Airtran has expressed how happy it is that they did not win their fight to acquire Midwest Airlines a fwe years ago and notes that they are the dominant player in Milwaukee now. My feelings as well. It is sometimes difficult to grow a business because of the capital requirements but it’s also very, very hard to integrate two airlines and it rarely realizes the expected benefits often touted during merger talks.
Bob Fornaro, CEO of Airtran, has also expressed interest in what might be happening with industry consolidation through purchases and mergers and says they want to play a part. However, it isn’t the role you think. Airtran sees those developments as opportunities to pick up assets such as aircraft, slots and routes that may have to be divested as a result of a merger between two entities.
I’m pretty sure that Gary Kelly (CEO of Southwest) would add a “hell yes!” to that.
The airline industry has seen a lot of growth among the LCC carriers (and whatever you think, US Airways is *not* an LCC carrier despites its stock exchange identifier) and virtually all of that growth has been organic. These airlines do the work of identifying good business targets and building the business of the route properly. Each route between two cities is rally a “mini” business of the airline. To build that business requires investment, time and good analytical skills. Maintaining that business requires good analytical skills and agility.
Legacy carriers shun executives from LCC carriers. If I were to take over as CEO of a legacy carrier, I would head hunt avidly among the LCC carriers. Those are the industry executives with the talent and skills to run an airline today. Unfortunately, legacy carriers tend to promote within and stick with their legacy management corps.
Southwest Airlines has announced that it is canceling its codeshare agreement with WestJet due to numerous and untenable changes requested by WestJet to the original agreement. Read the Dallas Morning News story HERE.
Why am I unsurprised?
It would appear that WestJet’s new leadership wants a new direction and, more important, wants to play with Delta. The upside to that is who wouldn’t want Delta feeding you traffic? Delta is huge and has a large network. The downside is that when you play with Delta, you are, by definition, the junior partner in such an arrangement. CEO Saretsky of WestJet and formerly of Alaska Airlines probably sees multiple codeshares with WestJet as being the best route going forward. Coincidentally, this is a strategy that Alaska Airlines has followed for many years.
Also, coincidentally, Alaska Airlines has recently made moves to be closer to Delta.
Is this good for WestJet? Actually, I really don’t think so. They had an opportunity to be an equal partner in a 3 way North American partnership that would have linked Canada, Mexico and the United States with 3 very good LCC carriers. Service types would match, service philosophies would match and each partner was potentially already prepared to cooperate on things more than just a codeshare. I’m sorry to see this happen as it would have been a great experiment and one I thought had lots of potential.
So, where does that leave SWA? Well, they aren’t saying much other than to just leave the door open to the possibilty of international flights which they’ve done for years now. It doesn’t really reveal anything. However, I suspect they’ve already made a subtantial investment in bringing this capability to their IT systems and they’ll probably pursue it to its conclusion if only to continue on with Volaris, their Mexican partner in this deal.
I think that SWA will pursue flights to Canada. It’s just too easy for them not to do so. The logistics are surmountable in this case. They may pursue the start of codeshare cooperation with Volaris to Mexico as their first goal but I suspect their very next goal will be flights to Canada and lots of them at that. In fact, Volaris can fly those US/Mex flights to SWA focus cities and let SWA carry traffic onward to Canadian destinations. There is a lot of Canadian / Mexican travel these days. I’m not sure if current treaties would allow codeshares via SWA between Canada and Mexico but I already see one way of getting around that.
One thing that does stand out is Southwest’s recurring statement about how “hard wired” they are for domestic travel. No one doubts that but they’ve been saying that for 2 years now. Most airlines would have gotten past that hurdle by now and it makes me wonder that SWA appears no closer to engaging in their Mexican codeshare yet. In fact, the WestJet codeshare was supposed to start first and even now SWA’s statements make it sound as if they’re just getting around to the challenge. Not good.
Also interesting is that, so far, I’ve not found any statements by WestJet on this new development. They are curiously quiet and I wonder about that.
With the news that US Airways and United are in merger talks, the subject of mergers and industry consolidation among US airlines has been reheated to a high temperature again. For the past several years, there has been a lot of talk about the need for consolidation among airlines in the US in order to return to profitability and there are many advocates (such as Doug Parker and Glenn Tilton of US Airways and United respectively).
New fees seem to have brought in additional revenue but no one can seem to really claim that it has changed the equation for earning a profit for airlines. Advocates say these new fees are helping airlines find a path back to earning a profit and I certainly think that experimentation with these fees isn’t over.
