get more labor productivity or reduce costs elsewhere such as in food and drink.  They can lighten the aircraft to lessen fuel burn and they can add improvements to their aircraft to improve fuel efficiency.  Some have the cash to add newer, more fuel efficient aircraft to their fleet and some don’t.  In other words, not all airlines are created equal and while one set of airlines may wish for capacity control, another set of airlines may well see opportunity in that move.

Costs aren’t the only thing driving an airline either.  One airline’s flight attendant labor hour may equal another flight attendant’s labor hour in pay but not productivity.  One airline may well be managing their fuel hedging better than another.  One airline may have a younger flight crew than another as well. Capacity control can only do so much.

Capacity control is the short term solution to a long term problem.  Short term solutions don’t fix companies and they don’t promote good strategy.  What analysts should be calling for is better management, better fleet planning and better labor relations.   The value of that stock will ultimately be better for a longer period of time when the company is managed better over a longer period of time.

Filed under: Airline News by ajax
No Comments »

The SUD Aviation Caravelle airliner was the first short/medium range twin engine jet aircraft produced.  The original models carried just 80 passengers but the final model, the Caravelle 12, carried as many as 140 passengers.  It was also unusual in that the first models did not have reverse thrust and used brake parachutes to help slow the aircraft upon landing.  All Caravelles had rather unique looking triangular passenger windows. 

Question:  This airliner shared DNA with what other “first” jetliner and what did they share?

(more…)

Filed under: Trivia by ajax
No Comments »

The Department of  Transportation has announced new rules governing airline behaviour in a variety of areas that should become firm in about 120 days.  First off:  Baggage fees.

Airlines will be required to refund baggage fees in the event that the airline loses a piece of checked baggage.  This, to me, is a no brainer and I’m going to make a prediction that airlines are going to cast about to find a loophole in this rule.  I think someone is going to try to change the “contract” for carrying this luggage.   Airlines are going to be faced with a lot of demands for refunds as a result of this and not only is that lost revenue, it also spells out additional costs in managing those refunds.

International airlines will have a “4-hour” rule mandating departure take place within 4 hours of leaving the gate.  They’ll also be required to supply food and water after 2 hours.  I think this is a fine idea and, frankly, I would even support a change of the domestic rule to 4 hours as well.  Both would be reasonable in my opinion. 

Airlines will be required to prominently display all potential fees and taxes for their fares on their websites.  I’m still trying to find the rules so that I can read them but I do wonder if this requirement applies to fares displayed on websites (and other venues) maintained by other companies.  Regardless, this one is a no brainer to me.  Airlines should be required to have a bit more transparency in this area.   Now it is time for consumers to step up and *read* what they are buying.

The airline industry response to this is roughly “Rules Bad!  Market forces good!” 

No, not really.  There is such a thing as too much regulation.  However, airlines are huge corporations with a lot of power on their side.  To act as if individual consumers can force this change if they want it is disingenous.  Government regulation is also good and in these cases, it’s about leveling the playing field between the consumers and the airlines. 

However, I’ll also say that I believe that with these rules, the playing field is leveled and it is now up to the consumers to do their work.  It’s time to read what is displayed with respect to the fares you are shopping.  It’s up to you to claim your baggage fee refund.  And it’s time to stop acting like every departure delay is a conspiracy against you.  In short, it is time to act like responsible adults instead of like children enjoying a temper tantrum.  You are getting what you asked for so now you need to step up and behave appropriately as well.

Filed under: Airline News by ajax
2 Comments »

They did it again.  AMR, parent company of American Airlines, has lost money for the 1st quarter of this year totaling $436 million.  Ironically, AA executives will likely earn bonus compensation this year because of the way their compensation deal is structured to offer shares in the event that the 10 major shrink to a lesser number.  They have.

1st Quarter Earnings reports will probably show just a few airlinese earning a profit:  Southwest, JetBlue and Alaska Airlines.  Losses will be blamed on higher fuel prices (they are) and airlines earning a profit will have that attributed to being a low cost carrier with lower costs.

