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?

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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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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.

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American Airlines and British Airways won tentative US government anti-trust approval  to cooperate closely with each other on routes and pricing.  Iberia Airlines, Finnair and Royal Jordanian are also a part of this package.  The one caveat from the Department of Transportation is that the “partnership” yield 4 slot pairs at London Heathrow airport to other airline(s) that might provide service between Heathrow and the United States.

 

This partnership is still contingent upon EU approval but I suspect the EU will grant it as well. 

 

Is this good for the consumer?  Well, in the long run I suspect so.  There is plenty of competition between the US and Europe in general and frankly I suspect travel to London Heathrow hasn’t been this competitive ever already.   In this case, I think we’ll see some capacity reduction between AA and BA on those US-London flights and that might well be justified.  There may be a few non-stop routes that see fares rise some but overall the general population of the US and the UK will likely find fares pretty reasonable or even unchanged in most respects. 

 

This will be a huge plus for OneWorld members in that they’ll be able to find better coordinated schedules for a variety of destinations throughout Europe and the US.  And it should put OneWorld on much more equal footing with both the StarAlliance and Sky Team. 

 

Of course, Richard Branson finds it all outrageous but, then, if you follow Richard Branson and Virgin Atlantic, you knew that he would already, didn’t you.  (I do think Richard Branson has finally cried wolf one too many times and no longer gets the credibility he might once have had.  One thing is sure, it’s time for VA to start looking for a partnership.)

 

Both BA and AA might moan and grown over giving up 4 slot pairs at Heathrow but both know that 1) those pairs will yield a tidy sum in a sale and 2) they’ll still have plenty of maneuvering room to make lots of money. 

 

I doubt very much either airlines’ unions will be happy about this though.  AA pilots will worry about a reduction of flying on their part which, in my opinion, is only a worry if they continue to fight new ultra-long haul services that AA could use their aircraft on.  This is a real concern given this agreement’s potential to free up 777 aircraft to fly to new destinations. 

 

The real win for OneWorld will be gaining anti-trust immunity with JAL for trans-Pacific services.  With that agreement and this one, OneWorld gets the opportunity to compete with the other two alliances on pretty good footing and they haven’t had that in quite a while.  Both agreements would also make it more attractive for other airlines to join OneWorld now. 

 

I would not be surprised if this development doesn’t suddenly make it a bit more attractive for OneWorld to approach US Airways about joining.  US Airways would make for a very complimentary addition to OneWorld and it would allow them to leave an alliance where they are quite literally relegated to secondary status on all fronts.  In OneWorld, US Airways could offer good domestic service to the other partners and cooperate well on both trans-Pacific as well as trans-Atlantic services.

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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.

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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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At the first of the year, I wrote 3 blog posts shown HERE, HERE and HERE.  It was really just my random speculation on what to expect over the next 12 months.  Well, now it’s December of 2009.  Let’s see how I did.

 

Boeing 787:  I guessed at an April 2009 first flight.  It still hasn’t flown although speculation has it flying this month either by December 14th or December 22nd. 

 

Airbus A380:  I guessed they would make their goal of producing 21 aircraft this year.  As of November 30th, 2009, Airbus says they have delivered 7 A380 aircraft this year.  Ouch.  This is a program that is in financial trouble.  No, I don’t think it will be cancelled.  Not yet but please don’t try to tell me this program will make a profit. 

 

My deathwatch had Midwest Airlines going away most likely by a sale.  That did happen and while the airline has essentially evaporated (from its original form), it does remain as a brand being run by Republic Airways.  

 

I speculated that Frontier Airlines would be bought out of bankruptcy but I guessed that jetBlue would be the buyer.  In fact, Southwest Airlines and Republic Airways were the suitors and Republic won.

 

I thought that United Airlines and US Airways would announce a new merger with Continental a dark horse candidate for buying United.  In fact, Continental became a member of the Star Alliance and firmed its relationship up with United but wisely kept its distance otherwise. 

