British Airways, American Airlines and Iberia Airlines received trans-Atlantic anti-trust immunity to cooperate on routes between the United States and Europe late last year. Since that time, all three have been maneuvering their operations to prepare for this cooperation. Now it begins.
Previously, flights between JFK (New York city) and Heathrow (London) on AA and BA frequently left within minutes of each other. Now, the two airlines will form a kind of “shuttle service” between New York City and London with departures from London to NYC in the afternoon leaving once every hour and flights from NYC to London leaving as frequently as every 20 minutes in the afternoon.
Frequency is good. Choice is good. And I would be tempted to criticize that much frequency except that a quick check of schedules reveals that all of these aircraft are either BA 747-400s or AA 777-200s. I do wonder if I haven’t identified where at least one British Airways A380 will fly routes. It also makes me speculate that AA’s recent order of 777-300ERs might not be for quite as distant routes as we once thought.
The airlines are also cooperating on other flights to between other cities. Iberia will fly to California from Madrid. Schedules between Miami and Spain will be coordinated going forward. A check of flights between Dallas / Fort Worth and London Heathrow show 3 coordinated flights a day with 2 AA 777s and 1 BA 747. There are 7 more connections (several at cheaper prices) available between those cities with stops in Chicago, Boston and Washington D.C.
Chicago to London flights as non-stops are a bit more frequent although all operated on 777s. Chicago gets 6 evening departures to London and when you consider the connections that AA has in its Chicago hub, this should be good for everyone in Oneworld.
I am struck by one thing now. The biggest argument against such an alliance was the dominance both BA and AA would have between London and the United States. Both were already dominant players by any measure. The new schedule for these flights show real muscle flex and I wonder how any other airline competes against this partnership into London.
This will be a very interesting alliance to watch for the next 2 years as it grows and blossoms. You have to wonder if Star Alliance and SkyTeam aren’t just a bit concerned at how this network unfolded on a global basis.
One example: QANTAS will soon be flying to DFW airport regularly from Australia. It will be possible to leave Sydney, Australia on QANTAS at 1:25pm on a Monday, arrive at 1:50pm in DFW that same Monday ( I love how the international date line makes that possible) and then depart DFW at 6:05pm on British Airways to London Heathrow arriving at 9:00am the next morning. Then one could hop a QANTAS flight from London Hearthrow at 12:00 noon and fly to Sydney, Australia via Singapore (fuel stop) arriving at 7:30pm the following day and thus completing a roundtrip flight on some of the longest flights in existence.
And you can book all of that through American Airlines’ website. This is some real market power and it will be very interesting to see how people respond to the offerings these Oneworld partners will have arranged between themselves.
V Australia and Delta Airlines have been fighting to enjoy anti-trust immunity with a mutual capacity agreement on routes between the United States and Australia. So far, regulators are unconvinced that this would be a good thing for consumers and see it as an opportunity to gain market share only.
To a degree, that’s true. V Australia and Delta Airlines are the new boys on the block when it comes to US/Australia routes. Their direct competitors are QANTAS and United Airlines who enjoyed near monopolies on those routes for years. In addition, the lion’s share of the market belong to both of those airlines today as a result of their strong alliances (Oneworld and Star Alliance).
I was glad that new competitors entered that market and I think we need more competition than just two airlines who want to behave as flag carriers. On the other hand, I never thought that those routes could stand 4 competitors either. Allowing an agreement between V Australia and Delta will help preserve the competition, I think, more than harm it.
Both airlines promise not to reduce flights between the two countries and I believe that is true. Instead, I think we would see the aircraft redeployed on other routes between the two countries to provide more coverage to both nations. This would be a good thing.
In light of QANTAS’ move to switch its route to Dallas / Fort Worth from San Francisco to link up better with its Oneworld partner, it’s time for the regulators to calm down and get their assurances and allow Delta to make this partnership happen.
If anything, a link up between these two airlines could result in better service for consumers. V Australia can feed passengers over to its Virgin Blue domestic market whereas United Airlines has no such partner in Australia. Since many of the objections come from Australian regulators, one must assume that there is some unequal treatment towards QANTAS going on here.
I think reality will set in and we’ll see this agreement approved some time soon but not without certain guarantees and I think the two parties will have to make a move to show that they don’t want to harm QANTAS too much at the end of the day.
Lately, it seems like QANTAS has all kinds of engine failures all over its fleet. Is it because they’re not maintaining them? I seriously doubt that. You have to consider how QANTAS uses its 747 and A380 fleets.
QANTAS is somewhat unique in that many of the routes it flies are not just exceptionally long but also exceptionally full. This means the aircraft are being operated at their maximum performance far more often than virtually any other airline is required to do. These aircraft are fully loaded with people and fuel and then must use maximum take-off performance in order to loft themselves into the sky for flights that have durations inexcess of 14 hours.
