A nice mid-afternoon laugh:

 

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Alaska Airlines is doing something pretty innovative in their cockpit.  They’re giving their pilots iPads for use as an Electronic Flight Bag.  Currently, pilots lug around as much as 25 pounds of paper that includes manuals of various sorts during their work day. 

Now they’ve got a 1.5 pound iPad and, by all reports, it only is lighter but quicker and easier to navigate to the required information.  It even saves them money over the long term because that is 20 pounds of weight times two they’re no longer carrying with them on every flight.

This was a great innovation and they expect to also include approach plates for various airports in the near future.  I would even expect to see this adopted for flight attendants (who also have to access large paper manuals) sometime in the future as the technology is proved through pilot use.

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With the various mergers and consolidation that we’ve seen over the past 3 years, there is quite a bit of speculation as to who is next in the merger game in the United States.   The truth is, with the exception of some very small players, I see no opportunities.

Sun Country is actively looking for a purchaser and I think it will find one but it won’t be for Sun Country’s business nearly as much for Sun Country’s Minneapolis / St. Paul gate space and, perhaps, a few routes.  Two candidates as buyers come to mind in this area:  Southwest and Frontier.  Both should find the opportunities in MSP attractive and Southwest is liable to also be attracted to the staff and equipment Sun Country is flying.  Sun Country flies the 737-700 and -800 and getting their hands on the -800 of which there are 10 available could help SWA get a jump start on an aircraft it needs.

Frontier has a little bit less incentive for MSP.  The aircraft fleet doesn’t match and they already have hubs and/or focus cities bracketing MSP in Denver, Kansas City and Milwaukee.  But getting to compete against Delta in MSP where it is by far the dominant airline could be attractive to Frontier. 

As far as other airlines go, I just don’t see it for now.  Airtran will be going away this year.  JetBlue is doing OK and while I think it could stand to grow, nothing is available and an attractive fit in areas where it could grow.  There is the ever so slight chance that JetBlue could make a bid for Frontier but Frontier’s new management hasn’t had very long to make a go of it with that brand and it doesn’t seem like they would want to be consumed.

Alaska Airlines is very profitable and doing very well with its multiple relationships with various legacy and international airlines.  They could be attractive to purchase but I think they would seriously resist overtures unless the economics just made their shareholders rich. 

American Airlines has too many labor problems and is busy coordinating with its OneWorld partners at this time.  This is an airline whose house is not in order and whose leadership is not really interested in acquisitions and who is not very visionary to begin with.   Without new and radically different leadership, I presently see AA maintaining the status quo.

US Airways is pretty profitable and has their act together in many ways operationally speaking.  They, too, have labor problems but somehow management manages to sit back and let labor fight among themselves while earning profits.  This is another airline that could stand to grow and the most attractive place to grow would be internationally.  The bad news is that they don’t have any long haul aircraft on order except the A350 and that isn’t due for quite some time.  What’s worse, there is no internationally strong airline for them to target for another purchase.   Obtaining long haul aircraft isn’t financially easy to do presently due to constrained credit markets and the popularity of their choice in long haul equipment (the A330.) 

In addition, in light of the uncertainty that fuel prices and the economy present, I think that any growth that airlines choose to do will be slow, methodical and very cautious.  It will be organic and through upsizing aircraft rather than many new routes. 

The merger game of this decade is still undecided.  Certainly Delta appears to have done well although their profits still seem very dependent on fuel prices.  But United is far from complete and they’re already experiencing more problems than Delta ever did.  Southwest and Airtran are working hard to consummate their relationship but Southwest has stumbled as much as they have succeeded in the past 2 years.  There is nothing to say that SWA will execute their merger with Airtran smoothly so far.   We hope they will but we don’t know they will.

Look for it to be quiet in the merger and acquisition game for the next 12 to 24 months absent the possibility of a few small acquisitions.  I expect well see the alliances spark up a bit more in the near future, however.

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I wonder if I am the only one grossly underwhelmed by airline performance in the 4th quarter.  American’s performance is, at this point, embarrasing to the company’s leadership in my opinion and they hold on, in my opinion, only because of an ever thinning smokescreen.   Delta only managed to eke out $19 million and for an airline that had charged through most of 2010 with impressive profits, you have to ask “why” it was so dismal.  Even if you allow for weather disruptions, it still kind of stinks.

ContiUnited (I’ll stop using that moniker one day soon) managed to beat expectations but still posted a significant loss and let’s not forget that both of these airlines were performing exceptionally well prior to the consummation of their merger.   Even Southwest remained guarded abouts its prospects going forward despite a reasonably decent fourth quarter result.

Are rising fuel costs a problem?  Certainly but they aren’t a problem anyone was unaware of.   The same is true of labor productivity.  These are pretty well known variables and if you don’t know how to manage those effectively at this point, it is time to leave the business.

When US Airways manages to stand out among our airlines given the inherent weakenesses they have in the US marketplace, you have to ask who isn’t doing their job, no?  Alaska Airlines even shined and that is an airline who has all the costs one would associate with any of the legacy US airlines. 

It certainly points out that mergers aren’t the solution to everything and capacity management doesn’t necessarily ensure profits.  In fact, I wonder if this excess of restraint isn’t effecting demand in general and driving customers to other options secondarily.   There is a reason why Southwest keeps running up its revenue score. 

At some point, you have to go out there on the playing field and compete.  Competing isn’t just offering the best price, it’s earning that customer for more than one particular flight.  With all that the airlines have implemented to enhance their revenues, are we finally seeing the results of that behaviour towards consumers?  I certainly think its a important part of the equation.

It’s time to put on the pads and get out on the field ready to play rough and compete.

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At the beginning of each new year, I like to review what I thought would happen over the previous year and where I think things might go in the next year.  Let’s take a look.

North America:

I thought that not much would happen with AA labor in the past year and that pretty much was the case.  We’ve now seen several years of virtually no movement on solving these issues and I suspect that 2012 is the year that we see some kind of movement.  Look for the flight attendants to be the aggressive parties but the pilots to be the leaders.  All they need is a management group that wants to get something done.  This might end up being a make or break year for AA CEO Gerard Arpey and it could well be based on coming to an agreement with their labor groups.

United Airlines (and Continental) really didn’t go where I thought which was the status quo.  Instead, they merged and got going on getting somewhere and I like that.  I didn’t think they would merge and said so at the beginning of last year.  They proved me wrong.  However, I think CEO Jeff Smisek hasn’t considered carefully what he needs to get agreement on to move forward with each phase of the merger.  Look for this year to be good for United financially but bad on getting labor groups to agree on something.  I don’t think they are headed in the same direction as US Airways . . . yet.

