Two commenters in the media caught my attention.  First, Gordon Bethune, the former CEO of Continental Airlines who said:

“This is the inevitability of an irrational workforce.”

Certainly true but it struck me that Bethune chose not to comment on the lack of leadership at American Airlines when it came to finding an agreement with the workforce.  I cannot say that I have seen good leadership.  Perhaps American Airlines has proposed good and decent contracts but they, and particularly Gerard Arpey, seemed to treat those negotiations more like arranging financing for an aircraft than providing a mutually beneficial agreement for their employees.

Leadership is something that Bethune understands and perhaps he even did comment on it but it sure never made the press.  And I think it would have.

Second, Robert Crandall didn’t miss his chance to offer his strong view that some sort of re-regulation of the airline industry was necessary.  I’ve always been in violent disagreement with this.  I think that the real problem is that we chose to deregulate the market side of the airline industry without doing so on the labor side.   Airlines got the markets deregulated but never were allowed to rid themselves of the legacy union contracts under the Railway Labor Act. 

Instead, airlines have had to fight far more than they should have to just manage a holding action against labor costs.  Bankruptcy became the only way for an airline to “deregulate” itself from those costs.  It is notable that every airline that has gone through bankruptcy reorganization has managed to not only right itself but actually earn fairly substantial profits in what has been arguably one of the worst decades ever for the industry.

The markets handled services well enough.  Those cities who justify it, generally get it.  (Yes, there is the exception of Essential Air Service subsidies but that really is paltry in the grand scheme of the industry.)  Mere small size doesn’t mean that service goes away.  The fact that Waco TX is just 100 miles from DFW airport but still has 6 daily flights to two different major airline hubs is evidence enough that if there is demand, the city will be served. 

Finally, a thought on choosing Tom Horton to be CEO and Chairman in Gerard Arpey’s place.  He is free to prove me wrong.  That said, I think American Airlines badly needs new leadership and leadership from someone outside the company.  Choosing Mr. Horton feels like inbreeding to me.

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Update:  For those sending me private emails, no, this will not change a thing with respect to travel on American Airlines today or even next year.  If you have a ticket, it will be usable.  This is not a liquidation but, rather, a reorganization.  AMR (American Airlines) has enough short term cash holdings to exist in its present state for at least 3 years barring a dramatic change in the airline economy.  Even if there was a dramatic change that ate up cash faster, AMR could survive in its present state for at least 2 years.  Its current situation will be fundamentally different in 2 years with respect to costs as a function of labor and fleet. 

Original Post:

It’s not entirely a surprise but it isn’t entirely expected either, is it?

American Airlines has filed for Chapter 11 Bankruptcy protection and Chairman and CEO Gerard Arpey is “resigning”.

Digest that for a minute.

We’ll be seeing some people say “they knew all along it would happen now” and we’ll be seeing others expressing deep shock.  If you followed American Airlines, you knew this was a possibility.  I think few of us expected this to happen this month, this year or in the next 6 months.  Not really. 

But it isn’t the *wrong* thing to do.  By doing this now, American gets its house in order and they do it while there is ample cash holdings to accomplish it.  This isn’t being done because American is out of money or can’t meet some obligation. 

It’s being done, primarily, to break labor contracts and gets its costs aligned with that of the other SuperLegacy airlines.

By doing it now, American gets to be in control of its destiny much more than by waiting to until cash holdings become somewhat critical and creditos get antsy.  Want proof of that?

Look who just got named Chairman and CEO of American Airlines:  Tom Horton.

My first reaction is that Tom Horton is *not* the person to be put in charge of reorganizing American Airlines (and AMR).  My second reaction is that maintaining the executive corps and the status quo is *not* what you want to be doing at this point. 

American isn’t having a tougher and tougher time of things simply because of what pilots earn.   That’s part of it and labor costs in general are a big part of their troubles.

The biggest problem?  American Airlines increasing irrelevancy to the consumer and its exceptionally decreased value to that consumer when compared to both SuperLegacy and LCC carriers. 

Evolution in AA leadership is going to be very unsatisfying.  A little more Revolution is what is called for.  Tom Horton & Company aren’t that, I believe, but they are free to prove me violently wrong.