That puts a lot of wear on engines that other airlines just don’t suffer.
I think just about everyone was at least a little surprised at the announcement of the QANTAS flight between DFW and Brisbane, Australia. It was a subject that would pop up on the radar now and then but generally dismissed with skepticism of it ever happening. Particularly with the equipment that QANTAS had for making the flight, namely the 747-400ER.
Flights between the United States and Australia have been the domain of west coast cities such as Los Angeles and San Francisco and the primary equipment has been the 747-400. The aircraft available to make such a flight has already changed and is due to change a bit more in the future. The 747 got used more because of its range and ability to haul a passenger load with a strong load of cargo. Generally, long flights like that work best if there is enough demand for a 747 because seat costs go down.
Now the 777-300 is plying trans-Atlantic routes between the US and Australia and soon will be on routes between the US and New Zealand. It’s a good aircraft for the trip because of the 777’s ability to fly it non-stop, carry a load of cargo and a fairly large complement of passengers. We’ll see these West Coast to Down Under flights fracture a bit more in the future when the 787-8/9 come online with airlines.
So why the 747 and DFW? Well, it’s notable that SFO is losing its flight with QANTAS but that makes sense now. San Francisco is the domain of United, not American Airlines and QANTAS is partners with AA via Oneworld. Los Angeles remains and it should remain as a Western US departure point between for Oneworld.
Until now, Oneworld has had to feed all its traffic from all over the United States to either Los Angeles or San Francisco and while LA is a Oneworld focus city, all other Oneworld focus cities are east of the Rocky Mountains. They are Dallas/Fort Worth, Chicago, New York and Miami. In that group, there was only one city that made sense with the aircraft available today: DFW.
The other thing that has changed is the new anti-trust immune cooperative agreements that are forming in Oneworld. First there is the trans-Atlantic Oneworld partnerships and second is the trans-Pacific(Japan) Oneworld partnership. Next is logically AA/QANTAS.
With DFW and Los Angeles as that “hub”, Oneworld can feed traffic to DFW from points east of the Rocky Mountains and from points in Mexico, Central America and South America all to DFW. Yes, AA can feed that 747 nicely. And if they do it well enough, you can bet on seeing an Airbus A380 being switched into that route.
DFW gets a nice boost from all of this as well. It’s already started to transition back into a more “international” airport than it has bee in some time. British Airways is now using a 747 on one of its flights to DFW and AA is using more 777s for its flights to Europe. It will continue to grow as a Oneworld “hub” both because of its good location (not nearly as affected by weather as other potential hubs) as well as the availability of room to grow.
I would be completely unsurprised at the addition of another direct route to Tokyo and a direct flight to China in the near future. Currently AA has 2 flights to Japan via 777s and I think we may see one more or, alternatively, we may see JAL start flying one of those flights with its own 777. AA has wanted to fly direct to China from DFW (and it should) but has so far been blocked by its pilots over duty time rules that AA wanted a variance for from the union. The flight they wanted to do ultimately went to Chicago instead. Expect AA to make another run at such a route.
One thing I don’t think we’ll see is a lot of additional routes from Los Angeles to Oneworld destinations. It’s a crowded airport with limited room to grow. Delta/Sky Team has a strong base in Seattle and United/Star Alliance has got strength in San Francisco. Dallas / Fort Worth offers the growth opportunities now with the ability to fly longer range flights using the 787 and 777 and I think we’ll see more and more long haul flights from DFW.
I have to say that I’m very pleased for DFW and I see this as a very good development for American Airlines as well. It’s nice to see opportunities created like this within Oneworld and on AA’s part, too.
QANTAS is adding a flight between DFW and Brisbane (with continuing service to Sydney) in May. And I don’t mind saying that I didn’t see this coming. Certainly not a QANTAS 747 flight. This flight will come at the expensive of QANTAS serving SFO and I actually do think that is quite smart.
More on all of the details in another post after I’ve had time to do research on this development.
With the announcement of Asiana Airlines purchasing (6) Airbus A380 aircraft, I began to wonder about the success of this aircraft as a whole. So far, it appears that Boeing was right about the demand for very large aircraft although it lost all of that demand (practically speaking) upon the arrival of the A380. My biggest concern about this program is the airlines it is dependent upon.
Just one airline, Emirates, is responsible for 37% of the A380 orders and just one region, the Middle East is responsible for 44 % of all the A380 orders. That is a stunning amount of eggs in one basket for a region that is volatile and largely dependent on wealth generated from one commodity. Think about that, roughly 1 of 3 A380 orders comes from a small handful of airlines who are based in a tiny area that is highly interdependent.
