Airlines are upset at new taxes and fees proposed in the United States and have protested them vigorously in public media and by even handing out barf bags urging people to contact their Congressmen.  Their main contention is that rising taxes will hurt demand and cripple their businesses.

They’ve also raised fares twice in the last 2 weeks.

No one ever said airlines were politically smart.

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There are few airlines in the world that have been operating for nearly the past century but they exist. 

Who is the oldest continuously operating airline the world?

Who is the oldest. . . period?

The answers after the fold: (more…)

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When you’re flying an airplane and the speed in the air starts to slow for whatever reason, you are actually supposed to push the stick rather than pull up.  Pushing the stick gives you some forward air speed and forward air speed is security for a pilot.

The one thing you do not want to do is nose the aircraft over completely and nose dive into the ground.

Running an airline is a lot like flying an airplane and I’m afraid that Alan Joyce and QANTAS might have just aimed the nose of their aircraft, QANTAS, towards the ground.  

There is such a thing as taking a stand against labor actions and it can be a smart thing to do.  However, grounding your fleet to teach your employees a lesson really is a bit over the top.  Furthermore, hoping that your government will step in and make your employees play nice again is a bit optimistic. 

Oh, the labor actions may get stopped but now you’ve destroyed any good will you might have had as an employer.  You’ve pissed off tens of thousands customers and you lost millions of dollars.  If you are a shareholder or, say, a member of the government, what do you do?

Get rid of the polarizing figure in this mess.  That’s what.  You won’t necessarily fire the board itself but you can make a point by placing them under immense pressure to rid themselves of someone who can’t make a deal.  I think Alan Joyce isn’t long for this world as CEO of QANTAS.

Filed under: Airline News by ajax
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Richard Aboulafia of the Teal Group has criticized Boeing and Airbus plans to ramp up production on their single aisle airliners and the man has a strong point.  Current demand isn’t from growth, it’s simply from the need to replace aging airliners and the thoughts of ramping up production to 50+ per month does smack of hubris. 

Some airlines do desperately need newer, more economical airliners.  American Airlines is a great example and they’ve made their order.  However, what makes sense for AA doesn’t necessarily make sense for another airline.  Take Delta, for instance.  Delta has a fairly mixed fleet with both Boeing and Airbus products.  What it doesn’t really have anymore is that 70’s/80’s fleet of aircraft with really inefficient engines a la MD-80s and what it does have in that category, it’s getting rid of fast.

But what about the MD-90s, you ask?  Check out what engine is on that aircraft.  It’s an IAE V2500, the same that is sold today on the Airbus A320 series.  What Delta is keeping isn’t nearly as old and inefficient as you think and the aircraft are far less capital expensive than new aircraft are.    Simply put, Delta is replacing exactly what needs replacement and not buying one aircraft more than necessary.

Other airlines are evaluating the options for what they need in the next 15 to 20 years.  Southwest has a fairly new, fairly efficient fleet of 737s and it will want to keep buying new aircraft, too.  But what does it need?  Right now, it needs the 737-800 and it needs it now rather than later.  It needs replacement aircraft for the remaining 737-300/500 aircraft in the fleet and that is being achieved with 737-800s (which  replace 737-700s which then replace 737-300/500 aircraft.)  But does it need the 737-MAX?

Well, yes and no.  It needs the MAX but the airline also is put into an odd position in that it is likely faced with the following scenario:  It will maintain a large fleet of NextGen 737s for the next 10 years or more.  If it buys the 737-MAX, it will need to hold onto those aircraft for about 20 years.  Assuming it can take deliveries in 2017, that means the MAX stays in the fleet for as long as 2037 or longer.  However, Southwest knows that a new single aisle airliner will be available around 2025.  That’s the airliner that it really needs to go deep on.  So, at best, the MAX is an interim solution for airines like Southwest (and Ryanair and others) and you don’t go deep on interim solutions. 

The same is true of the A320NEO.  For most airlines, going deep on the A320NEO is the wrong decision.  Well, for the committed Airbus customer, going deep on the A320NEO isn’t quite as foolish because it is fairly obvious that Airbus *won’t* have a replacement for the A320NEO as soon as 2025.  More likely, Airbus wouldn’t roll such an aircraft out until 2030.  This is why you’re seeing fairly strong orders for the NEO from existing Airbus customers. 

