In a recurring theme of celebrating what didn’t happen, American Airlines CEO Tom Horton has celebrated that, once again, American Airlines has not made a profit.
This time in April.
So, what are they celebrating? A fairly mild closure of the gap of losses year over year. April 2012’s loss was $142 million ($67 million if reorg costs weren’t counted, but we do count them.) This year, it’s down to $105 million ($39 million if you exclude reorganization charges and I don’t.)
Why do I count reorg charges? Because in the airline world, something always happens. In each financial reporting, an airline will mention that it had “one time” expenses. The problem is that these one time expenses always happen, they are just different each time.
So, is this improvement? Sure but we knew that was coming. Remember the last 18 months? AA has been massively reducing costs? This is the natural outcome of reducing those costs.
The real nugget is in the revenue picture and I’ll point out that AA mentions that it’s revenues are down by $48 million compared to last year. That is a problem. And it’s a problem that many have pointed out over and over again.
No airline gets “fixed” by merely reducing costs and that is especially true of American Airlines.
The time to celebrate is when costs are down, the fleet is renewed and revenues are up.
When will that happen? I’d say about 2 to 3 years after Doug Parker and his team have taken over completely.
The Teamsters are trying to gain the right to represent mechanics at both American Airlines and US Airways in separate campaigns. Today, they’ve presented signatures of, supposedly, more than 50% of the mechanics at American Airlines.
Meanwhile, the TWU and the IAM are agreeging to jointly love each other and represent groundworkers at the new merged airlines. But they’re both denouncing the Teamsters move to represent the mechanics.
American Airlines’ mechanics are currently represented by the TWU who are, according to some, perceived as not having done enough to preserve jobs.
It’s also notable that the Teamsters have taken some heavy losses in union elections of late.
What’s it all mean? It means that unions cannot actually get together and do a good job of both representing their membership, preserving jobs and working with an airline.
The impact will not be to American Airlines. It will come at the expense of union members. What union members are failing to realize is that they have limited amount of power and they are completely replaceable.
I would refer the mechanics to the mechanics of Northwest Airlines and their strike in 2005/2006. Northwest Airlines was able to fly through the strike and while it was somewhat impacted, the airline survived nicely and got a settlement with the strikers that worked to their advantage. At no time did the striking mechanics affect the airline in such a way that it became critical.
Some might dispute that. I would point out that that strike lasted 15 months. American Airlines (and US Airways) can find plenty of people to service their aircraft should the need arise.
The best thing that the TWU did for mechanics and others at American Airlines was that they did preserve jobs. Far more than I would imagine possible. They got their members a stake in the new company which will bring significant value to the table and they struck a deal that could be re-negotiated for better terms (and was) if someone else got a better deal.
If you can’t celebrate that and prefer shooting yourself in the foot, you deserve to be out of a job.
The SolarImpulse solar powered airplane has landed in Dallas and the Dallas Morning News’ Robert Wilonsky has captured the event. It may be the slowest plane ever to land there and the video is. . . excruciating.
I like the idea of Porter Airlines. This is an airline that actually operates using Bombardier Q400 aircraft from a small, inner city airport in Toronto and does so profitably. It uses the Bombardier Q400 in a manner I’ve always suspected would earn great money for an airline.
I like this airline because it represents a business model I have strongly advocated for flights of the type that Porter flies. It flies its aircraft on routes that fall roughly within an 800nm radius of its home airport, YTZ, or better known as Billy Bishop Toronto Airport.
Instead of cramming seats into the aircraft with a 30″ or less pitch, Porter offers a generous 34″ pitch seat that is roughly as wide as that which is in an Airbus A320 or Boeing 737.
The seat is attached to an extremely fuel efficient turboprop airplane that is also quiet and able to fly as fast as a jet (door to door) on routes less than 400nm and nearly as fast on routes up to 800nm.
The airline makes money and now it wants to fly jets. Specifically, it wants to fly Bombardier CS100 jets from the tiny Toronto inner city airport which currently doesn’t have a runway long enough for the jets and which actually bans jets.
