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.
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.
According to the Wall Street Journal (and other publications), American Airlines is about to receive notice of a record setting $25 Million fine related to MD-80 (as well as other, smaller issues) maintenance violations in 2008. Those violations, related to wiring in the nosewheel area, resulted in the temporary grounding of American Airlines’ fleet as well as other airlines also either having to scramble and make repairs or even ground their fleets.
During the Bush Administration, government oversight investigations reported that maintenance enforcement by the FAA was inconsistent and irregular and found that FAA oversight of Southwest Airlines was dysfunctional at best. The problems and controversies resultings from maintenance irregularities has caused many to question both the airlines and the FAA having a too close relationship and under the new administration, a much more “by the book” enforcement policy was instituted.
AA, at one point, described the wiring irregularities as not being a safety issue and I have to disagree with that position. It’s not often I do disagree with airlines perspective on such things but when an airworthiness directive is issued by the FAA and the manufacturer has already issued a maintenance directive, it’s a safety issue.
Regardless of whether the FAA was doing a proper job in its inspections or not, the airlines still have a duty to implement those directives in a safe and timely manner. In this case, that wasn’t done and even spot checks on aircraft at AA after the grounding revealed that many still did not have the procedure done properly.
Even though the FAA is working to establish the appropriate relationships with airlines and even though their enforcement is more by the book, airlines’ responsibility for these safety and maintenance problems remains their responsibility. This wasn’t a case of inspectors telling the airlines to not bother with the work and it doesn’t absolve AA or any other airline from its responsibility to follow the rules, regulations and law when it comes to safety and maintenance.
Just because a police officer hasn’t stopped you and told you that your tires are too worn to drive doesn’t absolve you from your duty to ensure your tires are appropriate for driving, right?
I don’t know if a $25 Million fine is appropriate or not. It strikes me a bit high at first glance and I”m sure it will be negotiated. But fines should have an impact and for a $23 Billion airline, it might take as much as $25 Million to make a point that lasts. I’ll point out that such a fine could well be the line between profitability and losses. That seems to strike a good zone for appropriate.
Do I think passengers were in imminent danger? Probably not but who knows? Out of a fleet of more than 200 aircraft at AA alone, it’s quite possible that a wiring harness was about to become a danger to the aircraft. It certainly isn’t inconceivable.
And the costs to do these maintenance and safety procedures is, in part, the price an airline pays for operating a relatively old and relatively obsolete fleet.
It is heartening to see the FAA appear to be far more interested in doing its job in the airline industry rather than acting almost subservient to the airlines. I’m sure the airlines are finding this a novel experience but it is what should have been happening all along.
American Airlines is introducing a new fee. This time, a fee from $19 to $39 can you get you a seat up front in coach including bulkhead seats and it will allow you “group 1” boarding.
Personally, I’m all for offering more varied product on aircraft. That’s the one development among “debundling” that I am in favor of. However, please offer me something of real value. Frontier gets it. United gets it. Airtran gets it. Even Southwest Airlines gets it.
AA doesn’t get it. A seat that has no more pitch or other benefits except that it is “up front” and I can potentially board earlier (and sit in an uncomfortable seat longer before take-off) isn’t more value. If the seat comfort isn’t going to change, do I really care if it’s up front or in the back? Well, maybe I do if I’m on a cranky old MD-80. Does it afford me more opportunity for overhead space? No, not really. Despite reports to the contrary, it’s just not that hard to find overhead space. Sure, the bins are more crowded but you can still access them.
If anything, it’s the jokers who put their luggage up front and then take their seat in back that annoy me.
But I’ll gladly pay for more seat pitch and a generally more comfortable seat. I’d gladly pay $20 / segment to gain 2 more inches of pitch alone. And I can already get that on an airline of my choice in most cases. For the prices AA is offering for this “service” you can more often than not get an Airtran business class upgrade. You can get more seat pitch and more service on Frontier. You can get more seat space on jetBlue. Southwest Airlines’ fee for priority boarding affords me a real opportunity to choose one of the best seats in a 737 for a cheaper price and you can bet I’ll have bin space on the SWA flight no matter what since they aren’t fools and charge exorbitant fees for baggage checking.
Perhaps this might have some appeal to a business traveler but I don’t think such a fee is going to be reimbursed as an expense. That certainly wouldn’t fly at my company, a major aerospace and defense firm.
How about a $25 fee that A) gets you a exit aisle seat and B) *guarantees* your checked luggage arrives with you? That might be particularly attractive to AA flyers.