Oil is always a frequent component of profitability. Soaring oil prices just two years ago nearly brought several airlines to their knees but also brought huge profits to other airlines who engage in hedging their fuel costs. I don’t think anyone would disagree that a more stable oil market would not only benefit the airlines but a lot of other industries. The wide oscillations of fuel prices have brought a big element of uncertainty to many parts of the economy.
I’m not sure consolidation is really the answer, however. Frankly, I think one big mistake of the 1990’s and 2000’s is that we have permitted airlines to go through bankruptcies (some multiple times) and reorganize themselves rather than being more insistent on a liquidation or two. It’s politically difficult to do so because liquidating a large legacy airline means tens of thousands of people suddenly becoming unemployed.
Yes, the airline industry is a network business to a large degree and network businesses can do better if they grow larger and capture more market share. I question how viable that is over the long term without restructuring other legacy costs as well. I think it is a nice, immediate answer and certainly offers short term (2 to 5 years) gains in share prices but there are other issues that need to be decided as well.
Seniority is king in the airline business and I’ve really come to believe that that is a huge obstacle to health for many airlines. Airlines have to compete on price in the market place but are not allowed to compete on salaries in the employment market place. Union contracts based on seniority are killing many airlines. Mind you, that isn’t to say that airline employees don’t have legitimate issues too, they do.
Airline employees are expected to quite literally work for poverty wages for years before starting to earn a real family supporting wage and then finally make it to a level for their last 10 or 15 years of work careers where they earn extremely generous wages for the exact same work that a junior level employee does for a salary that is unable to provide modest life. This disparity has to stop. Entry level wages should be higher and senior level wages should be lower. Airline crew should be able to move between airlines without having to re-set to the lowest wage scale again. We have enough airlines in this country that it is somewhat absurd to believe that a strike at one major airline threatens the national economy. It doesn’t. Airline employees deserve to be able to agree on a contract in a much more timely fashion. Failing to do this results in an even greater tenacious hold to seniority since it is the only thing that raises wages.
LCC airlines have managed to remain profitable and grow but only by keeping their business model flat with respect to equipment and staff. This allows them to keep productivity high and prevent creeping wages based on a structure that makes weight and distance the prime factor in pay. Actual work loads and skill sets are secondary in paying flight crew.
No, I’m not sure we need more consolidations and mergers and, frankly, I don’t think such things would substantially raise airfares given that LCC’s are pretty adept at spotting opportunities and entering markets. Virtually the only thing that keeps them from certain routes is legacy airlines holding monopolies on airport space or slots. Even then, those LCC’s are very good at looking for ways around those problems to gain a foothold. Notice how vigorously Delta and US Airways are trying to keep Southwest Airlines from gaining more slots in NYC?
The saga of the conflict between Southwest and WestJet continues with Southwest implying that they’ll consider direct competition with WestJet on flights from the US to Canada if the agreed upon codeshare falls through. Many speculate that Southwest is just blustering and that they’ll never fly those routes themselves. A frequent flying friend who has made many trips to Canada and through Canada asked me if I thought they would ever really do it.
I do.
First and foremost, this isn’t Southwest Airlines of 1989. This is Southwest Airlines of 2010 and a very different beast. If you had predicted to people that Southwest was going to institute flights out of NYC’s La Guardia airport in 2006, almost no one would have believed you. Guess what?
Second, Southwest has something that not a lot of airlines have. Employees who relish competion. When this initial codeshare was announced, some of the loudest opposition came from Southwest employees. They recognized that flights to and from Canada could easily be flown by them rather than another company. The pilots were particularly peeved about that and made it known during their contract negotiations. But all employees saw that the company could and, perhaps, should fly those flights themselves. Most also rightly recognized that similar flights to Mexico probably weren’t as easy to do for SWA and were, at best, a long term goal. My point is that SWA employees are very aware of their capabilities and very motivated to succeed as a company.
I think that in the 2 years since this codeshare pact between Southwest, WestJet and Volaris were announced, even Southwest management has realized that they can do more and try more and succeed. That said, Southwest is also an honorable company and I feel certain that their preference is to work out differences and continue with the initial plan. Don’t mistake that for SWA being afraid though.