Making the necessary changes both physically to the airport and to the laws is very daunting to say the least. And we are talking about Canada here, not the United States.
Porter has made an interesting play. It’s got an order for new Canadian made jets that are very important to the Canadian aerospace industry that is contingent on Canadian federal and provincial and city governments caving in to its demands.
We think this foolish. Porter’s success dosn’t come from flying from that small airport nearly as much as it comes from the aircraft it uses. Highly efficient turboprops.
To be true, Toronto’s main airport (YYZ) is incredibly expensive to fly from and does offer two strong competitors (Air Canada and WestJet) and so what. It is, at most, a level playing field.
If Porter wants to fly jets, let them fly jets . . . from YYZ. Turning Billy Bishop into a Canadian London City Airport just isn’t the right thing to do in this case. Even London City Airport has more infrastructure than this small airfield.
A couple boarded an airline flight on Turkish Airlines to fly from Los Angeles to Dakar, Senegal via Istanbul. Instead of arriving in Dakar (which uses the airport code DKR), they arrived in Dhaka, Bangladesh (which uses the airport code DAC).
Turkish Airlines issued tickets/boarding passes for Dhaka. Yes, the passengers did board the wrong flight but I’ll throw them a bone in that Dhaka and Dakar are too simlar to be easily distinguished verbally or even in written form when traveling internationally.
The passengers were taken to Dakar and their luggage caught up with them 2 days later but . . . this just shouldn’t have happened. Their passenger reservation record should have indicated their destination adequately and the only thing I can think happened was that a gate agent just blew it. I suspect I may know where, too.
I think the original mistake happened in Los Angeles when these people were checking in for their flight. It’s just the kind of mistake that could be made in the United States.
Southwest, as a function of owning Airtran, has tasted the allure of fees and saw its revenues increase 6x most recently in earning more than $176million in fees for 2012. Most of that was from bag fees collected by Airtran.
A very small portion was Southwest related (they do charge for bags, just not the first few bags).
I think we now know what the temptation is. Someone at Southwest did the math on their customers and realized that number could climb 6x more if they adopted it system wide.
The question asked is “Yes, but at what cost?”
It’s hard to say with Southwest. Their extremely loyal customer base might be far more likely to punish Southwest than some other airlines’ customers would.
I think we’ll see more dialog about the chance of fees at Southwest and we may even see Southwest adjust itself somewhat in the landscape of fees. Frankly, I think you could make an argument at Southwest that introducing modest baggage fees for 2 or more checked bags. It aligns Southwest against its competitors better while still delivering exeptional value to almost all who fly them.
Virgin America has been flying since 2007 and by all accounts is an excellent experience for travelers. By many accounts, the airline sees very good load factors as well. Their airplanes are new, their entertainment appears well done and their executive team is experienced.
But they still don’t make money. Each quarter we hear about how profit is just around the corner.
Now we’re hearing that by deferring aircraft deliveries and restructuring debt, Virgin America will make a profit and enjoy an IPO immediately thereafter.
I think maybe not. There is something wrong here that I fear is not going to be fixed by restructuring debt or deferring aircraft deliveries. Airlines are earning exceptional profits at this point and Virgin America still can’t get its act together enough to get close to a profit.
Is it the debt side? I’m sure there is some drag there but I more strongly suspect that the revenue side isn’t being addressed appropriately.
What I suspect is that Virgin America is lowering its prices on routes to get market share and isn’t earning enough revenue to be profitable. And that’s shame.
The airline has a problem in marketing, I think. It’s a flash airline. It looks like it’s for thin people who are actors and models. It doesn’t look like an inviting airline for the everyman who needs to fly from Los Angeles to Dallas.
So what does Virgin America need to stay alive?
It might need a new CEO and a new marketing person. It might be important to be “flash” to Virgin Brands Richard Branson but even Virgin Australia / Virgin Blue doesn’t ignore the common man in its marketing.