At the end of the day, for any traveler except the most extravagant, it’s money that can be better spent elsewhere. And if you are that extravagant, you’re probably getting an upgrade to first class anyway.
Often when I’m at an airport, I wonder who it is that is going into that expensive luggage shop or fashion store at an airport and buying something so expensive they can afford to stay in business. I also wonder if that really is the best use of space in an airport. I suppose if someone is willing to pay for the space, it must be on some level.
One of the most frustrating parts of being inside a terminal is the prices at newstands. It’s the land of the $1.50 candy bar and the $10 magazine. Want a bottle of water? No problem, please pay $3.00. Food isn’t much better and while it is a tad more expensive, it’s often much worse than that you can access from the same restaurant outside the airport.
Well, things should be more expensive at an airport. Space for shops and restaurants is much more expensive than most places and the logistics of stocking them is much more difficult at most airports. I’m OK with a bit more expensive for the real estate.
But why don’t we have better solutions to hold prices down a bit? Ever seen a vending kiosk like what they have in Japan? The things you can get in a vending machine in Japan are stunning. I wouldn’t be surprised to learn one day that you can buy a Smart Car in a Japanese vending machine. Why aren’t airports looking at solutions like this? Do we really care if a person rings up our magazine or candy bar or sewing kit or sinus medicine? I don’t. To the contrary, let me slide my credit card through a swipe and get what I want and be on my way.
You can stock vending machines more densely than what most newstands stock merchandise and, hey, you don’t have to pay for nearly as many staff to keep them stocked. You can also warehouse much of your stock off property and have a person or person(s) re-stocking the machines even several times a day.
Restaurants and food in general are a different thing. The problem here is that large companies bid for a multi-year contract to provide food services under a variety of brands. For instance, ARAMark is one such company. They license the brand but staff and operate the restaurants on their own. In many cases, the quality control that one sees exercised at that brand’s restaurants away from the airport is far superior to what one encounters at the airport.
Visit a Starbucks at the airport and you’ll see what I mean. That isn’t a Starbuck’s employee and he/she isn’t trained to the same standard and isn’t even necessarily kept in that position day in and day out so they learn the business properly. Often it’s someone with cursory training making bad coffee beverages that cost 30% more than what you find at a typical Starbucks.
This old and archaic system is, in my opinion, due for an overhaul. These contracts net the companies huge profits (almost guaranteed even) and those companies, in turn, fork over large chunks of cash to the airport agencies as well. Why aren’t we allowing a variety of companies to bid for individual space to operate their brands with the same level of quality found elsewhere?
I don’t think food and beverage prices would drop. Not at all, really. However, I do think choice and quality would go up considerably. Why should we believe that Starbucks or McDonald’s or anyone else would be so afraid of airport operations? These companies have already dealt with difficult logistics and proven themselves more than capable of earning a profit.
And if they don’t, they’ll go out of business and someone else may try their hand at operating a different business. Choice is up at many airports and the offerings often far outnumber what we used to see in the 80’s and 90’s but quality is down, at least in my experience, and regional offerings have been squeezed out of airports altogether. Wouldn’t it be nice to be able to get good regional BBQ in Atlanta at the airport? Or how about a great hot dog at JFK? Or Chicago deep dish pizza in O’Hare?
Airports seem to be falling farther and farther behind and I think that has mostly to do with food service contracts that often last as long as 10 years. Let’s get some more competitive bidding in place and break up the consortiums while inviting some regional diversity at these airports.
The merger between TAM of Brazil and LAN of Chile offers some interesting possibilities for the new airline group that will be operating under separate names in South America. One big question is which alliance will the group adopt. Currently, TAM belongs to the Star Alliance and LAN is a member of Oneworld.
This new airline will have a bit more bargaining power when it comes to alliances and they have a few choices to make going forward. The first is to participate in both under the respective brands just as before. I’m extremely doubtful that that will happen.
The second is to pick an alliance between Star Alliance and Oneworld. In this scenario, I would give Oneworld the upper hand simply because in this merger, LAN will control more and it is the Oneworld partner. American Airlines won’t want to let them go since they fit nicely into the AA system. In addition, TAM might offer Oneworld quite a bit of access to other parts of South America it really doesn’t have at this point. However, the Star Alliance has a lot to lose and a lot to gain. Especially with the Continental United merger going forward. One could see the Star Alliance attempting to bring the LAN system over to the Star Alliance with some incentives.