This is a year for Delta Airlines to continue rationalizing its routes and aircraft.  They spent much of last year doing so and saw great financial results.  However, their goal of a sustained 10%+ profit margin makes me think we’re going to see some weird stuff out of them somewhere around the beginning of spring.  Probably in the form of new and innovative fees.

US Airways pretty much performed as predicted and I like how they are earning a profit but I hate how they still have no agreement with their flight crews that will permit them to quit operating two airlines in one.  If Doug Parker were to have a New Year’s Resolution, it should be to hire someone who’ll get that taken care of this year.

LCC(s) and Regionals:

I didn’t see a merger partner for Southwest except, perhaps, Sun Country.  Southwest proved me very wrong on that but I like the results.  One concern I have is the somewhat “plodding” progress towards consummating this merger into one company.  Does it indicate a plodding approach to actually consolidating operations?  One good thing is this brings the potential for greater international flights and, hey, Southwest, consider just keeping that Airtran reservations system and then spending some real time to pick or develop a new one that will last another 30 years.  You could do a lot worse.

Frontier/Republic is holding its own and I thought they would hold their own.  I think they’ll hold their own this year but I don’t see them merging with anyone and I don’t see them growing subtantially either.  Brian Bedford could prove me wrong and I hope he does.

Airtran made the Milwaukee market.  They deserve the credit for the huge growth that city has seen in air travel.  Southwest needs to commit to doing the same when they lead the game.

I slammed Virgin America a few times last year for appearing to be afraid to compete.  In particular, with American Airlines.  Finally, Virgin America made the plunge and came to DFW with flights from both San Francisco and Los Angeles.  I liked the move and I think there is room for them to grow here.  Time will tell.  One thing I’ve noticed so far:  AA doesn’t seem to be attacking them quite as badly as one would have expected from AA just 5 years ago.   Mr. Cush, let me suggest that you could really do well with some flights from DFW to the NYC area.  In particular, to Newark. 

Alaska Airlines has moved closer to Delta in the past year and that worries me a bit for Alaska.  They’ve generally been an airline willing to do a deal with anyone that made sense.  Now, they appear to be more and more the Delta lackey and that could harm them in the long run.  Another thing:  Alaska doesn’t have any more logicical merger partners that make sense.  American Airlines may have missed an opportunity here by not getting closer to Alaska instead of withdrawing more and more. 

I don’t think we’re going to see any big mergers in the US this year.  We might see one minor merger and that’s OK with us.  I think this year we’ll see legacy and SuperLegacy airlines attempt to earn as much money as they can to retire as much debt as they can and to bank as much war chest as they’re able.  However, I see competition heating up this summer and I think the LCC and new entrant carriers are going to put pressure on the legacy and SuperLegacy airlines in the form of adding capacity *and* routes.  The question is, will the industry discipline we’ve seen hold strong or will someone crack?

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It’s been announced that jetBlue and Emirates will have an interline agreement functioning through JFK airport and within the next few days, it will be possible to buy thru passage to destinations between the two airlines.   JetBlue has been arranging and aligning itself with a number of airline partners through this type of agreement and Emirates makes the seventh such agreement.  American Airlines was announced just a few months ago and jetBlue has been enjoying an arrangement with Lufthansa (a major shareholder with seats on the board) for some time now.

CEO Dave Barger has described this as an open architecture and that means they are doing deals with whoever it makes sense to do a deal with.  The problem is the potential for conflict among the various partners.  For instance, one can only imagine how amused Lufthansa was to learn of this since their CEO has been a vocal critic of the advantages that Emirates enjoys in international travel.  

This isn’t exactly new.  Alaska Airlines has been engaged in similar practices with a variety of partners both domestic and international for years.  In Alaska Airlines’ case, it’s made sense and worked to a fair degree although in part because Seattle, it’s hub, is not a hub or really a focus city for anyone else.   However, over time, Alaska did business with so many partners who were competing with each other individually, it began to annoy some.  For instance, AA has been gradually drifting away from its partnership with Alaska and Delta has been strengthening this partnership.

Ultimately, Alaska has found that it really does, in a sense, have to dance with the partner who is making a difference to their bottom line. Of late, that’s been Delta and when one airline substantially bigger than you starts contributing significant revenues to your balance sheet, it is only a matter of time before it starts conditioning those results upon receiving certain concessions.

JetBlue sees opportunity and there is opportunity at present from all of its partners.  However, over time, someone is going to start making a bigger difference to the bottom line than someone else.  Emirates has great potential for this as does American Airlines.  Just between AA, Emiratese and Lufthansa, you have two airlines aligned with different alliances and one airline who isn’t but who knows how to provide massive long haul feed.  The potential for conflict is huge in the future.

Maintaining some kind of balance between its partners is going to be key to keeping this open architecture.  Like any business, dependence upon one partner can lead to inequalities that drive your business in directions you never wanted to go in.  The size of airlines that jetBlue is partnering with indicates just how massive that potential is and no one should ever make the mistake that a huge airline won’t one day decide to use its influence to diminish the influence of other airlines its competing with. 

Frankly, I think it benefits a small airline to pick a dance partner and stick with it.  If jetBlue wanted to enjoy feed from other airlines, it would have been better served to have chosen an alliance and worked within its system where there is some understanding that picking apart a partner is counterproductive.  Under the current model, no one partner has any great incentive to remain loyal if the competitive environment evolves.

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Update(Nov. 9th, 2010) :  According to the Vancouver daily newspaper, the couple was contacted last night (Monday, November 8th) and offered full compensation for their ordeal.

. . . like a family scorned.  Expecially a family that understands social media. 

I found out about a problem that a family recently experienced on Alaska Airlines and read the blog that was created by this family after their ordeal.  You can read it at:  http://alaskaairhatesfamilies.blogspot.com/

A lot of bloggers have spoken of the power of social media with airlines over the last year.  It offers a pathway for redress of certain grievances that previously would have been ignored by most airlines. 

First, all airlines make mistakes.  All airlines have employees who handle a bad situation badly.  The rules described by Alaska Airlines in defense of their actions are certainly true.  You’re expected at the gate and available to board at a certain time. 

But there is a difference between a gate agent standing there wondering where a passenger is who should nominally be there and available to board versus a gate agent who is being communicated with by a passenger who is experiencing a problem that will be solved in a few minutes time.  This is when you want your employees (even your contract employees) to show some good judgement. 

Allowing this man to board with his family would have cost *nothing* in terms of departure time and little extra in terms of stress on the gate agent.  When a passenger is communicating with you over a problem, stop and take the time to listen and work with them.   Why?  Because the costs in terms of reputation when that same family starts a blog that gathers national media attention are far greater than the costs of taking a few extra minutes to work this out. 

