I’m going to New Jersey. On yet another ubiquitous MD-80 that looks as if it was rode hard and put up wet.

10 years ago.

Filed under: Airline Service by ajax
3 Comments »

The people at Brussels Airlines decided to play a nice trick on a few passengers while they waited for the luggage.

[youtube http://www.youtube.com/watch?v=ag9Y6RQcbEc&version=3&hl=en_US&rel=0]

Filed under: Trivia by ajax
No Comments »

Delta Airlines has a great 2012 holiday video.

Filed under: Trivia by ajax
No Comments »

I’ve had some time to think about the new Virgin Atlantic / Delta Airlines deal and several things have occurred to me which make this a bigger threat than I think anyone necessarily perceived including me.

Virgin Atlantic knows its trade across the Atlantic and its got the London Heathrow slots to make a  lot happen for Delta.  For the first time in 30 years, American Airlines and British Airways may be facing a very real threat to their lucrative trans-Atlantic business.

Virgin has the aircraft and airports slots and Delta has the network.  Delta has the network feed into New York City and enough network to actually draw Oneworld (AA/BA) customers away from Dallas and Chicago to Atlanta and New York City and even Detroit.  AA and BA won’t lose their O&D traffic in those cities but it could lose a great deal of the network feed into those cities in favor of a Delta solution.

This will happen just as American Airlines prepares to scale up its operations with 777-300ER aircraft onto those routes and just as British Airways prepares to take delivery of its first Airbus A380s.  If Willie Walsh and Tom Horton aren’t cursing Richard Anderson, they should be.

Virgin has 747-400 and Airbus A340-600 aircraft that it can throw at routes to the US and a newish fleet at that which represents great service and certainly service competitive with AA and BA.

Filed under: Airline News by ajax
No Comments »

As the clock ticks towards the end of the year, more and more people are weighing in on the potential American Airlines / US Airways merger that’s been cooking for a few months now.  I have a few thoughts on this:

1)  It is curious to me that Tom Horton continues to describe himself as neutral on the merger idea on the one hand but also argues for a post bankruptcy merger any time the door is theoretically closed at a meeting.

2)  The fact that the pilots have been engaged on this leads me to believe that an offer is imminent.

3)  If an offer is imminent, someone has found a way to let Tom Horton exit gracefully.  I’m guessing the plan here is something similar to what Glenn Tilton got in the ContiUnited merger.  I’m also guessing that Tom reckons that if Doug Parker blows things, he may yet be able to step into the CEO role again.

4)  Not all pilots are eager for this.  There is a new blog started by about 35 AA pilots, mostly captains and mostly from the DFW base.  The fact that most are captains from the DFW base leads me to believe that these are fairly senior captains who may feel a touch threatened with respect to retaining their seniority against similar US Air (EAST) pilots.

Seniority is going to be a touchy issue for pilots and other crew.  It won’t be Delta like in the integration largely because rational thought isn’t in place for either union involved (APA or USAPA).  If this were an ALPA/ALPA integration, the odds for a smoother integration would go up.

You know what?  Smooth or unsmooth, it doesn’t really matter.  US Airways has already proved it knows how to run a split operation.  Furthermore, there is now federal law that will govern a seniority integration in this case and that should prevent a USAPA-like embroglio.

Some pilots from both unions point to Doug Parker and US Airways not being able to integrate their employees in the previous merger and that’s not quite true.  There was an arbitrated decision that very senior US Air (EAST) pilots threw a temper tantrum over and tossed out by electing a new union organization.  Parker & company couldn’t even be sure who to negotiate with for the last several years much less solve a problem.

Parker & company keep making offers to US Airways flight attendants and they keep voting them down asking for more.  And who wins in those situations?  Parker & company.  Because the NLRB won’t let the crews strike and does keep the new agreements coming which proves that progress can be made and that therefore justifies not letting the unions strike.  Meanwhile, US Airways keeps paying the old rates.