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Now we see some rumour developing that United Airlines is in talks to make a 200 aircraft single aisle purchase.  This has credence due to the fact that United has about 200 aircraft that are some of the oldest around (these are 757s and 737s mostly from the original United Airlines) and those aircraft are likely having a real impact on the bottom line as a result of fuel costs and maintenance.

I think we’ll see an order and I suspect that order may well go all to Boeing.  It may be named United but it is run by Continental executives now and those executives have found ways to effectively use the 737 on their routes.  Furthermore, I think Boeing may be able to offer earlier delivery positions than Airbus can.

What might we see?  I would look for a sizeable portion to be 737-900ER aircraft with some 737-800s.  In addition, I think we may well see a follow on order for the 737MAX aircraft again in the -800/-900 configurations. 

The current fleet of Airbus A319s are “good enough” and while some of the A320 aircraft are getting older now, they aren’t quite old enought to start planning retirement of until those older 737-500 and 757-200 aircraft are replaced.   About 1/3 of the A320s were delivered in the mid 1990s with the balance showing up from around 2000 and on.  Almost all of the A319s arrived in the early 2000s.  There is maneuvering room left with those fleets.

Airbus will want to keep United but I think they’ll struggle to offering the delivery positions that United will need.  Those positions are needed now and over the next 7 to 10 years.  Airbus has sold most of those positions.  The only way to offer early positions is to increase production even more.

And both Boeing and Airbus are struggling to figure out how to increase their production beyond their plans for production rates that will already be historic for commercial airliners.  It would require another production line and even more suppliers for airliners that are now fairly obsolete in light of the A320NEO and 737MAX.

Look for an order announcement in the next 1 to 3 months and my bet is on a 200 to 250 aircraft order of 737s with about 100 of those coming from the 737MAX line.

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The airline passenger rights organization, FlyerRights.Org and its founder, Kate Hanni are now advocating for a institutionalized dress code among airlines.   They think what is and isn’t appropriate should be spelled out by airlines themselves.

Given the inconsistency we’ve seeen among airlines and, in particular, airlines crews who are the current governors of what is and isn’t appropriate, it isn’t without merit. 

But what’s appropriate?  I tend to travel dressed in business casual of some sort but I do that because it’s often the most comfortable dress for me and it permits me to leave an airport and go directly to a variety of things such as meetings or family gatherings without looking inappropriate in those environments.

Do I necessarily approve of wearing pajamas or sweats on aircraft?  No, I don’t.  On the other hand, while I wouldn’t regard it as appropriate for me or my family, I don’t think such dress necessarily steps so far over the line as to require airlines to demand a change of clothes.

Let me add that if a man shows up dressed in nothing but lingerie, I would expect airline staff to put an end to the notion that he’s getting on the airplane before changing into something more appropriate.  I’ll also point out that no dress code is needed for that judgement decision.

We’ve seen two separate incidents of men wearing “saggy” jeans/pants onto aircraft and being removed from a flight.  Personally, I find the style a bit silly and if you expect me to take you seriously, that isn’t going to help you.  Yet, it is an urban hip hop style and it really isn’t something someone should be removed from a flight over. 

Do you seriously want me to believe that an entire aircraft is going to be distracted or upset over someone sitting in a seat with such pants on?  Let’s get real and admit that even if someone was “offended” by the style, they’ll also be quite able to get over themselves.  The airlines need not protect themselves from such styles.

Is such a dress code going to address safety?  Because once you start down that path, you may well find your lawyers advising you to do so.  I see a quite a few people wearing horrific footwear for aircraft.  Open toed shoes, sandals, and synthetic fiber made shoes are all bad when things go wrong on an airplane.  Ladies heels are a bad idea. 

Natural fiber clothes (cottons, wools, etc) versus synthetics are better because natural fibers don’t *melt* on you in a fire.  Leather shoes are far better than Nike’s latest styles because, again, leather doesn’t melt on your feet.   See my point?

Are we going to start requiring people to cover up tatoos because someone else might be offended by skin art?  You can see how this becomes a slippery path.

