As part of the deal to allow Continental and United Airlines merge, the two airlines will be required to open up some space at Newark Liberty International Airport and guess who’s leasing the take-off and landing spots?

Southwest Airlines. 

I think this is smart of ContiUnited.  They could have found any number of airlines that would be acceptable to the Department of Justice and Department of Transportation but that would mean allowing an airline with potentially even lower costs gaining a foothold.

Instead, they did a deal with an airline that, on some level, allows them to compete.  Both airlines have experience competing with Southwest in various markets and both have managed to co-exist with Southwest without being driven out of markets.   In other words, I think they realized the devil they knew was a whole lot better than the devils they don’t. 

For Southwest, I think this is great.  They get enough slots to do 18 daily roundtrips from an airport that arguably is more convenient to Manhattan and they get to build on their operations in the area by operating from 2 of the 3 major airports in the NYC area.  (3 of 4 if you count Long Island’s Islip airport.)

No announcement was made on what flights SWA might operate from Newark but I have a few guesses.  They could connect to Dulles or Baltimore’s BWI for one.  I’m sure we’ll see some flights between Chicago’s Midway and Newark.  I wouldn’t be too surprised to see a flight or 3 to Houston, believe it or not. 

One thing is for sure, they won’t be flights on leisure routes.

When they’re able to, I would expect a few flights from the NYC to Dallas area and Newark would be a great airport operate those flights to and from.  In the meantime, I would not be one bit surprised to see SWA re-jigger their route system to offer a few one-stop flights between the two cities.   St. Louis or Kansas City could be choices for that.

Why do they only give up slots in Newark?  Continental and United have very little route overlap and the one airport that the two had dominance at was Newark.  Actually, Continental had overwhelming dominance at Newark but when you added in United’s flights to major markets, it crossed the line.  This is good news for ContiUnited and expect their merger to close in late November or early December pending approval from a few other agencies.

In the meantime, someone please hand Senator Oberstar from Minnesota a roll of Tums, please.

Filed under: Airline News by ajax
No Comments »

The airline industry is a funny place to work.  Once you’ve worked inside it or lived inside it, it gets into your blood.  It’s hard to walk away from because airlines really are families and one doesn’t walk away from a family very often.  Even the industry is a family.  Two people from different airlines might disagree vociferously on something inside the industry but if an outsider offers a different criticism, you’ll see those two band together like brothers to fight back.  Sound familiar?

Despite the fact that we know most consumers buy on price, there is a strong brand liability that exists out there too.  A customer might choose to fly American Airlines to Europe but if he or she is a Continental fan, you can bet they’ll have nothing but criticisms and comparisons to what they think Continental is.  That customer loyalty, I think, derives from an attraction to the company DNA that was established over 40 years or more. 

American Airlines was always a bit more of a no nonsense airline that appealed to the conservative businessman.  Delta was about southern hospitality.  Northwest Airlines was attractive to that stoic Midwesterner since it mirrored their values.  Continental was always a bit of flash and upstart which attracted the entrepreneur.  Braniff was somewhat similar although there was a certain Texas adventurer to it.  TWA was Hollywood and Pan Am was blue blood.  Those airline personalities attracted similar people and although that has been diluted to a fair degree today, that DNA is still there.

I have to admit that I marveled at how readily people accepted the Delta / Northwest merger.  It was, in my mind, a clash of cultures.  It was as if the Southern Dandy went to Minnesota and married a solid, conservative blonde Swede.  Part of me expected neither family to accept the marriage.  Yet, they made it work.  They not only made it work, they made it look like true love.  I was,  and continue to be,  impressed.   Now and then there is a marriage that works out like that.

But, historically, mergers among airlines don’t often work out like that.  There are still former Republic Airlines employees who will give you a bit of an earful over Northwest Airlines purchase of Republic.   Until TWA’s demise, there were Ozark employees who would still privately confess great irritation at TWA purchasing their home.   Look into Delta and you’ll find Western Airlines employees who feel the same.  It’s usually more a marriage of convenience than a marriage of love. 

