Delta has a new holiday safety video and it’s entertaining.  See if you can spot the Yeti.

Filed under: Trivia by ajax
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Often the key to getting a deal done is finding a way for one or both parties to save some face.

The worst thing to happen in the Department of Justice lawsuit against American Airlines and US Airways is that the DoJ acted in a manner that immediately backed themselves into a corner.

Since that silly act, roughly 3/4 of the entire world has come out in support of the merger between the two airlines.  I’m pretty sure that Sri Lanka will be filing its amicus brief in support of the merger in a day or two (note:  that’s *humour* in that last line.)

A mediator has been assigned to this case and it is a way out for the DoJ.  With a mediator in place, a deal could be negotiated where the DoJ gets a token concession and is able to exit this lawsuit without appearing to have failed.

It’s failure that people fear the most in these things and lawyers have a big ego that goes against failure.  But this latest lawsuit may be one of the most unpopular acts the DoJ could have engaged in for 2013.

The mediator can help facilitate a deal but it also takes on the onus of having put a deal into place.  The DoJ can be seen as not giving in (entirely) and the airlines get their merger.

The deal that wins is that slots in Washington D.C. are given up and guarantees of service are made for a certain time period in other areas where competition is slim(er) as a result of  the merger.

My personal estimate of probability for a deal prior to the mediator being assigned was about 20%.  I would now raise it to 60%.

One item of note:  Were the DoJ to lose this lawsuit, it could lose all of the lawsuit.  Which means no slot giveups anywhere.  That’s a failure that would look very, very bad to any outside looking in at the DoJ.  There is some incentive for a deal.

Filed under: Airline News, Mergers and Bankruptcy by ajax
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Airbus has gone on record saying that there should be a minimum standard for seat width on international flights and that width should be 18″.

Notice that Airbus has no opinion on seat pitch (think legroom) whatsoever.

The reason Airbus wants an 18″ standard is that it downgrades Boeing aircraft without impacting Airbus aircraft.  Airbus tends to build its airplanes a touch wider than Boeing but not wide enough for another seat row.  This means that Airbus is perceived as being a little bit more comfortable.

This comes at a cost, however.  Airbus aircraft is typically heavier and has more drag on a per seat basis than Boeing aircraft which are really designed around a 17″ to 17.5″ seat width.

Boeing can claim a 10 abreast seating configuration for its 777 airplanes whereas Airbus has just a 9 abreast configuration for its A350 aircraft.  If 18″ is the new standard, Airbus will remain 9 abreast but Boeing would have to downgrade its claims to 9 abreast.

The truth is that many airlines do operate the 777 in a 9 abreast configuration today.  Some have gone to a 10 abreast configuration (and are largely despised for it.)

I can’t say that I disagree that an 18″ wide seat is far more appropriate for an international flight.  Hey, let’s go whole hog and ask for 18″ wide seats with a minimum seat pitch of 32″ for an international flight.

It’s all academic anyway because there is zero enforcement authority for this anywhere.

It’s Airbus being an upstart and getting attention again.  Positive attention that cost them not a single penny.

Filed under: Aircraft Development, Airline Fleets, Airline Seating by ajax
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The airliner being developed in Russia and branded as the Irkut MS-21 is a Boeing 737 and Airbus A320 competitor.  Well, in theory anyway.  The airliner is being developed to fit into the same capacity / range of those two product lines but it is a long haul and who knows if the airliner will ever be truly launched into production.

The Yak-42 was a three engine rough runway, t-tail design built in the hundreds by Russia during the Soviet Era.  For a Soviet aircraft, it was a pretty good airplane.  It resembled a 727 and had roughly the same capacity of a 717-200.

The actual progression was Yak-40 (a regional 3 engine airliner capable of rough fields and carrying about 40 people), then the Yak-42 and a Yak-46 and Yak-242 were conceived and even went through design exercises before being cancelled.

