737 MAX

August 31, 2011 on 1:00 am | In Airline News | No Comments

Update:  Southwest says they are *not* one of the airlines commited to the 737 MAX.

It’s official.  The re-engined 737 is approved to offer and Boeing says it has more than 400 commitments to the new aircraft already.  We already know that 100 of those is American Airlines.

But who are the others?  I think it’s a no-brainer that Southwest Airlines is a player in this and I think the strange silence that has suddenly enveloped Love Field is an indicator. 

We also know that one of the players is *not* Delta Airlines since their recent order is for the conventional 737-900ER and while there aren’t conversion rights, don’t believe for a second that Boeing wouldn’t accomodate Delta if Delta wanted them. 

I think the next player is Ryanair.  Not just because they’re Boeing user but also because Michael O’Leary has been incredibly quiet lately.  Few things could keep that man quiet but I think an airliner deal is one of them.  I also don’t think that Airbus is a player with Ryanair.  Neither Airbus nor Boeing is going to be offering firesale prices on these new options but there two factors that offers Ryanair more:  Better fuel and operational efficiency *and* reliability.  The dirty little secret is that Boeing 737s do have a slight advantage on dispatch reliability over Airbus and that makes a big difference for an airline like Ryanair.

There’s a lot we don’t know yet about the updated 737s but one thing being studied is increasing the gross weight of the -9 MAX to be even closer in performance (range wise) the venerable 757s.  That would be an A321 killer.

I also wonder if we aren’t going to see raked wings vs winglets on the new designs.  Boeing already knows how to do them for the 737 (The new P-8 Poseidon has them) and they’re supposed to be better for the really long missions. 

It’s good to see some action on this that isn’t being forced by Airbus and I think we’ll hear about several big deals over the next few months.  Know what will be really fun?  Seeing the 747-8i Boeing livery on a 737 MAX aircraft.

Brazil and Pollution

August 30, 2011 on 1:00 am | In Uncategorized | No Comments

If US based airlines think the regulatory environment for them is tough here, they should consider Brazil.  A court in Brazil has ordered Brazil’s second largest airline, GOL, to plan a yet to be specified area with trees as compensation for the pollution its jets create.  It is expected that the other 41 airlines operating into, through and out of Brazil will receive similar orders.

If costs are a real issue. . .

August 29, 2011 on 1:00 am | In Airline Fleets | 4 Comments

then why haven’t we seen more purchases of turboprop aircraft for commuter and regional routes?  After all, they make sense in that they can offer block times comparable to regional jets for routes 500nm and less.  They can take off from less used runways and they have operating costs that are as much as 60% less than the equivalent regional jets.   They’re quiet and vibration free and cost less to purchase.  And they continue to be used for such routes in many other parts of the world.

I wish I could guess that the problem was scope clauses but it isn’t.  Most of these aircraft fit well within the existing scope clauses and I think pilots would accept more turbo-prop flying in their scope clauses if it was asked. 

I think the problem is inertia.  Airlines got away from turboprops as the first generation regional jets arrived and the customer feedback was exceptionally good.  What airlines lost sight of is that the turboprop world changed around the same time and for much the same reasons.  

It’s a marketing issue, I think.  Airlines haven’t figured out how to sell such a flight and I don’t know why.  I’m pretty sure that no one is going to shy away from a lower price and the airlines can offer a lower price *and* make more money with these aircraft. 

The one other obstacle is that it takes a leader to see the possibilities and adopt the model.  Airlines aren’t managed by leaders anymore.  They’re managed by finance men and finance men see the adoption of these aircraft as risk.  Why?  They’re afraid people will avoid them in favor of regional jets offered by others.

I maintain that it’s a price driven world out there and adopting these aircraft will allow an airline to lower prices, offer the same connections and earn more money.  Ironically, if one wanted proof of this, one only has to look at how Horizon Airlines has rejected the regional jet and flown its Dash 8 / Q400 aircraft in support of Alaska Airlines and made a nice patch of money doing it.  Stranger still, Horizon is using these aircraft for fairly long flights.   Some in excess of the 500nm mile advantage.