Now we have Continental and United marrying.  United, arguably the oldest legacy airline of the United States and certainly of blue blood in the US, is marrying Continental Airlines, a western frontier upstart of a far greater checkered past.  Continental employees are chagrined because they see themselves as proud and independent and the airline who survived the worst and came out of that as one of the best airlines in the world.  United Airlines employees are feeling a sense of loss because despite the fact that their name and headquarters exist, Continental is really the daddy in this union and that just doesn’t seem right to them.  That became clear when John Tague didn’t make the cut in the marriage.  Nor did several other prominent and, quite frankly, strong performing United executives.  It might be United’s name but it’s Continental’s leadership that is going to go forward.

Continental employees wonder why they need United given their success for the past 15 years.  What does United bring to the table that they don’t already have?  United employees speculate that these upstarts are going to be overwhelmed faced with the prospect of running a “real” airline.  The truth is, neither concern is really valid. 

Customers seem to sense the same issues and certainly the home cities of each airlines’ headquarters.  It’s a problem for this merger.  Not an insurmountable problem and I do believe that once the merger is consummated and has time to settle, many of those fears really will go away. 

What airline is a United customer going to be flying after this merger is done?  What airline is a Continental frequent flier going to be a member of when it’s done?  I’ll wager that the average customer just can’t answer that based on the way things have gone so far.  I’m a relatively dispassionate observer to this and I can’t answer that question. 

The problem is that people can sense this fear and they’re reacting to it on many different levels.  It’s a fear that is almost palpable at this point and I think that comes from the somewhat mixed message that the new “brand” is sending.  People see a Continental airplane with a United name and I think that strikes them as an attempt to be all things to all people.  Notice that Delta and Northwest avoided that mixed message. 

You can change the typeface of the name United but you can’t change the mixed message.  Brett Snyder of the Cranky Flier is quoted HERE in the Chicago Tribune as saying:

“I’m a huge fan of making a clean break, unless you’re planning on replicating the service. . . ” and “”I don’t know how you meet expectations from both sides when you’re not really making a clear brand statement.”

Bingo.  He’s dead right.  Expectations aren’t getting met on either side.  This is much more an old school airline merger.  I actually agree that a new brand would have been a far better approach.  Even adopting an old brand that neither had history with would have been better if it set expectations for both sides.  Imagine the reaction if this new union decided to call themselves TWA or Braniff or even National. 

Even a new brand incorporating some elements from both would have sent a better message.  What if they called themselves Flagship Airlines with a new logo designed to evoke the service they intended to deliver?  It would have delivered a much more clear message either way. 

Here is an interesting observation:  Both airlines do have some distant genetic heritage in common.  Walter Varney who founded airlines that were direct ancestors of both United and Continental.  I’m not proposing the name Varney Airlines but I do wonder if there isn’t something in that history that would lend itself to a good name.

The problem is that it’s hard to walk away from the legacies each brand offer.  There are decades of branding invested in the names United and Continental.  There are decades of history behind each name and decades of family history in each name.  Even airline executives have some sort of emotional attachment to their airline and they aren’t immune to being influenced by that despite the belief they are cold blooded people focused on profits.  They just aren’t.  Not even Glenn Tilton who has relatively little history working in the airline industry.

They problem inside each airline is that the employees haven’t been given something to rally around.  How does a Continental employee rally around the idea that their company is losing its headquarters and name?  How does a United employee get excited about seeing his proud airline re-badged in the image of Continental?   A new name would have evoked some rebellion but it would have sent a message about this being a marriage of equals and I think employees and customers might have been vocal about the change but I also think they would have come to accept it relatively quick. . . especially if the new name was a good one that evoked something real. 

You couldn’t introduce a name like “Acura” or “Lexus” or “Lucent”.  That’s why adopting the name of a no longer existing airline might have been better.  It would have given an instant history and acceptance to the name and, yet, signaled a new start.  There are lot of defunct names out there to rally around.  And there are a lot of possibilities when it comes to new names. 

It’s not that I don’t think that this merger will succeed.  I do think it will succeed.  I just don’t think it will go very smoothly and I don’t think people will adjust to it very easily for the next 5 or 6 years.  That leaves them at a disadvantage to Delta and American Airlines. 

The next best thing CEO Jeff Smisek could do is get that entire fleet painted in the new colors faster than anyone could believe possible.  Get those operations consolidated quickly and get the customer facing side of the company unified in appearance asap.  Get something out there that people both inside and out of the company can rally around and accept.  Get the Continental executives up to Chicago as soon as the day of the legal merger and by up to Chicago, I mean have them living there on day one, not commuting.   That’s an important overture to make to the United employees.  Similarly, embed your best Continental managers into United hubs and so that the Continental employees see their influence day to day and don’t feel abandoned. 