Now they want to change the name to the defunct Yak-242 and allege that the MS-21 is derived from that study.  It’s a branding thing.

The problem is that the Yak has no positive brand image anywhere but in Russia.  No one thinks of the Yak-42 and says “Yeah, they should built something like that again.”  Calling the airliner Irkut MS-21 put distance between it and every other bad experience made in Russia.

But Russia clings to things and in this case it’s going to cling to the name Yak and believe that that name is going to win.

It won’t but that may be moot anyway as it remains to be seen whether or not Russia can build an airliner that interests the world.  So far, the Sukhoi Superjet ain’t.

Filed under: Aircraft Development by ajax
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There have been criticisms of how Southwest has played its game in Atlanta compared to how Airtran was working in Atlanta for quite some time.  The obvious comparison that has been made has been departures.

Airtran had a lot of departures out of Atlanta and those have been reduced over time by Southwest as it absorbs Atlanta into its schedule.

Airtran ran its Atlanta operation like a hub and that does mean lots of departures.  If that’s your hub, you want flights going everywhere.  Going everywhere means lots of flights.

Southwest runs focus cities that are connected with many point to point flights.  This means fewer flights.

Southwest knows what it is doing in Atlanta and its transition in Atlanta is about gaining access to business travelers in a market it was shut out from until its purchase of Airtran.  Atlanta will probably gain flights over time at a very moderate pace as Southwest identifies more opportunities.

But Atlanta is not going to be a hub under Southwest.

Filed under: Airline News, Airports by ajax
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Southwest Airlines CEO made it clear during an earnings call that Southwest believes that should there be a merger between US Airways and American Airlines, that slots in both the New York City and Washington D.C. areas should be made available by the combined airline.  And Southwest wants those slots.

In the most recent give-up by US Airways at Reagan National about 2 years ago, jetBlue won the auction for those slots.  jetBlue paid $40 million for just 16 slots.

Southwest has lost several bidding wars for assets over the last several years.  Bidding wars that even today I would argue it should have won by being just a touch more aggressive.  Southwest tends to want a “deal”  much like it got with asset purchases from ATA many years ago.

Those deals don’t exist anymore.  Premiums are paid for such assets and whether we like it or not, the price of entry in those markets is very high.

So, is Southwest prepared to pay to play in those markets?  I think it will.  Southwest’s business strategy has changed over the past 2 years and has an increasing focus on winning business travel.  To do that, it needs more penetration in markets such as New York City and Washington D.C.

Filed under: Airline News, Airports by ajax
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It often bothers me that Boeing never seems willing to buy into a start up airline.  Airbus has had to make it its business to go to these startups in hopes that they’ll gain market share incrementally.

But Boeing always seems to want to see a strong balance sheet and a track record before truly making a good deal to an airline.  On the surface, this seems smart but in reality, I think Boeing is slowly ceding sales to more and more airlines as a result.

A leveraged business, particularly in the airline industry, is a very common thing these days.

Most recently, VivaAerobus has been operating a fleet of 737-300 aircraft (20) and it just inked a deal with Airbus to buy A320 aircraft to replace those 737s and to expand with.

How do you let an airline operating your airliner successfully get away like that?

You treat them the way Boeing does.  They’re not big, they’re not the best financed and they’re the upstart in a highly regulated country.  But Airbus has the sale and Boeing doesn’t despite the fact that Boeing should have actually had the performance advantage on this sale.

It’s my belief that Boeing has trended towards being discriminating with its sales to only larger companies in general.  And I believe this will hurt Boeing more and more in the commercial landscape in the years to come.

Filed under: Airline Fleets by ajax
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US Airways 3rd Quarter results were down compared to the previous year and primarily due to expenses that are currently resulting from the anticipated merger between it and American Airlines.

