Competition is good

December 13, 2010 on 1:00 am | In Airline News | 1 Comment

Milwaukee has had 14 consecutive months of record traffic and if you ever doubted whether or not airline competition in a market is good, you should get over that.

Airtran, Frontier and Southwest have all been battling it out there and it has been good for passengers and businesses alike.  Yes, there is such a thing as too much competition but in this case we’ll see Southwest rationalize with Airtran and Milwaukee will continue to benefit from two airlines who want their business.

Markets with healthy traffic are always marked by health competition.  Witness what it is like in NYC, Los Angeles, Chicago and even Atlanta.  Now consider what it is like in places like DFW, Cleveland, Houston and Cincinatti. 

I’ve no objection to airlines earning a profit and you shouldn’t either.  But strong competition keeps airlines lean and well managed.  It’s notable that American Airlines probably experiences the least competition overall among the SuperLegacy airlines and is also the least healthy.

Oil is back on the horizon

December 12, 2010 on 1:00 am | In Airline News | No Comments

Airlines had a lot of challenges 2 years ago but none more challenging than the volatility and high prices  of oil.  That got a lot easier to deal with as the economies of the world melted down but the price of a barrel of oil is slowly rising again.

Oil went over $90 a barrel this week and it’s likely to go up a bit more.  Why?  Well, it isn’t because demand for it is increasing.  It’s because it is a popular speculation in the markets since it is dollar denominated (priced in dollars) and the US dollar has been pretty weak.  If you got a stack of dollars that, in the world market, is eroding in value, speculating oil (rising in price) can be a smart hedge against that loss of value.

Will it rise again to $140+ soon?  That’s anybody’s guess.  My guess is that it won’t go that high but I don’t think it is going to sink to $50 or $60 a barrel either.  Our world economies have stabilized in their fall but they aren’t necessarily robustly growing either.  Lots of countries have bought US debt and have a lot of dollars or dollars invested in that debt and they need to mitigate against the low value of the dollar to preserve their money. 

Oil speculation is starting to resemble speculation in gold and while I do think that we need to stabilize that market in the future, it requires the cooperation of *all* the major oil producing countries and that’s a tough thing to get. 

Airlines are, hopefully, already engaged in strategies to mitigate against fluctuating fuel prices through hedging.  They’ve got some profits coming in now and they can rebuild their cash holdings and start planning their fuel strategies with a more long term view.  Or, at the least, most of them can. 

Ultimately, oil prices will stabilize when the US (and the rest of the western nations) have stabilized their economies, their currencies and have a more solid foundation on which people can plan their investments.  The more uncertain the economies are, the more uncertain oil prices are going to be. 

The United States has largely stemmed its economic free fall and has even enjoyed some very modest gains in growth and unemployment.  The current administration hasn’t received the credit it deserves for reacting quickly and forcefully and without reserve.  Had they not done that, oil would have been much cheaper but only because we would be in a great depression and experiencing deflation and double digit unemployment. 

But this problem isn’t going to go away for at least 5 to 7 years.  Oil will be unstable and fluctuating for some time to come and airlines would be wise to deploy a long term strategy to cope with that.  Fuel hedges and renewing fuel inefficient fleets are the best way to go and waiting even a short while could end up costing airlines all their profits.

Unions are rejected by Delta employees

December 11, 2010 on 1:00 am | In Airline News | 1 Comment

Unions attempting to organize Delta employees have been rejected over and over again and to the surprise of many.  While some elections have been somewhat close, the results were pretty clear in every case.  Despite new rules favoring organizers, unions have had no real traction at this airline.

Unions can claim intimidation all they want but that doesn’t really fly in the airline world, pun intended.  Airline employees are well accustomed to unions, even those at Delta, and I’m very skeptical that even Delta can intimidate employees away from asking for a union if they really want it. 