Right now, both manufacturers have deep, deep order lists.  They want to extract as much value from those right now as possible because they know that as soon as they do introduce new airliners, those orders will change quickly.  The market will become flooded with cheap, relatively new “classic” single aisle airliners with a new single aisle airliner introduction.   When the market is flooded with those aircraft, the manufacturers have a much harder time selling customers into their newest and best.   So they want to slim those lists down as much as possible right now. 

The folly is that ramping up production comes with fairly high costs and the only way to justify those costs is to be able to show that you’ll have an order list that will sustain those high production rates.  The manufacturers think the NEO and the MAX will garner enough orders to justify those production rates.  That’s the part that is suspect.  Yes, initial orders are high(ish) but consider this:  Annual production of the 737 and A320 already exceeds 800 aircraft a year.  That’s a lot of aircraft and it wasn’t that long ago when Boeing and Airbus could hardly find a buyer for the planes they were producing.  I’m talking about 2002/2003 time periods which were a result of September 11, 2001 attacks that reduced air traffic dramatically and killed the finances of airlines around the world. 

So, is a growth to 40 aircraft plus or minus a month justified?  Probably.  Almost certainly.  Is growth to 50 or more per month justified?  No and I don’t think the manufacturers are going to commit to that presently.  Right now, Boeing can reach to the high 40’s without too much trouble.  Airbus would struggle with that without making a much larger investment in a new line (such as in the United States.)

The A320NEO and 737MAX aircraft are interim solutions.  That’s it.  Initial orders will reflect some pent up demand to replace aircraft but it’s unlikely that the pace will continue in a sustained manner.  In fact, airlines are being much more prudent in their orders by ordering a few here and a few there to just keep pace with their conservative needs.  We won’t see a need for production rates at 50 or more per month until a manufacturer gets off its duff and builds a new single aisle aircraft.

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One result of the consolidation that has gone on in the US airline market is that we have 3 SuperLegacy airlines with each roughly the equivalent of each other in size and revenues.  Each of those SuperLegacy airlines has both fortress hubs as well as hubs in extremely competitive markets.  I speculated that the result of these mergers would actually be more competition rather than less in major markets because that’s where the money is.

American Airlines has a plan that involves channeling 98 to 99 percent of its traffic through one or more of five “cornerstone” markets:  Dallas, Miami, Los Angeles, Chicago and New York.  There are just two fortress hubs in that mix today:  Dallas and Miami.  Los Angeles and New York are highly competitive markets for all airlines and Chicago is a major hub for both AA and United as well as being a strong focus city for Southwest Airlines. 

Delta Airlines retains its strength in Minneapolis (fortress hub), Detroit (fortress hub), Atlanta (fortress hub + LCC carrier encroachment), Salt Lake City (fortress hub) and competes aggressively in New York and Los Angeles.

United Airlines has its focus on Houston (fortress hub), Chicago (major hub with AA and Southwest), Washington DC Dulles (fortress hub), Denver (fortress hub + LCC),  San Francisco (hub) and competes strongly in the New York City and Los Angeles markets.

It’s not hard to see who the loser is here.  American Airlines has the highest costs and suffers more competition in more of its focus cities.  Even in Dallas, a fortress hub if there ever was one, American Airlines gets to face increasing competition from LCC carriers at DFW who’ve identified exceptionally high fares on cities they can serve and they face increasing competition from Southwest Airlines at Love Field particularly in 2014 when the Wright Amendment essentially goes away.  Miami is strong revenue wise but will never serve as a convenient hub for the rest of the United States.

The only way these airlines continue to grow is to make inroads in these competitive major markets.  Their established dominance leaves little low hanging fruit to explore.  If one were feeling predatory, an airline such as Delta would begin to focus on cities such as New York City, Los Angeles and Dallas.   So far, Delta has engaged with the competition in the first two cities.  Why do this?  Because American Airlines can no longer afford to fight sustained battles on its home turf on price and its service product is at least a generation behind the other two SuperLegacy airlines. 

In fact, I would maintain that engaging American Airlines in the DFW area could yield great success over 2 or 3 years.   American cannot fight that kind of engagement off on price alone.  It doesn’t have the service product it once had and its regional airline is one of the worst in the country at this point.  There is a reason why Virgin America and Spirit Airlines have shown up there.  There is a reason why Lufthansa is doing well with flights to Germany there and there is a reason why Emirates smells an opportunity there too. 