American Airlines and US Airways are working together on an integration plan presently under the direction of US Airways’ Robert Isom and American Airlines’ Beverly Goulet. The timeline for consummating the deal is still some time in the 3rd quarter and that appears on track as the US Bankrtupcy Judge (Sean Lane) has now signed the papers approving the merger.
The next big leap will be governmental approval of the merger which almost all expect to be pro forma at this point.
Will the airline sing with one voice upon the merger completion? No, that will take a while. After the deal closing, the next big milestone will be a single operating certificate and that will take a while to get. The two airlines have a pretty divergent fleet and harmonizing procedures and ensuring pilots from what are essentially 3 different groups are able to move forward as a single airline will take some time.
This merger integration will take a while and measuring it on speediness would be a mistake. It’s important to get things done in a timely manner, it’s even more important to get the decisions made correctly.
Many of the decisions that must be made are the kind that could impact an airline for a decade or more. Reservations systems stick with airlines for multiple decades, airplanes are a 20+ year asset and employees with institutional knowledge shouldn’t be driven away.
American Airlines has started its first ever flight from Dallas / Fort Worth to Seoul, Korea and this is a bit of a big deal for the airline as it represents a completely new destination for the airline as opposed to a return to service.
Curiously, Dallas airline Braniff International offered service from Los Angeles to Seoul using its new 747-SP aircraft in the late 1970’s. It was not possible to fly from DFW to Seoul non-stop at that time as even the long range 747 didn’t have quite the range necessary for such a flight. It’s even more notable that Braniff failed on that route in a very bad way.
Load factors on those flights served to quicken the airline’s problems leading to bankruptcy. At that time, South Korea was still governed primarily by the military and it was highly nationalistic in protecting its own airline, Korean Air Lines. So the route award to Braniff was made to be very problematic for Braniff to operate an attractive flight to Seoul.
Had that flight been introduced 10 years later or 10 years and from DFW, it likely would have succeeded. The ties between Korea and Dallas are signicant both in terms of residents of the DFW Area as well as in the telecom/electronics industries.
American Airlines should have every opportunity to succeed with this route and we applaud its development as it signals a desire to improve revenues and expand on opportunities to Asia from non-West Coast cities.
Southwest Airlines will initiate service to Richmond (VA), Memphis (TN) and Pensacola (FL) on November 3 and these are the last 3 stations Southwest needs to initiate service to Airtran only stations.
All three of these cities are good for airlines and they certainly were good for Airtran but I do sense something here that I think will get ignored by the new leadership team at Southwest.
Success at these cities will not depend entirely on business travelers. It won’t be possible to make these cities continued successes without paying attention to those who brung ya to this dance.
That would be the non-business traveler. Actually, it’s the “not corporate” travelers who make or break airlines in those cities. The entrepreneurs who don’t think it funny to pay exorbitant business fares to make their trips. These entrepreneurs will either get the ticket they need at the price they need to pay for they won’t go. They look an awful lot like leisure travelers but they aren’t quite. They’re not buying the SWA “Wanna Get Away” fares but they’re also not tolerant of paying any fare necessary.
They are shoppers and they discriminate and they do not possess loyalty to an airline because of a points program.
And ignoring these consumers at these kinds of stations will result in once successful Airtran stations becoming failures under the Southwest model of “We’re not the cheapest anymore!”
Flying Voices, the project to do an Oral History on Braniff International is working to raise money in a crowd funding campaign and needs your help. They’ve raised some money but they need more.
I’ve donated $50 and I challenge readers to offer just a small donation to make this possible. Braniff has no definitive history done on it and one will likely never be made. This Oral History project is a valuable effort to preserve what we know and love about an airline and it’s our last chance.
United Airlines has ordered 30 E-175 Embraer jets to use in the United Express fleet. The aircraft will have 76 seats and offers 10% savings in costs over their current 50 seat fleet.
It’s a good aircraft for the airline but it also points out something that, I think, might indicate a lack of competitiveness on the part of United.