If you think the costs to your reputation when something like this goes viral in national media, you have no idea of the costs you incur when you respond with “these are our rules, here is a token payment to shut up”.  Again, you want your people at the airline examining these things and showing good judgement.  This was an opportunity to “win” in the eyes of the public and get back a reputation that is pretty good. 

All Alaska Airlines had to do was compensate the costs of the ticket and publicly apologize. This would have won the customer back and won the public opinion back, too.  Defending yourself by citing rules is only going to make things worse at this point and when you do that, you increase the public perception that you don’t play by real world rules and people begin to think that you’re just “out to screw them.”  When you behave that way, it’s hard to conclude otherwise. 

It wouldn’t have been necessary to over-compensate these people.  Just make their increased costs go away.  Make them feel as if they been listened to by ACTUALLY LISTENING TO THEM AND APOLOGIZING. 

One of the biggest mistakes Alaska Airlines made in all this was allowing the social media guy at Alaska address this by citing rules.  Use your executives to cite rules, use your regular PR representative to cite rules but don’t let your social media face get associated with this mud bath.  Social media is about being friendly and service oriented.   Not only did Alaska Airlines damage their general reputation, they damaged the reputation of their social media efforts in a way that now few people will have trust in it as an outlet for anything helpful or useful. 

And social media is only going to get more important in the next few years, not less.

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Southwest Airlines CEO Gary Kelly speculated that Southwest could one day be flying to Hawaii and that has tongues wagging in the airliner world.   Kelly mentioned this possibility in connection with their decision to purchase the 737-800 which they should arrive at very soon.

The fact that no one confirmed that Southwest would in fact buy the 737-800 at their recent media day leads me to believe that they are still in negotiations with Boeing and probably it has to do with price more than anything.

Still, even if they add the 737-800, it doesn’t mean they’ll do Hawaii.  Flights to Hawaii require more than just that aircraft.  It means proving you can do ETOPS flights and it means keeping a sub-fleet of aircraft that can do ETOPS flights.  ETOPS means flight crews get more training and aircraft are specially equipped and specially maintained. 

Alaska Airlines is doing such flights at present and they appear to be succeeding well enough that they’re adding flights to Hawaii from other cities.   It is doable and it may well be profitable.

However, if this does happen, I think it might happen in 4 or 5 years, not next year or the following.  Southwest has a bunch of things to chew on at present such as their merger with Airtran, phasing in new IT systems and just adopting not one but two new aircraft types:  the 737-800 and the 717. 

If this does happen, it’ll happen once they’ve managed to digest their other challenges.  Don’t go looking for that Honolulu destination on their website just yet.

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jetBlue has announced its intentions on flying from Long Beach, California to Anchorage, Alaska next summer and, yes, this probably has some people rubbing their eyes to see if they read this right.

It’s an odd choice in my opinion since flying to Alaska requires a bit more general pilot knowledge and jetBlue doesn’t have any other traffic there.  That means they have to establish themselves in the city even if with contractors and without more flights headed there, I don’t know why one would do it.

One possibility is that this is about aircraft utilization.  Alaska flights are one of those things where you can get away with strange(ish) flight departures and arrivals.  Alaskans don’t seem to mind odd times and I wonder if this isn’t a flight that will depart late afternoon, arrive in Alaska in the evening and then do a quick(ish) turnaround for a “redeye” back to Long Beach where it will likely be used to fly a different flight during the day.  The flights times would make it work.

It’s notable that right now, Alaska Airlines doesn’t have a non-stop between LA and Anchorage.  In fact, it appears no one does.  That might just make the whole effort worth it or it might point out that there is a reason why nobody is doing it.

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Last week, Delta’s CEO Richard Anderson and Alaska Airlines’ CEO Bill Ayer were in Portland, Oregon and offered some insight on just where the close relationship between Alaska and Delta might be going.

Delta now operates non-stop flights from Portland to Amsterdam and Tokyo that were originally subsidized by Portland’s airport but which are now declared “permanent” by Delta.  They see Paris as a potential next stop.

Apparently those flights to Amsterdam and Tokyo are running pretty full now and it appears that Alaska Airlines is the one to thank for feeding traffic to those flights.  Portland is often discounted as a small city but it’s a small city with some major industry that wants both trans-Atlantic and trans-Pacific flights.  Since Alaska Airlines is the only airline in the Pacific Northwest that has a network to feed such flights, their partnership with Delta is becoming closer and closer.

I think Delta wouldn’t mind purchasing Alaska Airlines but I also think the timing isn’t right for such a purchase.  It just feels like one step over the line in terms of how regulators might envision such a merger. 

In the next few years, look for all three of the SuperLegacy airlines to start eyeing Alaska Airlines.  Delta has the best partnership with them but Alaska is no stranger to Continental (United) and American Airlines either.  They’ll do a deal with whoever makes sense. 

That’s also why I think Southwest ought to give Alaska Airlines a long, hard look as well. 

In the meantime, let’s cross our fingers on behalf of Portland and hope they get that Paris flight.

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About 24 hours after the Southwest Airlines / Airtran announcement, rampant speculation on who American Airlines should partner with started up.  The truth is, while I can make an argument for them to merge/acquire US Airways, I think they’ll shy away from a merger.  If they do go shopping for an acquisition, I don’t think it will be oriented towards a real “merger” a la Delta/Northwest or ContiUnited. 

There are a couple of targets left.  Alaska Airlines strikes me as one that should interest Southwest, American Airlines and Delta.  I think it’s pretty hard to get a deal done with Delta because of regulatory issues particularly in the Seattle area.  I think it’s pretty hard to for AA to get a deal done with Alaska because both parties have high labor costs and AA just won’t know what to do with the rather unusual operations Alaska performs in Alaska. 

I don’t think anyone is going to buy jetBlue at present and jetBlue’s CEO says they’re going to grow organically.  I would be happy to see jetBlue just get outside of its NY/Florida comfort zone and stop treating the midwest like it has the plague.

Frontier could be an interesting proposition for jetBlue, I think.  Sadly, I also think that Republic Airways is going to hold on to Frontier for dear life given what’s going on in the regional airline world.  Nevertheless, I do think that jetBlue could harmonize Frontier’s service and routes to the jetBlue way and make something of that airline. 

US Airways?  Well, they are the somewhat pretty girl who never gets asked out anywhere except to make some other guy jealous.  Until they get their labor house in order, I think it’s going to stay that way.  Their executive corps, however, ought to be attractive to someone.  Despite all of US Airways weakenesses and their “East/West” style of ops, those guys make money.  There is a lot to be said for that. 