If you think either airline isn’t burning a lot of cash right now due to the hold up from the DoJ lawsuit, think again.  US Airways’ one time expenses were $151 million for the 3rd quarter and while I don’t like talking about “would have beens” related to these kinds of expenses, let’s just pause and consider that a great deal of those one time expenses were related to its “hold” on the merger.

Considering that US Airways has less revenues than Southwest Airlines, the $216 million net profit for the 3rd quarter is exceptionally good and shows that that airline continues its strong record of providing profits.

Filed under: Airline News, Mergers and Bankruptcy by ajax
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There have been a number of airline industry watchers who have private and (sometimes) publicly expressed concern that American Airlines’ case with the DoJ on the subject of competition was hurt by American’s ability to turn a profit right now.

American Airlines has indeed earned a Q3 profit and it was a respectable one.

Delta Airlines had a Billion Dollar 3rd Quarter.  $1.6 Billion to be exact.

While you digest that news, consider that Delta doesn’t have the lowest costs around this town.

So, when we consider that the airlines of size (Delta and United) and what they’re able to produce for themselves in profit, consider the size of the warchest that that gives those two airlines.

And then explain how the much smaller American Airlines and US Airways are going to fare against those behemoths.

Filed under: Airline News, Mergers and Bankruptcy by ajax
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There is now speculation that there might be talks going on between the Department of Justice and American Airlines and US Airways to settle the lawsuit the DoJ has brought against the two airlines.

The speculation is largely born out of the fact that Texas Attorney General Abbott got a “settlement” deal with the two airlines and was made happy.

The truth is that that settlement was window dressing.  The Texas AG got nothing past what AA had already offered in many discussions.  The offer was merely put on paper and signed.

I do not think there is a deal to be made with the DoJ and I think those hoping for it are ignoring the fact that the DoJ has backed itself into an ugly corner by even filing the lawsuit.  There were other choices they could have made in August.  One would have been to enter into negotiations for what the DoJ would think necessary to improve competition.  The fact that that was’t the next step speaks loudly to the intent of the DoJ.

Lawyers are people and the leaders of these lawsuits didn’t get where they are by changing their minds.  The amount of ego that would have to be swallowed by both DoJ Attorney General Holder and the lead Deputy AG Baer would be very large.  It’s hard to imagine either man swallowing such a change and it’s hard to imagine a deal that allows either to save much face in the process.

Look for a trial starting on November 25th.  I still think the airlines win this trial and I think that will be even worse for the DoJ.  The Department of Justice is free to shock and surprise me with a deal but if one comes about, it won’t substantially change the merger between the two airlines except for in Washington DC at Reagan National airport.

Filed under: Airline News, Mergers and Bankruptcy by ajax
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Singapore Airlines did something shocking many years ago.  It took its nearly new A340-500 aircraft and put an all business class cabin in it.  Then it flew this airliner from Singapore to New York City (Newark) on a regular schedule.

This has been a flight of 9500 miles (or 8300 nautical miles) which, when you think about it, is really quite amazing.  The flights are sometimes a bit longer than that because they fly an air track that is most efficient, not always just a great circle polar route.

But Singapore is dropping the flights.  The aircraft used is a 4-engine aircraft that never made much economic sense for most airlines and it is probably becoming too expensive to operate this aircraft even on this route.

Will it be replaced?  It’s always possible but there are no plans to do so today.  A 777-200LR could fly the route with more passengers but who says there are more passengers who want to fly that route?  A 787 cannot fly the route today and there are no models with enough reserve distance in them to make that possible.  So, as a route, it’s probably gone.

The next longest route is Sydney-Dallas/Fort Worth at 7500 nautical miles and it’s notable that that aircraft is also a 4-engine airplane:  The 747-400ER.

The reason both of those are flown with 4-engine aircraft is that they have both the range as well as the ability to fly the most efficient, direct tracks.  Two engine aircraft such as the 777 always operate under ETOPS rules which often require slight deviations to stay within range of a diversion airfield.