The weak animal in the forest is American Airlines.   If Delta and/or United can work up a sufficient warchest, competing for AA customers in its cornerstone markets can provide growth.  But they aren’t immune to encroachment themselves.

Both airlines suffer competition from LCC carriers and, in particular, Southwest Airlines.  Look at where SWA is now a viable and cost effective alternative to the SuperLegacy airlines.  Los Angeles, San Francisco, Phoenix, Denver, Dallas, Houston, Chicago, Washington D.C., Atlanta and New York City (3 airports currently).  Southwest can provide price competitive fares, an equal or better economy service product, an equal or better ontime record and flights that are just as convenient if not more convenient at the end of the day. 

Southwest achieves that while also serving what I would describe as 2nd and 3rd tier cities.  Cities such as Kansas City, St. Louis, Nashville, Salt Lake City, Las Vegas, Lubbock, Little Rock, Indianapolis, Pittsburgh. Albany, Buffalo, Norfolk, Seattle. . . you get the idea.  And they serve these cities with a better offering than most SuperLegacy airlines.  In fact, Southwest tends to not just get the most frugal passengers but also the most value oriented passengers.

What’s different between those two?  Frugal flies the cheapest flights . . . period.  Value oriented passengers pay for the most bang for the buck.  A value oriented passenger pays a premium price for a fare that lets them travel efficiently, comfortably and without fees.   He or she doesn’t buy the cheapest fare.  They buy the SWA business class fare because it is hundreds of dollars less than SuperLegacy fares, doesn’t nickel and dime them and provides convenience they can no longer get from other airlines. 

They do well with those passengers in their focus cities but they do really well with those passengers in those 2nd and 3rd tier cities.  Do the math:  Fly on AA from Little Rock on an MD-80 or regional jet in cramped quarters to a hub or fly on Southwest on a more comfortable, newer 737 and direct to your destination. 

Those cornerstone strategies used by SuperLegacy airlines are heavy weights hung around their necks.  First they’ll survive at each other’s expense and then they’ll all suffer at the hands of the more convenient LCC carriers.

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There is a bit of hot talk again about more consolidation among US airlines as a result of American Airlines (AMR) President Tom Horton responding to a question about whether or not they included in such a consolidation.  He replied “Yes, it could.”

Does it mean they’re actively seeking a partner?  No, it does not.

I suspect that Horton’s response was more off the cuff than anything and simply not closing doors on the idea.  I do not think the current management team is seeking that kind of consolidation simply because it really does mean that many of them must go. 

Does it mean US Airways is a suitor to American Airlines?  No, it does not.  Even Doug Parker realizes that American Airlines tends to simply buy companies to shut them down from competing with AA.  He knows that the management isn’t about to give up the reins in a merger of equals and he knows that they are the one airline that has far bigger problems than US Airways.

Mind you, I continue to think that AA could stand a dose of US Airways management.  But a merger doesn’t begin to look attractive until there is a deal with the various labor groups and one can see what the financial impact is of those deals. 

In short, I don’t think there will be anymore consolidation in the near term (12 to 18 months).

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Southwest and other airlines took a bit of a hit in their fuel hedging over the last quarter due to lower than expected oil prices.  This resulted in a loss for SWA that otherwise would have been a profit and the loss is a paper loss at that. 

In reviewing the company’s performance as well as taking a view on the near and medium term future, CEO Gary Kelly actually sounded downright positive on the whole.   With some emphasis on caution, Kelly seems a positive future for Southwest and says that business bookings have remained stable and revenue growth is downright sweet. 

Good to hear. 

What I haven’t heard yet is a plan for handling the issues a 600+ aircraft airline should be doing with excellence.  For instance, why not illuminate folks on what the plan is for a new reservations system that will accomodate things like, you know, code shares that you have with partner airlines. 

Where will Southwest grow next?  The Airtran purchase is growth but not growth beyond the two combined companies.  In fact, we already know that there will be some contraction as a result of that purchase.  What’s the next Southwest adventure when it comes to routes?

And what is Southwest doing to prepare itself for 2014 in Dallas?  Dallas is a metroplex area with more than 6 million people in its catchment area.  Southwest manages to capture a nice portion of the eastern half, yes.  But in 2014, the gloves come off at Love Field with respect to non-stop flights to destinations in the continental United States.  Southwest will be restricted to operating from 16 gates at Love Field and that is not enough gates to serve everywhere people in the DFW area want to go.   (We’ll talk about this later this week.)