The next largest region responsible for orders, Oceania/India/Southwest Asia, is responsible for 23% of A380 orders with most of those placed by two airlines: QANTAS and Singapore Airlines. Now, I would bet on those two airlines. QANTAS because of their rather unique position in their markets and Singapore because of their ability, day in and day out, to fill their aircraft. But the remaining orders from airlines in that area such as Malaysia Airlines, Thai Airlines and Kingfisher, are suspect at best. I question their ability to use and fill those aircraft regularly and I wonder if some of those orders won’t ultimately be converted to A350 orders with deliveries farther into the future.
Europe accounts for about 20% of the orders and almost all of those airlines do possess the ability to use the aircraft based on their current business. However, their traffic is being impacted more and more by those Middle East airlines who’ve also bought the A380 but who also enjoy dramatically lower costs. In addition, at least two of those airlines were, at least in part, driven to make their orders by their political leaders in Germany and France. Any political influence in orders for such an aircraft bring some risk into the picture. Ultimately, those airlines have to earn a profit from those very expensive assets and filling 500 seats daily is a difficult thing to do day in and day out.
The only region with orders that seem credible is the Far East (China, Korea, etc). Those locations have the numbers to fill those aircraft and their orders are small and cautious, not big and grandiose, at 9% of all A380 orders.
Is it a success? Well, when your order book is so heavily depedent one so few, it doesn’t speak well of your ability to drive future orders and ultimately have a program that at least breaks even. Do you really believe that the Middle East and, in particular, Emirates, can continue to drive that order book up to the point that Airbus can earn a profit? I don’t. I also don’t think Europe or the Far East can do it either. In the case of the former, routes are fracturing into ever more longer and thinner routes. In the case of the latter, the number of people who can travel is very dependent upon what are, in some cases, still 3rd world economies.
So, no, the A380 isn’t succeeding financially and it isn’t likely to succeed financially. 40 years ago, a vanity project could be tolerated but if Airbus was run as a real business, this is a program that would be getting the axe, not promoted by the likes of John Leahy.
There is never that much revolutionary change in alliances. Last year, there was a fight over JAL between Oneworld and SkyTeam and Oneworld won but they really were destined to. It made sense for JAL. The alliances worked a bit to get better access to areas they were deficient in and to a large degree, they were successful. I don’t expect much change, if any at all, this year.
The Middle East:
Emirates did what Emirates does: it ordered more aircraft. I did what I do: failed to see how they’ll use all those A380s and 777s. The financial scene in the Middle East and, in particular, the UAE continues to be weakish and while I suspect it will recover somewhat this year, I think the area no longer carries that gleam it once did. I don’t see any failures in the near future but I don’t see any airlines really blooming either. Success there is, as is true for most businesses there, fairly dependent upon oil prices.
India:
Nothing astonishing happened there but it was already pretty mucked up. It remains mucked up and will likely stay mucked up this year.
The Far East:
China did kind of force their airlines into agreeing to buy Chinese aircraft as I predicted. In fact, Chinese aviation is suddenly acting very Chinese in that it is being required to toe a more obedient line. Face is everything there and I don’t like it when airline businesses are operating on the basis of “face” rather than good decisions. It’s notable that in the launch orders for the COMAC C919 aircraft, each airline took up just 5 aircraft orders each. They don’t want that airliner any more than anyone else.
JAL has done OK for the year. They’ve made progress with their finances and they did make some hard choices. They did have to file for bankruptcy protection and no one should have been surprised about that. The new CEO, Kazuo Inamori, and President, Masaru Onishi, are succeeding and making hard choices. Frankly, more so than is characteristic of a Japanese company and they deserve credit and support. This airline isn’t fixed yet but it is on its way.
Oceania:
QANTAS got hit pretty bad by the Rolls Royce failure on its A380. United Airlines is still on the US-Australia routes but badly needs to upgrade its product and it doesn’t appear positioned very well to do so. Perhaps Jeff Smisek & Company will address that better this year. Delta and V Australia didn’t get to form an alliance and they’re trying again. Someone has to give in this area and it will be either in the form of a codeshare alliance between Delta and V Australia or in the form of an airline withdrawing from the market (United or V Australia).
South America:
LAN, in fact, did continue to succeed in South America. So much so, they bought TAM to create LATAM and then bought AIRES (a Colombian airline)covering both the east and west coasts of South America. LAN is, in my opinion, now a SuperLegacy of South America and that’s a bit dangerous for them. South American governments are more protective of their countries airlines that is the custom in other parts of the world.
Curiously, LATAM is now operating airlines in two different alliances: Oneworld and Star Alliance. While there is speculation that they’ll continue this with LAN brands in Oneworld and TAM brands in Star, I think they’ll have to pick one and this may well mean a big battle among all three alliances. This is an area where SkyTeam could do well for itself by gearing up for battle now.
Aerolineas Argentinas: Well, what can I say? Well, I’ll say exactly the same I did last year.