Finally, there is SkyTeam who has a lousy representation in South America presently. SkyTeam a la Delta lost a big fight on the trans-Pacific side when it failed to win over JAL. A TAM/LAN entry into SkyTeam would be a huge win for that alliance and I suspect we might just see this dark horse try to bring them over to their side. This is exactly the right time for SkyTeam to woo such a company because there will already be integration efforts going on between the two as they consumate their merger.
In now way does this new merged company go ignored as a participant in an alliance. I do think it will be a fight and I do think all 3 alliances will be offering significant incentives to win LATAM over.
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.
Southwest Airlines admits it is considering adding a bigger 737 to its fleet and its the 737-800 that it is interested in. The 737-800 would give the airline more revenue opportunity used in and out of airports that have slot restrictions such as La Guardia or on routes with ever increasing density but where frequency isn’t justified.
Current SWA aircraft, the 737-300 and 737-700 carry 137 passengers and a 737-800 would probably carry about 175 people in a Southwest configuration. That’s an additional a potential increase of 38 passengers for those critical routes with costs that wouldn’t be all that much more than their current costs. A little bit more fuel and an additional flight attendant is all that is really required. That spells more profit.
And I like the idea. Frankly, I think Southwest could stand to add all 3 models of 737 to their fleet and I think they ought to seriously examine the potential of Hawaii and trans-continental flights. But, then, I also think they could stand to look at smaller aircraft for regional routes with high frequency too. It’s going to be the only way they can continue growth in the future.
However, don’t go thinking you’re going to see a 737-800 in SWA colours next year either. Southwest likes to mull decisions like this for quite a while and it would require negotiating amendments to their union contracts with the pilots and flight attendants at minimum.
Take note here, SWA pilots and FA’s, here is your chance to be industry game changers again. Pilots, you shouldn’t ask for a dime more to fly these aircraft. They require no extra effort on your part and it keeps the flying in your house, not SWA codeshare partners’. Flight Attendants, the same goes for you. The passenger count per flight attendant actually *drops* by two passengers with these aircraft. Be game players and make this happen. It costs neither union anything to make this work and most likely will add profitability to the company as well as future stability to your jobs.
This really is win-win. Get greedy and it is the beginning of a long end to SWA.
If SWA does adopt this idea, expect aircraft in the fleet 12 to 24 months after the decision is announced.
In a month, Frontier will have withdrawn the remaining Bombardier Q400 aircraft from the Lynx fleet and I continue to think that my have been a mistake.
Lynx routes will be operated by Republic Airlines E170 jet aircraft. I get that “pure jets” remain somewhat attractive but I think the Q400 will have been shown to have earned more profit on those same routes. I get that Republic needed to find a use for some of their aircraft, too, but I continue to believe that retaining the Q400 would have proven profitable.
Yes, I’m repeating myself. It was a small fleet but a fleet that fit extremely well. In addition, the Lynx outfit was one of the things that really caught Southwest Airlines’ eyes during bidding this time last year. If you’re catching SWA’s eyes, you *must* have something going for you.
It’s interesting to me that despite the emphasis on finding lower costs, so many airlines continue to ignore the turbo-prop. Yes, Continental has it for its regional flights on a large(ish) scale but that’s about it if you ignore Horizon Airlines.
The fact that Alaska/Horizon Airlines is making pretty good money from them and on segments that, frankly, are a bit long for the Q400, should be signaling something to other airlines. But those airlines remain tone deaf and I think that’s a shame.
I look at the flights that American Eagle flies regionally from DFW and it makes me cringe to see those old ERJ-140 aircraft going to Texas and Oklahoma and Lousiana destinations that could be served so much more efficiently with a Q400 or ATR-72. The same is true for the Chicago area.
I honestly believe that the airlines are the only ones afraid of these aircraft, not the customers. Imagine how much more competive one might be using them, however. Low fares are the key, not a jet engine.
The Virgins of Sir Richard Branson are now growing a little closer together.
Now a member of one frequent flier program can earn their miles/points on other Virgin branded flights and will soon be able to redeem miles for flights on various Virgin brands too. The only question is why did it take this long?
Virgin Atlantic appears to be set to be the “leader” of this consortium and well it should be. With the various Virgin brands in place around the world, one would think this kind of linkup would have been fully integrated a long time ago. Yes, Virgin America has been leery of being too closely associated with Virgin Atlantic but I think we can be done with that silliness now.
There are some synergies going on that, I think, could not only be expanded upon but which could lead to more growth for all. Codeshares are one thing, I say start the Virgin Alliance and get cracking on linking up to the rest of the world. Can’t you just see the marketing? “Do you want to be a Virgin?”