 

I said that Southwest Airlines would maintain its status quo but that Gary Kelly would be under fire from both employees and outsiders and he was.  However, that view is already being reversed again by Southwest’s resurgent strength in the business.

 

I thought that the Middle Eastern airlines such as Emirates, Etihad and Qatar wouldn’t see a bankruptcy or merger but would slow their growth and aircraft deliveries.  That, in fact, has happened and now we see Emirates working hard to distance itself from Dubai World’s financial woes.

 

China:  I said deferred orders.  Pretty much what happened.

 

The Far East:  I said airlines from that region would maintain their status quo, probably would not defer orders and might make new orders to replace existing equipment for greater effiency.  Again, pretty much what happened.

 

Australia:  I saw QANTAS slowing growth, deferring some orders and fighting hard against new entrants.  Again, that’s pretty much what happened.  I also saw two weak competitors on the US-Australia routes:  United and V Australia.  That is pretty much what is happening although V Australia has been pretty smart in working into a relationship with Delta where it appears the two airlines will cooperate with codeshares.  United remains alone and with weakening demand.

 

South America:  I said the Argentine government would take Aerolineas Argentinas back from Grupo Marsans and the airline itself would muddle along or contract rather severely in some areas.  Bingo.  Exactly what happened.  I also predicted Azul would become the jetBlue of Brazil and its not hard to guess that that airline is pummeling its competitors.  A future prediction was for the airline to fly internationally in 2014 with Airbus equipment.  We’ll see.

 

Africa:  I saw Delta continuing to pursue flights to major African cities (true) and SAA (South African Airways) issuing a small RFP for 777 aircraft to replace its rather inefficient A340 aircraft (didn’t happen.)

 

India:  I thought Jet Airways and Kingfisher might merge with the name Jet Airways being retained.  In fact, both airlines continue to exist but both are suffering severe financial problems, deferring aircraft deliveries and generally flailing about trying to find a way to continue.   One of these airlines will still ultimately have to exit the market and I continue to think it will be Kingfisher.  They have the wrong aircraft and the wrong aircraft on order.  However, Jet Airways is suffering badly from labor actions among its employees. 

 

United States:  I picked United to fail.  It hasn’t happened and while they continue to live, their cash holdings are being reduced, they still have severe labor issues, their service product continues to suffer and I still think they should be the ones to disappear.  I also thought Glenn Tilton would be ousted and, possibly, replaced by Doug Steenland.  That didn’t happen but John Tague has been groomed as Tilton’s replacement.  I still think Tilton should go if United can’t fail.

 

Europe:  I thought we would hear of a surprise from Lufthansa.  I didn’t like their purchase of SWISS and I didn’t like their flying the A340 in competition against the 777 being flown by many of their direct competitors.  They’re still here, still making money and they bought BMI.  I still think we’ll here of misfortune from them but apparently it will take a while longer. 

 

Random Speculations:

• I thought Southwest might add another aircraft type.  It didn’t happen but I think their interest got perked up when they looked at buying Frontier and saw the economics on the Q400.
• I thought Delta might order more Airbus A330 aircraft.  Instead, Delta is parking them in the desert for the winter season.
• I speculated that both China and Japan would defer or drop their regional jet programs.  That didn’t happen but the Chinese jet program appears to be a bad aircraft and unlikely to be used by anyone except Chinese airlines forced to buy it.
• I thought Bombardier would see a major order (20+) for their Q400 series aircraft from a US customer.  Horizon Airlines did up their orders  for 10 more but there were no other significant orders. 
• Airtran to form a small midwestern hub.  Yup, that happened.  In Milwaukee where they’ve taken over from Midwest Airlines and now face Midwest (brand owned by Republic) and Southwest Airlines entry into the market.  I think Airtran will hold on here and continue to develop business.
• Last, I hoped that jetBlue or Virgin America would enter the DFW market.  Virgin’s CEO, David Cush (formerly of American Airlines) did recently speculate about adding flights to either DFW or Austin.   I suspect they’ll choose Austin and DFW will remain a fortress for AA.