Southwest is an airline that generally keeps quiet until it really is ready for an announcement.  But this is *not* a small airline anymore and there is precious little conversation going on as to how SWA will manage itself in the future.

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Conde Nast has named Open Skies the best small airline.  This may well be true.  It is a small airline and getting smaller, not larger.   OpenSkies is the French(ish) airline set up by British Airways when an Open Skies treaty between the EU and the United States became a reality.  The airline is an all business class airline flying transatlantic routes between Paris and the United States using 757 aircraft.

If you are wondering if that business model sound familiar, it does.  This was the model for MAXJet, Silverjet and EOS airlines.  And, no, neither of those airlines are around today. 

What’s worse, OpenSkies is contracting as an airline rather than expanding.   At one point it was flying from Amsterdam and Paris in Europe (now down to Paris) and to JFK, Newark and Washington D.C in the United States.  However, after this month, there will only be flights to Newark.   In short, this is a quickly evaporating airline. 

And now we come to why I really dislike “ratings” from travel magazines and websites.  What good does it do to make such an award to an airline that flies one route and which is clearly about to fold into itself?   The landscape is littered with airlines that delivered “exceptional” service and then nose dived into the ground.  It’s disingenuous at best to be calling an airline such as OpenSkies a “best” in anything regardless of how much their onboard iPad made your socks roll up and down in excitement.   It is a disservice to the public.

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30 years ago and in August of 1981, the air traffic control union, PATCO, engaged in a strike contrary to federal law and found itself dissolved and most of its membership fired from their jobs.  I still have strong memories of my own father spendings days at Braniff’s operations center trying to decide which flights would get cancelled (He was an EVP of Braniff at the time.)

Question:  What famous attorney led the formation of PATCO and what presidential candidate did PATCO endorse in the 1980 election?  The answer after the fold: (more…)

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Southwest Airlines CEO Gary Kelly has decided to engage and fight a newly proposed fee of $100 per flight proposed by the current administration.  For details on his point of view, read THIS and THIS. 

I couldn’t agree with him more.  I think such increased fees are burdensome for an industry that benefits *all* citizens and businesses in the United States.  Whether you’re an infrequent or frequent traveler, you still benefit from a transportation system that makes quite a few parts of our economy successful. 

I also think that such fees imposed on travelers (directly or indirectly) is akin to treating them as having deeper pockets than the rest of the country.  That couldn’t be farther from the truth.  Some taxes and fees are quite reasonable and should be expected.  In light of the debt this country is in, I absolutely think we need to raise more revenues through more taxes and fees. 

I do not, however, think it is effective or smart to push burden off onto a class of people who have a weak lobby in Washington.  This goes a bit too far and it should be pulled off the table.

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United’s ALPA union has elected a new leader to replace current chairman Wendy Morse.  His name is Jay Heppner and his statements upon winning (Morse didn’t run for re-election) don’t lead me to believe that things will be better in getting the United and Continental pilots to agree to something. 

Heppner sees this as being about a new contract and it is no secret that United’s ALPA see the new contract and integration being about getting big, fat raises.  That’s a non-starter with United and, in particular, it is a bit insulting to the Continental pilots who upon integration, really do lose a bit of power as there are far more United pilots and many are far more senior than Continental pilots.   Continental pilots have largely been smart and pragmatic about the new world order in the airline industry and really don’t deserve to be impacted by recalitrance.

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American Airlines parent company AMR has announced losses again.  This time, despite an arguably very strong industry third quarter, AMR has losses of about $162 million.  $50 million of that resulting from hedging and foreign currency devaluations. 

There is no surprise here. 

Even when CEO Gerard Arpey responds that the carrier is “. . . taking aggressive actions to improve the company’s performance and strengthen its foundation for long-term success.”  He also says:

“We have put in place many of the critical building blocks for a successful future, including a strong network and alliance partnerships, accelerated fleet renewal plans and innovative products and services to enhance our customers’ experience.”

The problem is the stark contrast between AMR and other major legacy airlines’ performance.  In addition, it’s clear that AA’s competitors are not permitting their costs, especially labor costs, to rise and lessen the differences between them and AA.