Furthermore, I think the idea that Delta offering criticism of these unions isn’t intimidation.  If the unions can call Delta management dirty names and criticize their performance, it’s only fair that Delta management be allowed to throw a little mud themselves.  It’s notable that one union thought it effective to liken Delta CEO Richard Anderson to Adolt Hitler and that just goes a bit too far.  Among US airline CEOs, Anderson is one of the best and certainly well respected. 

The truth is, the employee environment at Delta is working for both the employees and management for whatever reasons may exist.  A union is only going to add value when those employees feel they aren’t getting fair treatment at the table.  Obviously that condition doesn’t exist today.  Why pay union fees when you’re interests are being accounted for?

Union organizers would be better off waiting a few years rather than continuing to rabidly fight this battle.  In fact, unions carrying on with this are likely to put off employees rather than win them over at this point.  Witness the fact that Delta flight attendants are asking the AFA to leave them alone.  These people are annoyed now, not enchanted.

That isn’t to say that Delta management has a free hand now either.  It means they’ve won, for now but they’ve got to remain on their own best behaviour to keep these conditions.   Attempts to be arbitary in their treatment of these labor groups will result in a change of heart.  Right now, I think Delta management gets that and they’ll keep their eye on the ball.  Should that management corps turn over, it may become a different situation.

These unions would be better off attempting to organize some regional airlines that are non-union.  These are employee groups that may well see value in them and it’s a better place to start at this time.

Paint

December 10, 2010 on 1:00 pm | In Trivia | 2 Comments

Imagine you are a company who specializes in painting aircraft.  Imagine just how exciting mergers like the Delta/Northwest and Continental/United mergers must be for your business outlook.

Volaris goes to Chicago

December 10, 2010 on 1:00 am | In Airline News | No Comments

Volaris starts up service between Guadalajara, Mexico and Chicago on December 13th and, yes, they’re serving Chicago Midway Airport.  This is clearly part of the interline/codeshare agreement they’ve been working on with Southwest Airlines. 

They’re currently offering service to Los Angeles, Oakland and San Jose and I’m sure you see a theme here, too.  They are all Southwest cities.   The initial announcement on the partnership between Southwest and Volaris included just those cities and connections being offered on Southwest’s website are for Western states primarily. 

This is a partnership that will get expanded upon quickly.  Just as I’m sure that Chicago is a part of the strategy, I think we’ll also see potential connections offered in cities such as Houston, San Antonio, Denver and maybe even Atlanta.  It’s a good fit and with Mexico regaining Category 1 status in its air system again, they can only work harder to make it worth each airlines’ effort.

This does highlight the fact that Southwest needs a reservations systems that dates at least from the 1990s.  As badly as they need it, I suspect that the Airtran system might just end up being the answer for Southwest.  It would likely be easier to transition to that system than it would be to spend time, money and effort studying all the possibilities or even building their own.  Until Southwest has this fixed, they don’t have much to offer international partners and, yet, the potential in this area is huge for Southwest.

Well Done Mexico

December 9, 2010 on 1:00 am | In Air Traffic Control, Airline News | No Comments

Four months ago, Mexico got its air traffic system downgraded from a Category 1 to a Category 2 rating by the US FAA.  This came at the same time that Mexicana was melting down in a great fury and both events were an economic and psychological blow to Mexico.

Well, they just got upgraded back to Category 1 after just four months (nearly unprecedented) and with strong assistance from the FAA in the United States.  In fact, the FAA will continue providing assistance to ensure that Mexico maintains the changes it made and maintains it status, more importantly.

This is great for Mexico and it is a well executed response to this problem.  It’s also great for US airlines because when that status got downgraded, US airlines were suddenly no longer able to codeshare with Mexican airlines and that probably accelerated Mexicana’s demise, to tell the truth.  Now, airlines on both sides can engage in codesharing again (Hello Southwest and Volaris)  and the world airline alliances can get busy in Mexico once more. 

Mexico shouldn’t have let itself get lumped into the ranks of countries like Croatia and Nigeria and their lapse in oversight was a bad thing.  But instead of acting outraged, they got busy and to their credit, they fixed the problems with lightning speed.  Give them credit.

