It pays to shop around and it pays to question whether or not a Low Cost Carrier really is low cost.
Just for fun, I looked around for flights from the DFW area to Portland, Oregon and I used Labor Day weekend as my target as it was a weekend where we should see some restrictions and fairly high travel. In other words, I wanted to make it a popular time to travel that would see realistic fares.
I checked out Spirit Airlines and found a roundtrip all-in fare of $320 and that didn’t seem all that great to me given what we know about their many fees. Next, I checked out my favorite airline, Southwest Airlines, and found a very high fare available for just over $500.
Yes, over $500 to fly Southwest to Portland, Oregon from Dallas and it was a connecting flight. This is way too much.
Like Goldilocks, I found the bed that was just comfortable enough: United Airlines with an all-in fare of just $367.00. It, too, was connecting (through San Francisco) but not with an terrible flight time involved.
Yes, I would pay a fee to check a bag on United but that fee would be less than Spirit’s typically and I would get to fly on a vastly more comfortable aircraft.
United’s 31″ of seat pitch vs Spirit’s 29″ of seat pitch. It makes a huge difference.
So, the Low Cost Carrier wasn’t, the Ultra Low Cost Carrier wasn’t and the legacy airline was the best fit.
Around the world, airlines are making record setting orders for new narrowbody aircraft. We airlines in Southeast Asia and Europe being particularly aggressive while here in the United States airlines are far less so (even American Airlines who desperately needed a new fleet.)
In the United States, most of these orders are being made to replace modest portions of fleets that are nearing the outer limits of age. 100 737s for Delta Airlines just means that old aircraft get replaced with new aircraft. No real change in fleet size.
Now, many US airlines are modestly upgauging their fleets with slightly larger aircraft. An A319 buyer is going to the A320. A 737-700 user goes with a 737-800. This capacity growth amounts to just meeting organic growth in a modest economy such as the United States.
However, in Europe and Southeast Asia, I suspect something else is going 0n. Some airlines will use some portion of their order to replace their oldest aircraft (Ryanair and easyJet) but I think the vast portion of their orders are going to go towards growth.
In Europe, I think we will see another fare bloodbath before things settle. This won’t be just between Ryanair and Easyjet either. Expect all the other low cost European carriers to be involved. Norwegian, Germanwings, Air Berlin and Monarch all come to mind as airlines that are likely to be affected by a battle.
In Southeast Asia, the competition is already massive with prices already about as low as they should go with airlines planning double digit growth for multiple years. Someone and something has to give here. Yes, low cost carriers in this region are revolutionizing travel but they’re also often operating at a loss for marketshare. Does this sound familiar?
I expect we will see one or more airlines in this region go bankrupt and I have in mind one particular entity: Lion Air.
Economic growth in Southeast Asia doesn’t occur at all societal levels and that kind of airline growth isn’t sustainable in that region. Someone will go out of business or will go bankrupt. Bet on it.
Alaska Airlines is being excoriated by Alaska residents primarily in Fairbanks for switching their flights between their fair city and Anchorage over to Bombardier Q400 turboprops. No more jet service.
I have a few words for Fairbanks residents: Alaska Airlines just did you a big favor.
Fairbanks is likely to get more frequency on flight segments where it will take absolutely no longer to fly the segment. The Q400 is made for such service and it can provide it reliably and, most importantly, at lower cost than the 737.
Flight durations won’t change. Dispatch reliability won’t change. Frequencies will go up. How is that bad?
Fairbanks will retain jet service to Seattle and Portland, Oregon and it will keep jet service on one 747-400 Combi flight between Fairbanks and Anchorage.
There appears to be a perception that these aircraft are dramatically noisier than the 737. They are not. There is also a perception that they cannot climb very high. They can climb quite high. Each aircraft can climb as high as one would ordinarily want to climb on a flight segment that short.
There is a perception that the Q400 isn’t good in mountain turbulence. Those in Fairbanks should observe that all the flights between Portland, Oregon and Seattle, Washington are in the Q400 directly over mountain ranges.
There is a perception that weather will be a real issue for passengers. Possibly for a small number. Possibly and depending on whether or not Alaska Airlines makes accomodations for its passengers (I think they’ll handle special circumstances just fine.) Let me also point out that the climates in both Anchorage and Fairbanks aren’t exactly North Pole-like. It can get very cold there during storms and winter months. About the same as what is seen in International Falls, Minnesota where they fly turboprops in and out of all year round.