The other problem is the perception that AA may have waited to long to get aggressive on responding to its problems.  They have allowed labor contracts to fester.  When other airlines dumped fuel hogs, AA waited 2 more years before getting aggressive on fleet renewal.  Other airlines continue to be more aggressive on capacity management.  American hasn’t engaged in developing its international flying aggressively in stark contrast to airlines such as Delta and United. 

I think analysts see a a “perfect storm” of consequences gathering on the horizon.  The only thing that keeps them from howling about it too much is the rather large cash holdings AA still has.  Unfortunately, those just eroded another $163 million which isn’t a trivial sum of money.

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Southwest pilots have been briefed by management that there really is a Plan B if Airtran and SWA pilots cannot come to an agreement on merging seniority lists.  Plan B is to keep Airtran as a separate entity and that would not be good for Airtran pilots (or other crew.)

There is a perception that Southwest is a friendly and nice company and, by and large, they are.  However, what people often forget is that Southwest is quite capable of making swift, hard decisions in the face of adversity. 

What Airtran pilots’ union didn’t consider is that playing coy on the first agreement and refusing to send it for a vote unintentionally signaled to Southwest that there may be adversity on the horizon.  Indeed, I would imagine that quite a few Airtran pilots are now fairly peeved at their leadership since the first agreement was more beneficial in terms of pay and seniority than what is on the table now.  Southwest’s message to Airtran pilots is this:  the deal doesn’t get better the longer it takes, it gets worse.

What’s the worse case scenario?  Plan B.  The unspoken part of Plan B is that Southwest can slowly diminish the size of Airtran over several years, transfer equipment (i.e. aircraft, gate space, etc) over to SWA and ramp up to take over Airtran flying over the next several years by hiring new pilots and crew that fit within their standards. 

In other words:  Want to keep your job?  Well, after this round of negotiations, the deal is that you get to interview for your job at some point.  If you successfully interview, you’ll join SWA at the lowest run in seniority and at reduced wages.  It will still be one of the most secure jobs in the airline industry but those people will have to reset to the beginning again and earn their way upwards once more.

Is Southwest that cutthroat?  You bet.  Is this a negotiating tactic on the part of SWA?  Yes but it comes with the knowledge that SWA really will act on its Plan B unlike some airlines.   Either way, SWA gets what it wants from the Aitran purchase and the worst case scenario for them is a stretched timeline for achieving all the benefits from the purchase.

Is this a gun held to Airtran pilots’ heads?  Well, no, not exactly.  They’re free to choose their destiny.  However, Southwest isn’t an airline that can be bullied and its pilots’ union isn’t either.  That’s the difference in this situation.  There is nothing to gain by being recalcitrant.   Even if Airtan pilots tried to strike (and remember that that can take years before the National Mediation Board gives permission), Southwest can move in and take on that traffic without much impact. 

What defies my imagination is how Airtran pilots (and other crew) think there is a better deal to be had than getting a payraise, decent seniority and the most secure job available from US airlines.

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There is a report that Etihad is interested in purchasing the Irish Government’s stake in Aer Lingus.  When the government announced its interest in selling its ownership of Aer Lingus, it said it would do so for no less than 1 euro per share. 

A 25% stake in Aer Lingus doesn’t turn those green aircraft gold, however.   There is the little matter of Ryanair holding an even larger stake at almost 30% of Aer Lingus.  Would Ryanair sell it’s stake?  Yes, it think it would if the premium for the shares was right.  It certainly is the way for Etihad to control the airline quickly. 

What is in it for Etihad?  Well, I’m not sure I see the value.  I do not think that Etihad can operate in Ireland using Etihad for a brand.  I do not think that Etihad will have any more luck than anyone else dealing with the dysfunctional groups involved in Ireland’s airline industry.   No one else has had luck so why would Etihad? 

As an investment, it only works if costs can be lowered and management is able to work with the powerful Irish unions.  Ryanair may make a lot of noise for publicity’s sake on this subject but it doesn’t mean they are wrong.   If it’s about slots, even into Heathrow, there are less risky ways to obtain slots.  If it’s about obtaining aircraft, there are less risky ways to obtain those too.  At the end of the day, I don’t see what Etihad wins from this in light of Aer Lingus’ position in European aviation or transcontinental flying.