The fact that Delta is courting Virgin Blue for codeshares in Australia is proof enough that that the Virgin products are good enough but they aren’t being tied together very well. This latest announce is a good step towards fixing that.
Sir Richard Branson has pointed out the challenges in competing on a route like DFW-London against British Airways and American Airlines, the two airlines who own that route and have done so for a long time. He’s right. Even when they were supposedly not cooperating, that route was “owned” by BA and AA alone. Not only does that remain so but now the two airlines can cooperate on the route.
But now Virgin America is going to fly to DFW. Imagine what happens if Virgin America is able to add a few more flights to DFW from other destinations. Suddenly, there might be enough feed for a Virgin Atlantic flight. Especially one utilizing an A330 or 787.
The Virgins need to cooperate and work with each other. They’ve got a great brand to work with, especially in English speaking countries, and it’s the best choice in fighting back against the alliances. The latest mergers and new alliance anti-trust agreements now should make it possible for the Virgins to argue on their behalf for close cooperation, something they’ve been somewhat reluctant to do for fear of anti-trust issues.
Virgin Atlantic needs to grow, as well. It’s time for them to push past their traditional routes and that’s going to require some different aircraft. Sir Richard Branson’s Airbus strategy hasn’t worked well for that airline and the 747 fleet is starting to get a touch old. 4 Engines 4 Long Haul sounded great but wasn’t the way to go. It’s time for Virgin Atlantic to start purchasing a 787/777 or A330/A350 fleet not just for economy but for flexibility.
Flexibility in that fleet should open up some opportunities for Virgin Atlantic worldwide.
Southwest Airlines’ CEO, Gary Kelly, claims they have managed to shift $1billion in revenue away from the rest of the industry as a result of their bag fee policy, often from leisure travelers. Their Q2 results show revenue up by $1billion compared to the previous year and while not all of that is from a shift in choice by customers, that’s a powerful number.
It does prove that people are paying attention to those fees and I think over time people will become more and more sophisticated in making a choice based on those fees. It really offers SWA three advantages. First, it makes them more competitive against legacy carriers in many instances. Second, SWA doesn’t incur the ill will of customers by charging those fees. Third, it is getting people to try Southwest and discover that it really isn’t the “bus” it used to be when it comes to air travel.
Even my own mother had certain long standing prejudices against them based on experiences more than two decades old. Recently, she’s tried them again and discovered that not only is the service product pleasant, Southwest has some of the most generous economy seating available today. That discovery has found her searching out SWA fares to destinations more and more instead of her general choice (Delta Airlines.) How many other people are making that discovery and changing buying habits?
Yes, people remain angry over these charges but they’re also becoming smarter about their choices and that doesn’t bode well for legacy airlines.
Yes, Southwest may be capturing more of the least profitable passengers to fill their aircraft. In fact, one look at Southwest’s load factors tells us they’re doing just that. Given a choice between retaining a business class traveler and a leisure traveler, most legacy airlines are going to try to preserve the former. However, when their load factors begin to drop and SWA’s doesn’t, there will be yet another new signal for these carriers that the bag fees may be doing more long term damage than is worth the near term gain.
Ahh, the jetBlue incident. The moment that many have fantasized about for years. A flight attendent delivering a resounding “fuck you” to obstinate and rude passengers somehow strikes a chord in many of us.
As you can imagine, I’ve had a lot of people privately make comments and ask questions about this over the past 2 days.
It’s your fault. The customer, that is. I’ve long said that there is something odd that happens to people when they get on an airliner. They just go weird and often do things they would never consider doing anywhere else in their lives. For instance, would you ordinarily choose to have sex in your dirty bathroom? Would you ordinarily get so liquored up that you would urinate on the restaurant floor? Would you argue with subway driver who asked you to sit down for your safety?
Paying a few hundred dollars to fly from point A to point B really does not grant you an exemption from behaving appropriately in public. It doesn’t grant you an exception from safety rules and it doesn’t offer you an opportunity to behave like a completely rude jerk just because you feel like it. When you’re on an aircraft, you are traveling in the public and when a flight attendant asks you to sit down and refrain from grabbing your luggage, be a good boy or girl and just do it. Contrary to what you think, standing up and grabbing your suitcase so you can rush to the front of the line to exit the aircraft is *not* going to improve your day so much that you just can’t stop yourself.