10% improvement over the current 50 seat jets? Really? If that is the case and if demand is as good as people say it is, why would United not buy Embraer 190 aircraft instead? It’s possible that its labor agreements don’t permit it to and, if true, that will hurt United badly in the coming years.
The Embraer E-175 is a fine airplane but it doesn’t offer the seat costs the E-190/195 offer and this isn’t a “new” aircraft family anymore. It seems like it must be but it isn’t. These aircraft came online in 2002 which makes their design originating from about 1999. That’s 11 years or more in age for these airplanes and a lot has happened in the aircraft world since their rollout.
What United needs is the seat costs that American Airlines will enjoy in about 18 months as new aircraft come online and American is able to contract with airlines to obtain and operate bigger regional jets.
Alaska Airlines is adding flights to hubs of its major partners from Portland, Oregon and I think this is long overdue.
Seattle has been Alaska Airlines’ “hub” but Portland, Oregon has always contributed a major portion of traffic to Alaska.
Since Delta’s pull back from Dallas / Fort Worth, there have been no non-stop flights between Portland and Dallas / Fort Worth. That is American Airlines’ domain.
In addition, Delta “owns” all the flights between Portland and Atlanta.
Alaska Airlines will be able to provide the Alaska Airlines experience both to its own passengers as well as both AA and DL who codeshare with Alaska Airlines. It’s a good fit all around and Portland has missed having such flights for a long time.
Delta Airlines assumed the naming rights for the Milwaukee Wisconsin the “Wisconsin Center” currently known as Delta Center about a year ago in 2012. Delta only just got its name on the Delta Center 2 months ago.
But that sign will be coming down on or after June 30th because Delta, who has 25% of the market in Milwaukee, wants to use its advertising dollars in cities where, you know, people will fly its airline.
It would appear that Rainn Wilson and several cast members of the TV show The Office (which I did know existed) got huffy when they arrived *late* to their flight from Philadelphia to Scranton. Rainn Wilson decided to pitch a fit via Twitter, as actors are prone to do, and here is what he said:
‘So @USAirways just screwed me & half the cast of The Office. Conctng flight left BEFORE departure time. Sorry Scranton won’t see u til tom,’
‘The plane was a 20 seater, missing 7 people who had obviously just landed & it leaves 10 minutes EARLY!’
‘REALLY going to enjoy trying to cnvice’ his 3.5million followers ‘not to fly USAirWays to fly @USAirways b/c of their s****y service.’
‘Does the CEO of @USAirways want to join us? I will fondle him angrily,’
‘I’m going to take a dump on a @USAirways plane’s windshield. In the shape of the @Delta logo’
So, I am so relieved that Mr. Wilson was re-booked on another flight on US Airways because that massive delay and inconvenience due to he and his crew missing a flight scheduled for them by some nameless person who ought to have known better than to schedule a 40 minute connection in Philadelphia on a Friday night.
But, hey, how many times does Doug Parker get an offer to be fondled angrily?
In a Forbes online story, Southwest Airlines Chief Marketing Officer Kevin Krone finally tried to answer the question many of us have been wondering:
What’s up with the generic TV commercials?
Apparently it is about being Southwest Airlines but not the old Southwest Airlines but, actually, connected to the old Southwest Airlines while remembering that they’re different now but, in fact, they aren’t because they’re still being a disruptor even if they aren’t trying to win leisure passengers but, rather business passengers now despite that being their business model 40 years ago.
Yeah, I’m confused too.
I have seen this over and over and over again: Change for change’s sake.
Southwest isn’t trying to win. It’s newly minted Vice President Whiz Bangs are trying to find a way to make a name for themselves instead of being stewards in running one of the most successful airlines in aviation history.
Since when is Southwest not interested in that incremental passenger called the leisure traveler? It’s those incremental passengers that often earn the profit on a flight.
Southwest Airlines is making incremental progress towards going international with steps like instituting flights to San Juan, Puerto Rico and rebuilding Houston Hobby Airport into an international gateway.