This disaster is much like the country itself. It won’t go away but it won’t perform either. No outside airline will consider taking it over after what happened with Grupo Marsans’ ownership. They lack an appropriate fleet for their flying, a strategic plan for stabilizing their revenues and no clear plan for future growth. But the Argentinian government also won’t let them go away. It is a matter of national pride.
LAN Argentina is growing in Argentina but somehow I remain skeptical that it will be allowed to succeed too well. Why? For one reason, the government of Argentina owns Aerolineas Argentinas and it has a vested interest in that airline earning money. For another reason, LAN Argentina is owned by the LAN Group of Chile. Look up how Chileans and Argentinians feel about each other.
Colombia / Central America:
Avianca TACA is doing fine and I look forward to seeing how they’ll compete against LAN.
Venezuela: Bah!
Europe:
British Airways accomplished a few things. They got into a royal battle with their flight crew that remains unresolved today in part by being petty. Their flight crew union, Unite, furthered that argument by being petty. BA did get their merger with Iberia accomplished and after many, many years they have their anti-trust agreement for trans-Atlantic flights between its European Oneworld partners.
Look for the BA/IB union to do OK in its first year and they may even start looking for another partner as soon as possible. The anti-trust agreement between Oneworld partners should also add to the bottom line. However, it’s time to settle this fight with Unite and it’s time for Unite to get real.
Lufthansa is moving along and did do something with their BMI purchase. I don’t think it did them any good when its CEO, Wolfgang Mayrhuber, started complaining about its ability to compete with the likes of Emirates. Whether or not he had a real point (and he probably did), it also did signal just how hard a job they’re having with the task of competing with the Middle Eastern airlines.
They also still have their A340s and their plans to add the 747-8i. They got their first A380 and all I see is fat, fuel consuming airplanes. This is going to be a problem for them if oil prices rise much more and when you consider that much of their competition is flying fuel efficient A330s and 777s, it makes you wonder about their long term strategy.
KLM/Air France: More of the same. I think this airline will need to make an order for new widebody aircraft soon. Because it remains, essentially, a French airline, I see a large order for A350s and a small order for 777s. I do not see the 787 in Air France’s future.
Airlines will earn profits and even earn great profits throughout the world. Many will be “record breaking” but as much from inflation as a recovery. Those profits will soon start to burn a hole in someone pocket and that is when I think we see capacity growth. I think that capacity growth will start with the Middle East airlines pursuing more revenue lucrative traffic from Europe and North America. But we’ll see it happen in the United States, too.
I would dearly like to see the 787 enter into service with someone and I think we will see it do so. But Boeing has got to get a rein on itself. The failures in the 787 program are as much about poor management as they are about stretching technology. There is too much accountancy going on there and not enough visionary leading. It’s time for them to start winning and they could do so by winning the KC-X tanker program once and for all. But it is also time to start talking about what’s next.
The demands of the 787 program *will* decrease as will the demands from the 747-8 program. Will it be talk of a 737 replacement or an improvement to the 777? I think the airlines would like to talk about the 737 replacement and that seems sensible. Rather than play cautiously, reach again, I say. Push engine manufacturers to come up with something to raise the game and push technologies again. It’s also time to talk about the 787-10 and I think there are more than a few airlines who would like to be a part of those discussions.
Airbus is going to muddle along denying any real problems with the A350 until the end of this year. Then we’ll hear about something delaying the entry into service date by a considerable amount. John Leahy will insult Boeing and claim the A350 will put the 787 to death but it won’t. Airbus might well buy the KC-X tanker program but I question the wisdom of this in light of their ongoing A380/A400/A350 problems as well as their announcement development of a new engine option for the A320 series. When do they earn money the proper business way?
It would be nice to see Embraer make a move into the 130 seat market and I think those guys could do it very well. Bombardier gets bashed by everyone but I still think they have something with their CS series and I think it will be taken up by another airline soon.
I think we’re going to see another round of fees. Just as soon as airlines can identify what other parts of their service they can de-couple from the basic flight. I think we’re going to see airlines put a price on early boarding and we’ll probably see fuel surcharges amounting to tens of dollars.
But let’s hope we see an interesting and prosperous year in the airline industry.
United Airlines CEO Jeff Smisek says that there are too many seats chasing passengers on routes between the United States and Australia presently. United has had a presence for over 25 years on those routes and its staying power comes from its corporate contracts and loyalty program but it is being challenged presently by lower fares from new entrants on those routes (Delta and V Australia) as well by the fact that its 747 aircraft have a less attractive IFE solution than others.
One of the great ironies for long haul routes such as these is that they have, for the last 40 years, been largely dominated by large widebody aircraft. Most commonly, the 747. Filling those aircraft day in and day out is a challenge and one reason why really only two airlines have traditionally succeeded on those routes. New entrants or weak players usually leave the market because there really are too many seats chasing too few passengers, particularly in hard times.