KLM works social media magic

December 8, 2010 on 1:00 am | In Airline News, Trivia | 2 Comments

KLM took on a bet with a group of Dutch Dance fanatics recently via Twitter.  If KLM could get enough reservations to fill a plane on the site http://www.fly2miami.nl/ before December 6th, KLM would agree to do a non-stop flight from Amsterdam to Miami for these folks.  It seems the Dutch Dance Scene really wanted to get to Miami because they filled the flight in less than 5 hours and they now have 351 reservations.  So it’s on.

Obviously this flight isn’t going to dramatically change KLM’s balance sheet but they get to do what is essentially a charter filled with non-refundable fares and make some money.  The Dutch Dance Scene gets to dance in Miami.  It’s win – win for both parties.

The power of social media has proven itself again and it’s a message that quite a few airlines in the United States could stand to listen to (do you hear me United/American/Delta?).

Continental Guilty in Concorde Trial

December 7, 2010 on 1:00 am | In Airline News | 1 Comment

A French court has found both Continental (as a corporation) as well as a Continental mechanic guilty of involuntary manslaughter yesterday and it stinks on many different levels.

Even if we ignore the fact that all the French parties in this trial were acquitted while the only US based parties (Continental and the mechanic) were found guilty, it still stinks for air transportation.  This sets a bad precedent for future air disasters, particularly in France, since going forward there will be little if any incentive for any party to cooperate in an investigation. 

It’s a precendent that any airline has to pay attention to when it comes to operating on French territory now and in the future.  When you face criminal liability as an airline and when your employees are subject to that same liability, it has to make an airline think twice about operating flights within your country.   When your “verdict” is blatantly patriotic as this one is, you really send a signal to those airlines and it isn’t a welcoming one. 

There is now no good reason for any airline employee to cooperate with any investigation into an air disaster and frankly I think this even extends outside of French territory.  This will have implications even in the United States as far as attorneys are concerned and that’s wrong.  Investigating an air disaster is already a difficult and contentious process at best.  Subjecting *any* mistake at all made by an airline employee to criminal liability means that it is in all employees best interest to shut up and say nothing on the record.

Accident investigations frequently result in changes in how something is done when we reveal the mistakes or uknown factors involved and that’s good.  That’s the reason why air disasters, as a percentage of air travel, have decreased so much over the last 30 years.  This one decision sets that back decades.

But let’s not ignore the patriotism involved in this.  It’s a factor and anyone who doesn’t acknowledge that just isn’t using facts.  As in all things like this disaster, there were a number of factors involved in the final outcome.  To absolve anyone French from any responsibility badly damages the reputations of the French legal system, the French government, Air France and the governming authorities for air transportation in France.  How can you, as an individual or company, trust these entities in the future if you witness them throwing a US based company in front of a moving bus while saving themselves.

This kind of behaviour is the worst you can observe in France and I’ll point out that this kind of stuff isn’t limited to just France either.  France just happens to be very good at it and, maybe, better than most. 

If this is what we can expect from the French court systems and government, shouldn’t we consider this when it comes to EADS/Airbus’ particpation in the KC-X tanker contest?  What if they won this contest, performed poorly and then hid behind the French government to escape consequences?  We’ve just witnessed a willingness to preserve French interests over truth or facts so why should the US (or any other government) believe that fair treatment and real consequences are available under any conditions that threaten French national interests in the future?

Southwest, the 737-800 and Hawaii

December 6, 2010 on 1:00 am | In Airline News | No Comments

Southwest Airlines got final approval from its pilot union on an agreement to introduce the 737-800 into the fleet and Southwest did what we all expected Southwest to do:  They announced they’ll be buying the 737-800.

I’m sure we’ll see these aircraft first on flights into and out of slot controlled airports such as NYC La Guardia’s or Washington D.C.’s Reagan National.  The speculative part is Hawaii.  Yes, these aircraft will have the range but that’s just the first issue to overcome.  To fly to Hawaii, Southwest would also have to have these aircraft ETOPS certified.