Some think that San Juan is international travel. Not so much. It’s a US Territory but, hey, it’s in the Caribbean and many of its residents speak Spanish.
Southwest will embark on travel to Caribbean and Mexican destinations over the next 2 years as it replaces Airtran flights with its own. To add density to those destinations, Southwest is eyeing other destinations in Central and South America that are within range of its 737-800 ETOPS aircraft and which could be served well from Houston, TX.
It’s got some things to do before that happens. First, it needs to build that international terminal fast. Second, it needs to build an international reservations system and it’s got Amadeus working on that part. Sabre is working with SWA on its domestic system and while many think that Amadeus might take over SWA, I do not.
The bottleneck isn’t going to be that terminal, however. It will be the IT systems . . . again. Southwest still hasn’t gotten things kicked into a gear with a Big Boy reservations system that will permit it to interface with other airlines or travel systems.
More importantly, it’s time SWA rework its own website which certainly met the needs of its travelers in 1999 but it really does not now. It’s time to build a travel site that shows the opportunities for travelers instead of being a place that continues to look “temporary” when it comes to booking a flight.
Delta and American Airlines have matched US Airways and United Airlines with $200 domestic change fees for those who want to change their tickets.
We think this is a mistake on the part of all these airlines and an opportunity for non-traditional, non-network carriers. What’s the opportunity? The chance to court some business travelers.
We tend to think of the business traveler as this road warrior who is traveling by airline 4 days per week and . . . not so much. The real business traveler travels barely enough to get real status in a frequent flier program and usually their status is so long that they do not get the upgrades they hope and pray for.
In fact, for most of those business travelers, it’s a back of the bus experience over and over again.
Southwest and JetBlue and others such as Alaska Airlines now have a greater opportunity to court businesses and their traveling employees by pointing out a lower “all in” cost to get where they need to go.
This blog is primarily a commentary on the airline industry and my intent is to offer opinion and analysis on what is going on with airlines today. From time to time, I take a walk back in time with airline history and it’s always enjoyable to do so. Many come here originally because of the somewhat obvious ties to Braniff International in the name of this blog but I suspect many are also disappointed to see that I rarely speak of Braniff.
Today will be different. I want to talk about an oral history project being done by two people who reside here in Texas and who originally became interested in the airline because of the fashion it set. You might be tempted to dismiss them, I wasn’t. The fashion that Braniff brought to the airline industry was revolutionary and it was entirely emblematic of the revolution it brought in many other ways as well.
Abra Schnur and Jacob Flores both have connections to Braniff history and both became much more interested in the airline over time. Now they want to do something with that love they have built for an airline we lost more than 30 years ago.
This is a work of passion and one they have taken on to do at their own expense and even with a cost to their families.
Both have the right background to do the job right.
There is very little real history collected on Braniff. There is no Robert Serling book on this airline and there won’t be. Robert Serling is dead. I don’t think there is anyone who can write such a book about Braniff anymore. Those authors are gone.
I think these folks want to preserve a little of what made Braniff International great. I think they want to be honest brokers and I think that they have an opportunity to succeed.
So, whether you are a fan of the entire airline industry or just Braniff, I would like to ask you to do a few things and none of them cost you much at all.
Go to their Facebook page called Flying Voices and “like” them. They need some love.
Seriously. Go do it now. I’ll wait while you click the link above.
Go to their website and read more about their project and form an opinion of what they want to do. Their website is, oddly enough, FlyingVoices.Org.
Go find out what these people are doing and see what you can do to help them out. If you can’t spare money but you can spare time or materials, ask them how you can help.
Are you a former Braniff employee or Braniff family member? Then get in touch with them and see if you can participate in their project.
I’ll issue a challenge to my readers and other airline bloggers: I’ve just given Flying Voices another donation and this time I’ve made it $50. I challenge all of you to give at least $10 to a project that I think will result in something pretty special.
Wouldn’t it be fun to preserve a legend as a group?