Right now, QANTAS and United have 747s and A380s on that route. Delta is using a 777-200LR and V Australia has 777-300s working the route. Delta is probably right sized but they’ll have to remain committed to the market as a long term investment in order to succeed. I understand why they want to cooperate with V Australia and I’m not sure that’s a bad thing for either airline but it appears that is going to take some time to work out.
United and QANTAS both are the dominant players but I wonder if they’ll remain so over the long term if Delta and V Australia hold their ground. It’s anybody’s guess. It does occur to me that we are about to see aircraft that would allow new entrants to make money on that route and, at the same time, be right sized for the route. That would be the 787 and A350 aircraft.
If those two aircraft permit the same profit margins that the larger aircraft offer, not only will those new entrants stick around but we might see more. Delta isn’t going to have the 787 for 10 years or more. United will have some and QANTAS should receive some too.
Right now, the most practical approach is for airlines to depart the west coast of the United States using large widebody long haul aircraft. What if United was able to start flying from the interior of the United States using 787s (which they are due to receive relatively soon)? It’s doable and it might be practical.
This is another great example of why larger and bigger isn’t always better. The 787 and A350 are going to offer possibilities for long, thinner routes that will ultimately fracture those large capacity trunk routes flown by the 747 and A380 right now.
With the QANTAS A380 fleet being grounded for several days, one thing was clear when it comes to this aircraft.
When one of these aircraft becomes unavailable, there can be a huge number of people needing to be cared for. QANTAS’ A380 carries as much as 450 passengers and their typical equivalent 747 carries just 307 passengers. For most routes that the A380 would fly, you would require generally 2 other long haul aircraft to deal with the extra burden. By 2 extra, I mean you would need two 747-400s to get passengers cared for on a LA-Sydney route or two 777-300’s or at least two 777-200s.
But my larger point is that when you fly this aircraft, a cancellation can inconvenience from about 450 to 550 passengers with just one flight cancellation. That’s a lot of people to take care of and airlines had best have a contingency plan to deal with such an eventuality because it is not like a single 737-800 cancelling. It’s not even remotely like a 767 or 777 cancelling.
It doesn’t appear that QANTAS has had much of a handle on dealing with their customers problems either. To be fair, it’s not easy to ground those aircraft and then dispatch 747s to outlying destinations to take care of passengers. The flight time alone between Sydney and LA is generally well in excess of 14 hours. And it’s not easy to keep a spare A380 laying around either. It’s not even easy to keep a used 747 lying around for backup.
Then again, it’s not like there will ever really be a huge fleet of A380s in the world either. Unless Emirates defies all predictions and really does take delivery on all of their orders.
It was disappointing to hear of the rather dramatic engine failure on the QANTAS A380 yesterday morning but it also caused me to ponder what the real implications are.
First, QANTAS’ grounding of this aircraft is likely unnecessary and way premature in light of the service history of the aircraft so far. At least with respect to technical reasons for doing so. However, QANTAS’ grounding is probably a wise choice with respect to public relations. This company has a long standing reputation for no lives lost in a jet aircraft incident and rightly so. Preserving this image is particularly important to an airline that by definition is frequently traveling over oceans to reach their destinations. In other words, don’t presume the grounding as an indictment against the aircraft or even the aircraft engines.
Second, after viewing a number of pictures of this incident, it is striking in that it was an uncontained failure. However, it also shows just how robust and just how much safer jet airliners of today are versus those of the 1960’s and 1970’s. An uncontained failure shouldn’t happen but even when it did, things were fairly non-eventful with respect to keeping the aircraft under control and getting it back on the ground.
Third, an uncontained failure in this Rolls Royce Trent engine is somewhat distressing. Even an engine with modest design mistakes typically will not reveal these problems for a long, long time. The pictures are dramatic and the amount of debris from this engine is also a bit impressive. This engine deserves rigorous investigation at this point.
The bottom line is that the aircraft remains safe. In fact, more Airbus A380s are actually flying with a different engine, the Engine Alliance engine from GE and Pratt & Whitney. Take the media drama and even the QANTAS dramatic reaction with a large grain of salt for now. One event does not make a trend.
Bloomberg BusinessWeek had a story a week ago about the brewing brawl in Australia over passengers which can be read HERE. In Australia, a country of about 24 million people (about what Texas has) and the size of the United States, three carriers are starting fight for passengers.
You know two of them: QANTAS and Virgin Blue. The third is a new entry named Tiger Airways. QANTAS is fighting with Jetstar, it’s low cost carrier.
What is brewing is a battle of LCC carriers over a market that, by population, should barely be able to support 2 carriers. In fact, a third carrier almost never survives these battles.