I think they’ve made some mistakes in the past year. I think delaying the codeshare as a result of re-prioritizing IT upgrades was, in hindsight only, a mistake. However, given the dire conditions SWA was facing when they made that decision, perhaps it was the right decision at the time. Remember that WestJet didn’t have to face those same economic problems at that time, already was experienced with flying internationally and it is somewhat disingenuous to act as if they’ve done all their work while their partner is lagging behind. WestJet knew what it was getting into when it made that agreement.
Southwest recognizes that future growth is going to come from entering markets that previously they avoided. That isn’t abandoning their model, it is accepting that the future is different. As a function of entering these kinds of new markets, there will be new challenges for them and they’ll make mistakes. They have made some mistakes. That said, they’ve also stayed true to themselves and not allowed their mistakes to drive themselves into more mistakes. Indeed, they are quite humble about internally acknowleding their mistakes and not too proud to reverse course and make something right or at least not repeat a mistake.
So, yes, I do think that SWA can and would enter into Canadian markets. They have a number of focus cities where that would make imminent sense for them such as Detroit, Chicago, Baltimore and even Seattle and Denver. They could change the NYC – Toronto market if they found enough slots at La Guardia to start flights on that route.
Southwest’s real business model is about earning a profit consistently. If adding routes to Canada can be done a consistently profitable basis and it yields profits that are better than other opportunities, they’ll do it remarkably quick.
Personally, I think this WestJet spat will get worked out but I think that will happen at the chairman level rather than the presidential level.
Southwest Airlines issued THIS press statement on April 1st in response to WestJet’s comments on forming a codeshare agreement with Delta. The part that really catches my eye is this:
“A codeshare between WestJet and Delta, as indicated in media reports, could be inconsistent with the agreement presently in place between Southwest and WestJet.”
It’s not good when one party is responding to the other in the press. One would presume that someone at SWA attempted to find out what is going on at WestJet and was either ignored or given no substantive information. Ordinarily, SWA doesn’t really play things out like this in the press. Clearly a message needed to be sent.
And the message does clear up some things with respect to SWA. Apparently there has been communication and agreement going on between the airlines in this partnership and apparently SWA is on schedule (at least internally) to start this codeshare. Well, that’s good news.
A little context on WestJet’s part. Their CEO, Saretsky, is brand new in the job and made his comments before officially becoming CEO on April 1st. Their former CEO, Sean Durfy, is relatively young and relatively new in the CEO position (about 2.5 years). I’m beginning to wonder if there is some dissatisfaction with the leadership of this airline on the part of the chairman (and founder), Clive Beddoe. I’m also wondering if Saretsky wasn’t speaking a bit out of turn when indicating a preference towards Delta rather than Southwest.
I also question whether WestJet can really be bought off by the world’s largest airline with an offer of a few New York City slot pairs and the promise of some feed into the Canadian network of WestJet. The more I think about this, the more it occurs to me that Delta quite likely is already flying to most destinations it requires in Canada via connections in Salt Lake City, Minneapolis/St.Paul, Detroit and New York City. In other words, is Delta playing WestJet in order to make Southwest uncompetitive in New York City and is WestJet really that naive?
Southwest’s announcement also seems to indicate that they’re willing to press on to Canada and why shouldn’t they? With the IT upgrades done, there really isn’t a reason why they can’t start flying to quite a few destinations in Canada and no reason why they can’t do it as economically as they would any US destination. I’m sure we’ll hear more about this relationship in the coming weeks.
The Dallas Morning News ran THISstory on Wednesday about new cooperation between American Airlines and jetBlue. In short, the two airlines will swap slots at JFK airport (AA to *gain* 12 slot pairs) and Washington Reagan National Airport (jetBlue to *gain* 8 slot pairs) and start cooperating (interline agreement) on flights where they do not compete.
It will become possible for a passenger in Burlington, VT to fly jetBlue to JFK and then seemlessly transfer to American Airlines to fly to London Heathrow airport. This is a good thing for both airlines. AA gains the opportunity for more feed into its major trunk routes (not flown by jetBlue) and jetBlue gets feed for its more obscure routes not served by American or American Eagle. These feeds will take place both at JFK and Boston’s Logan Airport in the Northeast and, most importantly, these “complete” flights are only available via American Airlines at the present. jetBlue doesn’t have the capability to offer such things yet.
Both airlines get to increase their potential strengths at airports where they want to compete harder and it’s a deal that is much more likely to happen with the FAA’s blessing than the Delta/US Airways deal currently under proposal. The deal also likely works to keep an airline such as Southwest Airlines or Airtran marginalized at those three airports without appearing to suppress all LCC competition since the deal is with jetBlue after all. This is smart.