 

That’ s it for my 2009 predictions.  I’ll make more at the start of 2010.  On the whole, I probably did as well as anyone in making predictions in this business.

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You did book your air travel a couple of months ago, right?   Don’t expect to find much available at this point for holiday travel because airlines are now either blocking their sale fares for those dates or adding a premium to them for certain days.   In short, they intend to maximize the income from peak demand days any way they can.

 

That said, there are a few strategies you can employ for a less expensive trip.  Traveling with a family?  If so, see if you can send your family ahead of you on a non-peak day while you travel on a peak day later so you can finish your work week.   Look for early departures to your destination.  A 6:00am flight might not sound attractive but if you save $100 per ticket, that’s a tidy sum for a family of 4.   Look for connections through a non-traditional city that might take longer but cost less. 

 

What if you have a lot of air miles and you want to use them?  Again, you’re likely out of luck but there are some thing you can check into.  See if your frequent flier program has any partners that travel the route you want.  They may have availability.  The Star Alliance now has not 1, not 2 but 3 partner airlines in the US (United, Continental and US Airways) and Sky Team has the rather huge network of Delta/Northwest.  Oneworld, I’m afraid, is limited to American Airlines but if you’re traveling to an international destination, you may still have a chance.

 

International destinations require some creative thinking for a cheaper fare.   Perhaps if you are traveling to the UK you might ordinarily use American Airlines but they’re rather expensive for the dates you wish to travel.  It might be possible to fly via one of the Oneworld partners using a different hub.  You may make 1 or 2 connections instead of flying non-stop but, again, the savings may be worth it particularly if you have a family.  It might be possible to fly Iberia to Spain and connect via Madrid or Barcelona for instance.  Or if you ordinarily use Northwest Airlines, you may have better luck checking KLM or Air France’s schedules for connections via Paris or Amsterdam. 

 

Holiday travel is also the time when checking luggage is certainly more of a risk.  Try to send gifts ahead of you via UPS, FEDEX or the USPS.  Consider what you are taking along for clothes.  Maybe you need to wear nice, dressy clothes once on your trip.  If so, considering wearing them for the flight so you can pack an extra shirt and tie into a smaller suitcase that you can carry on instead of checking.   This is a good strategy for taking along a bulky sweater or coat too.  

 

Finally, consider where your flight(s) may be connecting through.  Try schedule your holiday travel connections through southern hubs such as Dallas, Houston, Atlanta, Memphis, Charlotte or Phoenix.   This doesn’t completely eliminate the risk of bad weather but it does help mitigate it considerably.  Try to leave as early as possible in the day as delays only get worse through the day when weather is involved.   Check your flight status the day before your trip.  Is there weather affecting one of the cities you are traveling to or through?  If so and you find your schedule flexible, try calling the airline and seeing if you can change your schedule to something better without penalty. 

 

If you find yourself stuck at a connection, look for opportunities to fly to a nearby city instead.  For instance, if you’re traveling to Chicago and weather has massive delays being experienced, perhaps your airline also flies to Milwaukee.  If so, they may let you change your destination to Milwaukee where family can pick you up or you can rent a car to travel down there.   Even if your chosen airline doesn’t fly to someplace nearby, perhaps a partner airline of theirs does.  Suggest that as a option to the gate agent if you are trying to re-book.

 

Have a strategy.  See what your options are *before* you leave and have a couple of backup plans you can suggest to an airline agent in the event of a cancellation.  Yes, they are supposed to have more resources than you in that situation but they also have limited time to think a problem through.  If you have a suggestion or two they can try, you may make your life and theirs much easier since you are signaling some flexibility and trying to work with the system instead being in war with it. 

 

I’ll also suggest this service.  It’s Cranky Concierge found HERE.  It is a travel service offered by Brett Snyder of the Cranky Flier blog.  For a low price, you get an ultimate airline geek who will help you with all those strategies I named and more.    I think for holiday travelers, this could be a huge value in the event something goes wrong with your flight(s).    I myself do this kind of thing for friends and family but chances are you don’t have an airline geek in your circle.  The Cranky Concierge can be your own personal airline geek and help get you there more reliably.