QANTAS is, by far, the biggest player. Virgin Blue holds some status for having fought for ground and held it in Australia but Tiger Airways is coming in with lower costs than the othe two and hubs established in both Melbourne and Adelaide.
Melbourne I get. Adelaide makes me scratch my head. Adelaide isn’t a city of great commerce or international business. Adelaide has a population of 1.2 million people but it falls in an awkward place for hub. Situated in southern Australia between Melbourne and Perth, it remains distant from the traditional battlegrounds of Melbourne, Sydney and Brisbane. It’s not even a logical stop on the way to Perth.
Bloomberg BusinessWeek reports that Tiger Airways’ costs are just about half of Jetstar’s on a per seat kilometer basis (2.75 cents Australian) and it would probably surprise you to learn that Virgin Blue has the highest seat-kilometer costs of 6.75 cents.
Who survives? It’s anybody’s guess. Tiger is definitely the underdog still until they gain more market share and more credibility.
In the meantime, Virgin Blue’s new CEO (formerly of QANTAS) has decided not only to stay in the fight but also go head to head with QANTAS in business class. With the highest LCC costs, I have to wonder if Virgin Blue isn’t the one that may get squeezed out of the market this time.
Virgin Blue has good coverage of Australia but poor feed internationally despite operating subsidiary brands V Australia, Pacific Blue and Polynesian Blue since those serve routes that are predominantly leisure oriented.
Each airline is going to suffer from excess capacity and fare wars to fill those aircraft. Tiger Airways has just 9 Airbus A320 aircraft now but plans a fleet of 30 for Australia in the near future. What’s worse, QANTAS will be adding capacity with the arrival of new aircraft from both Airbus and Boeing in the form of A320’s (31 orders), A330 (7 orders) and the 787 (15 orders). Virgin Blue has 85 737-800’s on order and 3 Embraer E195 jets too.
That is a *lot* of capacity. Imagine all those aircraft serving Texas.
Time will tell but unless Virgin Blue can operate with lower costs and keep their market share, Blue may go red.
Air Berlin will be joining Oneworld sponsored by British Airways it has been announced. I would like to announce something myself:
Huh? Air Berlin?
Air Berlin is European continent based LCC carrier and while they get generally good marks as an LCC carrier, I’ve a hard time figuring out how their service product harmonizes with the rest of Oneworld. Particularly with British Airways, American Airlines, QANTAS, Finnair and Cathay Pacific. Is Oneworld just that eager to have more feed on the European continent?
Teenage girl Abby Sunderland set off two emergency beacons after her boat’s mast was removed in heavy weather yesterday. You can read details HERE.
The rather interesting part of this rescue operation, to me, was that she was located and contacted after a QANTAS A330 was chartered and sent to find her. No coast guard aircraft could make that trip and very few (if any) military aircraft in that part of the world would have been capable of doing it. An empty A330 could do it easily (it was about a 9 hour trip total). The pilots of the aircraft were able to communicate with Ms. Sunderland when she used her marina radio.
One very noticeable development with the announced United Airlines / Continental Airlines merger is that 2 of the 3 major airline alliances (SkyTeam, Star Alliance and Oneworld) now have Super-Legacy airlines participating in it. SkyTeam has Air France/KLM and Delta (Delta/Northwest). Star Alliance will have United/Continental and, so far, will continue to have US Airways in the US market.
Oneworld has American Airlines. A lone airline ever increasingly burdened with debt and who shows little sign of recovering in a market that several airlines have shown improvement in. Oneworld has the fewest airline partners although it arguably maintains global coverage. I see some opportunity for a few of its partners, too.
QANTAS has long had ties to both British Airways and American Airlines but I wonder if they aren’t looking around and realizing that there may be better opportunities with Star or SkyTeam. They compete with British Airways on many international routes so I wonder how much love they feel on that side. It’s true that AA provides them with lots of feed in the US but several other partners could do the same in the same cities. In fact, I suspect SkyTeam would love to have them on board. United (Star) already flies US/Australia routes. In addition, Air New Zealand is a Star member and doing nicely on trans-pacific routes too.
Oneworld doesn’t directly access Canada and has mediocre ties to Africa (via European partners) and Latin America is perhaps a bit underserved in that LAN is the only partner there and their concentration is on the west coast of South America. The Far East remains well served by Cathay and JAL but India is conspicuously missing. That’s a country of 1 billion (with a “B”) people. You would think that having a regional partner in India would be a priority. Southeast Asia is weak as it is basically served with flights to and from that region but not within. There is another 1 billion people located in that region.
There are several European partners but I do notice that there are two primary hubs: London and Madrid. Not the hubs most people want to fly in and out of. London is congested and prone to delays and Madrid is served by Iberia, not an airline with a great reputation. It also doesn’t “feel” like a convenient hub.