So the question is:  if costs are a real issue, why aren’t airlines working harder to use the right equipment and earn more?

Sunday Trivia: 50 Seat Aircraft

August 28, 2011 on 1:00 am | In Trivia | No Comments

We all know Bombardier’s 50 seat jets in the CRJ-100/200 series aircraft.   The CRJ-100/200 aircraft are actually derivatives of the original Canadair Challenger business jet and Canadair is the foundation of what became Bombardier’s aerospace division.

Can you name the first Canadair 50 seat airliner?

The answer after the fold: (more…)

Threats on a plane

August 27, 2011 on 1:00 am | In security | 2 Comments

Correspondent James Fallows of the Atlantic wrote this particularly sensible commentary on terrorism and threats on a plane in criticism of his own magazines story found here.  First, let me say that Fallows is dead on right.

After 10 years, we are still engaging in security theater in airports and on aircraft.  After 10 years we still cite “terrorism” as the reason to give up constitutional rights.  After 10 years, people, particularly in the United States, are still being ninnies.

If you’re actually thinking about threats that could originate from the extraordinarily improbably and what they mean to you as a passenger on an airplane, please do us all favor:  Don’t fly.

I’m not kidding.  Stay away from air travel.  You’re too stupid to act in common sense if there ever was an emergency.  You are, no doubt, the person who blocks people trying to exit a burning aircraft while you debate on whether or not to grab your laptop.

If you want to support being sexually assaulted prior to boarding an aircraft, you’re too stupid to juggle a single ball in the air.  And you’re unable to responsible evaluate threats in your life.

Mind you, I’m not telling you the highly improbable can’t happen.  It can.  However, the likelihood of you being a victim of a aircraft hijack is an order of magnitude less than the likelihood of you being the victim of a pigeon pooping on your shoulder.   Are you running around suspicious of a pigeon and its intent to do harm to your suit?

If you take the position that you have a real and tangible probability of experiencing terrorism in the United States, you could do everyone a very big favor by becoming housebound and staying out of everyone else’s way.  You’re an inhibitor of commerce, freedom and the ability to get off the damn airplane in a timely manner.

Delta’s Aircraft Approach

August 26, 2011 on 1:00 am | In Airline Fleets | No Comments

I have long liked how Delta (and Northwest originally) has focused on its aircraft according to both operational and capital costs.  The result of their ongoing analysis has found them keeping DC-9s (now due to leave definitively) far longer than other airlines as well as buying up MD-90s because not only do they suit their routes, their extremely cost effective to acquire and operate. 

I like the approach because they continue to analyze their costs with all available context and for both near and long term needs and adjust their approach with more granular control that most airlines ever consider exercising.  When it makes sense, they make a move.  In the case of the 757s that the recent 737-900ER order will replace, you can have confidence that that kind of analysis was done before ever issuing an RFP.

Not only does this make Delta a “smart” airline, it also signals to shareholders that a fiduciary responsibility is being kept in mind that is both healthy for the airline and healthy for the investor.  It’s an extremely rare attitude of “let’s run an airline that earn a consistent profit.”  After all, why be in business if you can’t do that?

How about that Delta order?

August 25, 2011 on 1:00 am | In Airline Fleets, Airline News | No Comments

Delta Airlines has decided to order 100 Boeing 737-900ER aircraft to replace aging 757 aircraft and I’m underwhelmed.  Supposedly the order was won on price and delivery positions and I buy that. 

What does surprise me is that this aircraft doesn’t quite have the transcontinental range one would want unless you buy them with 2 auxiliary tanks and then you’re talking about reduced cargo capacity.  I don’t think these are being purchased to replace *all* 757s and I don’t think this means that Airbus is out of the game for single aisle aircraft. 

I think these purchases are for high density, low fare routes that are being served by 757s.  I also think that Delta will manage its 757 fleet (one of the largest in the world) so that it maintains that kind of lift for some years to come.  That said, some of those aircraft are getting old and its time for them to go. 

In addition, I don’t think this order signals one thing when it comes to fleet planning for Delta.  I do not think it means that Boeing is still the preferred provider.  I do not think it means that Delta is going to harmonize its fleet more.  I think it simply means that Delta needed 100 aircraft with seating for about 180 passengers and that’s it. 