There is a perception that turboprops are more prone to icing. They are not. The altitudes in which icing occur are altitudes that both the 737 and the Q400 spend about the same amount of time in. Both have anti-icing features and they work well.
And I want to point out one more thing: Fairbanks city population is 31,000 people. The entire metropolitan area is 97,500 people. Waco, TX has 125,000 city population and 235,000 metropolitan population. Waco doesn’t get 737 aircraft either. In fact, Fairbanks is roughly equivalent to Sherman, TX in population sizes and Sherman, TX doesn’t even get commercial air service. Take a minute to go lookup Sherman, TX and we’ll wait until you’re done.
Anchorage – Fairbanks sees about 11 flights a day in aircraft ranging in size from a small 30 seat turboprop to a large 737-400 with 144 seats. ERA Aviation is flying the same class of turboprop between the two cities multiple times per day with zero problems.
So, basically, there is no problem here. Just pride over issues that don’t exist.
The order games have begun at the Paris Air Show and there is one takeaway you should absolutely get from it:
It means absolutely nothing. For at least this year.
Both Boeing and Airbus will land orders, cry out in joy that they won this customer or that but the status quo will largely be maintained.
Airbus will engage in its silly and, in fact, already has by announcing an order for 20 A380 aircraft by Doric Leasing. Until proven otherwise, this feels like a silly order by a company who isn’t a “name” in aircraft leasing and who perhaps doesn’t understand just how limited the use of the A380 is for most airlines. Without a few airlines named as taking up these aircraft, I’m not sure I believe the order.
Boeing has announced its easiest order ever for this year: GECAS is ordering 10 787-10 aircraft.
Also notable is EasyJet who has ordered 135 A320 aircraft (35 CEO aircraft and 100 NEO aircraft) and it’s notable because I think Boeing might have been able to win this on price. Yet it appears Boeing wasn’t even trying to contend.
And Boeing has officially launched its 787-10 with United Airlines being the US launch partner with an order for 20 of the aircraft. Other “launch partners” are British Airways (an order for 10) and Singapore Airlines (an order for 10).
This won’t be a year of shock and awe and I suspect many will be glad for it as the industry has had enough shock and awe over the past few years to last quite a while.
Memphis has heard the bad news. Delta has said that due to continuing financial losses on routes from that city, it is “de-hubbing” the city. The process will start after Labor Day and Delta says it will keep a large presence in the city.
Memphis sees this as bad, I see it as good. Having hub status was prestige but I’m not sure it was real value. In fact, air fares from Memphis were kind of high and while the service frequencies were nice, they probably weren’t necessary if Delta couldn’t earn a solid profit there.
They’ve got Southwest moving in and I think they’ll be surprised to see how Southwest might “luv” Memphis. This is an opportunity to put a lot of point to point connections through Memphis that may serve its purposes far better in the long run. And businesses won’t mind having a significant airline presence that offers useful routes and value oriented prices.
I look for Southwest Airlines to turn this into real opportunity for itself as it can build point to point flights to and from Memphis that will provide real profits and which will fit very well into Southwest’s existing destinations.
William Ris, 65, senior vice president for government affairs. (AA executive now)
Additionally, Dan Garton (CEO of American Eagle) will be leaving and I’m sorry to hear that. I do hope that Garton may have another very good position lined up elsewhere. He had been made CEO and President of American Eagle with expectation that it would become an independent company for him to run. Now, not so much.
These were the right choices. This is a real “A” team lineup. This is not a political lineup but a real lineup of truly the best people for the positions. Will Ris will leave soon but he’ll be of great benefit for the next few years of integration. Beverly Goulet is essential as she knows where all the bodies are buried and she is very, very smart. Maya Leibman is exceptionally talented and brings something that this new airline will need: Someone who has been there and done that on reservations systems. She’ll have the unenviable task of merging systems here and her knowledge of what has already been tried will be very helpful.
If I’m an investor or employee of the company, I am very happy about this announcement.
If I’m middle management at American Airlines, I’m a little shaken and worried for my future.
What this is not is a repeat performance of the ContiUnited merger. Jeff Smisek went political with that merger and consented to keeping United staffers under pressure from then Chairman Glenn Tilton. Retaining those people retained United’s old way of doing things and kept the Continental Breath of Fresh Air from entering the organization. I’m not sure Smisek can turn it around at this point.