However, it greatly disappoints me that jetBlue has taken this route. It isn’t unprecedented since jetBlue is already cooperating with airlines such as Lufthansa (who owns 17.5% of jetBlue) and Aer Lingus but it is disappointing because it shows jetBlue willing to be a 2nd tier partner with a legacy instead of building upon its own successes. Can you really see jetBlue adding flights from the NYC area to destinations in Texas or Chicago now? That would be highly unlikely.
It would appear that jetBlue has decided the status quo is good enough instead of challenging other airlines in new markets as was their mandate and focus when starting the airline. It’s a safe play and even profitable in the short term but it limits their ability to compete and deliver new service in the long term. Now it sounds as if their strategy is to be more like Alaska Airlines (friend to many, enemy of very few) and a lot less scrappy like Southwest, Airtran or Frontier/Midwest.
Southwest Airlines has announced HERE that beginning in the 1st Quarter of 2011, they will begin flying all of US Airways domestic routes. US Airways, unable to get its pilots to agree among themselves much less on a contract with the airline, has decided it would be more profitable to turn over their domestic network to Southwest Airlines and form a joint partnership that has Southwest feeding traffic into US Airways robust international system of flights.
The aircraft Southwest will use for these new routes will feature Southwest colors with the US Airways logo on the tail. In return, US Airways will keep its own colors on its international aircraft but add the name “Southwest” along the upper portion of the aircraft fuselages.
No US Airways flight crew will be moved over to the Southwest system nor will existing aircraft fleets be exchanged. In a related announcement, Southwest has accelerated its existing orders with Boeing and announced a new 225 aircraft order for 737-800 and 737-900ER aircraft to be used to serve the former US Airways system.
Two days ago, the new CEO of WestJet stated that WestJet would be pursuing a code share agreement with Delta with the potential to implement this either before or in place of their existing agreement with Southwest Airlines. Several reports tie this in with the proposal to give WestJet some slots at (5 pair) at La Guardia Airport in the Delta/US Airways slot swap deal currently being discussed.
First, I continue to be skeptical that there will be an agreement between Delta and US Airways for this major slot swap between La Guardia and Washington National airports given both the FAA’s and Department of Justice’s attitude towards this deal. Other than Delta and US Airways, no one is thrilled about the idea of Delta and US Airways getting to “pick” their competition by granting these slot swaps to airlines who aren’t poised (and never really will be) to compete with these two legacy airlines. If a deal does go through, I expect it will look different than the current proposals and it will involve a transparent auction of these slots to a high bidder.
Nonetheless, this is a bad announcement for Southwest airlines for a few reasons. First and foremost, the thundering silence that continues from Southwest since this announcement was made sort of indicates they were as caught off guard by this as anyone. It isn’t good for such a large airline to appear as unprepared for this development as they seem to be.
Second, the original deal between Southwest and WestJet is part of a 3 nation alliance between Southwest, WestJet and Volaris, all airlines operating in the tradition of being LCC carriers and all with a model similar to Southwest’s own. Southwest was clearly the leader in this alliance and it appears that it’s delays in getting themselves positioned to start this alliance have hurt this agreement. Acting like the 800lbs gorilla and then not getting the job done in time doesn’t make you appear to be an agile player in the airline community.
Southwest has said the delays came from making other changes a priority within their IT system. Whilethere are some changes such as new business class options, none of those changes to date are the kinds of things that should have delayed such an alliance for a year or more. No other airline would have taken nearly as long to integrate into that kind of alliance and that points out problems with Southwest’s IT system. Southwest is accustomed to going it alone on their systems (they do not, for instance, participate in a global reservations system) andhave done so for nearly 20 years. Now, that departure from industry norms is starting to hurt them apparently in being unable to make these kind of changes and integrations in a quick and agile fashion.
Third, Southwest’s image of leadership among LCC carriers is further hurt by this. Many founders of LCC carriers have pointed to Southwest as their inspiration for how to run a modern airline. No doubt that this is true but it also points out that these 2nd and 3rd generation LCC carriers have become more responsive to both their customers and the potential for new business than Southwest has managed. Losing that image of leadership is a bad thing for Southwest both externally and internally.