I really don’t think institutionalized dress codes are needed for airlines.  If you’re unaware of how to dress for an airline flight and show up in clothing that is clearly over the line, you’re easily identifiable and I really don’t care if you think you’re entitled to be an offensive idiot in an aluminum tube for 3 hours.  You aren’t. 

On the other hand, I’ve long since past learned to ignore most of the stupid going on in clothing styles and you should too.   Airline employees are, by and large, in possession of common sense.  Just let them exercise it and get over yourself.

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In honor of mentioning Bruce Dickinson, Iron Maiden and Astraeus earlier this week, we have a rock band question.

Led Zeppelin and many superstar rock bands of the 1970’s finally made the switch from old propeller aircraft to a genuine jet airliner.  In many cases, it was a famous airliner named The Starship which could be leased for band tours and customized to the band’s desires. 

Question:  What kind of airliner was the Starship and who was the original owner?

The answer after the fold: (more…)

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Since the QANTAS lockout was stopped by the Australian government, good faith bargaining has been engaged between QANTAS and its various unions with its negotiations with the pilots being seen as the “test case” for what these negotiations would mean.

Sadly, there is little “good faith” going on in the negotiations and it has become apparent to most that there will be a forced arbitratted settlement between QANTAS and most of its unions. 

When QANTAS engaged in its lockout to force the Australian government hands into this mess, I speculated that this could be very risky for QANTAS if an arbitrated settlement had to be forced in this.  Politicians and particularly the current government of Australia ultimately have to pay close attention to its consitituents aka labor unions.  The most expedient solution is to force a solution that makes the unions happier than QANTAS.  QANTAS, on the other hand, needs cost savings and a union favorable agreement won’t give them that.

At the end of the day, you want a government involved in this kind of thing only when there is an absolute critical emergency.  The disagreements between QANTAS and its unions, in particular the pilots, really had not reached that state.  Government is likely to be very annoyed at being tagged with this mess in this way and that doesn’t bode well for QANTAS either.

It is always possible that I’ll be surprised at the results.  I rate that possibility as less than 1 in 3 chances.

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Airline enthusiasts who are also fans of Iron Maiden will recognize the name Astraeus because Iron Maiden member Bruce Dickinson works for Aestraeus as a pilot when he’s not dressed up as a rock star.  In fact, Aestraeus 757s have been chartered by the band and flown by Dickinson for concert tours.

Sadly, Astraeus has had a rough time since 2008 and its efforts in the charter business have been less than perfectly successful.  Now the airline is in the hands of administrators for bankruptcy in the UK.  Will the airline be re-launched?  As much as I hate to see airlines fold, I think this one will likely be liquidated given the competitive environment that Europe enjoys.

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American Airlines has chosen to receive Airbus A319 aircraft and A321 aircraft in its first round of deliveries from Airbus as a result of this summer’s order.  So far, it isn’t know how many of each will be received. 

The A319 choice surprised me somewhat.  Some speculated it would be ordered as a gap filler between AA’s 160 seat 737-800 and its largest regional jet, the CRJ-700 which has about 65 seats.  AA’s MD-80 aircraft are configured with 140 seats.  The A319, in American Airlines configuration, should have about 126 seats based on my research into how other SuperLegacy airlines are using the aircraft.  Delta has 126 seats on its A319s, United has 120 seats (but with Economy Plus in the mix) and US Airways has 124 seats.  I expect American to meet or beat Delta’s seat count. 

I myself didn’t expect the A319 to be selected because it is heavier aircraft and the costs to operate it are similar to the A320 much as what has developed between the 737-700 and the -800 on the Boeing side.  I actually thought that something such as the CSeries might get considered as that gap filler.  The A319 offers a bit more flexibility on payload and range but the CSeries would offer better trip costs most likely. 

Unlike many, I don’t regard the CSeries as a program that will fail.

The A321 was the no-brainer.  It will fill the 757-200 role nicely on most domestic routes.  I would expect these to be configured with about 185 seats on anything but specially configured international aircraft.  US Airways has 183 seats on its A321 aircraft but, again, I expect American Airlines to beat that number by a few seats.   Current American Airlines 757-200 aircraft have 182 or 189 seats depending on the mission its configured for.  I expect we’ll see something close to 189 seats for AA’s A321s with the remaining 757-200s to be reconfigured for those long, thin trans-continental and trans-Atlantic flights. 