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When I think about various labor negotiations going on in the airline industry, I become fairly sure that the issues are fairly close to the same for everyone.   If you ask most people what they want from their job, they’ll generally respond with a desire for their work to be valued more now than 10 years ago, an opportunity to play a role  in their destiny, job security or even just the opportunity to not look over the shoulders for a while.

The order of priority is different for each person, of course, but at the end of the day, it’s about their role being valued.  I could spend days writing about how an airline such as Southwest injects this into their culture but they really are the exception to the rule.

American Airlines is negotiating furiously with its pilots this weekend and I wonder how that has gone for both sides.  I would imagine that for the pilots, the goals are better wages, a retirement that has some security to it, opportunities to rise within the seniority system and leadership. 

For the company, I would imagine the goals are better productivity, fewer obligations to a pension system that is unsustainable in the long run and the opportunity to introduce change quicker in response to a market that changes weekly in this era. 

Ironically, I suspect they are not far apart in their goals but how each perceives a win is probably very, very different.  American Airlines “wins” by being able to announce an agreement that offers them greater flexibility and predictable costs that are now worse than the industry average.  The company must show shareholders, investors and the financial world in general that they have a sustainable operating model for the future or the leadership involved will be asked to leave.

Pilots achieve a “win” very differently.  At AA, the pilots are a very senior group and when you reach a certain age, you want life to be just a little bit easier, not more difficult.  They’ll want better wages, a high degree of certainty when it comes to their retirement and schedules that aren’t so bruising. 

One of the biggest obstacles in this scenario is seniority.  The seniority systems closely ties pilots to the airline and makes it very damaging for a senior pilot to leave the company at any time before retirement.  Those who have tens of years invested in it don’t want to see it gone. 

Seniority systems also tie pilots to flying that they often do not like.  Pilots are humans and some enjoy doing just a few long but punishing international flights and some would actually prefer to spend 2 or 3 or 4 days doing domestic turns but sleeping in their beds more often. 

Even if you didn’t get rid of the seniority system, it would be helpful if pilots weren’t paid by the size of aircraft they fly but, rather, purely on seniority at the company.  The work involved with flying a 777 or an MD-80 is actually really not much different.  It isn’t more work to fly a twin aisle vs a single aisle airliner.  Sometimes it is different work but it isn’t “more”. 

Frankly, it would be to the advantage of safety if we could get more grey hairs flying those domstic single aisle airliner flights.   They’ve been there and done that in more circumstances and know the pitfalls better than any junior pilot does. 

Wouldn’t it be more interesting if a pilot were able to choose his destiny without having to take  a penalty because he or she doesn’t enjoy flying 777s to India and actualy prefers flying from Dallas to New York City and back more often? 

A win here would be to decouple seniority with aircraft type.  Let pilots choose what they want to fly without penalty.  Let them match their preferences to a situation where they feel they have a strength rather than be tightly bound to a style of flying they hate. 

Stop forcing them to upgrade to new aircraft and even from First Officer to Captain.  Does it really matter if a man prefers to stay a senior FO to becoming a junior Captain?  It really doesn’t. 

My suggestion here is that it would be better for both parties to quit trying to hammer square pegs into round holes.  Find ways to let pilots do the kind of work that best fits them without financial penalty.  Instead, ask for more productivity within that work and build schedules that allow pilots to achieve their monthly hours without having to be away from home for 15 to 20 days per month.  Offer incentives for those pilots to live inside their base. 

Make it possible for pilots to live a productive and rewarding life.  The happier and more rested they are from a schedule that does work for them, the more productive, safe and agreeable your workforce will be. 

It would be great to see both unions and airlines think outside of the box on these issues.  Find a way that makes both sides happier with their circumstances.  Refuse to give into inflexibility.  Be fair and trade a happier life for more productivity.  Ask for opportunities for “fence off” a portion of flying to test different work models and find those that do work for both.  Experimentation is what both sides need and it will offer the chance for both sides to try something new without having to commit to a change for years and years. 

Identify styles of flying and group them into schedule groups that pilots can bid into.  Pay pilots a wage based on seniority but not on aircraft size.  Pay pilots a bonus for living at their base instead of commuting.  Pay another bonus for taking on productive schedules.   Offer the opportunity to go fly the same aircraft in a very different setting for a limited period of time so that pilots can explore what works for them without having to make decisions that could affect them and their families for years. 

Find a way to make your people happy and you’ll find that the “costs” involved with that are far less than the costs that come from cranky pilots who are forced into demanding more money just because they feel so trespassed on by being made to fly schedules and aircraft they do not enjoy.