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In the Cleveland Plain Dealer, Continental President Jeff Smisek was quotes as saying that Continental may re-visit the idea of merging with United Airlines in the future.  The story can be read HERE.

 

Continental has experienced a rather rough dip in unit revenues over the past year even compared to other US legacy airlines.  The airline was much more devoted to the business traveler (particularly in the international segment) and the decline in business travel has hurt it more than some other airlines.   A merger with another airline could help Continental diversify its revenue sources and experience synergies much like the Delta/Northwest merger appears to be providing that mating.   To date, Delta / Northwest has not been profitable but it does appear to be weathering the economic recession in the airline industry quite well and its new found flexibility with both equipment and passengers seems to have benefited the airline.

 

However, I didn’t like the idea of Continental merging with United in 2008 and I don’t like it now.  United is saddled with a lot of debt, an angry labor pool and aging aircraft.  Continental, on the other hand, is much the opposite.   While Continental has a well trained management corps and their own employees are much happier, I don’t see what United brings to the table that they can’t already develop on their own over time.   The Denver hub would be of little value to Continental and is already a battleground between two LCC carriers and United.   United does have the better system over the Pacific but lacks the aircraft to modernize it while Continental has the better product for Pacific travel, it doesn’t have the spare equipment to spruce up those routes to compete against the likes of Delta/Northwest. 

 

To me, it seems that Continental would benefit more from smaller, more tactical mergers that dovetail more closely with their service and aircraft fleet.  Alaska Airlines is one partner that, in my opinion, would be an excellent fit for Continental.  It would give them an West Coast route structure, a fleet that meshes (mostly) with Continental’s, an employee group already accustomed to be treated well and a management corps that is doing remarkably well and which could augment Continental’s own management leadership nicely.    Even more important, Alaska Airlines is profitable at present.

 

The next best strategy for Continental is to start planning for the future.  They have a number of new long haul aircraft due over the next 4 years and despite how everyone feels in the airline world, this recession will be over someday in the future.  Continental could capitalize on their strengths and aircraft fleet by targeting United Airlines and its Pacific destinations for 2011 or 2012.  By selectively targeting United and US Airways, Continental could fair very well without taking on all the baggage any other legacy airline has to offer it. 

 

Joining up with United Airlines really doesn’t offer Continental much that it can’t already achieve except the Chicago hub for both domestic and international flying.  Continental’s Cleveland hub is a very distant second to United’s Chicago but I wonder if having that kind of market dominance in Chicago is worth the trouble of bad labor relations, old aircraft fleets and a group of executives that have shown themselves to be mediocre in everything they execute.   In fact, by joining the Star Alliance, I suspect that Continental will reap almost as much benefit with little trouble.

 

Continental’s new home in the Star Alliance is interesting to me in that Continental’s product seems to much more closely match that of other Star Alliance partners (Lufthansa, Singapore Airlines, Thai, Air Canada, Air New Zealand) than either existing US based Star Alliance member aka United Airlines and US Airways.   I suspect that member airlines will be quite willing to book more traffic on Continental for US domestic destinations than on United or US Airways.   If anything, US Airways becomes the odd man out and should begin considering finding a new home.  I’d suggest OneWorld.   Nonetheless, I’ll be monitoring Continental’s experiences in the Star Alliance for the next year as I do think it’ll make a positive difference in their fortunes.

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United Airlines, an airline that has offered spotty-at-best service for more than 10 years, seems to have the 9 lives of a cat to most people.  Unfortunately, of all the legacy airlines, it is the one that should have melted away some time ago.   It emerged from bankruptcy in 2006 after spending 3 years and over $300 million reorganizaing itself to operate in a world with $50 / barrel oil without a realistic plan to deal with contingencies.