This merger is a long way from being done smoothly.  The two entities have to make nice with their union employees and get them to agree on a transition to one contract and none of those employees have a reason to buy into this so far.   One thing is certain:  If the employees don’t buy into this merger and cooperate, this will be a long and painful merger resulting in a huge loss of opportunity in the market place.  The synergies won’t be realized and the financial markets will voice their disapproval fairly quick, too.

Branding is more than just communicating with a customer.  It’s a united front (no pun intended) for employees to work under and without a strong brand to connect to, those employees won’t know who they’re fighting for.

Filed under: Airline History, Airline News, Airline Service, Airlines Alliances by ajax
No Comments »

Since I started writing this blog, I’ve come to one thought many times:  Airlines, at least most of them, work very hard these days at trying to be all things to all people.  The reason for this is that the airline business, particularly in the United States, is all about market share. 

In other words, to be viable as an airline, particularly a larger airline, you have to have a pretty significant chunk of market share for a set of routes.  Without that share, you won’t average a load factor that earns you a profit.  In fact, it isn’t just about market share of a particular segment.  If you dominate solely in leisure travel, you’ll struggle to survive much less make a profit.  Even Southwest Airlines has learned the value of the business traveler. 

But is that the right direction going forward?  Some variation of that is probably going to remain the truth for some time.  However, I do wonder if airlines aren’t harming themselves by trying too hard to be all things to all people. 

When it comes to domestic service, I do think it would be wise for more airlines to emulate United’s 3 class domestic service of First / Economy Plus / Economy.  Offering more value for more money is a strategy that plainly works although I also understand the perceived risk involved with that.  You can’t easily change the configuration of an aircraft to meet changing seasonal demand for a particular product.  This is an area where aircraft manufacturers could do some work.

However, at the international level, I think many US legacy airlines are trying too hard to be all things to all people.  I’ve always admired Continental’s approach with their BusinessFirst and Economy products.  BusinessFirst is business class and, let’s face it, that’s what is going to sell at the front of the aircraft day in and day out when compared to first class. I think the new ContiUnited (I must come up with a new moniker for that) would be wise to adopt the Continental model BusinessFirst and the United Economy Plus/Economy model.  It’s 3 classes of seating but really 2 classes of service.

Airlines seem to be overstressing themselves in other places as well when it comes to trying to appeal to everyone.  When you’re trying to market to the leisure crowd, the business crowd and the uber-rich crowd, your message gets muddy.  Can you identify who does what best for which crowd in objective or subjective terms? 

You have far less of a problem with that in other parts of the world.  If you want best price in Britain, you’re likely going to fly Ryanair or EasyJet.  If you want a more business oriented service, you’re likely going to pick British Airways.  It’s notable that BMI has more of an American approach and they don’t do so well.   Ryanair specializes in delivering the best price possible and has focused on that goal relentlessly.  British Airways specializes in service and image and focuses on that goal pretty well despite current problems and criticisms. 

We could stand to see a bit more focus out of our airlines.  Isn’t it interesting that when airlines set up “specialty” brands in-house, they usually did pretty well and only went away when the competition in that specialty went away?  I think there is a lesson there.  Does every flight need to meet every need?

I think the key to becoming more adept at specializing in customer needs, we need aircraft that are more easily configurable for particular demands.  It’s interesting to me that business class in Europe is often coach seating with the middle seat “blocked” from use.  Sometimes that same middle seat can be folded down into a “service” area for the aisle and window seats.  What if an airline or seat manufacturer came up with a product that allowed configuration of seat pitch in a manner of minutes with the addition of a row or two of seats in less than half an hour? 

There is nothing wrong with segmenting service for various needs and charging for it.  No objects to those pricing models.  The issue with “fees” is charging for something that had no charge until recently and acting like you are doing someone a favor.   Airlines could create a great deal more value in their product with more specialization towards particular customer needs and wants. 

After 40 years, I think coming up with seating that is configurable “on the fly” shouldn’t necessarily be quite the challenge it’s made out to be.  The industry should be able to meet this challenge and I think when they do, they may find a way to more reliable profitability.

Filed under: Aircraft Development, Airline Seating, Airline Service by ajax
No Comments »

American Airlines is in discussions with its transatlantic Oneworld partners, British Airways and Iberia, to consolidate in Terminal 8 at JFK airport.   This would be a good counter-move to Delta’s intention to renovate and expand at the same airport.