At some point, you need to make the deal you can get, not the deal you want.  US Airways crews haven’t been able to get their act together to realize that much less make it happen.

I rate a merger announcement as 80% probable at this point but I’m not sure that I agree that it will happen before the end of the year.  I can see this deal getting announced in the 2nd week of January, however.

Filed under: Airline News by ajax
No Comments »

Southwest Airlines has made a few announcements that I think signal some more evolution in the future.  First was SWA VP Bob Jordan announcing that some time in 2013, Southwest will begin charging a cancel fee of a sort.

Currently, once you buy a ticket on Southwest, you essentially buy a “value” that should you miss or cancel your flight, you can use the credit towards a future flight (generally you must use this credit within 12 months).  Southwest plans to charge a “cancel fee” if you don’t call and cancel your flight.   This new service fee will be oriented towards SWA’s most restrictive fare categories.

In addition, Southwest is preparing to engage in a multi-stage codeshare rollout with Airtran.   Southwest will start slowly with a test beginning at the end of this year with several intermediate phases to follow and a complete roll out finished by April.  This is a big milestone for Southwest in its merger integration.

At first glance, one would be tempted to believe that these two items are fairly unrelated but they aren’t.  Southwest chose Amadeus software for its new reservations system and these two items signal that the software implementation has come quite a way.

It has to have or Southwest would be unable to implement the above steps.  I’m pretty impressed that Southwest has progressed this far in a new system implementation over the last year and I don’t think Southwest would be talking about these items if it hadn’t fairly solved most of its problems in these implementations.  Furthermore, I think it speaks well of choosing a tried and true system in Amadeus rather than asking someone to write all new software.

Airlines do better adjusting their business model to fit well tested software than they do creating all new systems.

Filed under: Airline News by ajax
No Comments »

Leeham News has a short blog entry referencing this article about Southwest and its Airtran merger and integration.  It is difficult to figure out where to begin in trashing this story.  But let’s take a shot at it:

1. Southwest Airlines will remain a single aircraft type using the 737 in the various variants it has today and in which it plans to have in the 737MAX.  The 717 has been offloaded to Delta and will be gone in a fairly short period of time.
2. Airtran is not based around the 717 solely.  It, too, uses the 737-700 which is also a significant part of the Airtran fleet.
3. Airtran is a hub and spoke operation but it’s major hub is Atlanta only with significant focus cities (a la SWA) elsewhere.
4. Airtran does not operate just primarily into major hub airports.  It has had a significant number of flights into cities that are smaller than the typical SWA destination that it made profitable using the 717.
5. As SWA takes over Airtran routes, it’s adapting them to SWA’s point to point model.
6. SWA has huge focus cities which kind of resemble hubs.
7. Atlanta was the only airport that SWA could fly into in that area.  There was no smaller, inner city airport.
8. SWA has been operating into and out of major hub airports already.  Notice its operations, for instance, into La Guardia and Newark airports.  It’s operated out of LAX for a long, long time.  Phoenix as well.  Same for Denver.  It’s figured out the “how to operate at a major airport” problem for a long time.
9. Airtran does present Latin American opportunities but also Caribbean opportunities and SWA has already announced plans for Puerto Rico as a first step.
10. It completely misses the point that Airtran, as a subsidiary operating entity gives SWA the chance to accelerate international flights via the Airtran reservations system.

I’m sure people see my point.  This isn’t SWA’s first rodeo and for sure it knows how to deal with a variety of destinations and airports.  What it completely ignores is SWA’s already high and rising labor costs which is an area of concern.  The creators of that “report” would know this if, you know, they had listened to Gary Kelly’s concerns expressed at a variety of quarterly earnings calls.

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

It’s occurred to me that American Airlines may want an accelerated pilot contract hearing in bankruptcy court for multiple reasons.  First, it enables them to woo the Unsecured Creditor’s Committee towards their stand-alone plan.

Second, they have 777-300ER aircraft arriving shortly and that pilot contract allows them to train pilots and presumably stay on schedule for entry into service for that aircraft.  I rather believe that this is  the prime driver.