Making substantial partners wait to engage in a strategic alliance that, by all accounts, should be very beneficial as well as ground breaking is neither smart nor a good show of leadership. Canada really only has 2 airlines capable of entering into an agreement like this and the last thing you want is to annoy the 2nd largest airline of Canada into exploring options with a heavy hitting airline such as Delta and its associated alliance, SkyTeam. Volaris may prove to be more patient but you have to wonder if they aren’t asking themselves if there is another partner in the US who might be interested in them. A partner such as jetBlue or Virgin America or even the Republic Airways two-headed beast, Frontier/Midwest.
This doesn’t mean that a wholesale change in leadership is called for at Southwest but it may well indicate that it is time to find ways to become a leaner, more agile competitor. The days of simply having to show up and winning customers are over. Witness the competition that SWA is seeing in new markets such as Denver and Milwaukee. In this industry, winners attack and grow rather than ponder and play it cautious.
First there was this video from Southwest Airlines promoting the fact that the first 2 bags on SWA fly free. The “competitor” is blurred out but quite obviously Airtran, their closest rival in the LCC wars. (In fact, there is an interesting mistake in the interior scene of the “competitor’s” aircraft.)
Then Airtran came back with their own video and I have to say that their response was, in my opinion, a direct hit on Southwest Airlines. Well done, Airtran. Now we’ll see how Southwest comes back (and you can believe they will.)
Since I wrote this post HERE in mid January, I’ve kept an eye on airfares between these two cities. A check made yesterday revealed that advanced purchase (and not too advanced as in less than 30 day) fares are now at $158.00 on American Airlines and Airtran. They are a few dollars higher on Midwest and a few more dollars higher on the Frontier flight that is actually the Midwest flight.
Airtran hasn’t started these flights yet and when they do, they’re planning to use SkyWest CRJ-200 aircraft for those trips. Not the most comfortable airliner for 2+ hours of flight. It’s interesting to note that since I last visited this subject, AA has upgraded its equipment to CRJ-700 aircraft on most of the flights with just one ERJ-145 remaining. Midwest/Frontier continues to use Embraer E-170 equipment and both those aircraft are quite tolerable for the trip.
Even more interesting, Southwest Airlines is now offering not one but two “direct” flights with no plane change between the two cities and their cheapest available fares match Airtran’s offerings. The flight times are 3 hours, 10 minutes which is just shy of an hour more than the others nominally. In other words, they’ve shortened up the transit time by 20 minutes and when you consider where you live in Dallas, flying through Love Field just might make that a wash at this point. You also get to fly a mainline Boeing 737 instead of a regional jet. The real kicker is no bag fees on Southwest which, in many cases, makes Southwest the cheaper flight and potentially no longer than the others “door to door” for many in the Dallas area.
I would say that if Airtran does expect to keep this route, the CRJ-200 isn’t going to be adequate for that route. They’ll need to offer the kind of service they have on their B717 aircraft to siphon away traffic from both AA and Midwest.
Anyone who follows this industry is well aware of labor problems at many US and European airlines. There have been at least three major strikes I can think of in the last month in Europe (BA, Lufthansa and Olympic). American Airlines seems to have had almost its entire operations labor force at the negotiating table for the past 4 years and not a one of them seem to be acting like a deal is soon to be had with several threatening to ask for release from negotiations to begin a 30 day cooling period and one (the TWU) who has asked for such a release.
Even Southwest Airlines has had a couple of snags in the past year with its pilots union and their TWU local. Delta’s flight attendants are making noise about trying to unionize again and this time they may have the votes for it when you consider that Northwest’s flight attendants were rabidly unionized. Frontier employees haven’t rebelled yet but I kind of wonder if that isn’t closer to happening than many realize given Republic Airways’ direction.
US Airways has problems with its pilots’ unions not being able to get along well enough to come to a consensus on whether or not the sun rose in the east. I do wonder how long it will be before we see the unions at United Airlines begin to overheat much like American Airlines’ already are.
Sure, there are some airlines who are managing to get along with their operations employees pretty well. That includes Southwest Airlines, Continental and even Frontier (for the moment.) However, a pretty vast number of airline employees seem to be simmering just before the boil over point and I’ve begun to wonder if there doesn’t need to be a better industry solution to collective bargaining than what they’ve got now. With the way things seem to be headed, particularly at legacy airlines but certainly not limited to them, there could be a truly momumental perfect storm of labor actions in the US.