It’s about market share in New York and now we find the SuperLegacy airlines moving to own the most they can in that market.  AA (Oneworld) and Delta (SkyTeam) at JFK and ContiUnited at Newark.  It’s a fight that is sure to get bloody over the next few years.

If AA can move to bring its partners under the same banner and make things even more convenient for connections, it may have a grip on JFK that resembles British Airways’ at Heathrow Airport in London. 

It also makes me wonder what ContiUnited might do at Newark.  While Continental plainly dominates at Newark Airport, it also presently stands to have the least pleasant facilities and since it’s new to the Star Alliance, it may take quite some time to bring its Star Alliance partners under its umbrella at Newark. 

While a number of Star Alliance carriers to have flights to Newark, a number don’t.  And things aren’t well organized at Newark for Star Alliance.  Will they be?  I don’t see how ContiUnited can afford *not* to get their act together at Newark to compete. 

Newark is actually a bit more convenient to Manhattan and that is, after all, where the high dollar traveler is going to or coming from.  It makes sense for the Star Alliance to cooperate and consolidate and ensure good feed to those international flights but they’re going to have to get some airlines to move over, I think.  Airlines such as ANA.  

Others, such as Lufthansa and SWISS and Singapore Airlines are all in Terminal B.  Continental has Terminals A and C.  What ContiUnited really needs is a revised Terminal C and/or a portion of B while giving up A to others. 

But will the other airlines cooperate?  Don’t bet on it.  Keeping Newark in disarray would be a good thing.

Filed under: Airline News, Airlines Alliances, Airports by ajax
No Comments »

A new executive team for the merged airlines Continental and United Airlines has been announced.  We already knew that Glenn Tilton was moving up to non-executive Chairman and Jeff Smisek would be CEO.  However, now we officially know the fate of John Tague.  His position of President is going to Jeff Smisek. 

John Tague is largely credited for the operational turnaround at United and appears to have done a great job while there.  I think it is a shame to see him going away and I do hope another airline out there scoops him up. 

You know, someone like American Airlines who could use a little Tagueness. 

Also going away is Kathryn Mikells, current United Airlines CFO and also somone who has gotten a lot of credit for getting United’s financial house in order. 

Frankly, it bothers me to see the two shining stars of United leaving.

Filed under: Airline News by ajax
No Comments »

One thing coming out of the 2nd Quarter financials from several airlines is, once again, just how much baggage fees are adding to revenues and, more importantly, profit.  United President John Tague is expecting that this kind of ancillary fee could soon be adding a billion dollars more to revenue and that is from its current levels of $350 to $400 million.

Like them or not, those numbers are hard to ignore. 

It does make me wonder how Southwest Airlines will continue to defend its no baggage fees approach going forward.  Load factors on airlines are at astonishingly high levels and that means that Southwest isn’t necessarily siphoning off customers from airlines with those fees.

Filed under: Airline Fees, Airline News by ajax
No Comments »

Continental Airlines and US Airways have gone from red to black in their latest 2nd quarter earnings reports and it’s a remarkable performance for both airlines.  Continental wobbled a bit in the 1st quarter but came back with a strong report of $233 million report and when you combine that with United Airlines earnings, you see a potential competitor to Delta that is the equal if not superior. 

Delta Airlines, American Airlines and the proposed ContiUnited merger all will result in airlines with revenues between $23 billion and $28 billion and it just strikese a yellow highlighter across American that it had a gap of over $400 million in profit this past quarter.

US Airways’ result, however, is even more impressive.  In fact, US Airways in general is becoming more and more impressive.  Operationally, they’re hitting high numbers on completing flights on time, losing baggage and just generally making people feel good about their choice.  This is not the airline you saw even 2 years ago and if I were asked about flying them today, I would highly recommend them at this point. 

US Airways came in with a net profit of $257 million this quarter and they did this with the least relevant hubs in the industry.  They did it despite the fact that after nearly 5 years their pilots still haven’t decided upon a union and negotiated a contract.  They did it despite becoming the third wheel among the Star Alliance’s US based partners.  They did it despite making Las Vegas, at best, a focus city instead of a hub. 

I would love to see some of that DNA move over to American and get things sorted for once.