I do think we’ll see a flight of 8000 or more nautical miles some day in the future.  I do not think we will see that flight in the next few years.  At the end of the day, such flights are really one-offs that will come and go as demand changes.

Just like the Concorde, it was nice while it lasted.

Filed under: Airline History, Airline News, Trivia by ajax
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A U.S. Air Marshal was caught taking photographs up women’s skirts with his cell phone and was caught by a passenger who took his phone and then notified a Southwest Airlines flight attendant immediately.  The marshal was arrested by airport police.

The TSA says it is cooperating with the investigation of this man.

Would anyone care to place bets on how long it takes the Transportation SECURITY Administration to describe this as a one-off event and that the officer was terminated and it isn’t anything to be concerned with?

It is events like this that makes me want to create a category in this blog titled “Are you kidding me?”

Let’s examine the problems here.  First, a person who was given great trust violated the public in a manner that increases the public perception that the TSA isn’t there to provide security but, rather, a haven for sex perverts.  If that seems harsh, I won’t apologize.  All too many encounters with the TSA devolve to someone getting groped or inappropriately photographed.

That badly damages public trust and TSA credibility.

Second, the passenger took the phone away from the marshal.  Seriously?  The passenger just grabbed the phone and took control of the situation along with a flight attendant.  Let me point out the irony here:  The passenger and flight attendants did what an air marshal should have done.  Even if the guy was doing something bad, one would kind of hope that he had the presence of mind to not let someone take something from him.

That doesn’t describe the kind of person we want performing air marshal duties, does it?

Third and most important is that these kinds of things happen too frequently.  For several years now, the TSA has promised that it is cleaning up its act.  But, hey, we have air marshals photographing women under their skirts and TSA officers stealing parking placards and re-selling them.  And many more things going on.

If this was the FBI, would we be tolerating this in a security force?

The TSA has not cleaned up its act.  It has not provided security and it is not, by any obvious measure, attempting to build public trust and credibility.

When your security force is assaulting you and stealing from you, my first inclination is that you must live in a corrupt third world country.

But we’re talking about the United States here.

Filed under: Airline News, security by ajax
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American Airlines has turned in a very respectable 3rd quarter profit of $289 million and say they would have made much, much more if bankruptcy costs hadn’t gotten in the way.  I continue to respond that one time charges and bankruptcy costs happen and should be considered in results.

We’re nearing the second anniversary of American Airlines’ bankruptcy and it is good to see the profits and also see that a significant amount of money has been set aside for employee profit sharing.

It also makes me feel particularly bad for the US Airways employees because the delay in the merger has yanked away the economic benefits they would be experiencing as a result of the airlines’ success together.

Filed under: Airline News by ajax
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American Airlines has announced that it is adding two new routes from DFW to Hong Kong and Shanghai and has done so with great fanfare.

The Shanghai route will use American’s 777-200ER but the Hong Kong route will make use of AA’s newest 777, the 777-300ER.

When American Airlines ordered the 777-300ER a few years ago, it felt like a very, very good decision.  In fact, in some ways it simply defied imagination that AA was the US airline that finally decided to buy the -300ER (none had done so at that time and none have made such an order today.)

I’m a fervent believer that international routes will trend towards longer, thinner routes.  I do not believe that either the 747 or the A380 has a very strong place in the airline world today.  But I also think that the 777 fits neatly into that high capacity, long route structure that so many airlines are using to make big money from.

And American is clearly doing very, very well using the -300ER.  So well that one does wonder at the reticence to purchase being shown by both United and Delta.  Yes, each still has the 747-400 and I would argue that neither is well served by that aircraft.  Particularly in light of the age and the changing structure of routes.

So let’s celebrate something that you hear  very rarely from me:  Congratulations to American Airlines for a very wise decision.