That isn’t so true.  Southwest’s costs are less than, say, American Airlines but they are no longer the lowest in the business.  Alaska Airlines is certainly not a low cost carrier as they operate like a legacy airline and they are a legacy airline.  They have, however, been smart in renewing their fleet with very fuel efficient aircraft in contrast to the other legacy airlines who haven’t. 

There are a few lessons here:  Fuel is and will probably be the most volatile component in airline operations going forward.   Labor may not be the key driver in airline costs anymore.  Fuel efficiency is probably going to win over “cost of ownership” when it comes to the decision of buying new aircraft.  Delta’s model of retaining old aircraft may end up being a very poor strategy with volatile fuel prices.  Finally, good labor relations leads to good productivity and good productivity leads to profits.  All three of those airlines work hard to maintain good employee relations.

Back to AMR:  It’s unsurprising that the flight attendants are ranting at American Airlines for its poor performance.  Their methods are incendiary but their point should be taken:  This isn’t a leadership team that has performed.  Mitigating losses to a lower level isn’t performance.  Particularly when taken into account over the past 10 years. 

Arguing that the compensation paid to the executive team is necessary to attract competence is probably a valid point.  AA has often argued that it has to pay the salaries it pays in order to attract talent and keep it.  The question that, I think, has gone unasked is:  Is this really a top talent team? 

Can you really argue at this point that the executive team is full of top performers when the total losses over the past 10 years adds up to over $11 billion?  Pay the compensation, absolutely.  But perhaps it’s time to pay it to airline talent that have a better track record.

Remember that this is the team whose corner stone strategy includes waiting for other airlines to have the same labor costs as they do.

Filed under: Airline News by ajax
1 Comment »

At first glance, integrating Airtran’s fleet into Southwest’s operations would appear to be easy and straight forward.  In fact, it isn’t.  Airtran operates a different floor plan and a two class cabin.  All of this affects things like weight and balance of the aircraft as well as using the floor plan on Southwest flights.

So Southwest will begin slowly converting Airtran fleet over to the Southwest model one by one.  Southwest will add these aircraft and, over time, take over Airtran routes.  Airtran will slowly reduce in size by fleet and route at the same time until both are on the same single operating certificate and the aircraft are homogenized into the fleet. 

Expect this to take longer than a year.  Even converting the 737-700s is fairly straight forward but now Southwest has to decide upon how it will configure the Airtran 717 aircraft for all coach seating before it begins that integration.  Since Southwest generally executes these kind of changes when aircraft already require service and maintenance, the two airline operations could co-exist for a longer than usual period of time until this work is complete.

Filed under: Airline Fleets by ajax
No Comments »

AMR has said in today’s financial results call that it will order an additional 2 more 777-300ER aircraft from Boeing. 

Is American Airlines opening up piggy banks one at a time and counting their pennies and only ordering aircraft as it is sure it can pay for them?  This makes for 5 total aircraft ordered of the 777-300ER over the past 4 months.  The orders, so far, were initially for 2 with one added the following month and now an additional 2 more added.  Each of these aircraft will be delivered in the 2012-2013 time period.

Filed under: Airline News by ajax
No Comments »

Japan’s Sendai Airport, scene of major damage from the tsunami and featured in this post, has re-opened for service again.  According to Today in the Sky blog, Sendai was cleaned up with a great deal of help from US servicemen.

The airport still has a long way to go in being completely restored to business.  However, Sendai was able to accept its first commercial flight from Japan Airlines just 30 days (April 13) after the disaster.  Apparently much of the cleanup was performed by US servicement who got started just hours after the tsunami when they cleared a small portion for their aircraft to land.  The work was done quietly which was in accordance with directives to maintain a low profile during relief efforts.  When the airport re-opened, the US servicemen were already gone.

From my own perspective, this kind of thing is actually more in accordance with how US servicemen usually operate when assisting with relief in disasters.  It’s selfless and it never embodies chest thumping.

Filed under: Airline News by ajax
No Comments »

Aeromexico, Mexico’s flagship airline these days, says its IPO (Initial Public Offering) was oversubscribed by two times.  The airline managed to bring in about $330 million ($3.9 billion pesos) from the IPO on Friday.