Any guesses are just that:  guesses.  I suspect that Delta remains in negotiations for replacement aircraft for other parts of the fleet and I think that that does not include negotiations with Bombardier for its CSeries aircraft.  Whatever second part of this single aisle order is, I firmly believe it will belong to Airbus or Boeing.

Another word on the SWA/Airtran Pilot Impasse

August 24, 2011 on 1:00 am | In Airline News | No Comments

According to the Dallas Morning News, Southwest CEO Gary Kelly says that as a result of the Airtran ALPA MEC decision to not have their membership vote on the proposed integration agreement, tens of millions of dollars in financial incentives are now off the table.

One thing about Southwest and its employees, even its unions, they all understand that to experience reward, the deal has to get done.

Apparently Airtran-ALPA didn’t take that into consideration.  What will be amusing is if Airtran-ALPA thinks that those incentives will go back on the table.  My guess?  They won’t.  Those incentives were for a quick deal and a smooth integration.  Southwest doesn’t pay for mediocre. 

No, really, they don’t.  And SWA employees know that.  I do wonder just how hard SWAPA tried to sell the deal to Airtran-ALPA.  I also wonder if there will be a backlash against Airtran-ALPA leadership at this point.  If I were an Airtran pilot and I had the opportunity to A) go to work for SWA and B) earn not just more money but a lot more money and C) I just lost my one shot at real financial reward for doing the deal, I would be pretty unhappy. 

Next up is mediation between the two parties and if that doesn’t work, then we see binding arbitration.  The longer this takes, the less Airtran pilots will see in reward.  Will there be a better seniority deal on the table?  I don’t know.  I’ve never been able to find out the details but I suspect that the deal only gets worse from here on out.  SWAPA approaches negotiations with a sense of honor and I doubt seriously they find Airtran-ALPA’s behaviour funny or very forgiveable.

Is ALPA being obstinate?

August 23, 2011 on 1:00 am | In Airline News | 1 Comment

We’ve learned that ALPA-Airtran has decided not to submit the pilot agreement decided upon between them and Southwest Airlines APA union weeks ago.  ALPA delayed their vote for several weeks and now it’s coming out that there will be no vote.

SWAPA (Southwest Airlines Allied Pilots Association) will be the controlling union when this merger is over.  ALPA has no chance of becoming the controlling union and ALPA has kind of allowed things to spin out of control more than once over the past several years (think US Airways pilot integration and what that resulted in.) 

SWAPA membership appeared to get slightly feisty upon learning the details of the agreement but quickly settled down and started voting.  ALPA-Airtran almost made me think of that husband who is afraid to go home and tell his wife he just gave some guy their life savings to start a restaurant.  It’s as if ALPA-Airtran leadership felt very timid about promoting this deal and really gave no indication as to why they would feel that way.

My thinking?  Well, I have wondered if national ALPA leadership isn’t feeling frustrated these days.  The US Airways thing didn’t go so well and the two chapters involved in the United/Continental merger don’t appear to be able to agree on what kind of coffee to have at their negotiations.  And let’s not forget their second failure to organize jetBlue as well. 

Furthermore, they got spurned and insulted by rogue elements in American Airlines’ APA and by all appearances independent unions or non-traditional pilots unions appear to be gaining strength at ALPA’s expense. 

So, did ALPA-Airtran get slapped at by the national union?  I would like to think that didn’t happen in light of the fact that its president is the very reasonable Lee Moak but Lee Moak is just one man in a forest of much more traditional union types. 

Let’s not forget that ALPA at both the national level and within Airtran have got little to lose by being obstinate.  The union leadership will not control the Southwest pilots and that is certain.  But there may be the hope that if they play extra hard in the SWA/Airtran deal, they’ll be perceived as doing their job by membership at other airlines. 

But there is a price to be paid for that behaviour.  That price, however, is exacted upon the rank and file Airtran pilots who arguably have quite a bit to gain from this merger in terms of benefits and salaries.  In addition to those gains, they have a lot to gain by going to work for an airline that has an excellent record of working with union leadership that is arguably very strong (SWAPA). 