But Doug Parker has clearly decided to use those who do have a successful track record and who brought him to this dance. He’s clearly positioning himself to follow the Delta / Northwest model of “how to integrate two airlines” and I firmly believe that this should cause creditors and financial analysts to get much more comfortable with the merger and its approval.
United Airlines would be considered a big player in the ancillary fee department of airlines in the United States. They had really 4 classes of service, for instance, long before most when they adopted Economy Plus. Most recently, they became national news for their decision to raise already high ticket change fees another $50.
If there are going to be fees, I hope more airlines also take United’s approach to offering some value in the process. United is now offering subscription plans that would either allow a passengers to routinely check bags for a year without additional fees or another plan that would permit travel in Economy Plus for a year without additional fees.
United isn’t just offering one plan either. Checked baggage subscription plans offering opportunities to carry one or two bags and also offer the opportunity through widened regions. Their simplest plan (1 bag) in the domestic United States is just $349 and one of their most expensive, two bags checked globally, is $799.
There is value in those fees for the frequent traveler.
Economy Plus works similarly. For a base fee, the traveler would be able to access Economy Plus on a space available basis for $499. It’s $599 if we add in Hawaii and/or Alaska. For global access, it is $699.
But remember that that is on a space available basis and space available comes after top tier elites in that area. There may be value here or may not be.
What’s the catch? Well, top tier frequent travelers already get access to these things and this is really aimed towards the frequent flier that is traveling just a few times a year. It fits a niche.
If fees aren’t going away, programs like these are good values for those who travel more than very occasionally and other airlines would be smart to emulate them.
Congressmen have a well known fondness for Reagan National Airport in Washington, D.C. They can work their 5 or 6 day week and catch a flight from this airport to home in short time. The drive to Dulles can be very painful and particularly so towards the end of a week.
So Congress doesn’t want the merged airline of US Airways and American Airlines (aka American Airlines Group) to lose slots because of their merger. The fear is that lost slots will result in lost routes to home states for Congressmen.
They aren’t wrong to fear this. A divestiture of slots at Reagan National would almost certainly see them fall into the hand(s) of low cost carriers, at least in part. Low cost carriers won’t use those slots to fly to Albany, NY non-stop.
They will be used by a Southwest Airlines to fly to someplace like Austin, TX. Or, perhaps, JetBlue to fly to Denver.
Should the new carrier be allowed to keep all its slots at Reagan National? I’m sure everyone in the airline industry would shout out “Yes!”. Personally, I think that certain airports with Reagan National being a perfect example should not be dominated by one airline. Greater access by other airlines at that airport would be more appropriate.
Why? Because it isn’t all about the people who live in Washington D.C. It’s also about the people who live in other cities who have that need to travel to Washington D.C. A little more competition and a little less domination at airports would be preferable.
I am of the opinion that people complain way too much for taxes and express way too little gratitude for the services provide for those taxes. Everyone complains about road taxes, no one ever speaks positively for the fact that we have an interstate highway connecting two major cities.
However, I also think airlines and airline flights are over taxed. Too much of the infrastructure (airports, FAA, etc) are financed with taxes on airline flights. We’ve reached the point where a double digit percentage of the total cost of a domestic flight are often taxes. That is too much.
In addition, by taxing only airline travelers, we end up not taxing others who benefit from that transportation infrastructure.
It’s not just the passengers who benefit from airports and airline flights. Those airline flights and the ability to fly between point A and point B directly benefit our economies in many ways. The provide a pathway for commerce to take place between two companies or locations or regions that otherwise would not exist.
Now the government wants to raise taxes more on airline flights and couches it as necessary to pay deficits and infrastructure costs and suggest it’s an inflation increase at best.
Taxes were very onerous long before today and they only increase. There are many different taxes and they are largely imposed upon passengers to support airports, airport parking, airport roads, air traffic control, etc. And we’re really not done with taxing travelers even at that point.
Consider the hotel and car rental taxes imposed on travelers in destination cities that can often be as much as 40% of the total cost of a car rental or 25% of a hotel rental. That’s excessive.
Passengers should expect taxes on their travel. Airlines should expect taxes for the infrastructure they use. But the citizens of this country need to recognize that they benefit greatly from this commerce whether they fly or not and, as such, should also pay a portion.
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.