Filed under: Airline News by ajax
No Comments »

United Airlines announced a second quarter profit of $273 million and that’s an impressive result.  If Continental’s come in as impressive as that, the heat will be on American Airlines in ways we can only imagine. 

Speaking of United and Continental . . . their respective pilot groups have come to an agreement on transition.  There is a transition agreement now in place for them but don’t think this means that the groups are near a final merge agreement.  The transition agreement just governs how the two airlines will operate with the pilots during the merger transition.  I suspect that obtaining a final agreement is still going to be a bit bloody.

BA cabin crew have rejected the latest British Airways offer for settlement.  After voting was completed, the latest offer was rejected by about 2/3’s of the labor group.   While that isn’t wholesale rejection, it’s significant enough to be a real problem.  The hold up is the restoration of flight benefits.  BA did finally agree to restore flight benefits to crew that had originally had them taken away for participating in the first round of strikes earlier this year.  However, they were restored with loss of seniority and that means they were restored as if these crew were entry level again.  This is an area that I’m afraid I side with the union on.  Those flight benefits shouldn’t have been taken away as a punitive measure and its the one big misstep by Willie Walsh.  The smart move would be to cave in, get another vote going and come to a final settlement. 

At the Farnborough International Airshow, single aisle aircraft orders are happening at a rapid clip.  Both lessors (GECAS, Air Lease Corp, etc) and airlines themselves (LAN, Flybe, etc) are ordering large amounts of aircraft for delivery over the next several years.  LAN has an agreement for up to 50 Airbus A320 class aircraft and Flybe has ordered 35 of the Embraer E-175 jets.  GECAS, GE’s leasing arm, has ordered 40 737-800 aircraft.  Still, I think this reflect the rather dismal orders placed last year more than it does resounding growth for the next few years.  In other words, I think a lot of these are replacement equipment rather than aircraft purchased for growth.

Filed under: Airline News by ajax
No Comments »

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

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

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

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

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

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

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

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

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

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

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

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

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

Filed under: Airline Service, Travel Hints by ajax
1 Comment »

For the past 3 years or more, we’ve heard virtually every airline CEO talk about the need for consolidation and the problem of too many seats chasing too many passengers.  Now we have Northwest Airlines fully consolidated into Delta and we’re about to see United and Continetal merge together as well.  But does that really solve the long term problems in this industry?

One the one hand, I admire how the airlines are using their dire straits to argue for greater dominance in their industry.  It’s the legacies doing this and their “poor me” story is working very well among the public as well as among their own employees. 

I would argue that, if anything, we need even stronger competiton in the industry for the long term.  The greater dominance we allow isn’t necessarily going to raise prices all that much but what it will do is make it ever more cost prohibitive for new entrants into the market.  That’s the ultimate goal of consolidation:  keep the new guys out and keep the current competition neutralized as much as possible.

Quite honestly, what we really need is for a legacy airline to go out of business and liquidate.  I had long hoped it would be United who had to do this but, sadly, they scrapped by and made it to the other side.  US Airways is often pointed to as a candidate and while I’ll agree they are potentially the most vulnerable, I’m not sure I want to see them go.

I’d like to see one of our behemoths leave. 

Yes, it would put a lot of people out of work for while.  It would lead higher fares in the short term.  It would also allow room for new entrants who’ll bring fresher ideas, staff, aircraft and, wait for it . . . , lower fares.

It will help break the stranglehold that unionization has on this industry. 

What I’m really proposing is that we need a revolution in the US airline indudstry rather than an evolution of the legacy carriers one more time. 

We need airports to have room for new airlines to enter their markets and establish footholds that result in lower fares.  That means someone has to go.

This country needs to quite looking at each individual airline as an essential industry to our economy.  They aren’t.  Not anymore.  If one legacy went out of business and liquidated, the other airlines would move so fast to establish new business in those markets that it would make our head spin. 

In other words, they would grow the old fashioned way:  through competition.

It’s interesting to me that the airlines who have managed to weather the economic recession so well also happen to be the airlines who didn’t contract but, rather, grew themselves as legacies withdrew from unprofitable routes. 

It is often claimed that we need the legacies because they serve the small communities.  I wonder how the small communities feel about paying a disproportionately high fare in the current systems.  The truth is, there are lot of markets that I question the need for air service in many areas.