 

The problem is, oil was already at $60 / barrel when it started fresh.  Since 2006, United has been the one airline that always manages to arrive to the party in rumpled clothes and only a $5 bill to pay the door charge.   Those rumpled clothes are an aging fleet (although all of the truly old Boeing 737s are now being withdrawn from service to cut capacity) of aircraft that do not match the interior quality or service level of most of its competitors. 

 

The management team, most importantly CEO Glenn Tilton, has spent more than 2 years maneuvering to merge this airline with another and, yet, has been rebuffed by all potential candidates such as Continental, Delta and US Airways.  Indeed, they took a particularly condescending attitude towards US Airways’ offer to explore mergers when Glenn Tilton implied that he and his team would remain in place and “mentor” the US Airways management team including Doug Parker. 

 

Say what you will about US Airways but it isn’t the company we knew in the 90’s or even 3 years ago.  Doug Parker and team are really America West and they’ve been better at executing to plan than virtually any other management team at a legacy airline.  If anything, Mr. Tilton would be well served by Mr. Parker’s mentorship. 

 

Now the marriage dance in airline mergers is essentially over.  Delta and Northwest are walking down the aisle, Continental has chosen to stand alone (wisely in my opinion) and American Airlines has decided to pursue trans-atlantic partnerships with British Airways and Iberia Airlines.  There is no one else left for United to pursue a merger of equals and they lack the cash and operating plan to purchase a smaller airline as well.  Indeed, Continental Airlines is joining the Star Alliance (of which United is a founding member) and that may benefit United but if they think they will remain the shining star in the US market for that alliance, they are sadly mistaken.

 

Continental’s management team is stable, smart and agile in this market.  They are uniformly the choice of airline among business travelers (and that is who pays the bills) and possess a young, modern, harmonized fleet of aircraft that serve the routes efficiently.  Continental has hubs that will serve that alliance well in both NYC, Houston and Cleveland and offer Star Alliance members excellent codeshare options throughout the United States.

 

United Airlines has a fleet of 747s that are some of the oldest -400 models and by all passenger accounts they are in desperate need of refurbishment (unplanned for 3 years and not recognized for another 2 years while United showed its legs to potential suitors).  They possess a large 777 fleet which, on the surface, would imply some modernity there.  However, about half of that fleet are early model “A” market 777s powered by the less powerful and efficient Pratt & Whitney engines.  No lip gloss found there.  The other half are 777-200ER models that would at first glance appear to be more modern intercontinental aircraft.  They aren’t, really.  They’re what Boeing originally referred to as “B” market 777s and, once again, they are powered by the less reliable and efficient Pratt & Whitney PW4000 series engines.  I would point out that every other operator of this aircraft in the US is using the more powerful and efficient Rolls Royce Trent or GE90 engines (American Airlines, Delta Airlines and Continental Airlines.)

 

Their 767 fleet, a large one comprised of 767-300ER models, shows the same flaws as their 777 fleet.  While some were built as recently as 2001, they are all powered, once again, by the less fuel efficient Pratt & Whitney engines.  I’m sure a theme is beginning to reveal itself here. 

 

The same also remains true for their 757 fleet in that they are powered by the lesser Pratt & Whitney engines while other airlines are utilizing the real rocket of that type, the Rolls Royce RB211 powered 757 that, with winglets, is capable of ETOPS trans-atlantic operations.

 

Ignoring the soon to be gone 737 fleet (which is old and dingy but not powered by Pratt & Whitney for once), the remaining aircraft are various Airbus A320 types.  While they are not old by airline standard, most are more than 10 years old and some are approaching 15 year of age now. 

 

An old airplane is not an unsafe one but, in United’s case, it is an uncomfortable one.  While other airlines have paid attention to maintenance, comfort and even tuning engines, United has spent its time navigating bankruptcy and its management team has bet their golden parachutes on a merger.  With no other really suitable partners, they are now faced with operating an airline that by most standards, is not competitive.  What’s worse, they have lost 2 years time that could have been spent executing a service plan that might work.