What is more noticeable is that the founding partners of Oneworld were mainstay legacy airlines. Airlines that have not seen any revolution to date and who often are burdened with some of the highest costs to operate in their regions.
With the ever growing size of both Star and SkyTeam, I do wonder if there will be any room for Oneworld. Could the Oneworld alliance be absorbed by the other two?
On April 16th, Republic Airways will unveil its choice of brand going forward to use on both Midwest and Frontier Airlines flights. Does anyone here think it won’t be Frontier?
On another note, here is a video shot from inside a QANTAS A380 showing a tire blowout and subsequent fire during a landing in Australia.
It’s been announced that India’s airline, Kingfisher Airlines will be joining the Oneworld alliance, probably in about 18 to 24 months. While Oneworld and Kingfisher are playing this up big in today’s news, it puzzles me and, frankly, I have some doubt as to whether or not it will actually come about.
First, Kingfisher hasn’t exactly been the most financially solvent airline in a market with 2 other major competitors (Jet Airways and Air India) nor has it exhibited a very rational strategy on choosing its destinations. It has a couple of trunk routes from India to London and Singapore, a couple of route to leisure destinations in Asia and a domestic network that is reasonably extensive but not overwhelmingly competitive.
While I’m sure that Kingfisher offers Oneworld partners AA, BA and QANTAS some feed, it doesn’t appear that Kingfisher itself has the resources to make use of the partners in their home countries. Their fleet is comprised of A330 aircraft and while they’re scheduled for A380s and A350s, not a person around thinks they’ll actually take up the A380 and the A350 is scheduled for deliveries to start in 2014 but it’s unlikely that those will be on time either.
What also surprises me is that Jet Airways, Kingfisher Airlines major competitor, already had a good codeshare relationship with American Airlines and QANTAS. Their equipment and services better aligned with Oneworld so I’m puzzled why we are not hearing about Jet Airways joining Oneworld.
There certainly is a need for a Oneworld partner in India and with Air India joining Star Alliance, that left Jet Airways and Kingfisher. My guess is that they couldn’t make a good enough business case for Jet Airways who enjoys good relationships with SkyTeam members too. However, if I had to pick between the two, Kingfisher wouldn’t be my choice.
I suppose Kingfisher may work if it wants to be the domestic provider for Oneworld in India. They do have the domestic network to make that work. But they will likely become jealous of feeding all that high dollar traffic to AA, BA and QANTAS just to get the domestic traffic in India. It doesn’t feel equitable. One thing I’ll say for Oneworld, their partnerships do seem quite equitable for the most part with each partner airline appearing to bring a good strength to the table both domestically and internationally.
According to USA Today, QANTAS is eliminating their First Class sections on all but the Airbus A380 aircraft in their fleet. Going foward, QANTAS will be selling Economy, Economy Plus and Business Class seating. Certainly this strikes me as pretty smart. It’s expensive and difficult to chase after first class passengers and those first class passengers are few and far between these days.
Notably, the airlines that have made their business class sections their top offerings are also the airlines that have captured a great deal of lucrative business traffic. Business class *is* first class if we’re in 1995. It’s way better than what we called first class in the late 1970’s / early 1980’s.
I’ll also point out that one of QANTAS’ best competitors, Air New Zealand has pursued this strategy for years quite successfully. Continental Airlines has a very loyal group of passengers and has done quite well with it too.
The number of people who might be upset at there being no First Class offerings on an aircraft can be counted on one hand and certainly don’t offer a very good return on investment when one considers the cost to create the offering on the aircraft and then pursue the customer.
Why are they keeping First Class on the A380’s? I suspect its for a couple of reasons. One, they can probably capture some first class traffic on those “capital” routes. Two, the product is brand new on the A380s and they likely don’t want to have to go through the expense of refitting those aircraft. Three, the A380 isn’t exactly demanding more space for business class customers right now anyway. Will it go away? Probably but only when a refurbishment of the aircraft is called for.
It’s official, JAL is staying inside Oneworld and the folks at American Airlines can relax on that front.
The only thing that surprises me about this announcement is that it was done this quickly. I thought it would take a month or more for the airline to come around. That said, it was a smart move for two reasons.
First, the last thing JAL needs to be doing right now is agonizing over an alliance. Their problems were not going to be solved by being in the right alliance. They were going to get solved when the executive leadership started focusing on cutting jobs, slashing costs and rationalizing the routes. The new JAL Chairman and new president apparently decided to move that issue of their plates and get on with the real work.
Second, it’s a smart move because there were big anti-trust issues involved with a lashup with SkyTeam and Delta. The US government signaled as much a couple of weeks ago when it told Japanese negotiators for the new open skies treaty that approval for anti-trust agreements already applied for was not a “done deal”. By staying with Oneworld, JAL gets to preserve its alliance infrastructure, benefits from revenue guarantees for the next few years and has the time to focus on restructuring itself rather than wasting their time on fighting an anti-trust battle in the US.