Does Waco, TX really need flights from Dallas and Houston?  Probably not.  Those residents should probably be driving to Dallas or Houston for their flights.  It costs about $30 to drive to Dallas from Waco.  Air fares between those two cities are currently advertised from $130 to $600 one way at present.  It’s economically wasteful to take that flight.

We, as a country, should be looking to create more opportunities for new airlines as well as existing LCC carriers who want to enter markets but are bullied away from them at present by the established legacy carriers dominance.

Filed under: Airline Service, Death Watch, Deregulation by ajax
1 Comment »

Continental Airlines has announced the second 787 route that it will initiate with the arrival of the Boeing 787.  The first was from Houston to Auckland, NZ.  This time, it’s Houston to Lagos, Nigeria and I’m seeing a trend here. 

Continental is clearly intending to make Houston much more of a international gateway city and that makes some sense to me.  Houston Intercontinental Airport isn’t overcrowded, has excellent feed to it domestically and the new 787 makes a lot of long, thin routes not only possible but profitable. 

It doesn’t hurt that there is a fair bit of oil business in Nigeria too. 

This flight will be subject to a fair bit of regulatory approval and planning on the part of ContiUnited but it is both sensible and doable.  It’s clear that the 787 will be used to expand opportunities rather than simply replace existing aircraft, at least by ContiUnited anyways. 

It’s also further proof that very large aircraft flying hub to hub (hello A380 and B747) as a model for international travel is going to be reduced as these new, next generation widebody aircraft come online.

Filed under: Airline Fleets, Airline News, Airports by ajax
No Comments »

4 days of vacation and not reviewing anything to do with the airlines (or defense industry or the oil leak in the gulf) and it was quite relaxing.

Right.  Well, I see British Airways and Unite still haven’t got their act together.  These two desperately need binding arbitration.  British Airways needs it in order to bring back a degree of certainty to their operations.  Unite needs it to, well, preserve some semblance of the idea that they “won” something.  British Airways is winning this conflict now.  They’re winning it in public opinion and they’re winning it when it comes to employee viewpoints.  For Unite to continue without a deal only weakens them week by week.

I see that all kinds of politicians are questioning details of the Continental / United merger.  Oddly enough, many of them are from Texas and those folks are questioning the wisdom of Houston losing the Continental HQ.   Well, so do I but for vastly different reasons.  Houston is not going to be dimished as a hub nor is it going to lose many jobs.  In fact, I suspect they won’t lose any jobs in terms of “count” but I do think there will be transitions and changes.  This is a prestige objection on the part of Senator Kay Bailey Hutchison.  She lost the race for the Republican nomination for Governor in Texas and she desperately needs to appear to be looking out after “the people” in Texas if she expects to keep her seat in the Senate. 

I simply think it is stupid to move HQ to Chicago because it is fantastically more expensive there.  That’s all.

I saw a few stories about Australian airline JetStar adopting the iPad for inflight entertainment.  And, unlike most bloggers on the airline industry, I don’t care really.  I don’t see it as an industry trend, I don’t see it as unwise and I don’t think it’ll be but a blip on the airline horizon.  iPads are cool and probably cheap to deploy.  Oh, and you can deploy them quickly too.  Will it be a trend? I doubt it but I don’t care.  I really don’t. 

Boeing refuses to say whether or not they’ll bring a 787 to the annual flightshow in England this year in Farnborough.  They say they’ll make that decision closer to the show.  I say they would be insane not to give their customers a taste.  If they’re refusing to say, it may only be because they don’t know if their GE equipped test planes will fly their first flights on time.   Still, if I were to be money on an outcome, I’d be betting that ZA001, the first to fly, will be there all shiny and spiffy.  Maybe they’ll bring ZA003 which has seats.  One way or another, I’m betting there is a 787 at Farnborough. 

I refuse to talk about the person(s) who were left on United aircraft over the past few weeks. 

It’s been over a month since the new “tarmac rules” have been in place.  Am I the only one to notice only the soft sounds of crickets so far?  We’re 1 month into the thunderstorm season and nary a peep from anyone except Kate Hanni of FlyerRights.Org who wants rules in place to keep airlines from being punitive against people who want off an aircraft.  Actually, I somewhat support the notion but I think Kate Hanni is the wrong supporter for such a measure.  She’s got too much mud on her.