I think they are more attractive for bringing into a new alliance.  Currently, US Airways belongs to Star Alliance but ContiUnited kind of makes them look superfluous.  SkyTeam just doesn’t need them either.  Oneworld aka American Airlines/British Airways,  on the other hand, could perhaps take advantage of them.  The deal would have to be a bit sweet because US Airways, if nothing else, is enjoying a nice “under the radar” ride on Star Alliance right now. 

I can’t think of anyone who could find a use for Virgin America at this point except, well, the Virgin Group.  Even the Virgin Group seems to have a hard time seeing a real value for working with Virgin America.  If they had any money, I would point them to Frontier but I think Republic Airways would just laugh out loud.

The truth is, I think there is suddenly some opportunity out there to start a new airline.  I would look for weak airlines who have major hubs and very little competition.  Some place where business customers and leisure travelers alike are dissatisfied with their current offerings and restrictions.  Some place that has a history of embracing the airline industry and where you can hire experienced people to kick that venture off.  That would be a great place to start something new.  I wonder where such a place might be?

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Regulatory authorities are going to start seeing Southwest Airlines differently as a result of this merger.  SWA has done a great job of characterizing itself as the small underdog.  In truth, it’s a big airline and this merger is going to get authorities such as the Department of Transporation and Department of Justice to see it a bit differently.  SWA flexes more muscle against its own competitors than most realize and this move does eliminate a lot of problems that Airtran was giving it.  Airtran had lower costs and a nice service product and competed very, very well against SWA on major market routes.  SWA will forever be seen differently going forward now.

Southwest’s fleet strategy has always been a popular topic of conversation.  While it’s true that they’ve stayed close to their 737 roots, different aircraft types aren’t unheard of for them.  In the 1970’s and 1980’s, they briefly operated 727 aircraft.  In the 1980’s they bought Muse Air and operated their MD-80 aircraft for a while too.  The addition of the 737-500 was, in some senses, the addition of a different type for them as well. 

Adding the 717 isn’t quite the challenge for them that many think it is.  This purchase grows their fleet from approximately 550 aircraft to 602 737s and 86 717s or 686 aircraft total.  Let’s put that in perspective for a minute.  American Airlines has about 630 aircraft, Delta about 728 and the soon to be ContiUnited will have 700.  Southwest leaps past AA and plays in the SuperLegacy category on fleet numbers.  It will continue to lag behind on capacity measured as revenue passenger miles.  Nonetheless, SWA is a huge player on a global scale. 

There is already speculation about SWA “de-hubbing” Atlanta.  Well, I think the structure  of the routes into and out of Atlanta will change dramatically.  I think we’ll see a SWA-like operation in Atlanta after a period of time.  However, it will remain a “hub” in the sense that will be a major player in the SWA system just like other cities such as Phoenix, Los Angeles, Houston, Dallas, Denver and Chicago.  Those cities are hubs too.  SWA just doesn’t operate flights into their “hubs” like a network carrier does. 

I wonder if SWA isn’t missing an opportunity to reinvent itself with this purchase.  Airtran did many things very, very well and they are a profitable and very competitive carrier.  They introduced Sirius/XM Satellite Radio on their flights.  They were one of the very first airlines to have an all Aircell GoGo Wifi fleet.  Their business class product is popular and upgrades to that business class product were also profitable. 

There are some elements here that SWA could stand to step back and examine.  They aren’t nearly as far from their own business model as they think.  SWA is working hard to attract the business passenger and that business class product might well be worth keeping and even introducing across the fleet.  Southwest is introducing Row44 Wifi (too slowly in most people’s opinion) and now they have an airline that knows how to do it quickly.  They have a unique opportunity to take a look inside the viability of Aircell’s GoGo product and see if they don’t want to reverse course. 

I don’t think onboard entertainment is necessary but I do think the Airtran satellite radio offering is a great value added item on their flights and, again, it’s worth taking a look at.  I don’t want SWA to be jetBlue but the satellite radio quite possibly “fits” within their quirky nature. 

I don’t think many airlines, if any at all, will object to this merger.  It eliminates a lower cost competitor for them and replaces them with someone who has rising costs that are moving closer to legacy airline costs these days.  In addition, the sheer size of SWA and the access it gains to major slot-controlled markets such as NYC and Washington D.C. mean that legacy airlines can now argue that there *is* enough competition in those areas.  I wouldn’t be surprised if Delta and US Airways wanted to revisit their proposed slot swap deal in the near future.

Finally, there is another airline out there that kind of fits neatly into this mix.  An airline that would be as unconventional as a purchase for SWA but which would really be a west coast mirror equivalent of Airtran purchase.  Alaska Airlines.   If SWA is willing to take on integrating an LCC carrier like Airtran, it could take on integrating a sub-legacy carrier such as Alaska Airlines.  Especially one with a fleet type that remains compatible with SWA but which offers even more potential since Alaska Airlines operates a broad range of the 737 family. Such a purchase gives SWA a strong presence in all of the regions in the United States and an opportunity to see how a regional airline (Horizon Airlines) works using a very cost effective type:  the The Dash 8 / Q400.

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As an owner of an iPhone, I’ve become very interested in web sites developed specifically for the smart phone users and even more interested in travel related apps as well as travel specific mobile websites.  As much as social networking is becoming important for airlines, I think having a mobile website is even more important.  

It’s kind of cool to be able to complain by Twitter or some other social networking media but the busy traveler is even better served by being able to access his airline of choice via a mobile website.  I may be wrong but I believe that Continental Airlines had one of the first mobile websites available and that comes as little surprise to me given their popularity with the business traveler.  

I wrote about that Continental website more than a year ago.  Since then, a number of airlines and travel related websites have now also gone mobile.  Now that we have a quorum of companies participating, I’ve added a new section of links titled, oddly enough, Mobile Sites. 

It isn’t comprehensive but it is a good slice of what we in the United States would use.  Interestingly enough, I think many of these sites were rolled out with little or no fanfare and that seems strange to me. 

Midwest Airlines has a site but Frontier, it’s sister airline under Republic Airways, does not.  That doesn’t surprise me as I think Midwest Airlines was doing a much better job than many when it comes to technology and social networking.  I do hope that that feature will be adopted over to Frontier in the near future. 