So, I ask you:  Should the national ALPA leadership have a dog in this fight?  I think they have a duty to represent their pilots in this merger but I don’t know if they should have overriding influence on the negotiations either.  I suspect that had the agreement been put to a vote among Airtran pilots, it would have passed and the merger would have gotten on with getting done.  But that would have essentially put an end to ALPA’s ability to influence the merger or stay in the spotlight.

Airline Foreign Ownership

August 22, 2011 on 1:00 am | In Airline News | No Comments

Christine Negroni, blogger and journalist, has written that foreign ownership restrictions of US airlines is due for a change that would permit cross border mergers.  She points out that the five biggest airlines by market capitalization are *not* US based airlines but rather airlines such as China Airlines, Singapore, Cathay Pacific, China Southern and LATAM. 

The problem with her argument about market capitalization and how foreign ownership could drive that for US airlines is that it ignores a critical element in why those airlines have such high market caps.  They’re well run airlines in areas of the world where money have very few places to invest in well run businesses. 

The problem with US based airlines and their market caps is that they’re not well run airlines.  Foreign ownership doesn’t change that.  Trans-border mergers don’t change that either.  If you think a foreign airline is going to buy a legacy US airline and run it better, you’re kidding yourself.  Those same named airlines are interesting in that they also have access to a far lower set of costs in operating as airlines than US based airlines enjoy.  In addition, they enjoy density on their routes that few airlines do get to enjoy and they also enjoy a certain “protected status” in their respective regions that airlines in the United States don’t get. 

Furthermore, if you think that a merger between parties like American Airlines and BA/Iberia means that the BA/Iberia leadership runs the show, think again.   While BA/Iberia knows how to run a smallish network with a global long haul business, they don’t know how to run an airline in the very unique competitive environment that the US is.  American Airlines knows how to do both and they have something that very few other airlines have and that is the cash management know how for a theoretical combined unit enjoying $48Billion plus in revenues. 

Here’s the thing:  The US market is literally unlike any other airline market in the world.  Some markets see one or two LCC carriers and 1 or 2 legacy airlines whereas the US has 4 enormous legacy airlines that would compete on a revenue basis with any other airline in the world.  In addition, the US market has the largest LCC style carrier in the world with several other major LCC carriers in its market too. 

Furthermore, there is no other place with the kind of network flying going on that we see in the United States.  And the competitive market that represents is unyielding and brutal when compared to any other region in the world. 

The ability for foreigners to own a US airline or for a US airline to merge with a foreign carrier or carriers is not going necessarily improve the financial health of a US airline.

That said, I, too, think the rules should be amended as long as we preserve our strategic interests in having the airline system that we have.  The US airline system is a strategic asset worthy of preservation for both economic and defense reasons.  It’s a global marketplace but it’s not a globally ruled marketplace and that’s important to remember.  There are just a tiny handful of countries that enjoy that kind of transparent marketplace that we provide for ourselves and preserving our interests is not counterproductive to the airline industry nor US interests.

Sunday Trivia: Airline Mergers

August 21, 2011 on 1:00 am | In Trivia | No Comments

Delta Airlines merged with Northwest Airlines in 2008 (hard to believe it’s been nearly 3 years, isn’t it?) to form what was, at that time, the World Largest Airline.  That merger had some oddities to it in that the architect of the merger was Richard Anderson who, although was CEO of Delta at that time, had led Northwest in the past.  Coincidentally enough, both Delta and Northwest purchased iconic airlines based west of the Mississippi in 1986. 

Question:  Can you name the airlines that Delta and Northwest purchased in 1986?

The answer after the fold: (more…)

Delta sticks.

August 20, 2011 on 1:00 am | In Airline Fleets | 1 Comment

Delta has decided to stick with its plans to order up to 200 aircraft in 2011 says CEO Richard Anderson.  This despite the sudden economic turbulence and it’s the right move.

Delta has some right old aircraft on its hands.  It’s fleet average age is 12 years which isn’t as bad as American Airlines but it doesn’t tell quite the story either.  Much of its mainstay narrow body aircraft is *old*.  And they’ll only get older while Delta waits for deliveries to start. 