But here is the real surprise for me:  The A319s will have CFM engines and the A321s will have IAE V2500 engines.   While you can choose from either manufacturer on both airframes, American has decided that commonality is trumped by mission performance evidently.  Again, I would have expected American to probably go with CFM on both airframes if only because they do have some experience with the engines as a function of owning the 737-800. 

However, the IAE is reportedly the better performer for longer duration flights and it would appear that the planners at American would prefer to optimize performance of the aircraft according to its expected mission as opposed to reduce costs by having a common engine family.  Contrary to what some may think, I think that’s the right decision.  SuperLegacy airlines will own enough of an aircraft/engine family to enjoy economies of scale and it is no longer necessary to try to maximize cost benefits by sticking to one aircraft type and one engine.

In other words, buy the aircraft and engine that best fits the expected mission should be the purchase strategy we’ll see not only from American Airlines but other SuperLegacy airlines as well.

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News media is full of predictions that you’ll be packed like sardines on flights for both the Thanksgiving and Christmas travel seasons.  It is enough to make one throw away that non-refundable ticket and stay at home, right?

It shouldn’t.  Read these travel hints and you *will* have a better overall experience no matter how many people are traveling or no matter how much your flights are delayed.

One: If you have traveled at all over the past 2 years, you’ve already experienced  a packed flight.  The reality is that you should fly with the expectation that you will have people seated next to you.  Accept that reality and you’re already on your way to a better experience.

Two:  If you’re flying, choose airlines, if possible that do not have baggage check fees.  Readers here know I”m a big fan of Southwest in this respect.  The nature of their system means they handle baggage reliably and they permit 2 free checked bags up to 50lbs each.  That, alone, can save you money even when Southwest isn’t the absolute cheapest on your route. 

Three:  If overhead bin space is important, pay that fee to get onboard early.  This isn’t just true for Southwest but also for other airlines as well.  Priority boarding is often available and that does increase your chances for overhead bin space.

Four:  Take soft luggage as your carry on.  It’s easier to fit into odd shaped spaces.  Take something that is small enough to fit under the seat in front of you so that if bin space is fully occupied, you still keep it with you instead of having to gate check your bag.  Do you want to be one of the 4 or 5 people who delay a flight for 20 minutes because you had to gate check? 

Five: Wear comfortable clothes but keep the sweats and pajamas at home.  Wear something that is comfortable *and* appropriate to travel so that if you’re stuck someplace, you’ve got something wearable if you have to go to a hotel or restaurant because of a delay without looking and feeling like the idiot.

Six: Get yourself a bottle of water.  Yes, pay the $3 for the bottle at the store in the terminal and take the water.  But even more important, drink the water.  Staying hydrated helps with muscle aches and pains and also leaves you feeling more able to deal with the unexpected.  In my home, we say “Agua es vida” or “Water is Life”.  It helps, use it. 

Seven:  Eat a *good* meal prior to departure.  I am not referring to getting yourself a Big Mac to take on board.  Have a balanced meal and ensure it has some protein.  This will keep you better fueled for your trip that junk will.  Avoid sugar, chocolate, energy drinks and coffee.  THIS GOES DOUBLE FOR YOUR CHILDREN.

Eight:  Build someslack time in your schedule.  If an airline advises arriving at least 60 minutes prior to departure, get there 90 to 105 minutes ahead of departure.  Schedule your connections so that you and your bags can transit the airport to the next flight without panic or urgency. 

Nine:  Early morning flights are far more likely to work than late afternoon and evening flights. 

Ten:  Go to the TSA website and ensure you are packed and dressed in a manner that makes transiting security smooth.  Do NOT be that person who discovers large bottles of liquid in your briefcase or purse as TSA scans it. 

Eleven:  Be kind to those around you.  They’re in the same situation as you.  Show your fellow human beings some courtesy and you’ll get it back as well.  Smile a little and offer a holiday greeting to a fellow traveler or airline employee.  You get what you give.