Filed under: Airline News, Trivia by ajax
4 Comments »

Continental Airlines announced their first route to use their soon to arrive 787 aircraft.  It will be from Houston to Auckland, NZ and if nothing else, this is just fun to think about.   Tentatively scheduled for November of 2011, it’s a long way off still and I would regard it as being subject to a lot of things going right such as the aircraft arriving in time. 

This is exactly why I believe aircraft such as the A380 and 747-8 have a very limited role in the future of air travel.  We now have aircraft that, in the broad scale, are medium sized but very long range capable.  The 777-200LR was the first but even that aircraft is a touch big for some routes.  Not so for the 787-8.  The 787-8 is a 767/A330 sized aircraft capable of handling longer, thinner routes that, frankly, really don’t get flown today. 

Houston to Auckland may strike many as a little weird but it really isn’t.  It puts Auckland within range of the middle of the United States with a full load and margin for safety.  Suddenly there are a whole lot of cities on the East Coast and in the Midwest that can enjoy 1 stop service to New Zealand.  Previously those people had to fly to the West Coast and, in many cases, had to make 2 stops before arriving in LA.  Even if they had to make one stop, this flight will mean less travel time “door to door” than ever experienced before. 

Houston might seem an odd gateway to Auckland but it isn’t.  Consider the hub cities the new ContiUnited will have.  You can feed traffic from NYC, Philadelphia, Washington DC, Cleveland, Chicago and Houston to that flight.  That’s probably not enough to fill a 747-800 but it’s plenty to fill a 787-8 aircraft and I suspect a lot of that traffic will tend towards a more premium customer. 

The United part of the airline will continue to handle West Coast to Australia trips.  Air New Zealand will probably keep their routes from New Zealand to the US but ContiUnited will now be the first to open up the eastern half of the US to Down Under.  That’s huge and a bit of a blow to both Delta (SkyTeam) and American Airlines (Oneworld).  This could potentially see Delta and/or AA opening up routes using the 787 to similar destinations Down Under. 

Will it happen?  I think so but it does have a certain fairy tale quality to it.  I remember Aviation.Net members discussing such fantasy routes as far back as 2005 I think and when such things get fantasized on Aviation.Net, I tend to believe they’re too good to be true.  However, I believe this has a better than 50% chance of happening because it fits well within how Continental is run, the Star Alliance network and its what a SuperLegacy network airline should be flying when it comes to long haul destinations.

Filed under: Airline News, Airline Service by ajax
No Comments »

Continental has announced that 15 of about 150 pilots furloughed in 2008 will be recalled back to the company.  Another 100 who took voluntary leave will also be coming back.  Supposedly this is because of some planned growth on Continental’s part including the addition of 2 new Boeing 777 aircraft in the near future. 

 It’s a good piece of news both for these pilots and the industry.  Delta has announced it will be hiring some additional pilots as well. 

But the Continental news has me wondering even more about how Continental and United pilots will integrate their seniority.  If I were a betting man, I would bet that United pilots have a higher average seniority and that means a seniority merge could result in a lot of Continental pilots getting bumped back down.  Seniority determines pay so it will be a contentious issue.  Sadly, neither group has someone like Delta ALPA leader Lee Moak to guide them through in a reasonable way.

Filed under: Airline News by ajax
No Comments »

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?

Filed under: Airlines Alliances by ajax
No Comments »

I still don’t like this merger too much.  I like that the identify remains mostly Continental and I like the fact that the Continental management appears to be the group that will run the airline.  However, I see quite a few risks here.

1)  While I have more confidence in the Continental management team than United’s, I’ll point out that Jeff Smisek is still a somewhat untested airline CEO.  He’s had about 4 months in the job at Continental and he’s been pretty aggressive in just those 4 months.  So far, I think I would be a bit more comfortable with Larry Kellner in control.   He wasn’t quite so “in your face” but still managed to be very tough when it came to making decisions.

2)  Glenn Tilton appears to be given a nice cushy position as non-executive Chairman of the new company but I’m not so sure he won’t try to influence the direction of the company.  He was brought in to execute a bankruptcy and always appeared to want to sell the company and move on but his actions said a bit more.  Is he ready to take a back seat?  I’m not so sure he is.   This isn’t a man who is used to taking a back seat to anyone.

3)  Employees and labor.  United employees might have something to look forward to in a management team that acts like it wants to run an airline.  However, Continental employees appear to be having some trouble figuring out why this is good for them.  They had it good and now they can look forward to some rather bad karma and aggressive behaviour from their brothers and sisters at United. 