ETOPS certification would have to be kept up on every aircraft or on a small subset of aircraft that would operate from the West Coast.  There is a certain complexity there that, to me, doesn’t smell like something Southwest would be immediately ready to accept.  They know the value of Hawaii already and I think they would like to fly there via a partner or by themselves again at some point but how soon?

Look for these aircraft to show up in about 1.5 years.  They’ll first deploy to the slot controlled airport routes.  Next, don’t be surprised to see Southwest introduce some trans-continental services with these aircraft.  I don’t think we’ll see a lot of trans-con flying but I think we might see a few select routes get developed with the -800.  If those go well and they like how those distances feel, we then might see SWA prepare to fly to Hawaii provided they can figure out how to maintain ETOPS on either the whole -800 fleet or a subset of that fleet.

In other words, Hawaii is probably at least 3 years away if not more.  SWA may well try to link up with another partner and that isn’t necessarily a bad idea.  However, I think the unions have made it clear that they want to keep the flying “in-house” going forward as much as possible.   With the Airtran merger still on its plate and the integration of the two airlines over the next 2 years, I think a more realistic time to see a flight to Hawaii might be in as much as 5 years.

Iran Air has the Star of David

December 5, 2010 on 1:00 am | In Trivia | 1 Comment

It was recently discovered that Iran Air’s headquarters has the Star of David on top of its building and, as you might imagine, Iran is outraged to make this discovery.  You can see it HERE in this story.  Prior to the revolution in Iran in 1978, it was quite common for Israeli engineers to work in Iran. 

Israel even had a direct flight from Iran to Israel.  Engineers were hired to design and manage the construction of a great many public works buildings and they often performed other services.  Those whacky Israelis also had the habit of sticking the Star of David into difficult to spot places.  My father has a Iranian banknote from the 1970s that was printed by the Israelis.  The engraving for the background contains the Star of David.

You can also find this feature on top of a public building in a main square in Tehran that was also built by Israelis using Google Earth.

Welcome Virgin

December 4, 2010 on 1:00 am | In Airline News | 1 Comment

Virgin America is set to start 2 flights a day between Dallas and Los Angeles and 2 flights a day between Dallas and San Francisco and it began this past Wednesday with a party.  As expected, American Airlines is already responding.  AA is boosting its frequencies by 2 flights a day and they’re offering extra frequent flier points for booking on their flights as well as prizes for selected travelers.

It’s a typical AA response and one they’ve used against other entrants onto what they regard as their turf.  But is it enough?

In the past, new entrants have typically offered a service product that is no better than their so the competition was based on price and frequency.  While frequency is likely going to be a selling point, I’m not sure it’s going to be as much a factor this time since VA has decided to schedule its flights in what appears to be perfect “business” times.  Their morning flight to Los Angeles departs at 7:00am and their evening flight at 4:35pm.  This offers good arrivals times into LA and good departure times from DFW airport.  Their flights departing DFW for San Francisco leave at 8:00am and 2:15pm and while I’m not a fan of the latter, the former fits nicely too.

This might end up more about service product this time and VA has a service product that beats AA hands down.  American offers you a choice of their clapped out MD-80s, 757s or the possibility of their new 737s.  However, those 737s are equipped with less comfortable seats, no in flight entertainment and WiFi on AA is spotty.  Virgin offers WiFi on all their aircraft, in flight entertainment on all their aircraft, more comfortable seats on all their aircraft and better food and drink for purchase. 

Business travelers, especially those whose company has shunted them to economy, would be wise to give this product a try.  Anyone traveling on these routes would be wise to support VA in its entrance to the DFW market because this is exactly the kind of competition that AA hasn’t had for years on its routes from Dallas.  VA picked two very good routes to enter as they had exceptionally high fares.  I just checked on fares to both LAX and SFO for next Wednesday and found a low fare of $129 each way ($250 RT) available for both routes and that compares to fares that were in excess of $400 round trip on American.