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American Airlines isn’t getting any traction on deals with any of its unions.  In the pilot negotiations, there was a push for a deal but leadership in those negotiations just kind of faded away and each party went to the press to plead their case instead.

Tentative deals are being denounced by membership in the TWU and the flight attendants are eerily quiet but some of the most militant at American Airlines.

Suddenly, not only analysts are using the “B” word but even employees seems to becoming familiar with the idea.  It’s a word that should never be used lightly.

The AMR board met last week and a few new directors were brought on board but anything else that was discussed has so far been kept quiet.  In fact, almost too quiet. 

Will the board willingly go into bankruptcy?  No, I do not think so.  Their job is to manage in the interests of shareholders.  If bankruptcy comes along, the biggest losers of all will be shareholders as their ownership will evaporate.  Creditors will get something.  Employees will get nothing additional and likely face years more of negotiations for anything.

Several current generation CEOs of airlines like to talk about how it’s a business and it should be managed as a business.  Return on investments and profits should be the focus.  We couldn’t agree more but . . .

Airlines require very strong leadership.  Leadership isn’t just providing a return on investment or earning profits.  In fact, neither of those are possible if you don’t have the interests of your large workforce aligned with those goals. 

And if the workforce is unhappy and resentful, it isn’t interested in the company goals. 

American Airlines is lacking in leadership.  It has all the management an airline could ask for but nono of the leadership it needs.  It means getting everyone on the same page working towards common goals and doing so in the best interests of everyone.  Does that sound like AA leadership?

Everyone is way too comfortable with the idea of bankruptcy.  I think the employees look upon it as almost welcome in that it almost certainly means the end of the Arpey regime.   When it’s gotten that far, it may well be time for the board to act and install a leader before that shareholder value goes poof.

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Nigeria has fined British Airways $135 million and Virgin Atlantic $100 million for:

“. . . for abuse of a dominant position, fixing prices, abusing fuel surcharges and taking advantage of passengers. . .”

Apparently Nigeria can’t resist acting like the stereotype of an African country.  What this is about is Nigeria wanting its flag airline, Arik Air, to do better financially and to compete on the same level as those two world class airlines.  Let me point out that right now you could pick any one of the US based SuperLegacy airlines and discover that they, too, would have trouble competing with the services provided by those two airlines. 

Airlines have long been the source of national pride for nations and particularly so in Africa.  And when they find they cannot compete effectively, they decide to blame it on the Imperialists.  I take note that that isn’t limited to Africa.  India is engaged in the same shennanigans with European airlines in an effort to protect their flag airline, Air India. 

Why?  Because those governments can’t stand looking their own citizens in the eye and telling them that competing means operating efficiently and effectively like the rest of the world.  Instead, they preserve the airlines at any cost in order to preserve what are perceived to be high profile jobs for their citizens. 

Rather than pay those extortionate fines, I would suggest that British Airways and Virgin Atlantic withdraw their services to Nigeria and prevail upon the British government to withdraw landing rights to Arik Air at any airport within the UK borders.  This is a case of “they need us more than we need them” in my humble opinion.

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The NMB (National Mediation Board) has reviewed the 2010 union election at Delta for flight attendants and determined that Delta did not interfere illegally in the election.  Flight attendants there rejected the AFA (Association of Flight Attendants) as a representing union by a large enough margin and under the new rules requiring that only cast votes be counted.

What’s that mean?  Well, for one thing, former Northwest Airlines flight attendants get a raise and better work rules in the non-union shop.  Ironic, no?

Will there be another election?  I suspect we’ll see another attempt in 12 to 18 months because the AFA is able to get enough traction to force these votes. 

Will it ever succeed?  Only if Delta takes it eyes off the ball and stops treating its employees in some of the best ways the industry has experienced.  In other words, it isn’t likely to.  In fact, the flight attendants from Northwest are generally older and more senior and more likely to fade in numbers over the next decade.

Unions can be good and powerful forces for employees but how relevant are they when the company simply continues to do the right thing?

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The FAA is going to fine American Eagle airlines a negotiated amount of $900,000 for tarmac delays during a day of storms in Chicago on May 29th.  The storms moved through the area more slowly than anticipated and several America Eagle flights bumped into the 3-Hour window.