Virgin America doesn’t have one either and I think I know why.  Those folks have used an excessive amount of Flash programming on their sites and that won’t fly on many mobiles including the iPhone.  For a company that has positioned itself in the way Virgin America has, I think this is bad for the airline.  (Just like I think opening new routes to leisure destinations is bad, too.)  Virgin was an early adopter of GoGo Wireless and has its “Red” system onboard for entertainment and food/beverage ordering.  They don’t, however, appear to be embracing social networking or mobile apps yet.   It is an area that a young, agile airline should be leading in.

Are you listening Mr. Cush?  You need someone working on this as of last year!

The various sites available are robust in some cases and some offer pretty limited capability.  I expect that that playing field will level out over time and result in a reasonably consistent group of offerings. 

Quite a few airlines have offered iPhone apps and I do hope to talk about those in the future sometimes but they’re only relevant to the iPhone and while it is an amazingly popular phone, the Blackberry is the businesman’s mobile phone still. 

Web sites that are mobile capable are the way to go both because it serves the busy person with a smart phone but also because it delivers a consistent look and feel to customers who may move from, say, a Blackberry to an iPhone or an Android based smartphone to a Blackberry.   Apps, on the other hand, are either phone or phone OS specific and that means maintaining a growing collection of software. 

I’ve added a couple of flight services mobile sites as well.  Each works from OK to good and, again, I think these will be updated to offer more functionality over time.  They’re all linked on the FlyingColors blog but fair warning:  a few don’t launch to the mobile site unless you’re browsing from a mobile smartphone. 

Got an app you like or another mobile site I haven’t found?  Offer it up in the comments section and I’ll add it along with the others.

Update:  Virgin America has dumped Flash from its site and is apparently working on a mobile site to be rolled out this year.  See this PC World story.  That’s good but they’re still behind the curve on mobile sites and, from what I can tell, social networking as well.  So much for being a hip airline.

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There is no doubt the airline industry is changing again.  With legacies merging to become SuperLegacies and owners of very diversified fleets, there is more and more pressure on regional airlines.  In addition, the bankruptcies of the 2000’s have led to airlines with lower cost structures and revised contracts that allow more “regional” flying of mainline routes.  That would imply more regional airline flying but the “regionals” flying those aircraft under those scope clauses are, for the most part, owned by the legacy airlines. 

Republic airlines has been attempting ot diversify itself by buying Frontier and Midwest.  Mesa airlines is just holding on by a thread.  ExpressJet tried branded flying and corporate flying without much luck.  So, where does it from here?

I think cost is going to be the driver in the future.  Regional jets became prolific for one reason in the 1990’s:  cheap oil.  That’s gone and it is unlikely that we’ll ever see it again.  Three regional airlines adopted a newer model of flying modern turboprop aircraft and I think it is interesting that those three also happen to be pretty profitable and reliable operations.  Horizon (wholly owned by Alaska Airlines), Frontier’s Lynx and Pinnacle (Colgan) on behalf of Continental all adopted the Q400 turboprop and made it work very nicely. 

Yes, Lynx is going away since Republic couldn’t justify a small subfleet when it had other aircraft that were more expensive and which would sit idle if not used on behalf of Frontier.  However, even Southwest Airlines was very intrigued by what they saw of Lynx last year when they decided to bid for Frontier.  Horizon continues to be profitable and flies this aircraft on some pretty long routes and remains competitive with regional jets and even some mailine aircraft.  Pinnacle (Colgan) has done very well for Continental out of the NYC area and will soon be expanding its turboprops into Houston for Continental.

The turboprop is much cheaper to operate.   A 30% to 40% load factor can result in a break even flight whereas some airlines effectively lose money on similar routes using small regional jets. 

They are cheaper to buy.  A Q400 costs less to purchase than an E170/190, has almost as many seats and is just as comfortable for 90%+ of all routes.  They’re also a little bit cheaper to maintain.

The modern turboprop can fly block times on routes of 500nm or less that are competitive with any jet.  Oh, there might be 5 minutes difference in the block times between a Q400 and an E170 or B737 but it’s a competive block time.  Why?  The turboprops reach crusing altitude faster, can take off from more runways and can land quicker (reduced time to go from cruising to landing altitudes.) 

I think we’ll see independent regional airlines explore more turboprop flying for the legacy airlines in the future.  It is a niche that fits them well and, yes, goes back to basics.  The regionals which are flying mainline routes with semi-regional jet equipment are going to be subsidiary companies of legacies in the future.  The legacy airlines can use them to onboard new pilots and use them as places to keep pilots hired when furloughs are necessary from mainline flying.  Unions like that and, as a result, are likely to embrace allowing more “scope” for flying the 70 to 100 seat aircraft on more mainline routes in the future.

Filed under: Airline Fleets by ajax
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The DoT has proposed new consumer protections on Wednesday and most aren’t unreasonable.  First, they’re proposing to require airlines to post complete information on baggage fees and offer refunds and/or reimbursement(s) for delayed baggage.  I couldn’t agree more.  When airlines began charging these fees, their attitude was the fee was for “transporting” the luggage and I believed that no matter what their stance, if you charge a fee for it, then you should also be prepared to offer minimum guarantees for that fee.  Alaska Airlines sort of did this.  No one else has and that’s wrong.  In fact, the stories of people trying to get refunds of their baggage fees when their baggage went missing or became delayed are just horrid. 

If you charge a fee for it, be prepared to be held to a standard.  The argument that it is a free market out there isn’t true anyway. 

Second, the Feds want better and more fair fare advertising.  Again, I couldn’t agree more.  One of the best things that happened for airlines in the past 3 years was a la carte pricing.  Except those a la carte prices never showed you your “all in” price until you were inputting your credit card for payment.  Customers should be able to see what they’re buying up front and they should know their options *before* their purchase is complete. 

Third, they want to ban price increases after a ticket is purchased.  Now, I’m not sure what they mean about this.  If they mean once you buy a ticket, it should cost more to change that ticket to another date, I’m not sure I agree.  I’ll be working to learn more about the intent here before I pass final judgement. 

Fourth, they want to require timely notice of flight status.  Mmmm, I’m not sure what their standard is but in my experience, this isn’t an area that airlines are doing a bad job in.  Yes, sometimes status is a bit tardy but I wouldn’t say it is impossible to get information on flight status or even see it updated regularly.  Again, I want to learn more about the intent here but I suspect this isn’t an area where we need much protection.

Fifth, they want to require special notice of bag fee increases and notification of baggage fees when a consumer purchases a ticket.  Again, I agree.  If the airlines want to charge these fees, then there should be prominent disclosure of these fees and they should be disclosed well in advance of the final purchase. 

Sixth, they want to increase the limits to be paid for being bumped.  Again, I agree with this.  The existing limits were created in an era when a hundred dollars was real money.  Bumping is at an all time high with the increased load factors on various airlines.  The consequences for overbooking and then inconveniencing a traveler should rise with the times. 