Filed under: Airline Fleets, Airline Service, Airports by ajax
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I am awfully critical of the airline industry most of the time.  The truth is, I see so much room for improvement and so much room for more profit, it often drives me crazy to see the short sighted decision making that exists in the industry.

I continue to tell people that doing something well costs about as much as doing something poorly.  If that’s true, why not do it well?

But there is one area in the travel world where I think things have gotten better.  Way better.

Airports.  Not all airports but many have vastly improved themselves into places that are relatively helpful, navigable and service oriented.

Some are even coveted destinations (Portland, OR for isntance).

When I pass through airports, I’m often struck by how much easier it is for someone to buy what they need on the fly whether its food, coffee or an iPhone charger.  The convenience is far greater.  The selections are far greater.

Food has improved and reached the point where most of my criticism lies with the cost (which I find artificially high provide kickbacks to the airport) and the service (sometimes).  The service often suffers in an otherwise well done restaurant because airports still think they have to award monolithic concession contracts to large companies such as ARAmark instead of becoming more inviting towards the unique.

I would point out that some of the very best airports are ones that embrace their locale and which invite local gems to become part of their airport environment (Portland!).

Airports are much better.  Many are improving their parking and somewhat cooperating with off-premises parking establishments as well.

Mind you, some airports have an enormous distance to go, too.  Newark comes to mind, for one.  Philadelphia too.  Some airports are behaving, still, like they have a captive market and really don’t need to make improvements.  Those airports will be surprised at the effect they have on their local economies as the future evolves.

But I am pleased to see that airports have improved so much over the last 20 years.  I’m also pleased that they appear focused on a better service delivery and that goes a long way towards making an airport an appealing prospect.

Filed under: Airports by ajax
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One recent development with Alitalia is that they are failing more and more (no, that’s not the new) and now governments are getting involved to provide aid (no, that’s not it either) to stabilize the airline for restructuring (nope, not that) and possible acquisition by Air France /KLM (no, that’s old too) is that International Airlines Group objects.

There it is.  IAG led by Willie Walsh doesn’t want that aid going to Alitalia.

And I agree. Alitalia is comically bad in so many ways  and has been comically bad at regaining a foothold in the European market since it’s “takeover” by Air One forced by the Italian government.

Quick question:  Did you know the “old” Alitalia was liquidated?

IAG is right.  The aid is illegal and, more importantly, it distorts the marketplace in Europe.  Alitalia has been unable to succeed legitimately under any guise for more than 20 years.  It’s time to let go and allow the markets to provide an airline to Italy.

I suggest Ryanair be chosen to take Alitalia’s place in Italy.  Afterall, that kind of failure deserves some kind of punishment.

I haven’t done this in a long, long time but Alitalia goes on my Death Watch starting now.  Although this airline has a habit of rising up from the dead, shaking its hands and saying “I’m baaaack!”

Filed under: Airline News, Death Watch by ajax
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Southwest Airlines has started a countdown to October 13th, 2014, the end of the Wright Amendment and the beginning of Southwest’s ability to fly non-stop to wherever it wants in the continental United States.

Personally, I’m going to treat it as a countdown to my mother’s birthday (which is the same day).

My best guess on flights Southwest launches that day:

• Chicago
• Los Angeles
• Portland
• Atlanta
• Baltimore
• Newark
• Phoenix

I know you’re surprised I put Portland on that list  but I do think it will become an immediate flight.  The fares on that route today are sky high with no competition.  American Airlines flies that route with 4 flights a day and Alaska Airlines has one flight a day as well.  This is a route I feel certain SWA will pick as low hanging fruit unless something happens to that city pair in the meantime.

October 13, 2014 will be a very big day in Dallas.

Filed under: Airline News, Airports by ajax
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No, not really.  From time to time, well, nearly daily really, I see “stories” on Google about airlines or the airline industry thrown about buy companies writing analysis about stocks.

The Motley Fool is one, quite frequently, who does this.