I won’t argue who is paid well, paid poorly or over-paid. I certainly won’t argue who is or isn’t over worked either. Frankly, if you think being an airline employee in operations is a cush job, you really don’t have visibility into just what those jobs entail and just how many hours a day they consume. But if there is this much job dis-satisfaction among these ranks, clearly change is called for and I really don’t think this is all about money.
I think this is about job satisfaction. Yes, the union leadership (such as it is and that ain’t much) expresses the grievances in monetary terms but I really don’t think it’s all about the paycheck. I think it’s about feeling job satisfaction and feeling some meaningful reward from the job which, yes, includes salary levels. For airlines, I think this about a need to have greater flexibilty and ways to improve productivity that aren’t constrained by decades old rules.
Who is going to find a better way in this system which is largely based on 1930’s law and habits? I really wonder if there is any industry leadership who has the ability to find a better way.
I found THIS little nugget today announcing that Airtran will hold its annual shareholder meeting in Milwaukee on May 18th this year. At first glance, I might accuse Airtran of just pandering to the Milwaukee market. On further reflection, this is a bit more than just pandering. It’s too much effort for just pandering. It strikes me more as respect quite honestly.
I’m sure most see this as a shot aimed at Midwest Airlines since Midwest is considered Milwaukee’s home town airline. But I’m not sure it is aimed at Midwest so much as it might be aimed at both Southwest Airlines, American Airlines, Delta and United. There just isn’t any brand for Midwest even in Milwaukee anymore and to think it might still exist is to not give enough credit to those who live in Milwaukee. They aren’t fools, they can read newspapers and they’re just as smart as any other market.
But Milwaukee is a loyal city and I think Airtran is making the right moves in Milwaukee. Rather than just showing to offer a good fare, they’re investing in the city and I suspect that Milwaukee will respond to that. That’s why I think this move is aimed much more at Southwest, American and, yes, even United and Delta. AA, Delta and United all serve Milwaukee primarily through their nearby hubs and have never shown much respect for Milwaukee as a market. At least not until Airtran and Southwest showed up.
Southwest is the newest airline to arrive but Milwaukee has courted them for years without success. Southwest didn’t pay too close attention to Milwaukee until Airtran did. Only Airtran showed up, grew their presence in the market and now is respecting the city by making it a focus city, an employee domicile and now their shareholder meeting site. This all is very smart on the part of Airtran and it will get noticed.
There has been a great deal of talk about Midwest Airlines and Republic Airways’ intention to consolidate that brand with its Frontier brand in the near future. Most notable is that few people seem to be decrying the loss of Midwest Airlines anymore. Certainly not like they were when Airtran attempted to take them over a few years ago.
Midwest ceased being an airline last year and became a brand only. When Frontier and Republic equipment began to fly its routes, the distinguishing features of that brand were eroded heavily. Now it’s basically a logo and a location and no one seems to care anymore and that means the brand has little, if any, value.
Will Frontier be the new brand? No one has really said much about what the plans are but there have been a few vague hints that it might be a new brand altogether. The fact that anybody is talking about this in vague public hints really shows just how much Sean Menke is already missed in getting this thing figured out.
Frontier has an excellent brand and one that could well work in Milwaukee just as good as it has in Denver. Frontier had better service differentiation and a better selection of products than Midwest ever hoped to have. It’s nationally known and folks in Denver have learned to be very loyal to it. Others could too.
A new brand is the mis-step that I think many are wondering about. You can only have so much of a “virtual” airline in operation until people begin to wonder who they’re flying with. Dilution of both brands in favor of a much more generic but new brand is not a good idea.
There are signs the industry is, perhaps, starting to slowly recover. That recovery is likely to be slow and painful and it isn’t the time to be trying to introduce yet another new airline brand to the country and compete against established airlines who are arguably better situated to compete already (SWA, Airtran).
Republic would be far better off to work on consolidating the operations between both Midwest and Frontier and standardizing on the Frontier brand which means getting the Frontier services onto all aircraft too. Marketing and sales then will have much better guidance on what they’re selling and who they are selling it to. No matter what the brand’s name, it’s time to get a cohesive marketing plan together and begin executing it on all fronts including online social media as well as local sales efforts. Wait too much longer and Frontier, as a brand, is liable to go the way of Midwest and I’ve already pointed out that that brand suddenly has no value to anyone anymore even in its home market.
Instead of mergers galore, I think what this industry really needs is growth.