Finally, it’s my understanding that they want to tighten up and/or close loop-holes in the 3 hour rule.  Personally, I would wait 12 months before going any further down this road.  I’m in agreement with the 3 hour rule but I also think that it’s wise to make sure there are no severe unintended consequences as a result of the current rule.  One area I do think could be improved is preventing airlines from acting punitively towards passengers who do want to disembark from an aircraft.  The Feds should have required re-booking on another flight with no additional fees in the original rule or, at the least, set a maximum change fee for re-booking. 

All in all, airlines asked for this, in my opinion.  They’ve often abused customers in ways that we don’t see in virtually any other industry.  In fact, their ability to abuse customers points out that the airline industry is not a free market place.  It really is more of an oligopoly and one that even many LCC airlines happily participate in.  I look forward to reading more comments from others on these proposals and when I have more firm information on the exact nature of these changes, I’ll be commenting again.

Filed under: Airline Fees, Airline News by ajax
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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.

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There have been some interesting comments in the news today made by Continental’s new CEO, Jeff Smisek.   First, he seems the switch in alliances as a very good thing for Continental but it is way too early for us to see that as anything other than justification for the switch.  It was notable that he referred to being in the SkyTeam partnership as problematic since they felt Delta was trying to kill them.  I’m not sure Delta was trying to kill them but I don’t think Delta saw them as adding value probably. 

 

Another comment is one I’ve been waiting for from an airline.  Mr. Smisek says Continental will cancel flights before risking fines under the new rules for 3 hour delays.  I’ve been waiting for an airline to make that statement publicly because the rule is about to go into effect but also because the winter weather this year has been atrocious for northeastern airline operations.  No airline likes new rules.  No airline ever embraced a rule that punished its violators with fines.  Even the most progressive of airlines hate change.  But airlines have been relatively quiet for the past 2 months of winter and that made me wonder if I was ever going to hear threats of cancellations.

 

Well, to my surprise, it was Continental that finally stepped up to the plate.  The thing is, if one looks at what winter did to airline operations so far this eyar, any flights that got cancelled would have had to be cancelled anyway.  There might have been a handful that could have gotten off if given 4 hours instead of 3 but it would have literally been a handful.  What has been notable is just how quickly and quietly the airlines recovered their operations after each event.  No outraged passengers were found on the news complaining either. 

 

The airlines were all negatively impacted by the storms and all lost a significant amount of revenue because of that.  It was unavoidable and it wasn’t because of the 3 hour rule looming in front of them.  That’s how the airline business rolls sometimes.

 

The final notable comment is comes from Continental reiterating that it may be open to a merger in the future.  They don’t see the Delta/Northwest merger as being in the books as a success yet and I agree.  They do, however, believe that if that merger does prove successful, it points to what Continental needs to consider in the future.  I don’t see this happening any time soon at all.  The truth is, Delta got the best partner available in the US.  The next 2 candidates come with a lot of baggage that isn’t easily solved by even in the best managers in the industry:  United and US Airways. 

 

I think we’ll see Continental exploit its membership in the Star Alliance and grow itself organically rather than by merger.  There is one company that, if I were Continental, I would be interested in buying.  Alaska Airlines.  The problem is, if they make a move on Alaska, it will become a bidding war between AA, Delta and Continental.   Maybe United even enter into that fight.  Continental doesn’t have the war chest to win that fight.  Not right now.  If they do recover and re-start their growth and if Delta’s merger doesn’t prove as successful as it hopes, they would have a chance.  Even at that, I think AA would fight very, very hard to win that battle just to keep Continental off the west coast.

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Alaska Airlines and its sister company, Horizon Airlines have announced a pilot program to introduce electronic boarding passes into their system.

 

Electronic boarding passes are displayed on a PDA with a bar code that can be scanned at the airport.  Continental began pioneering this technology but Delta and American Airlines have been testing it out at various airports over the past several months as well.  All of the anecdotal reports that I’ve read so far seem to indicate that it has worked well and fairly smoothly with the only comments being that some TSA officers were surprised by seeing one but not unfamiliar with it.

 

What do you do if you cannot get your PDA to display the boarding pass?  You can always get a paper copy by checking in at the airport as well.   Passengers choosing this option aren’t at risk just because of a problem with their PDA. 

 

Alaska / Horizon also introduced their new mobile website at:

 

http://www.flyasqx.com/

 

 

If you’ve tried this technology on a recent flight, your comments on it are welcome.

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Since Virgin America began operations, I’ve been watching for something sensible to happen.  There have been a few developments that make sense. 

 

In addition to VA’s initial trans-continental routes, they began to add some West Coast service to places such as San Diego, Las Vegas and Seattle.  This let me increase aircraft utilization since those routes from San Francisco and Los Angeles weren’t 6+ hours but, rather, 2 hour (or less) hops.  And having a bit of network to feed into those trans-con flights made sense too. 

 

But this put them into competition with a few very well established airlines as well.  United, Southwest, jetBlue and Alaska Airlines all operate on the West Coast very effectively and on the same routes. 

 

Alaska Airlines, a legacy airline with a very good full service product started to jump on the anti-VA bandwagon and issued a number of objections to their “US Owned” status to the DOT.  Most likely because VA had a product that competed very well against their full service business class product and that was a major source of revenue.   Alaska Airlines had a lot to lose on some of those routes in particular.  Strangely, United remained pretty quiet and probably because their frequent flier program kept their business customer pretty loyal.

 

Speaking of frequent flier programs, that was another area that Virgin America was a bit lax in and that kind of surprised me too.  They had 2 extra years to develop a strong program and have the infrastructure in place to support it.  It was something that, in my mind, would have made sense since the business customer likes such programs and they had a good trans-continental service product to attract those people.  Instead, it was rolled out a tad late and still lacks much of a partnership with anyone. 

 

Although VA positions itself as a low cost carrier, it really offers a 2 class service product that is comparable to any legacy airline and, in many cases, it is a service product that is much better. 

 

Aircraft are equipped with a two class cabin (first and coach) called, oddly enough, First Class and Main Cabin.  There is a Main Cabin Select product but that’s really access to Main Cabin seats that have a bit more legroom (exit aisles and bulkhead seats) with some of the First Class service product (meals, beverages and premium tv channels are free).  It’s an economy plus plus or semi-business class product. 

 

I believe all airlines could stand to offer more service products through their cabins and this was an area that I thought VA was kind of smart in.  I still think a lot of airlines could stand to differentiate even more but I liked what VA had there.   It was more “business” than “coach” than a lot of airlines’ economy plus products and even competed very well against a similar offering from jetBlue.