One thing that has become clear from this fight. American Airlines has emerged as the leader of Oneworld. The other major partners, Cathay, QANTAS and British Airways, didn’t really step up in the way you would expect of such a partnership. Yes, this was a fight based in the US but those 3 airlines stood to benefit but didn’t really work terribly hard to win the fight on behalf of AA. Look for AA to become the Oneworld leader and the airline that starts setting the direction for Oneworld for the future.
That could be good or bad. Good because Oneworld really hasn’t had much leadership from any airline to date. However, American Airlines has to set a direction that other airlines want to follow and one that benefits everyone in the alliance. If they don’t take up the leadership reigns, look for Oneworld to melt away in 5 years or less.
These three alliances have been forming, growing and shifting for some time now and it is almost fair to say that they’ve reached a certain maturity that lets us take a look at what the future might hold.
There will always be shifts between alliances as time goes by but the major structures are now in place and let’s be honest in that airlines are not equal partners in these alliances. There are bedrock airlines and there are airlines who are really more associate partners.
In the Star Alliance, US Airways has definitely been more of an associate member than, say, United, Lufthansa or Singapore Airlines and with the recent addition of Continental and the close partnership its formed with United, US Airways is even more the redheaded step-child in this organization.
SkyTeam really has the strongest core though. Formed, in part, from the original Northwest / KLM alliance that began in the 90’s, it now has an extremely strong network that spans both the Pacific and Atlantic oceans. If it has a weakness, it is in South America among South American carriers and I’m not sure if that is really a weakness right now.
The Star Alliance and SkyTeam have both managed to work among themselves in pretty close partnership and develop strong networks playing on each others’ strengths. Schedules between those partnership airlines are pretty rational and they do tend to treat affiliate partners as having value in the organizations.
Then there is Oneworld. Oneworld isn’t so much a partnership alliance as it is a looser affiliation of airlines. To be sure, at one time Oneworld’s members represented a very strong core of airlines who were profitable and very strong on a global level. To a degree, they still are but this has definitely become the weak alliance over time and with the fight over JAL taking place, its now fighting for its life.
Oneworld doesn’t know how to work well with each other. Partners American Airlines and British Airways have dominated that relationship and because of their obstinance over trans-Atlantic routes and slots at Heathrow, they haven’t been able to work closely together over time and develop those relationships that have been grown in other alliances. Because of their dominance, other potential strengths in their network, QANTAS, JAL and Cathay Pacific for instance, haven’t really been exploited fully either.
Oneworld is, for most intents and purposes, an old style Anglo-American relationship with AA, BA, QANTAS and Cathay Pacific dominating that alliance. (If you don’t think Cathay Pacific is Anglo, look up its history and its executive team.)
If Oneworld loses JAL, I’m not sure this alliance survives in the long run. It cannot afford to be an alliance with two dominant partners (AA and BA) and it cannot afford to lose even one trans-Pacific partner. If JAL moves over to SkyTeam, then I suspect over the next few years we’ll see one or more “majors” in that relationship find homes elsewhere.
No matter what Oneworld does, they lose a major network in Japan if JAL leaves the alliance and they have no hope of luring ANA over to their alliance either. The best they can hope to do is build their routes systems into Japan with more direct flights from outside Japan. That isn’t very satisfactory.
They already lack a major partner in China itself (Cathay Pacific isn’t quite that kind of partner) and lack a major partner centered in Korea and Southeast Asia/India.
I suspect we’ll see one or more core partners in Oneworld slip away to one of the other alliances. It wouldn’t be too hard to attract LAN away from Oneworld, for instance. Nor would it be difficult to perhaps walk Cathay Pacific away from Oneworld. That would leave three basic Anglo American core partners who have no harmonized strategy and not much to offer smaller affiliate partners either.
What’s more, JAL doesn’t need their money now that they’ve gone into bankruptcy. The Japanese government is financing them and will provide all the capital they need at this point since they have little choice to do anything else. That means JAL is free to consider a long term strategy and if it can get some real signal that anti-trust immunity would be granted to a partnership between Delta and JAL and the rest of SkyTeam, that’s their best deal.
It has occurred to me that the reason there hasn’t been more worry about the dominance such an anti-trust immunity would grant is that, maybe, Delta has signaled its willingness to draw down its legacy network to and inside of Japan that it gained in its Northwest Airlines purchase. Northwest Airlines not only had a strong system to Japan, it also had a strong network system of flights originating from Japan to regional Asian destinations.
If Delta is willing to let JAL fly that system on its behalf, that may well satisfy regulators in the United States.