What comes in this order?  My guess is that we won’t see any game changer orders for any 2nd tier manufacturer such as Bombardier or Embraer.  This will be about replacing older A320s, 757s and MD-88/90 aircraft.  Those are the aircraft with older, less modern and less powerful engines that are costing big dollars in fuel bills. 

I do not see this being about 767s or regional jet aircraft.  Nor do I see Boeing 737 replacements coming on line either.  It’s unlikely that we see 747s retired in favor of others in this round.

So who are the players?  Airbus and Boeing, of course.  I’m not sure I see this as either company’s advantage either.  Airbus will be pitching the A320/A321 NEOs and Boeing will be pitching the 737s (new and old) and it will be tough to call this one.  I think who comes out on top in this order will be determined by who has slots for earlier deliveries of the more re-engined aircraft.   If Airbus has slots, it will get orders.  We know that Boeing has slots but order delivery dates are somewhat murky, in my opinion. 

I do not look for Bombardier CSeries or Embraer E190/195 aircraft to be ordered in this.  They’re smaller and Delta has that seat range covered right now. 

My best guess?  I tilt towards this being Boeing’s order.  I think it might be won on price and an opportunity to get re-engined aircraft just a tad earlier than Airbus.  However, I do not think that means that Airbus is out of the game on future orders whatsoever.  I just think that it may come in the form of a follow on order in the next year and may well include Airbus medium to long range twin aisle aircraft as well.

All Aboard

August 19, 2011 on 1:00 am | In Airline Fees, Airline Seating | No Comments

There have been several stories over the past few months about airlines once again playing with how they board people on flights in the hopes of speeding turning around flights.  Remember that if you can turn a plane around in 30 minutes vs one hour, you can literally change the profitability of that aircraft from bad to good for any one day.

Some airlines board from the back to the front and that was fairly common for a long time.  Others set groups that include people spread around in the passenger area which has been found to be “speediest” and then there is the SWA cattle call which has no assigned seating but which does prioritze boarding by group and with fees.

The typical load for a 2 hour flight in the US has roughly 140 passengers or more and for airlines offering two classes of service, I have a suggestion.  Board first class first and last (2 groups) and let them choose which they prefer to enjoy.  But here is the revolutionary in me:

Board economy class without assigned seating for any flights 3 hours or less.  The random nature of choosing your seat in that model lends itself to “spreading” the process out and there is a reason why it provides a faster turnaround for Southwest Airlines.  Put those in economy class into 3 boarding groups and just let the chips fly where they may but offer the opportunity to be in the first group for a fee.

Finally, board economy class with assigned seating for flights over 3 hours in duration and randonmize each group in economy class seating. 

There.  I’ve started the fire, go ahead, fan the flames.

737RE definition might be firming up

August 18, 2011 on 1:00 am | In Airline News | No Comments

Various media reports point to Boeing leaning heavily towards a “minimum” investment strategy in defining what the new Boeing 737 Re Engine would look like. 

That means an aircraft that receives enough modifications to handle the heavier CFM Leap56 engine with a reduced fan diameter which should make the 737 models roughly equivalent to the Airbus A320NEO with about 2% cost efficiency advantages over the A320NEO.

My problem with this is that it simply confirms the Airbus A320NEO as the right move and offers Boeing little advantage over the next 10 to 15 years and possibly puts it at a disadvantage over that time frame since there are fewer areas to incrementally improve performance of that airframe over time.   One example is that the 737 already has winglets (aka “sharklets” on the A320). 

In addition, this is the creeping incrementalism that we saw at McDonnell Douglas over nearly a 2 decade time period that led to their ultimate demise.  Aircraft manufacturers don’t win over the long term with derivatives and I’ll point out that there have been a total of 9 major derivatives of the 737 with several sub-derivatives of those as aircraft as well.  That’s an aircraft that has run its course without something game changing.