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Now that the 787 is being delivered to customers, let’s ask a question:

In what year did Boeing announce the 787 and what was its original designation at that announcement?  The answer after the fold.

(more…)

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Just a couple of weeks ago, I realized it had been quite some time since we heard something outrageous from Michael O’Leary.  Sure enough, he’s back.

This time he’s beating the drum about toilets but with a twist.  O’Leary claims that they’ve proposed removing 2 of 3 toilets on its 737-800 aircraft which would permit them to seat 195 passengers  instead of 189 at present.  He claims it would save passengers about 5% on air fares.

Let me first point out that we’re talking about a savings of about $4.00 on an $80 one way fare.  That said, I’ll admit that O’Leary is right in that price is king and having the lowest prices has been a very successful model for Ryanair.

I’ll also point out that Boeing has to get such a configuration certified for the airliner and that can be a very costly proposition. 

Will O’Leary get his way?  I kind of doubt it.  At least with respect to the toilet proposal.  Furthermore, what do you do when you have a toilet go out of service on an aircraft at remote station?  Fly without?  That might be asking for more trouble than it’s worth.

But he did get his way.  He got you and me and the world media to pay attention to Ryanair again.

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China Southern received their first Airbus A380 and I learned something a bit surprising.

That was the 17th delivery of the year and the 58th Airbus A380 to be delivered.  For the record, I think that Airbus might have just got its act together on the A380 now.

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Engine manufacturer Pratt & Whitney solved a big problem by buying out Rolls Royce from the International Aero Engine consortium for $1.5 Billion.   Pratt gets to take control of its destiny for engines made for single aisle airliners and Rolls Royce gets to make money from manufacturing them. 

What changed?  For a pittance (even at $1.5 Billion), Pratt & Whitney no longer has Rolls Royce blocking the IAE consortium from adopting Pratt’s Geared Turbo Fan.   But Rolls Royce continues to make money from the consortium by manufacturing the current IAE V2500 engines.  P&W bought Rolls off and it was a good deal at twice the price.

This gives Pratt control of pricing for both the V2500 engine as well as its Geared Turbo Fan engines in the Airbus lineup.  It can present a financial business case as advantageous as CFM’s with the Leap and Leap56 engines.

It makes sense for Rolls who has never been a big player in engines for single aisle airliners in that it keeps their hand in the mix but lets them move on and focus on their lineup for twin aisle aircraft.  It’s notable that P&W hasn’t had a real good core strength in that market for 10+ years now.  Each gets to focus their efforts where they are successful and, more importantly, each gets to compete against GE who has good strength in the CFM lineup as well as in the GEnX and GE90 engines.

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Just when you think that nothing will move at American Airlines except at a glacial pace, there is a hint of movement.  American Airlines and its pilots union, APA are engaged in intensive meetings and AA has expressed a desire to the Allied Pilots Association to conclude negotiations this week. 

No, you didn’t read that wrong.

The desire is a good thing.  However, temper that with the fact that we don’t really know how good the lines of communication are between AA and the APA.  Just because desire exists doesn’t mean that one side or the other is prepared to be satisfied with what is offered.  But it’s nice to hear it expressed.

The APA has called a board meeting for this weekend in order to be ready to respond to anything arising out of the negotiations. 

Of course, as soon as APA President David Bates communicated with the membership, the dysfunctional portion of the APA got itself fired up immediately by speculating that several board members would refuse to attend the board meeting to deny a quorum.  Others insisted that the APA and AA are miles apart in any deal. 

I criticize AA quite often for not concluding new deals with its labor.  I’ll continue that criticism until its lethargic pace changes.  However, I’ll also criticize the Allied Pilots Association for acting like a pack of sophomore girls in high school.  It’s distressing to see the sabotage that takes place from time to time by the “hard liners” who firmly believe the best pilot’s salary is what the CEO makes + $1.   Sabotage in the form of insulting the people at ALPA who have made their resources available to assist negotiations.  Sabotage in the form of open and insulting criticism of its (somewhat) newly elected leadership.  Sabotage in the form of not attending board meetings to deny action on items. 

That doesn’t gain you what you want.  Actually, it works in the company’s favor as it simply delays an increase in salaries and/or benefits that would result from a new agreement.

Filed under: Airline News by ajax
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