These funds will be used to finance the purchase of 10 Embraer 190 jets and 10 Boeing 737s.  The airline already operates 40 737s and has so far added 8 Embraer 190 jets. 

The IPO represents 15% of the company’s equity presently.  Aeromexico was acquired by Mexican investors in 2009 and instead of representing a cash out by investors, this signals new investment in the airline which couldn’t come too soon.

Aeromexico owns a mixed fleet that is both old and new.  It expects to receive new 787s to replace its aging 767s soon and it still operates almost 40 ERJ-145 aircraft.  While fuel is somewhat cheap in Mexico, it still is a prime driver of costs for airlines there.

Filed under: Airline News by ajax
No Comments »

Southwest Airlines’ and Airtran Airlines’ pilots unions have agreed to agree on the process for integrating their seniority lists. This isn’t an agreement on merging the lists but simply an agreement on how they’ll go about doing so.

They’ll first negotiate and then if they don’t get an agreement, they’ll have mediated talks and if those don’t work, they’ll have arbitration with a binding agreement. Standard stuff between unions but what I like is the fact that they’ve set deadlines for all these processes and those deadlines all fall within 2011. Good on both of them.

This process is governed by the McCaskill-Bond Act which was passed by Congress after the AA-TWA merger and the flight attendants union simply stapling on employees to the bottom of their list.

A curious question comes to my mind on US Airways as a result of this. I believe such a process was followed by US Airways and America West pilots unions. The result was an arbitrated result that the US Airways pilots didn’t like. The process was hijacked by US Airways pilots who initiated a vote amongst *all* pilots for new union representation. Since US Airways pilots outnumbered America West pilots, they got their way at the end of the day. At least until America West pilots sued. It would seem to me that federal law may well have been violated in this. If any readers here know the status of this, please comment.

Filed under: Airline News by ajax
No Comments »

Airbus has been in existence in one form or another for roughly 40 years. It’s first aircraft was the A300 which was designed as a large capacity, short haul aircraft. It was well designed for European routes but US airlines regarded it as a bit undersized and too short ranged for their uses. At that time, US airlines were using Douglas DC-10s and Lockheed L-1011s for those needs.

Finally, Airbus got a toehold here in the US with one major US trunk airline. Can you name the airline and the CEO who agreed to give the A300 a try? The answer is after the fold:

(more…)

Filed under: Trivia by ajax
No Comments »

Shortly after most airlines begin charging to check a bag on flights, the debate began on whether or not the airlines had an obligation to deliver that bag to the destination reliably and, failing to do that, refund the charge.

It’s a question I asked myself as soon as American Airlines began those charges since they used to be well known for bag delays from Chicago to Dallas. So well known that if you’re bag didn’t show up on your flight and you were a regular, you just waited for the flight that arrived an hour to two hours later. It never came on the very next flight, it usually came on the flight after that and sometimes the flight after that. I became so used to it, I simply sighed, went to a bar and waited without even registering a complaint to the AA baggage clerks because I inevitably found that I knew when it was coming more accurately than they did.

I firmly believe that when you charge for this service, you have obligation to deliver the service reliably or, failing that, an obligation to refund the baggage charge. In dollars, not flight credit. And immediately, not weeks later.

Airlines say that if the DoT requires them to do this, costs will rise and everyone will pay more for their flights. Yes, they said costs.

Costs won’t rise but the revenue from those fees might, perhaps, be reduced and doesn’t it say something when airlines panic over this? The airline industry is a weird one. They’ll cavalierly hand out freebies to people who fly frequently and, yet, charge huge fees and abuse customers left and right who are anything less than a frequent flier. They’ll cling to the fees and fares they’ve charged until their body is cold and dead. And many consumers accept this without even much objection.

Let me ask you this: Would you order a new washer and drier, permit yourself to be charged months in advance for a delivery that is delayed and when the items do arrive you find them damaged or one missing and not complain? What we wouldn’t put up with from just about any other service or product provider we regularly put up with from the airlines. Why?