To most people, that sounds crazy in light of the present economic situation in the industry. It depends on who I think should be growing, doesn’t it? We need to see more growth and expansion from airlines like SWA, Airtran and jetBlue. Heck, let’s throw Virgin America into that mix too. Those are the airlines that are going to drive service and price in this business for the foreseeable future.
Now, how they should grow is up for debate. Each of those airlines is pretty good at what it does and how it does it so trying to merge with an equal really isn’t a great idea. They shouldn’t dilute their corporate culture in favor of growth at any cost. However, that doesn’t mean you can’t pick up a deal here and there. Frontier was a perfect example of an airline that would have been a good buy for any one of those airlines. In hindsight, there should have been a bit more of a bidding war for Frontier.
There aren’t a whole lot of smaller airlines in this country. Frankly, I think Virgin America is more of a candidate to be taken over than to consume someone else. Sun Country Airlines still looks good to me, particularly for someone who wants an good entry into the Minneapolis / St. Paul Market. There was a time when it would be very unwise for most airlines to attempt to compete with Northwest Airlines in that market. Now that they are Delta, have 48 hubs and are headquartered in Atlanta, I suspect an airline could get an edge into that market.
But there are other growth opportunities out there. DFW has space to be a focus city for an airline. So does Houston. Las Vegas is no longer to be a hub for US Airways. St. Louis is an old city but it is still a city of industry with an airport that has nothing but crickets chirping in it. There are plenty of regions lacking in good competition still.
I don’t think a merger of legacy airlines will do anyone any good. Oh, it would take come capacity out of the system which would probably raise prices on *some* routes. I’m not sure if that is “good” for the consumer. It might create further dominance of a region or hub and I don’t see the benefit in that. The Delta/Northwest merger was one that worked because it labor issues were settled, there wasn’t a whole lot of overlap between the two companies routes and each company was accepting of the idea. Those circumstances don’t occur very often.
Most everyone is aware of the controversy going on between director Kevin Smith and Southwest Airlines. SWA removed him from a flight stating they believed him to be too big to fit the seat. Kevin Smith tweeted and blogged about the issue, SWA has responded a number of times with apologies, etc.
Well, I just read SWA’s Nuts About Southwest Blog post about Kevin Smith HERE. I have to say that I had decided early on to not report or comment on this because, frankly, my reading of the incident yesterday caused me to believe both were a bit wrong in their actions and responses. Now, I kind of wonder what’s going on at SWA quite a bit more than I wonder what’s going on with Kevin Smith.
You see, one of the very telling things about Kevin Smith’s tweets and blog posts is that he got names. Names of captains, flight attendants and gate agents. Another item of interest to me is that no one disputes that he fit into the seat with armrests down and no seat belt extender. Yeah, he’s a big guy but he isn’t *that* big of a guy. He certainly isn’t THIS person. Any of the photos I’ve seen of him over the past 2 days leads me to believe he’d fit just fine on Southwest’s seats.
First, the captain wants him off. Then, it wasn’t the captain but other staff and in order to expedite the flight. Huh? This was an Oakland to LA flight. It’s not that long. You seriously want to tell me that comfort was the issue for anyone? Do you really want to say this was in order to expedite the departure of a flight when he was already seated and no one appears to have complained?
I’m not sure if some person or persons are lying at SWA. I don’t believe that SWA is malicious like this as a corporation. But someone is either not telling the complete truth or, worse, concealing a hidden reason for these actions.
Southwest has apologized, yes. Unfortunately, by engaging in this debate, their apology is a bit hollow this time around. They should investigate deeper, admit any issues whether they had to do with capriciously applied corporate policy or poor judgement on an individual basis. To me, it just seems as if there is more to this story than is being told completely. The odd part is that the story has evolved considerably on SWA’s part and not at all on Kevin Smith’s part. Stranger still, SWA continues to not refute any facts cited by Kevin Smith.
Some time ago, US Airways and Delta Airlines came to an agreement to “swap” slots between New York’s La Guardia Airport and Washington DC’s Reagan National Airport. Delta would get a large number of slots in New York and US Airways would get a smaller but more important number of slots in DC. Each airline would get to consolidate their power in the city they’ve chosen to be a power player in.
This required regulator approval from the Department of Transportation and the DOT finally issued their ruling on this. They were OK with it only if each party sold a number of those slots in the respective markets. And they preferred that the slots go to “slot needy” airlines (i.e. airlines who have no slots at those airports or who have an extremely limited number of slots.) In other words, the DOT wasn’t completely comfortable with just how consolidated each airline would become in each market.