I have an interest in seeing Virgin succeed on these routes.  I live in the DFW area and I’ve spent nearly 10 years getting angrier and angrier over the exceptionally high fares that AA has enjoyed a variety of routes departing DFW.  I’ve become so upset at the treatment I’ve received on AA that I’ve actively sought connecting flights on other airlines to avoid American’s “service”.   This is exactly the kind of new entrant DFW needs and stands in stark contrast to the others that have come here such as Spirit Airlines. 

Virgin America’s CEO is David Cush, a former American Airlines veteran executive and he gets what it will take to survive the attack from American.  I’m cautiously optimistic that he’ll recognize that there are plenty of other opportunities in this market and executing on them now puts his airline in position to do well even against Southwest after the Wright Amendment is fully lifted.

For those of you chasing the frequent flier status game, take a look at this new airline coming to DFW.  You’ll get better treatment and more opportunities for comfort and service for simply paying a lower fare than you’ll ever get as an AAdvantage Gold or Platinum member on routes such as these.  Do you want status and an old aircraft or service and a new aircraft?

Grants Distort

December 3, 2010 on 1:00 am | In Airline News, Airports | 3 Comments

American Airlines is switching its 2 flights per day from Springfield, IL to Chicago over to their DFW hub next April.  By doing so, AA will be eligible to dip into available grants setup to defer start up costs on new routes. 

One of the things that irritates me the most about how the US airline world has become distorted has to be how regional jets are used.  We don’t use them on regional routes.  Well, they’re still used on those routes but far more often we use them on long, ultra thin routes like Springfield, IL to DFW.  Or how about the time I flew from DFW to Cleveland on a Continental Express ERJ-140. 

The truth is, any flights from Springfield, IL should be going to regional hubs that are nearby.  We should see larger turbo-props flying passengers from Springfield to Chicago, St. Louis and Memphis.   I don’t know if Springfield can honestly justify the 6 flights per day it has to Chicago at this time but, if it can, I would argue that 1 or 2 of those flights is superfluous at best. 

Small airports like Springfield get access to all kinds of grants and other funding that permit them to attempt to attract new services and, hopefully, help grow their local economy.  But those grants are used to distort markets and encourage flights that would never exist if they had to be justified on the real market demand.   How is Springfield, Illinois truly better served by 2 flights per day to the DFW area for AA/Oneworld connections to the rest of the world when it can access pretty much the same parts of the world easier (and more economically) through Chicago?

The truth is, if you look at just a 350nm radius emanating from Springfield, you’ll find that the options on a regional basis to hubs and/or focus cities that actually have both political and business ties to Springfield, you realize just how insane it is to be flying a Springfield to Dallas route of 630nm using an ERJ-14X aircraft. 

Cities like Springfield should be cultivating multiple routes to multiple hubs/focus cities near them.  They should seek to offer broad based links to their entire region instead of a link to one part of their region (Chicago) and another link to an area entirely outside of their economic sphere (Dallas).    Using Springfield as an example and defining their “region” as being roughly 350nm diameter, they could target links to Chicago, Milwaukee, Detroit, Indianapolis, St. Louis, Kansas City, Minneapolis / St. Paul, Memphis, Nashville and even Cincinatti and Columbus. 

Grants and incentives have a tendency to drive decisions towards things that are clearly serving a narrow, immediate “want” rather than a broad based, market driven “need”.  I would far rather see grants help improve airports themselves and let the municipal, state and business leaders of a city make a business case to airlines for routes they need.  All too often, when I see a route like DFW-Springfield, I wonder what local business executive wants that route for his convenience and to what other businesses detriment is it being done?

ANA wants the Dreamliner . . . NOW.

December 2, 2010 on 1:00 am | In Aircraft Development | No Comments

All Nippon Airlines (ANA) is lamenting the new delay on Boeing delivering the Dreamliner to one of its launch customers and I don’t blame them.  I don’t think anybody regrets ordering the 787 even at this point but I do marvel somewhat at the patience being displayed by several of the customers.  This was an aircraft that Boeing arguably needed in its product lineup several years ago.