This is the first announced fine for breaking the 3-Hour rule and it has some implications in that it sets precedent for other airlines going forward in the future.  My first impression is that this fine was a touch heavy on American Eagle.   It certainly is a non-trivial sum and when you consider the thin margins of a regional airline, it certainly makes an impact.  If every regional flight earned $500 in net profit (and they don’t come close to that in the real world), it would take 1,800 flights to earn that fine back.  Consider that for a moment.

On the other hand, American Eagle is by far the worse violator so far.  It has twice as many of these delays as the 2nd place leader, Delta.  

I think this fine has  huge implications for JetBlue and its violations during the October snow storm.  You can bet that JetBlue will be scrambling to defend itself over those delays.  Sadly, there is quite a bit of public perception already going against JetBlue in that instance and perception can often be a great influence in such fines.

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Southwest has been working on adding international destinations to its system for several years now.  With the purchase of Airtran, it gained an airline already doing it and it will soon integrate those international destinations into its system as codeshares.  That will be a big moment.

Question:  What airline with international destinations was Southwest’s first experience with international destinations?

The answer after the fold: (more…)

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Earlier this week, it was announced that Southwest/Airtran was *adding* routes from San Antonio to Mexico City and Cancun. Airtran will be the “airline” that services those routes.

Yes, Airtran will grow into some routes.

Fares aren’t announced until regulatory approval is gained. I do wonder if Southwest plans to use the Airtran entity for international expansion. But I wonder about a lot of things when it comes to Southwest lately. Like when are they going to introduce a reservations system that doesn’t require a handcrank?

Those routes are curious to me. Southwest already has its codeshare into Mexico with Volaris but that connection is focused on the West Coast area and it offers flights from the US to Guadalajara with connections onward.

The Mexico City and Cancun flights are smarter flights. Particularly smart from San Antonio. And don’t be one bit surprised to see one added to Monterrey in the near future.

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Emirates has signed a deal with Boeing this past week for 50 more 777-300ER aircraft with a list value of $18 Billion.   It’s a big deal for Boeing and a big one for Emirates although Emirates is rather used to making big deals. 

Emirates already has the largest fleet of 777 aircraft and they like and use the -300ER very effectively on their routes.  They also have 50 A350-900 and 20 A350-1000 on order.  And let’s not forget the the massive number of A380s still to be delivered. 

That’s a lot of capacity.  Consider that Emirates uses the -300ER in capacities ranging from 354 seats to 442 seats.  I suspect that some of these -300ERs will replace -200LRs which will then be used to replace A340-500s that are not nearly as economical as the -200LRs.  In addition, I think even more of the -300ERs will replace some aging -300/-200 standards currently used for high density flights to cities in medium haul range of Dubai.  That will also reduce the number of Rolls Royce Trent powered 777s in their fleet and convert the focus more fully to GE90 engined 777s.  That said, there will still be quite a few -300ERs coming online as additional capacity. 

Can they fill those aircraft?  Regionally, Emirates serves cities that are mega-dense with populations and make money doing so by cramming as many people into coach as possible.  Globally, Emirates is expanding to new cities in ways that does make one wonder if there is much low hanging fruit left for them.  Take for instance their new flights to cities such as Seattle, Dallas, Buenos Aires, Dublin, Harare, Lusaka and Rio de Janeiro.  Not a one of those cities is a mega dense destination such as those flights they’ve had to cities already served. 

I continue to question the viability of Emirates in light of the evolving landscape for point to point routes around the world made possible by the latest generation aircraft coming online.

This order also gives Emirates a whip to use on Boeing.  Boeing is now talking about what the next generation 777 should look like.  It is a given that we’ll see a new wing and likely new or improved engines as well.   Increased use of composites is also probably a given.  Some think the -200LR gets stretched a bit with the goal of similar range and the -300ER gets stretched more with a goal of more payload over existing range. 

Neither of those configurations necessarily makes Emirates thrilled.  Emirates model is based on high capacity, long range flights and they’ll want to see more range with similar payloads in lieu of more capacity with similar range.  To an extent, neither option is mutually exclusive.  Airlines such as Emirates can configure aircraft for less than high density capacity and get more range.  But only to a point.