Both airlines expressed dismay and offered that they wouldn’t necessarily go through with the deal if those were the conditions. Both felt that the consumer was losing out on improved benefits in those markets. Oh, and of course this is the fault of the Obama administration according to some pundits.
Now, the airlines don’t want to give up those slots to the slot needy because it potentially allows a toehold into two markets that have been very difficult for LCC carriers to find access to. Southwest Airlines, for instance, only managed entry into the La Guardia market by buying the assets of defunct ATA. jetBlue would love access to Washington National but there has been no real opportunity there either. Frankly, both Delta’s and US Airways shuttles between NYC and DC would be pretty threatened by a jetBlue operation running between those two cities and Boston.
Frankly, I’m glad the DOT put those conditions on this swap. First of all, no consumer ever benefited from an airline consolidating its position in a market. The benefits airlines speak of are things like connections to other destinations, through ticketing to other destinations, etc. The benefits are *not* better prices. Ask people how American Airlines is doing in Dallas ever since Delta withdrew from the market.
I don’t mind airlines merging and growing bigger but I do mind airlines carving out domains in certain markets with regulatory approval. Those markets aren’t monopolies to be granted. And in those two particular markets, there isn’t exactly a limited number of customers available.
In fact, in those two markets, LCC carriers have been shut out largely by large, legacy carriers who have “sat” on their slots rather than give them up or sell them. It is quite literally to their benefit to operate a slot pair with a 40 seat RJ rather than to give the slot up because the introduction of competitive fares from LCC airlines who might get a toehold will literally decimate their yields in those markets.
But keeping competition away and even allowing airlines such as Delta and/or US Airways to consolidate their strength in such markets is tantamout to providing artificial support to airlines who have cost structures that are no longer viable in most of the United States. I do wonder what the anti-Obama administration pundits have to say about this kind of government support for legacy airlines?
The truth is, we need to distribute *more* of the wealth in those slot controlled markets, not consolidate it. We need other airlines encouraged to enter those kinds of markets and provide solid competition on routes that are held in a stranglehold grip by legacy airlines. That is what will benefit the consumer.
Several airline journalists and bloggers have posted their reactions to Air New Zealand’s new coach seating that has the possiblity of becoming a kind of 2 or 2.5 person “couch”.
I have to say that unlike all the other reactions I’ve read (very positive), I’m wholly unimpressed. Granted, I wasn’t there to “experience” it but from the photos the seat cushions themselves look awfully thin for true comfort. Despite the models looking like they’re luxuriating in comfort, that does not look like a comfortable way to relax even on an airplane.
Yea! Premium seating got even better for customers of New Zealand. (I’m being sarcastic) Economy customers got introduced to 10 across seating on their 777s. Bleagh. Economy purchasers can now spend even more money to lounge on something that, frankly, isn’t lie flat and doesn’t really look comfortable at least for taller, bigger or older people. I’d rather have more seat pitch and, yes, the real economy seating on the 777s will have 33 inches seat pitch (and let’s not get carried away celebrating) but I just don’t see the real advantage to the couch seating. I wish I did but I don’t.
What this airline world needs is a better seat for domestic 1 to 4 hour travel with a bit more than 31″ of pitch. Let’s celebrate and dance when we see that from a mainline carrier in the United States. Heck, Airtran has a comfortable en0ugh seat that with just 2 more inches of seat pitch, I’d be dancing in celebration of them. Same for Southwest.
I want to see some seating innovations for the typical customer actually get implemented.
Southwest’s 4th quarter financials have been released and contrary to analysts expectations, Southwest not only made a profit in the 4th quarter, they’ve made a profit now for 37 years in a row. For details on the numbers, click HERE.
I’m sure many will attribute this entirely to Southwest’s “no baggage fees” campaign but I think that is doing a disservice to Southwest. I’m quite sure this has more to do with having an excellent service product, excellent staff and a new CEO who appears to have come into his own and really is a new SWA leader. Congratulations Southwest.
Southwest Airlines’ blog, Nuts About Southwest, had a post about their cabin interiors which you can view HERE.
If you think aircraft seat pitch hasn’t changed over the years, take a look at their photos. Particularly the first two photos of interiors. The seat pitch is dramatically more generous than the last two photos. The seat pitch shown in the first photo would, at a guess, exceed that of United’s Economy Plus on most aircraft.