A couple of days ago, I saw a report by a website called Zacks promoting news that the shutdown is affecting airlines but also has a statement that Southwest is affected in its ability to get jets delivered and is due to take on new widebodies.

That’s just bad information on a level that should never happen.

Southwest is not buying widebody jets.  It is buying ever so slightly larger 737-800 jets of which most of 2013 deliveries are supposed to be.

Filed under: Airline News, Trivia by ajax
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Someone has sued United Airlines for having an algorithm in its frequent flier system that causes more points to be charged to those who have more points when redeeming frequent flier points for hotels.

United Airlines says this suit is without merit.

Curiously, I have often noticed that American Airlines own system often will offer me a “low” price in points for a flight that if I do not take it, minutes later “disappears” and is replaced with a higher price.  And keeps incrementing as long as I stay on the site.

Mind you, this is an anecdotal observation and I really have no idea of what strategy is employed by airlines with their points based system.  But such strategies have an “airline smell” about them.

And that’s why I think frequent flier points are useless and not be sought when choosing travel.

Filed under: Airline Service, Frequent Flier by ajax
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Last week, Delta CEO Richard Anderson made the comment that there was no apparent effect from the government shutdown on airline business.  While the effect was not immediate, I truly think we’re going to see some down times (again) for the airlines in this country.

Economic uncertainty leads people to defer purchases, travel and seek alternatives to face to face meetings in business.  We have seen this time and time again.  Corporate America’s reaction to the 2008/2009 economic crisis shouldn’t be forgotten by now but it seems to be.

The shutdown introduces uncertainty about our future.  Economies aren’t just driven by the stock price on Wall Street or the unemployment numbers calculated by the government.  They are a kind of living, breathing creature.

And not a smart creature either.  Economies tend to be dumb and emotionally reactive.  They are not nuanced and subtle and they do not act with patience.  One would like to think that they reflect the whole of those participating in them but they don’t.  They just don’t.

So, when uncertainty from a government shutdown is combined with the uncertainty and growing fear that a failure to raise a debt ceiling introduces, I do worry for the industry.

Creatures that are kind of dumb and reactive don’t do well when Congressmen who are veterinarians by trade start making statements that they have “read a lot” about the economy and believe that “nothing will happen” if the nation defaults on its debt.

No, it isn’t emotionally upsetting to anyone when the most financially strong country in the entire world defaults on its debt.

Anyone who wants to vote Congressman Ted Yoho out of office for saying things too stupid for Congressmen to say is welcome by me.  The alternative is that Florida should get exactly what it asked for in electing such person to that office.  Your choice, Florida.  Make it soon.

Congressman Ted Yoho – He’s read about economy and knows what’s best for the United States photo from Wikipedia

Business travel is one of those expenses companies very quickly act to restrain when uncertainty or hard times come about.  You can bet that CFOs and CEOs are already instructing people within their company to curtail expenses, especially travel.

Because in times of uncertainty, it’s best to hold on to what you have as tightly as possible.

The political stalemate over the shutdown and the debt ceiling is going to be the undoing of 2014 for the United States left to continue much longer.  Whether you approve or disapprove of the Affordable Healthcare Act or not, that piece of legislation was not the law to fight over and put our country at risk.

I personally think that there are far greater issues that could have been debated over than whether or not greater healthcare coverage for all in this country was a good or bad idea.

I also think that the failure to acknowledge that a great deal of our debt resulted from an economic crisis of global proportions and which originated from a fundamental failure to properly oversee and regulate financial markets is egregious on the part of both houses of Congress.

What happened in 2008/2009 wasn’t ordinary by any stretch.  Entire industries which are huge i this country were literally at stake.  Extraordinary times have extraordinary consequences that take time to get past.

It’s beneath the dignity of this country to threaten shutdowns that hurts its businesses and citizens and it’s beneath the dignity of this country to threaten default on debt simply to force a change in a law.

Filed under: Airline News by ajax
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