If it were to be a Re Engine strategy, it would have been far more encouraging to see Boeing design a new wing or a modification to the wing to bring additional gains.  It would have also been more encouraging to see a modification to the nose gear to permit a full on adoption of the CFM Leap56 and, possibly, even the addition of a 2nd engine choice (Pratt & Whitney GTF).   Yes, that begins to look like a new airliner but it puts Boeing firmly ahead in the narrow body game.

My own preference was to see Boeing make a move for an entirely new aircraft with introduction into service in 2018.  It would have been a difficult challenge but it is one that Boeing is in position to achieve.  It’s learning curve with new materials and design approaches has peaked. 

Offering that you couldn’t figure out how to immediately ramp up production to 40 to 60 aircraft a month is a somewhat lame excuse for backing away.  If you can build if efficiently at current production rates (in the mid 30’s per month), you can figure out how to build it at a 60+ aircraft rate when that time comes.

This, in some ways, smells like Boeing trying to maintain the older airliner to use as an replacement for aging military aircraft such as what they’ve done with the 737 in creating the Boeing P-8A Poseidon (replacement for the venerable P-3).   It’s notable that even that aircraft got a better wing in the form of having raked wingtips a la 767-400ER for longer duration, efficient flying.

My greater point is that you don’t win and you don’t grow as a company by playing “keep up” and playing it safe.  Airbus managed a coup by forcing Boeing’s hand and scaring them away from a new design.  Somehow, I severely doubt that a Boeing led by someone such as Alan Mulally would have adopted such a strategy.

American Airlines and TWU talks see negotiator departure

August 17, 2011 on 1:00 am | In Airline News | No Comments

The National Mediation Board is stepping away from talks between American Airlines and the Transport Workers Union and this is going to hurt both parties.  In addition, I think this is an indication of just where talks may go between American Airlines and its other unions.

The NMB said that “the amount of time expended in these mediated sessions, insufficient progress and insufficient hope for progress, the NMB could not justify scheduling future mediated sessions at this time. “

This could describe progress in union talks involving American Airlines across the board. 

Sadly, I think AA and its unions will continue to argue that its the other side instead of recognizing that failure to come to an agreement is badly damaging both parties.  American Airlines is hurt by the clear inability to bring a new wage and benefits structure to its operating model and employees are hurt by working under agreements that are diminished in value every year they go unmodified. 

I put the problem on American, however.  It’s the company’s duty to provide leadership to its employees whether they are represented by unions or not.  Ultimately, the buck stops with executive leadership and executive leadership isn’t finding any new ways to engage and lead their staff.

US Airways doesn’t get an injunction

August 16, 2011 on 1:00 am | In Airline News | No Comments

US Airways went to court to get an injunction against its pilots union for conducting a “safety campaign” designed to slow the airlines operations and put pressures on US Airways.  The judge didn’t grant immediate relief but he did something else that does signal that the pilots union would be well advised to reconsider its actions.  He granted a quick hearing date and refused to move jurisdiction to a union friendly US Federal Court in New York. 

US Airways “East” pilots (former employees of the airline before it was purchased by America West) seem to enjoy shooting themselves in the foot.  This isn’t an action that is likely to find patience with from a US Federal Court and it’s an unwise move in general.  You don’t sucker punch your own company smugly while demanding a new contract when you can’t even get half of your membership to go along with you.

Doug Parker and America West should have eliminated the US Airways name and signaled who the regime was when it bought US Airways.  Sadly, US Airways pilots (EAST) think they still work for the same old airline and in the same old airline industry.  It would be wise to take a look at what happened to American Airlines pilots’ union, Allied Pilots Association, when it did something similar more than a decade ago.  It cost them millions of dollars in fines after a “sick out” campaign that failed completely.

Random Acts of Coolness

August 15, 2011 on 1:00 am | In Airline News | No Comments

Southwest Airlines is entering the Atlanta area 3 months after the consummation of its merger with Airtran Airways with a low key campaign called Random Acts of Coolness.  The airline is sending employees out into the Atlanta area performing good and kind deeds such as handing out water to police and firemen and the general public.  $100 gift cards are being donated to schools.  Some employees spread out to area schools with gifts such as tote bags, pens, etc for teachers preparing for the new school year. 