I would love to see someone reading this argue the airline case and not from the point of view of “fares are cheap, quit expecting so much.” It isn’t expecting much to see your luggage travel on the same aircraft to the same destination you are going to.

Filed under: Airline Fees by ajax
1 Comment »

For the past two weeks, we have learned of a number of incidents involving sleeping on the job by air traffic controllers. Congress is outraged, Secretary of Transportation Ray LaHood is outraged and now we see people resigning over this as well.

It’s definitely a problem and it is definitely disappointing that so many incidents can be identified as happening so recently. Outrageous? Not necessarily. Anyone who knows the life of an air traffic controller in the tower is likely unsurprised.

It’s a hard job. It’s stressful, demanding and one mistake can put your entire career at risk. Duty time in this role takes a toll on people in ways that most experience rarely. These people experience it every time they go on the job.

What I find so distressing is that no one is asking the question: “Why are all those air traffic controllers so exhausted?”

Trust me when I say that these sleep events aren’t sheer laziness. It comes from odd schedules that leave controllers sleep deprived to such a degree that if they were truck drivers, we would pull them off the road. If they were pilots, they wouldn’t be allowed to fly. But since they are air traffic controllers, we just keep pushing them.

No one should be regularly experiencing this kind of fatigue in their job and certainly no one who is in position to affect hundreds of lives. And, by the way, NextGen air traffic systems aren’t going to solve this problem.

These controllers work very odd schedules that change day to day. They have no regularity and if you think a pilot’s life is irregular, just shadow an air traffic controller for a week. Rather than villifying them and firing them, we should be investigating these incidents in a manner similar to how the NTSB investigates a transportation disaster.

We need to ask for an unbiased, non-political, solutions based investigation that addresses all the problems with firm recommendations.

Instead, we’re trying to fire people and look good in the press.

Filed under: Air Traffic Control by ajax
2 Comments »

Southwest Airlines CEO Gary Kelly has said recently that he believes Southwest will want to keep Airtran destinations such as Wichita, KS in all likelihood.  He also added the caveat that until they can see the viability of these smaller destinations for themselves, a solid committment can’t be made.  That evaluation won’t take place until Southwest officially merges with Airtran.

I think Southwest got a peak at what their world could look like when they did their due diligence on purchasing Frontier Airlines.   I think they saw the viability of operating smaller aircraft with reduced frequencies to some of these destinations and I think Southwest wants in on that action.  It wasn’t just Atlanta that Southwest wanted when they looked at Airtran. 

Airtran has made it kind of specialty of theirs to develop routes to what I would term third tier destinations.  Those destinations are places such as Wichita, Branson and Des Moines.  Airtran serves quite a few small destinations with regularity but not frequency.  Some with subsidies and some without. 

Take a look at these cities and you’ll see opportunity that fits neatly within the Southwest system. 

1. Key West, FL
2. Bloomington, IL
3. Moline, IL
4. Des Moines, IA
5. Wichita, KS
6. Lexington, KY
7. Portland, ME
8. Flint, MI
9. Grand Rapids, MI
10. Branson, MO
11. Omaha, NE
12. Atlantic City, NJ
13. Rochester, NY
14. White Plains, NY
15. Asheville, NC
16. Akron-Canton, OH
17. Allentown, PA
18. Harrisburg, PA
19. Knoxville, TN
20. Newport News/Williamsburg, VA
21. Charleston, WV

Airtran has built up quite the business at these airports and all of them can be served by Southwest focus cities.  This is why Southwest keeps saying that the 717 has a place in the fleet for some time to come.  It’s an aircraft that can efficiently serve such cities (as well as their 737-500s) to feed traffic to major cities such as Chicago, Baltimore, Indianapolis, Atlanta, Dallas, Orlando, Washington, D.C., Tampa, Oklahoma City, Nashville and Milwaukee.