 

jetBlue really took things to aother level with their LiveTV offering on their aircraft.  Virgin America took it to yet another level by offering a full entertainment system (including TV) that even allowed shopping and the ability to order food and drink from a menu, thus eliminating the traditional beverage and meal cart services.   The system, called Red, worked pretty well although some reviews had it not always working or in need or a re-boot from time to time.  Such systems do take time to work out bugs and time for staff to learn to work with. 

 

VA also got aggressive and was the first US airline to offer GoGo inflight Wifi on its aircraft.  With accomodations like power ports at each seat and the existing entertainment offerings, this was likely adding whipped cream to the ice cream.  All of their aircraft are equipped with it and Virgin says they’re doing OK with it.  Probably more so than some airlines. 

 

All of these offerings cost a lot of money to both purchase and maintain and VA continued to see red ink as time passed by.  (It is difficult to get a very good picture of VA’s finances because it continues to be a private company instead of a public corporation.)   At one point, rumors that its US investors wanted out spread around and Alaska Airlines filed yet another objection to VA with the DOT who, recently, yet again ruled that VA was more than sufficiently US controlled.  (Read THISfor more info.)   CEO David Cush did continue to speak publicly that their revenues were improving monthly and that he did think VA was edging closer to an operating profit.

 

In fact, VA did manage to eek out a small third quarter operating profit as reported in December which, frankly, surprised a lot of people.  I know I was.  It was a 59% improvement (according to VA) over the previous year’s third quarter and they managed to make it happen in what has been arguably one of the worst economic climates for airlines ever.  This got my attention.  Frankly, the climate hasn’t been good for VA since they started to improvement during those times is impressive, to me anyway.

 

Virgin America is also a bit unusual for the airline industry in that it has a number of women in senior leadership positions.  Their SVP for Inflight Services, VP – Marketing, SVP-CFO and VP – Planning & Sales are all women. 

 

Also curious is the rather interesting Canadian influence in their leadership.  The Chairman of Virgin America is Canadian Don Carty, former Chairmen and CEO of American Airlines.    Frances Fiorello, SVP – Inflight Services has had a long career with Candian airlines such as Canadian Pacific, Canadien Airlines and Air Canada.   Bob Weatherly, SVP of Flight Operations, has a similar Canadian history. 

 

And then there is the American Airlines connection which kind of puzzles me at times.  Don Carty, David Cush, Diana Walke,  and Ross Bonanno each have a history with AA.  Virtually all their senior leadership has extensive with experience with previous airlines.  In fact, after looking into their biographies, it made me realize just how VA might be managing to make it despite all predictions against them. 

 

It’s a strong team with a strong background in successful airlines that, for the most part, have reputations for good cost control and good service products. 

 

Virgin America has been on my death watch for at least a year.  Now, a lot of my inclination towards that has been based on routes.  Yes, they’ve grown and, yes, they’ve added routes.  But they don’t seem to want to really compete except where there is really low hanging fruit against their service product. 

 

They recently opened up routes between, of all places, Fort Lauderdale and Los Angeles and San Francisco.  Obviously they saw some opportunity there but I don’t get what the attraction is in adding those two routes before a lot of other opportunities.

 

VA doesn’t have an East Coast network at all.  They have destinations in NYC, Boston and Washington, D.C. (in addition to the Fort Lauderdale routes) and that’s OK.  Competing on the East Coast is brutal and those three main destinations have enough originating traffic in them that they don’t necessarily need network traffic feeding in on the West Coast yet.

 

David Cush has, at times, talked of adding routes from the West Coast to Chicago but he wants O’Hare airport and claims there are no gates to be had.  This isn’t exactly true.  There are gates but VA doesn’t want to pay the price to get entry to them.   There were, at one point, gates available at Chicago’s Midway airport but VA doesn’t like that idea either. 

 

More recently, Mr. Cush dropped hints of adding a route possibly to Austin or Dallas / Fort Worth.  Most agree that Austin might happen (there is a strong tech connection between Austin and the West Coast) but doubt the DFW possibility. 

 

You see, my problem is that VA seems to be ignoring the possibities in the middle of the country.  With their service product, they could compete very well against AA on routes between DFW and San Diego and Los Angeles.  They could compete well with AA and United on routes between Chicago and Los Angeles and San Francisco.   There is a strong connection between Denver and Los Angeles and despite the back alley fight going on in Denver, it has possibilities. 

 

They’ve by-passed Portland, Oregon which has strong ties to both LA, Seattle and San Francisco and Alaska Airlines, who owns a lot of that traffic has already proven to be susceptible to VA’s service product.

 

Indeed, if you look at their route map right now, they have every appearance of avoiding any destination that is a real hub for a legacy airline. 

 

I can’t think of a market that is more need of a real competitor in service product to destinations on the West Coast than DFW.   Completely dominated by American Airlines, the service product and prices to West Coast destinations is weak and expensive respectively.  Atlanta could stand a bit of competition on routes to the West Coast too.   The same is true for Miami, Minneapolis / St. Paul, St. Louis, Detroit, Kansas City, Cleveland and maybe even Philadelphia and Baltimore. 

 

It’s always a nice strategy to enter airports where the barriers to entry are easy and cheap when you’re getting started.  But VA is more than 2 years old and clearly has a product that, like jetBlue, can compete against major airlines and win.   In any of the major hubs I”ve named above, they are dominated by one or two airlines on those West Coast routes that are flying old aircraft with little new service product and who have much higher costs than VA.  It isn’t going to get easier to compete with these guys with time. 

 

That’s why a part of me continues to view VA with skepticism.  New airlines don’t win by being afraid to compete.   Airtran and jetBlue are perfect examples of airlines who were willing to go up against major legacy airlines and beat them on both price *and* service.   Airlines who weave and duck from their opponents tend to lose.  Skybus was a great example of that. 

 

There are often moments that are ripe for smaller businesses to make a commitment to going against their major competitors and, if you wait too long, those moments go away and never come back.  I’m starting to sense that Virgin America is beginning to lose those moments. 

 

Would I fly VA?  Sure.  I’d love to enjoy their service product.  However, they fly nowhere I want to travel so it is going to be a long time, if ever, that I get to try them.  Would I suggest them?  Absolutely.  At least for now.  They aren’t going to go bankrupt any time soon.  They’ve managed to get past that infancy stage now and kudos to them.  They offer some fantastic prices on their routes and I doubt anyone would be disappointed by flying them.

Filed under: Airline History, Airline News by ajax
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Now that it is 2010, what can we expect?