Filed under: Airline News by ajax
No Comments »

With the AA Pilot Contract ratified by the Allied Pilots Association, speculation as to what’s next has gone into full overdrive.  Some think American Airlines will make a case for its stand-alone bankruptcy exit plan and some think this clears the last hurdle for a merger with US Airways.

American Airlines has asked that the court set a hearing to approve the contract more quickly than the customary 21 days.  I suspect that request is more about checking the box quickly than anything.  With this contract settled, American Airlines is done with the big challenges of reorganization in its mind.

Is it done?  Frankly, we’ve seen them address costs in a very aggressive manner and not just in the area of labor.  AA’s fleet has been slashed of aircraft and leases on other aircraft have been renegotiated.  Costs have been addressed more than adequately.

But where is the revenue plan?  It remains the cornerstone market strategy of old.  Routes haven’t been radically altered and hubs haven’t been re-tooled and new markets haven’t been explored.  Bankruptcy reorganization gives AA time to work on this area too and it appears there has been no real interest in putting in the same effort here as what has been done to costs.

My concern is that American Airlines has achieved another 10 year holding action.  Time will tell but this reorganization feels like the company has puts its hopes into the cost cutting basket without truly addressing the need to grow revenue and, frankly, repair relations with employees.

I sit amazed that the company hasn’t acknowledged its challenges going forward with respect to employee morale.  Were I an analyst, I would be worried about this companies exit from bankruptcy not because the employees would intentionally sink the ship but because a service company such as an airline is extremely dependent upon its employees providing a positive experience.

American Airlines seems to think it’s still the dominant player in all its markets and that people don’t have choice.  That’s just not true.  Los Angeles and New York City are extremely competitive marketplaces and areas where other airlines have been much more aggressive than AA to date.  Chicago is a very, very competitive market with United Airlines and Southwest Airlines eating at American’s constituency every day.  Miami / Fort Lauderdale has a tremendous amount of LCC competition and airlines are flying to South America from other gateway cities and competing just fine with AA.  Dallas / Fort Worth has increasing competition at DFW airport and the prospect of a fairly unlimited Southwest Airlines in 2014.

The differentiating difference for an airline over the next 3 ot 5 years in the SuperLegacy category is going to be service and its those employees who have been roughed up badly who will be delivering it.  What’s being done to sooth those wounds and what’s being done to incentivize a positive experience for passenger?  A plan for this would be a good thing.

Filed under: Airline Service by ajax
No Comments »

There are some reports filtering around that Delta may be interested in taking on an investment in Virgin Atlantic.  Specifically, the reports say that Delta is interested in buying the 49% ownership share that Singapore Airlines holds currently.

Singapore Airlines has wanted to exit this relationship for some time now so that part makes sense.  Singapore Airlines has also been a constraint for Virgin Atlantic in prior years because Singapore has some veto on how Virgin may operate and market itself in the Asia Pacific region.

However, the real speculation is that many think this is Delta’s opportunity to gain better access to London Heathrow airport.  It’s possible that Delta might be persuasive in getting Virgin to work with it on slots but somehow I think this isn’t exactly what Virgin has in mind.  Those slots are extremely valuable assets.

Would this mean an airline alliance for Virgin Atlantic?  I think so.  Even Richard Branson has hinted around at the idea of Virgin joining such an entity and there was some speculation that Star Alliance might be the most interested party.  But SkyTeam could work, too.

The problem is that Virgin isn’t a very attractive party in the alliance game.  It has no local network to offer partners.  In light of that, I think Delta sees Virgin’s value and success diminishing over time and it could wield influence in the not so distant future to get Virgin to release slots and gate space to it in London.  Even that leaves Delta somewhat at a disadvantage since there is no regional network to connect to beyond London.  Not really.

SkyTeam’s alliance partners in Europe are Air France and KLM predominantly.  Neither have substantial networks out of London and don’t seem to plan anyway at present either.

Filed under: Airline News by ajax
No Comments »