This order gives Emirates and its CEO Tim Clark the opportunity to start bludgeoning Boeing into building a high capacity, ultra-long range aircraft that they need and want.  Its become clear that the A350-1000XWB is not going to be that aircraft.  Not the way Emirates wants them.  Emirates will threaten order cancellation if it doesn’t get its way with a definition of those next generation 777s that meets its needs.

Will Boeing crumble?  I think not.  Boeing has rightfully valued Emirates as a customer but also recognizes that meeting the missions of other airlines is more important than just one airline.   It doesn’t like all its eggs in one basket and building an Emirates 777 will result in other airlines being less than enthusiastic for the aircraft.   However, I do think that Emirates can nudge Boeing into more performance overall and that would be good for everyone involved.

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Am I the only one who missed the pilots of Southwest and Airtran ratifying their seniority agreement? My excuse was a weeklong bootcamp training session at my company. What’s yours?

The highlights are that both groups overwhelming approved the agreement with in excess of 90% of both groups voting and inexcess of 80% of each voting group saying “Yes”.

This is good for Southwest, Southwest’s pilots and Airtran’s pilots. Conflict erodes profits and eroded profits at Southwest hurt everyone’s fortunes. More importantly, there is a template for coming to agreements among other unions.

Furthermore, Southwest can get on with the business of harmonizing and integrating Airtran. The sooner that gets done, the sooner the synergies of the merger are realized.

The question is this: Will the other unions avoid the mistakes that Airtran’s ALPA group made?

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Allegiant Airlines has come to an agreement with Scandinavian SAS to buy 13 more MD-80 aircraft for its fleet. Kind of a yawn announcement, isn’t it?

Allegiant uses the MD-80s and makes a strong profit doing so. They get praised for business model and frugal operating plan and deservedly so.

To a point.

Yes, the capital costs are extremely low. Yes, Allegiant can operate them with density that makes them profitable.

No, Allegiant can’t count on that working for the future. Airtran got started operating extremely old DC-9 aircraft and did pretty well for a time. Then its executives realized that fuel would be an issue and it started buying new aircraft. New, fuel efficient aircraft such as the 717 and 737-700.

Fuel and maintenance costs *will* become an increasing problem for Allegiant. Don’t kid yourselves. The MD-80 aircraft are strong but they are old and they have been ridden hard and put up wet by airlines around the world. That takes a toll.

The smarter move would be to start transition to the *next* cheap aircraft to buy. In my mind, that’s the 737-300. They’re only getting cheaper and they offer a pathway to continue on as an airline. Airlines will be dumping their older 737s in favor of the newest offerings and the older 737s such as the -300 will only get cheaper.

It also offers a pathway into a family of aircraft that can be purchased to fit a variety of needs.

The status quo can be great. But in this case, I think the status quo hurts Allegiant far more than helps in the next 5 years.

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(Flickr)

I got asked what I thought of the A340 last week by a reader of FlyingColors and decided to give some thought to that subject and write a post.

The truth is, the A340 was probably the first Airbus aircraft that I really liked visually.   I liked the slender appearance of the widebody fuselage and I liked the four engines and how they were hung on the wing in a proportion that just seemed a bit sexier than other 4 engine aircraft. 

I liked Airbus’ approach to the A340/A330, too.  I’ve always been fond of the parts bin approach to creating value for a customer and the A330/A340 development was certainly that. 

A fuselage that got borrowed from its first twin-aisle aircraft and CFM engines that were derived from the A320 aircraft.  Need a medium range hauler?  Use our A330.   Need a long range widebody?  Try our A340.   Going trans-Atlantic?  Use our A330 and if you’ve got trans-Pacific routes, we have this lovely 4 engine aircraft for you. 

And you got to have pilots that could fly both. 

It was a beautiful approach and a real answer to what was needed at the time.   It was way better than McDonnell Douglas’s offering in the MD-11 and Boeing really didn’t have an aircraft that even fit the needs at all. 

ETOPS was changing the game at the same time, however.  So was engine development.

The MD-11 was a bit flawed in that it really needed a truly new wing and better engines to achieve its mission.  But the ever frugal derivative player, McDonnell Douglas, played things just a bit too frugal.