And serving such cities isn’t out of SWA’s experience.  Take a look at the third tier cities they serve:

1. Birmingham, AL
2. Little Rock, AR
3. Hartford, CT
4. Boise, ID
5. Louisville, KY
6. Jackson, MS
7. Omaha, NE
8. Manchester, NH
9. Albuquerque, NM
10. Albany, NY
11. Long Island, NY
12. Oklahoma City, OK
13. Tulsa, OK
14. Providence, RI
15. Greenville / Spartanburg, SC
16. Amarillo, TX
17. Corpus Christi, TX
18. El Paso, TX
19. Harlingen, TX
20. Lubbock, TX
21. Midland/Odessa, TX
22. Norfolk, VA

As much as SWA is concentrating on growth to larger, mainline cities, SWA still has a vested interest in serving those smaller third tier cities and towns.  Even more so today as they can feed that traffic to one of many focus cities and carry people onwards at a far better value than being offered by a legacy airline.

Filed under: Airline News by ajax
No Comments »

Some photographer taking an 11 hour flight to Paris from San Francisco via the polar route took time lapse photos of his entire trip.  During the “night time” portion of the trip, he caught the aurora borealis in its glory.  It is all well worth watching.

SF to Paris in Two Minutes from Beep Show on Vimeo.

Filed under: Trivia by ajax
No Comments »

Both the CEOs of American Airlines (Gerard Arpey) and Southwest Airlines (Gary Kelly) decried rising oil prices as a crisis at a conference in Dallas last week. 

“We’re all very worried about what’s happening in the oil market,” Arpey said. “If the economic recovery dampens, it won’t be good for traffic.”

It’s true that rising oil prices will again challenge airlines to earn a profit and it is also true that the volatility in the oil market(s) makes things very unpredictable for airlines.

However, we have created another problem within the airline industry that goes unrecognized so far.  We haven’t allowed a major airline to go bankrupt and liquidate since Eastern Airlines.  Instead, we’ve allowed continually bankruptcy reorganization that has permitted uncompetitive companies to become marginally competitive again for a brief period of time.  Some of those companies figured out that they had to change the way they did business (Continental) and some haven’t. 

Mergers haven’t really eliminated airlines.  They have re-branded them with a new name.  Delta didn’t eliminate Northwest, it absorbed it and it continues on today.  United didn’t eliminate Continental, it continues on today. 

The reason we need to permit an airline or two to truely fail is that the barriers to entering the airline market are exceptionally high.  When we prop up the legacy and SuperLegacy carriers, we make it an order of magnitude more difficult for new new, leaner airlines to enter into the market place. 

We also don’t regulate anticompetitive behaviour very well.  In this country, it’s perfectly acceptable to allow an airline to flood a route with capacity and below cost pricing to eliminate a new entrant from that route.  The consumer is hurt in two ways:  They see potential for new, low fares show up for a very limited time and they see an new, better airline potentially eliminated from the marketplace.

After more than 30 years, we still haven’t done anything about the anti-competitive nature of unions in the airline business.  The airline industry got deregulated but labor did not.  The current scenario makes change in rapidly changing conditions all but impossible for airlines facing higher costs elsewhere. 

I’m not in favor of eliminating unions but I am in favor of eliminating years long talks between airlines and unions on new contracts.   Billion dollar business negotiate mergers and consummate those mergers in as little as one or two years.  It can take far in excess of 2 years for a union and airline to come to an agreement on a new contract that by the time it is voted in, market conditions have changed again.

This puts both unions and airlines at a strong disadvantage in this industry.  It is as big of a crisis as any oil crisis at this point.  This industry has no agility and is constantly lagging behind changing conditions. 

It’s interesting to me that the only airlines who earn profits and who do negotiate things like high oil prices with any agility at all are the newer airlines who have contained other costs such as labor and equipment or those airlines who have figured out that working with their employees to get agreements quicker is the right business decision. 

A depature from the marketplace of a major airline would be healthy and good for the airline industry.  It would put executive teams at various legacy and SuperLegacy airlines on notice.  It would put unions on notice as well.  The status quo isn’t working and the industry remains fairly stagnant.  Legacy airlines inch along while low cost carriers earn money for investors. 

We now even encourage airlines to become even larger monolithic companies that are even harder to turn around in the face of trouble.  That’s our real crisis in the airline industry, not oil.

Filed under: Airline News by ajax
No Comments »