I also have trouble seeing United’s labor unions cooperating.  They’re pretty militant and often remind me of American Airlines’ labor group.  While Continental’s labor groups generally accept that it is a new world out there, United’s seem to want to return to the glory days of the mid 1990’s.   And who decides seniority integrations?  Better yet, is the bad example set by US Airways EAST/WEST groups going to set a precedent for becoming recalcitrant if they don’t like the decision?  Part of me believes that United’s labor groups will most likely attempt to shove their desires down Continental’s groups’ throats.

4)  Fleets in these airlines show some opportunities but they also show some risks.  In the Boeing area, there is some room to “harmonize” the fleets.  Both operate 767’s, for instance, but different variants.  That’s a good thing if the pilot and flight crews are able to agree on seniority lists and get on with things.  It’s a bad thing if you have to use one part of the company to operate one variant and another to operate another variant.  The same is true on the 777 and 757 fleets. 

Both have orders for 787 aircraft and I suspect those will remain on the books .  United ordered A350’s and I kind of think those orders might just go away.  It’s the domestic fleet I wonder about.  UAL uses primarily A320 series aircraft and CAL uses primarily 737 series aircraft.   Again, if the pilots and flight crew can get together on labor agreements and seniority, it would be good to settle on one type.  The two aircraft are so similar that it is silly to operate two different fleets serving the same purpose.  (This really isn’t the case in the Delta/Northwest situation where the fleets were dissimilar enough to offer some opportunity for “right sizing”.) 

5)  Regional airlines.  United has relied more and more on regional airlines to serve mainline routes.  Continental has used them much more in the model of a traditional feeder network and primarily because of scope clauses with their pilots.   There are more than 10 different regional airlines serving the two airlines.  They need to consolidate and, frankly, they should consider buying 2 or 3 of those regional airlines and harmonizing their services a bit more.  Right now, I see a mad scramble to keep a lot of different kinds of regional aircraft in service with the two and I think those regional airlines are going to do anything they can to keep their contracts.  Service will suffer with so much competition.

6)  Service products.  Continental has a nice, focused service product for two classes (economy and business) that has worked fantastically for them.  United has 3 or 4 depending on how you count them.   First, business, economy plus and economy.  How do you harmonize these service offerings and keep both frequent flier groups happy.  A lot of Continental OnePass members already feel a bit cheated with the entry into Star Alliance and what it entitled them to on United and US Airways.  Those travelers count and you have to find a way to keep them happy.  Whose program survives and, at the same time, how do you keep from diluting the program(s) by being all things to all people?

Call me crazy but if I had been Continental, I would have encouraged a US Airways / United merger just to watch that organization melt down while I made plans to capture their business the old fashioned way:  By competing with good service.

Filed under: Airline News by ajax
No Comments »

I just saw THIS Seattle Post-Intelligencer Blog entry with the photo of the proposed livery for UAL/CAL.  I have to say that it is a pretty handsome look.  Everything is Continental (including the typeface I believe) except the name.

Filed under: Airline News by ajax
No Comments »

Now, this morning, I’ve seen several reports that the new combined airline will use the Continental livery and logo but the United name.  If nothing else, at least I can look forward to not seeing that horrid United livery anymore.

Filed under: Airline News by ajax
No Comments »

There are now reports that the boards of both United Airlines and Continental Airlines have approved an agreement that sees UAL buying CAL for approximately its current market price of $3.2 billion.   It is an all stock deal where Continental shareholders will receive 1.05 shares of United for their Continental stock.

The Washington Post reports that the new company will have a 16 member board with 2 seats reserved for labor unions.   The combined companies will have employees number over 90,000 and a combined fleet of more than 690 aircraft.

Official announcement of the deal is said to come on Monday morning.

It’s basically the deal we’ve all been hearing about for 2 weeks now.  UAL buys CAL, the company uses the United name and the Continental executive team runs most of the show.  Read the CNN/Money Magazine article HERE.

Filed under: Airline News by ajax
No Comments »

This news story HERE from Reuters indicates that United Airlines and Continental Airlines have agreed on stock pricing and the share price would seem to indicate that Continental got what it wanted.  If true, that would seem to indicate that Continental is for most purposes running this show.   I still wonder what becomes of John Tague at United.

Filed under: Airline News by ajax
No Comments »