These delays have added up to something well past 2 years now and we don’t know what else may show up causing further delays.  The most disturbing part of these delays, to me, are that many have been caused by quality control issues with manufacturing partners and with problems centered on systems that arguably should have been robustly tested and matured at this point. 

It begs the question as to what the hell were these partners doing during the long delays involving fasteners for instance.  Engines could have been tested more.  There was no high rate production impeding Alenia’s abilty to ensure strict quality control.  Even power panels could have been tested much more in a integrated systems environment.  

Additional testing would have greatly reduced risk in delivering this aircraft and I just don’t get the sense that there was a financial commitment to this.  Certainly quality control problems on horizontal stabilizers shouldn’t have been discovered after so many airframes had already been built. 

This smells like a former aerospace company that used to be based here in the United States:  McDonnell Douglas.  It’s notable that it is former MD people who are largely running the business today and the truly successfuly Boeing people are now elsewhere.   What Boeing needs is an Alan Mullaly and at this point, I don’t think one exists at Boeing anymore.  If he/she does, they’re being kept hidden well. 

Blaming these delays because this airliner is on “the bleeding edge” of technology really doesn’t quite pass the sniff test anymore.  That was OK in 2007 and 2008.  It was even somewhat acceptable in 2009.  But this 2010 and it is about to be 2011.  Agressive and thorough testing should have eliminated most of the risks that are being realized at this moment and that is very disappointing.

El Britberia Airlines

December 1, 2010 on 1:00 am | In Airline News | No Comments

It’s always fun to come up with contractions of names for airlines that merge.  My newest is Britberia Airlines, British Airways and Iberia Airlines.  Good news for those two:  they now have shareholder approval of their merger and expect to conclude the deal in January.  The new entity will be called International Airlines Group and it will manage both the British Airways and Iberia brands.  I wonder if someone at AA didn’t help with the new name as that is about as bland as one can get.

Willie Walsh, who will serve as over-arching chairman of this new group, says it’s been a good year for British Airways with this merger and their recent anti-trust approval to work with American Airlines.   While it may not have been their worst year, I don’t think it’s a “good” year.  They’ve still got a fight going on with their cabin crew union that really needs to get solved.

The new group still falls behind Lufthansa and AirFrance/KLM but it does make BA/IB a better player against those two but with a weakness or two as well:  They’re still dependent on a growth constrained hub at Heathrow airport and their ability to expand will lay with the Iberia hub in Madrid.  The other two SuperAirlines have got hubs in better places for more of Europe’s traffic.  Hubs in places like Paris, Amsterdam, Frankfurt, Berlin and Zurich.  They’re just more centrally located.

Walsh says future growth will be focused in Madrid but I don’t see how that helps BA in its home territory of the UK.  How is it more attractive to take a flight from Manchester to Madrid to go overseas to many places?  I think this union needs a northern European partner and I think they’ll seek one out once this merger is fully ironed out.  If not a European partner, then a different Ireland/UK hub is probably needed. 

Madrid and Spain seem logical for connections to Africa, South America and perhaps the middle East or even India.  The UK is a logical connection point for destinations within the UK, northern Europe and North America.  But growth is needed in the UK and Heathrow can’t continue to be the hub for all things BA.

Perhaps the Irish government will sell Aer Lingus to the group.  Dublin could be a nice gateway city for trans-atlantic flights and connections to airports throughout Ireland and the UK.

SAS may want the Bombardier CS300

November 30, 2010 on 1:00 am | In Airline News | No Comments

The Nordic airline, Scandinavian Airline(SAS), is looking to modernize a good portion of its current fleet of 737 and MD-80 aircraft and Bombardier is reportedly favored to win with its CS300. 

SAS owns a pretty varied fleet which includes both Airbus A320 series aircraft as well as old and new generation 737s (including the unpopular 737-600).  A more harmonized fleet would help.