 

Unlike this time last year, probably not much.  There was some momentum for change last year that really doesn’t exist this year.   Airlines will continue to fight to hold their own in the marketplace and with the reduction in capacities, even the worst of the lot will likely cling to life this year.

 

North America:

 

Major airlines of North America have made all the changes they can and all are managing their businesses and cash very closely right now.  I don’t expect much, if any, change to develop in the next 12 months but let’s take a look anyway.

 

American Airlines has some labor issues to address but with the current economic climate, they have been getting away with their efforts to defer those issues.  Labor unions would like to push a few issues with American but they’re smart enough to realize that now isn’t the time.   Most likely they’ll continue their face saving efforts at making a point with their members but I don’t expect any real labor action at this airline this year.  Perhaps, if things get better, we’ll see some movement in the 4th quarter.

 

United Airlines, my least favorite legacy airline, has similar issues that American has with labor but, again, those labor issues aren’t likely to see much movement either.   I suspect that United will continue to move more of their flights over to regional airline partners because its worked (for now) and their customers will find themselves on more and more regional jets.  Since price is the prime driver for customers right now, they’ll accept that move and hate the flights as much as they always have.

 

Delta/Northwest should see more of its operatioins combined and, possibly, a unified single operating certificate by the end of the year.  That doesn’t mean much for their customers since Northwest aircraft are being painted into Delta colors at a furious rate.  The service product is already being harmonized to a fair degree and it’s a good one already. 

 

I don’t see any major aircraft purchases and I remain interested in whether or not they’ll keep their 787 orders.  There has been rumour and innuendo that they won’t but I kind of think they will keep them.  Their 767 fleet is old (except for the 767-400) and I can’t think of a reason why you wouldn’t want to have the 787 begin filling the role of those aircraft.  I’ve wondered if their hints aren’t just an opportunity to get Boeing to get interested in offering a better deal for more aircraft. 

 

US Airways needs two things in this next year.  First, they need their pilots to get together and start operating as a single group.  As dangerous as it is to try to interfere with a union group, I wonder if US Airways won’t wade into the problem in an attempt to have a final resolution.  Certainly they could argue that they’ve been patient enough. 

 

They also need to manage their cash very, very closely.  Cash is blood to an airline and US Airways has a bit of risk in this department.  Should cash holdings be depleted more, they’ll have to start seeking that merger partner again and no one appears interested in marrying with them.  This is another reason it needs resolution for its labor problems.   That said, I don’t see US Airways disappearing or filing for bankruptcy again. 

 

Continental Airlines has felt the hurt this past year and its unlikely to feel much better this year.  Their business model depended a bit more on business class travel and the economy hurt that demand the most.  That said, I can’t imagine a better group of managers for keeping that airline on track through the rest of the downturn.  Things will hurt and belts will be tightened a bit more but I don’t see the service product changing.   When the economic downturn does really turn the corner, Continental will be better placed to succeed than many. 

 

Despite their recent move to the Star Alliance, I do *not* see Continental getting any closer to United Airlines whatsoever.

 

Low Cost Carriers / Regionals:

 

Southwest Airlines continues to manage itself to the tune of its own drummer and the results of their long(er) term thinking are showing left and right.   They’ve managed to make solid overtures to business clientele in areas that, I suspect, count more day in and day out.  

 

I don’t see a merger partner in the future for them except,  possibly, for Sun Country Airlines.  For some reason, I see this as a real winner for Southwest in that it gives them space and routes in Minneapolis / St. Paul, a labor group that is accustomed to delivering Southwest style service and which can be harmonized into the Southwest labor groups relatively easy.  There is no rumour of this purchase but Sun Country has its own problems and it’s a match that fits the Southwest acquisition model. 

 

I think Southwest will remain persistent in its Denver expansion and will work hard to create a network in the upper midwest states of Wisconsin, Minnesota, Illinois and Missouri.   The wild card, in my mind, is the Washington D.C.  area and the NYC/Boston areas.   Shuttle type service is what Southwest knows very well and I wonder if they won’t try very hard to organically grow their flights in these areas.  If so, Southwest needs to find an “in” at Washington Reagan airport.  To do this, they would need to buy a shuttle operation from US Airways and/or Delta.  Perhaps US Airways will be interested in such a sale if their cash holdings erode more. 

 

Frontier/Midwest/Republic:   I don’t know what happens here.  Midwest really isn’t an airline anymore.  It really isn’t even a brand anymore.  It’s a name for selling tickets.  Frontier remains an airline and a brand and Republic seems to want to continue caring for both.  Since Republic is managed by very smart people, I kind of think that they may look for a way to wind down the Midwest name over the next 12 to 18 months and make Frontier the primary airline.   A tasty cookie isn’t a good reason to keep the Midwest name around.

 

Airtran deserves some applause.  This airline has managed to grow itself some, find new markets and earn some money during one of the worst downturns in the airline industry.  

 

Their move into Milwaukee has succeeded and promises to continue to succeed.  Milwaukee is a loyal city, to be sure, but it is a city that appreciates value even more.  Airtran has managed to offer great value, good service and appeal to a city that just a couple of years ago was kind of anti-Airtran.   The one obstacle in their way is the arrival of Southwest, another airline very good at offering value and appealing to the Milwaukee kind of customer.   I think Airtran has the upper hand but they are by no means the sure winner in this market.  Southwest may be able to beat them with frequency.

 

Virgin America keeps showing up and usually right after I become convinced they’ll disappear.  I still don’t know what this airline does best and I still don’t see them as being a scrappy enough operation to fight their way into the cities it needs to be in.   Virgin continues to dance around Chicago (claiming they can’t get space but if they wanted it bad enough, they could).  Their product would servce cities such as Dalllas, Denver, Houston, Chicago, Atlanta, Baltimore, Philadelphia, and, perhaps, Cleveland/Cincinatti very well.  

 

Instead, they added flights from the west coast to Fort Lauderdale and talk about adding service to a Texas city such as Austin.  This is too timid.  The CEO, David Cush, seems afraid to compete against his old employer (AA) and that is a shame since they have a very competitive and attractive trans-continental product.   I would speculate on VA being bought by another airline but . . . why?  They just don’t have much there and seem to have little interest in exploiting real advantages that they do have.   Maybe they’ll just run out of money and get shut down.

 

Alaska Airlines has felt the heat from Virgin America but they continue to do pretty well with their little airline and they continue to do it without being aligned with a major.  I don’t see much changing for Alaska Airlines.  They’ll continue to be a scrappy airline with good service to a limited number of destinations.  And, somehow, that seems OK when it comes to Alaska.

 

Next up, the world.

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