 

If the cost pressures airlines are facing continue for another year, they (United) will be faced with another potential bankruptcy and, this time, it should be a liquidation.  There is no argument for this airline continuing its operations under the present regime nor is there an argument for it continuing to operate simply to support air transportation in the United States or abroad.  There are plenty of air carriers that can take up the slack and operate more coherently than United.   In fact, the only part of United ceasingly to exist that I find distasteful is that it potentially offers American Airlines an even greater lock on Chicago’s O’Hare airport.  Since I experience that kind of fortress here in the DFW area, I know just how expensive that can be for a consumer.

 

Successful airlines share a few qualities that I’ve noticed over the years.  They generally possess a young, fuel efficient and harmonized fleet.  They buy the airplanes configured for performance on a variety of routes.  They have leadership rather than just executive management.  They focus on a clean, comfortable flight experienced that is defined by the service provided by its employees.  Such an airline also carefully watches its money and nurtures its finances to avoid running cash short on the wrong day.  It takes care of its employees not by offering the best salaries but by offering a living wage, a hospitable workplace and with fair treatment in both hard times and good.

 

That is the antithesis of United Airlines and, so, they go on the Death Watch.

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Yes, flying from point A to point B is a challenge these days.  Particularly if you are connecting through a hub or traveling to or from one.  Arm yourself with phone numbers.

 

Are you a frequent flier member of the airline you are taking?  If not, join right away and you usually can do it online.  If you are a member, good.  Why?  Because most frequent flier programs have dedicated phone numbers you can use to access a reservations agent.  Get that phone number and access to those agents. 

 

If you are flying internationally, get the phone number of the alliance (OneWorld, Star Alliance, SkyTeam, etc) your airline belongs to.  Frequently member airlines will cooperate with you when you are having trouble with a connection. 

 

Look for codeshare partners on flights you want to save money.  For instance, when I was traveling to Moscow from Dallas, I saved over $200 by calling Finnair and booking the flight through them instead of American Airlines and the very same route using the same flights on American Airlines flight numbers was really that much more.  In addition, because I was flying as a Finnair passenger, I got priority boarding *and* frequent flier points on American Airlines.  I should also mention that when I called Finnair, I got a nice reservations agent immediately instead of an automated system hopelessly trying to recognize my voice.  Sweet, huh?

 

When you are going to be in a foreign city, leave prepared with the booking phone number of your airline in that city.  Even better, travel with a cell phone that you can access service globally if possible.  That way, when you are stuck at London Heathrow with 20,000 other passengers, you can call the US and get a hold of your airline there.  I use ATT (Cingular) service myself which is a GSM system that is compatible with most systems around the world.  Yes, the fee to call the US can be a bit expensive but it is a lot cheaper than battling your way through problems locally . . . sometimes.

 

Consider traveling to a different hub than London or Amsterdam.  The truth is, it takes about the same time to fly from DFW to Frankfurt and then on to another destination in Europe as it does to fly to London and use their preferred partners.  There are plenty of hubs to choose from such as Frankfurt, Munich, Madrid, Brussells, Rome, Zurich and many others.  Try a foreign airline that offers Frequent Flier points on your plan but which uses a less crowded hub to connect their traffic through.

 

That same strategy can be used domestically as well.  Look for less congested hubs.  Instead of Chicago or Detroit, consider St. Louis or Cleveland.  Instead of Atlanta, consider Charlotte.  And choose on the basis of seasonal weather.  You do *not* want to fly into New York City in the summer unless it is your final destination for instance.  Likewise, Chicago and Detroit can often be affected by weather in the oasisnaturalcleaning.com summer.  DFW or Atlanta airport hubs can often be much more reliable because they eperience drier weather in the middle of the summer.   

 

Check Weather.Com and see what the seasonal weather is like at your choice of hubs and plan accordingly.  It usually doesn’t cost more to go through a different hub and you can save a great deal of time connecting through a hub that is slightly out of the way as opposed to trying to connect through a busy, weather affected hub.  It isn’t a guarantee against problems but it does greatly mitigate against potential problems.

 

 

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