The problem is, SAS doesn’t necessarily need aircraft that are necessarily big players on medium haul routes.  While it does need some higher capacity aircraft for leisure destinations, it needs smaller capacity aircraft in bigger numbers for frequency.

The CS300 has a nominal maximum range of at least 2200nm and that’s enough for SAS’s world in Europe.  That would allow them to serve all of europe from their hubs of Copenhagen, Stockholm and Oslo or any of their other focus cities as well.  Take a look at what 1900nm range gets you from Stockholm by clicking HERE.

It’s notable that this airline is the only airline that found a real use for the 737-600 and bought 28 of them.  They also have a number of -500 models as well.

The Cs300 would probably fit well into their strategy and offer them a light aircraft with good capacity for flying frequency in their stronghold(s).   They would get an efficient engine for this kind of flying as well.

My guess is that the Boeing aircraft will go away completely over time and SAS will buy more Airbus aircraft for routes requiring more capacity.   Boeing just doesn’t have anything in its product line up that fits the SAS model.

A lot of people believe the CS300 isn’t going anywhere and even I wondered but it seems to me that this might be just the kind of niche Bombardier needs to serve.

Subsidies

November 29, 2010 on 1:00 am | In Airline Fleets, Airline News | No Comments

The dirty little secret in aircraft sales are the subsidies that are used both in the United States and Europe to bolster their exports.  You see, you can actually affect your trade balance by selling just a few extra aircraft and that really isn’t possible to do with virtually any other industry.

Right now, foreign airlines such as Emirates or Ryanair can purchase airliners using financing from sources such as the US government in the form of low cost loans.  If we sell and deliver more 737s to Ryanair or 777s to Emirates, it helps our trade balance.  The airlines get to grow with lower costs that are a function of these loans that offer lower than market interest rates.

And let’s face it, Ryanair and Emirates aren’t exact airlines in need of subisidies. 

The same situation exists in Europe with Airbus.  You didn’t think that United Airlines and Northwest Airlines bought those Airbus A320s at market rates, did you?

To date, it’s been the dirty little secret among governments and the manufacturers.  Recently, US airlines started pointing out the inherent disadvantages of this when it comes to their ability to compete and they’ve got a strong point. 

The truth is, sudsidies aren’t necessarily bad if we’re using them to bolster transportation in parts of the world where obtaining any financing is difficult.  But we’re not.  Not really.  It’s a good idea that has been turned on its head with loopholes for situations that just no longer exist. 

Now a pack of airlines who are major beneficiaries have indicated that they are open to relaxing the “home country” rule that forbids such subsidies being offered to airlines in home countries as long as no restrictions are put into place that would inhibit their own great deals.  Read more about it HERE

How nice.   It’s notable that removal of this “home rule” would also permit several of these airlines to get the same great financing  in Europe on Airbus models in addition to Boeing aircraft. 

How about we end all subsidies to all airlines with the exception(s) of those in true third world areas?   Is it appropriate that an airline like Ryanair can purchase airliners from Boeing at already ridiculously low prices and then finance them with such low cost loans that they’re able to buy a 737 and re-sell it for a *profit* 3 years later?

No, of course not. 

A better idea would be to come to an agreement on how to offer these subisidies to airlines in poor countries who might really benefit from such a subsidy and then eliminate such things for any airlines operating in modern economies.

This means you Ryanair/Emirates/Virgin Blue/Etihad/CargoLux/Oman/Norwegian/Pegasus/Wizz airlines.  Not a one of you is a disadvantaged airline.  Instead, you’re all airlines who are pounding your competition into the ground with lower costs that really are a direct function of these subisidies.

Don Nyrop . . . again

November 28, 2010 on 1:29 pm | In Airline History | No Comments

For those interested, here is a New York Times obituary on Donald Nyrop of Northwest Airlines.

Who is protecting you?

November 28, 2010 on 1:00 am | In Airports | 3 Comments

Before anything else today, let me say this:  I’m quite sure that very few security officers in the TSA are truly evil or have even bad intent.  I suspect most are just trying to earn a living in a world where that has become quite a bigger challenge in the past few years.