Yes, it’s a marketing effort but it is also really how Southwest Airlines works.  Embracing the communities it serves is a hallmark of how Southwest wants to invite business.  It’s about the long term and investing in people locally. 

This is where it gets difficult for Delta because although that airline is known for its southern hospitality, Southwest practices a certain sincerity and humility in becoming a part of a community that is both hard to resist and hard to fight.

Sunday Trivia: Inflight Magazines

August 14, 2011 on 1:00 am | In Trivia | No Comments

It is standard for airlines to have inflight magazines  and many are actually quite good.  Can you name the airlines associated with these magazine names:

Domestic:

  1. Spirit
  2. Sky
  3. American Way
  4. Hemispheres

Foreign:

  1. High Life
  2. Discovery
  3. Morning Calm
  4. Holland Herald
  5. enRoute

The answers after the fold: (more…)

American Eagle Spin-Off

August 13, 2011 on 3:01 pm | In Airline News | No Comments

AMR, Inc., the parent company of American Airlines and American Eagle is doing everything it can to make the American Eagle Spin-Off successful.  More details are percolating to the surface and now we see that in addition to AMR taking on American Eagle’s debt and leasing aircraft at a nominal fee to American Eagle, it’s giving American Eagle a 9 year contract for flying that tapers off during that duration.

Right now, American Eagle performs about 90% of all regional flying for American Airlines in areas as diverse as the Caribbean, Canada and throughout the United States.   That will slowly end as American also gets the right to withdraw flying by aircraft type over the length of the contract.  In theory, this lets both parties have an orderly transition and it doesn’t preclude American Eagle from winning that flying back in a competitive bid for the contract.

Regardless, it’s hard for me to imagine American Eagle flying off with success.  The airline is burdened with aircraft ill suited to competitive flying against other regional airlines and its labor contracts are some of the most generous around.  Furthermore, just how far AMR is going to divest itself from American Eagle is an indication of just how difficult it is to sell the airline and if no one wants it, there is a reason for that.

Tax Holiday didn’t intefere with capacity planning

August 10, 2011 on 1:00 am | In Airline Fees, Airline News | No Comments

The Cranky Flier wrote on Monday that the “tax holiday” on airport taxes caused by Congress’ inaction on funding the FAA might have caused capacity planning problems for airlines and that it was therefore sensible that airlines would raise fares to close that gap to maintain predictable demand. 

What the hell?

In addition to sounding like an apologist for airlines, that post may well ought to be a candidate for his own Cranky Jackass award. 

When reading his blog entry, one gets the sense that this brief pause in taxes would have sent airlines into a major tizzy when it comes to capacity planning for the winter season.  I assure that that was not a fear and that airlines are quite a bit more flexible than that. 

It was obvious that the brief elimination of those taxes was just that:  brief.  That meant that for a brief period in time, a rise in demand would not have overwhelmed their aircraft or flights in any major way.  More to the point, while airline demand is price sensitive, it isn’t *that* price sensitive.  If it were, airlines would be able to fill aircraft 100% by offering just a week or two of sales going into the next season.  And it wouldn’t take a big sale. 

But we know that airlines don’t experience such opportunities and to suggest otherwise and justify what was, at best, a greedy move is just wrong.

While I do not like the move on the part of the airlines, I’ll also say that that they were free to do it and they’re also free to experience the negative press from doing so.  I don’t think they should “hold it” and give it back to the FAA either.  This is business, they made their move and it wasn’t illegal or sneaky but it was greedy. 

The point made by more than a few Congresscritters that airlines have been grousing about taxes for years saying they depressed demand and now they’re enjoying the largess of the absence of those taxes was also valid.  But airlines like to bitch about those things that directly affect their demand and never seem to pound on the table over taxes that affect travel.

You’ll never hear an airline scream about the taxes on rental cars and hotel rooms imposed by municipalities and states.  And, yet, those taxes are far more egregious in many cases than any airline tax.

Taxes are necessary and they are what pay for our infrastructure.  Complaining about them doesn’t make them any less necessary.

But back to my original point:  Cranky’s argument is disingenuous at best and far beneath him, in my humble opinion, compared to the body of opinion he’s shared over the past many years.

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