The 747 was simply a different class of aircraft.  The 767 was too small and too short ranged to fit the gap.

Airbus did a great job with those aircraft in offering a sweet spot solution for both capacity and range and then made a strong business case for both of them by making them as common as possible.  You cannot blame any airline who went that route.  It was, in the context of the times, the perfect solution.

What we didn’t really count on was engine manufacturers being willing to truly make game changer engines and ETOPS going far past anything anyone could envision.  The 777 was born and it was an even bigger game changer.  First an aircraft that solved the A330 problem just a little bit better.  Not fantastically better but it offered just a touch more capacity and bit more cargo capacity and it did it with engines that were more revolution than evolution.

The A330 has survived because of its improved derivatives and any airline using them makes great money.

The A340 got hampered by a few things.  It needed a bit better wing  and better engines (and finally got both in the A340-500/600).  The CFM engines were a great choice going in but the Rolls Royce Trents were the answer to a question that got asked a bit too late.

Airbus bet on 4 engines being preferred for long haul, trans-oceanic routes and given the dominance of the 747 in that market, it wasn’t a bad bet.   Their mistake was in underestimating Boeing’s ability to look forward.  Boeing saw the possibilities in ETOPS and extra high by-pass engines that were more reliable than anyone could have conceived of a generation earlier.  And it should have given its customer base at the time.

Airbus was hampered by a bit of McD disease and by multi-government ownership at the time.  It didn’t have enough capital to go “all in” on designs and knew it had to make its business case on flexibility which meant derivatives.  In fact, it often only got capital for new investment if that investment benefitted its owners in the form of jobs programs for their citizens.

While thinking about this post, it occured to me that Airbus even produced a 747-SP.  The A340-500 derivative.  It could fly fantastic distances but without enough passengers to make it cost effective.   Then the 777-200LR came along and was capable of doing *that* mission better and cheaper.

The 777-200ER and 777-300ER killed the A340 in all forms (And EADS CFO just admitted it in the press).  It could haul more passengers and cargo for the same or longer distances for less money.  It was that simple.  Boeing made the business case on trip costs and won. 

Even if hindsight is 20/20, you can’t say that Airbus made a mistake with the A340.  The A340 killed the MD-11 and exposed the weaknesses of owning 747s.  It did its job very well but it arrived just a little bit too late to enjoy its success for very long.  Timing is everything.

I would criticize Airbus for the A380.  Yes, it has made a few airlines some good money.  It also ignores the model(s) for long haul travel over the broad spectrum in favor of trunk routes.  It will never enjoy the numbers or prevalence of the 747.  On the other hand, neither will the 747-8i. 

I’m not sure the A350 is the answer either.  I don’t think it fits long, thin routes as well as the 787 and its planned derivatives.  I don’t think it fits the long, large capacity routes quite as well as the 777 either.  Its smallest derivative is an A330 replacement at best and I question whether or not it will ever get built.  Its largest derivative so far doesn’t respond to the 777-300 as a game changer either.  They are free to prove me wrong.

It’s not that I think the A350 won’t sell.  It will.  But I think it’s destined to be a player among a fairly small core group of airlines.  Much as the A380 is and will be.  Boeing took a page from the Airbus playbook and built the 787 to fit a nice, broad piece of medium and long haul routes and positioned itself to answer the largest A350 with a next gen 777 or next gen new build large capacity, widebody aircraft.

Boeing one ups Airbus over the next 20 years with its product line up and does it in a way that has the gaps covered in distance, capacity and service. 

With all of that said, I still think the A340 is one hell of an elegant and pretty airliner.  It lends itself to the great airliner liveries of the world.  Just look at these:

(All images from Flickr under their Creative Commons License)

Filed under: Aircraft Development, Airline Fleets, Airline History by ajax
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Last week Ryanair did it again by speculating on adding pay per view on their aircraft that could include porn.

Say all you want but there is no way in hell that’s happening in this decade.

And it’s all about the free press. O’Leary did it again and lest you think he’s running out of moves, let me suggest you are wrong.

Filed under: Trivia by ajax
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