After reading a CNN story found HERE, I got curious as to what we’re buying when it comes to security.   So I checked jobs at the TSA website to see what was being advertised.  What I was interested in was the going rate for a TSA officer. 

I was more disappointed than I expected and that’s saying something.

Apparently most of these jobs start as part time and can continue to be so for as much as 3 years.  That means less benefits and the officer will almost certainly be working another job to make it in this world.  Anyone who has worked 2 jobs will tell you that that is a draining experience.  Even if you’re working a steady 40 hours as week, a 2 job lifestyle is much harder on a person than a single steady one job lifestyle.

We pay these vaunted officers $14 / hour roughly to do this job part time.  Again, in this world we actually life in, that ain’t much.  Do people survive on less?  Sure.  Do many people survive on less?  No.  We have this idea that honest work at low pay rewards and frankly as someone who has done honest work at low pay, I can tell you it doesn’t reward you.  It just stresses you out and generally depresses you. 

I wonder how vigilant the average person is working 2 jobs (at least) for pretty low pay in an environment that places them on the frontline for abuse?

If a worker gets a full time gig, they earn about $29,000 a year and they stop out at a stunning $43,000 per year.   These folks can make a maximum of $43K per year and that equates roughly to someone over 25 years of age who has achieved an Associates Degree.  

Look at it differently.  The median income for an officer lies somewhere in the vicinity of  $36,000 / year.   My point is that we are, at the very best, hiring the middle section of people who below average in capability as determined by earnings. 

Then we abuse them a bit more with lackluster benefits (their healthcare can cost hundreds of dollars per month if they think they can afford it and they probably cannot without working a 2nd job again.)

Let me suggest that we want security officers who are *more* capable than average.  We want officers who are more vigilant than average.  We want officers who we would at the least hire to be police officers in a major city (and they aren’t) and we probably want a better person than entry level police material. 

Because good security involves critical thinking and the exercise of good judgement.  That costs something.   Instead, we’re hiring a person who is roughly qualified to work at a Sears department store.

Emirates Wants More

November 27, 2010 on 1:00 am | In Airline News | 2 Comments

Tim Clark says Emirates wants more range from Airbus and its A350-1000 than it presently offers and it expects more from Boeing’s 777-300ER, too.  The airline is unsatisfied with the inability to serve ultra-long haul routes from Dubai with what it considers adequate payload.  Adequate payload is carrying 350 passengers from Dubai to Los Angeles with a full cargo/baggage load in about 16.5 hours. 

Frankly, that’s expecting a lot from even advanced technology.  We’re getting there but the big problem is how much fuel you have to carry to achieve those distances with those loads.   Those distances begin to require airliners to carry more fuel in order to carry more fuel for range and you can guess how quickly the diminishing returns show up on such a prospect. 

Lighter but stronger aircraft can solve that but we’ve already seen what a challenge  that can be with the 787.   There is no doubt that the manufacturers will figure out how to do it somewhere along the line but my gut tells me that this isn’t a problem solved with a better wing or better engine.  It’ll require re-thinking the large widebody airliner in a way that will require even better composites and other lightweight materials. 

It takes time to develop and test those materials.  It can take a lot of time to even figure out how to ramp up production on these exotic materials.   We still haven’t seen 787 partners prove they can meet production demands for CFRP fuselage barrels.  I think they can but the proof is in the pudding and we haven’t tasted the pudding yet.

My gut tells me we are at least 15 years away from producing a truly revolutionary widebody capable of carrying 40+ tons of payload for those ranges.  We’ll get there and it’s time to start thinking about it but don’t look for such an aircraft in the next 10 years.  It won’t be showing up. 

Besides, it’s a relatively limited market and it’s become clear that the manufacturers need to turn their resources towards producing a better short haul, single aisle airliner.  Frankly, that’s where the real money is at in the next 10 years.

Going Through Security . . . In A Speedo

November 26, 2010 on 1:09 pm | In Trivia | 1 Comment

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