Before anyone points a finger at the real problem being leisure travelers or infrequent travelers, I strongly disagree. I’ve seen plenty of frequent fliers behave just as bad as anyone else. Remember the woman who decided that she was treated poorly on Southwest Airlines because she was denied a seat on aircraft in favor of seating an overweight child? She was on standby. She didn’t have a confirmed seat and it doesn’t matter if the kid was overweight or not. It lacked class to contact media and act as if she was horribly wronged by the airline. She wasn’t. She was being petulant and acting entitled to far greater treatment than she deserved or had paid for.
It’s your fault. You, the airline, have caused this. You have spent the last 80 years teaching the public that they’re always right on your aircraft that *your* airline owns. You’ve condemned your staff over and over again in favor of someone who spent $200 one time to travel on your airplane and your staff knows just where the line is. Sadly, that line offers only a small amount of uncomfortable manuevering space.
The truth is, the customer isn’t always right. That comes from someone who has spent most of his career in service industries. The customer is quite capable of being wrong and making that person who chooses to be obnoxiously wrong in charge of your staff’s career isn’t the way to properly run a business. You have a right to say “this customer broke our rules, behaved boorishly and conducted themselves in a manner which would get them banned from a restaurant so we ban them from our airline.”
You really do. I wouldn’t use that power lightly, mind you, but it’s time to re-set some expectations for your customers. One of those expectations is that $200 is not purchasing them the right to ignore airline regulations, FAA rules or the right to abuse your staff.
It’s not entirely surprising that the jetBlue flight attendant kind of lost it. Do I think he’s a hero? Absolutely not. Do I think he’s a horrible person? Absolutely not. Sadly, he’s most likely a person working a hard job (not unlike most of us) who simply allowed his anger to reach a point that he chose to do something terribly foolish and unprofessional. He’s neither an absolute sinner nor an absolute saint. He’s a human being who clearly made a bad mistake.
Not unlike the many people who do one really stupid thing on aircraft as customers almost every week.
Most telling of all is that I’ve yet to have seen anyone condemn an extremely rude and disruptive passenger for their part in this.
Virgin America has announced its latest destination and I must say it has me eating a delicious meal of crow.
Starting in December, Virgin America will have 2 flights a day on two routes to DFW from both Los Angeles and San Francisco. I am thoroughly pleased to hear the news. It’s competition we need to see in the DFW market and they’re both routes that make sense for the business traveler in the DFW area.
Now, Virgin America, get to work on marketing your wares in the Dallas / Fort Worth area. Yes, it’s going to be a tough sale to lure the business traveler from AA but you do have potential. You have a much newer aircraft, better interior and better service product to offer. Get those guys and gals to try it just once and I suspect you’ll have ’em sold on the idea of flying VA to those destinations every time.
You’ve got the right introductory prices but don’t forget that the local Dallas business traveler often is allowed business/first class on trip segments greater than 3 hours. Sell that service product.
I’m going to suggest three other west coast destinations from DFW that have a lot of potential. San Diego, Seattle and Portland, Oregon. They are dominated by AA with exceptionally high fares and an exceptional number of frequencies. Again, the AA product is shop worn and generally on unpleasant aircraft. You can sell this and they’ll fit neatly into your west coast ops already.
This flight attendant is an extremely good sport. I suspect that if this had happened on a US legacy airline, the aircraft would have diverted and everyone arrested.
When the Federal Aviation Administration downgraded Mexico’s aviation safety from Category 1 to Category 2, people took notice and, no doubt, so did Mexico’s airlines. Does this reflect on Mexico’s airlines? Yes, I think so.
Mexico has joined the ranks of countries such as Haiti, Congo and Serbia & Montenegro. In fact, the only nation listed as Category 2 that surprises me is Israel and I suspect that has to do more with execution and very specific circumstances than it does with technical quality. Nonetheless, when you join those ranks, it speaks poorly of your country *and* your airlines.
Is a nation’s aviation infrastructure always indicative of the airlines? No, of course not. There are plenty of Category 1 nations who have had airlines that had unsafe operations over the years including the United States. However, I can’t think of a particularly outstanding airline coming from a Category 2 nation except El Al. You don’t really hear of the operational excellence of airlines from Honduras, Paraguay or the Phillipines, do you?
This is bad for both Mexico and Mexico’s airlines. And with Mexicana trying desperately to leap off a cliff and kill itself, it looks even worse.
Suddenly, Mexican airlines can no longer codeshare with US airlines because of this. That means participation in alliances is going to mean very little in terms of revenue. That is going to hurt. And, let’s face it, Mexico doesn’t have a great reputation for fixing its problems quickly. The Mexican Way is to bicker about it for as much as a decade before doing something.
It would be in the best interest of airlines in Mexico to start safety audits with IATA immediately and to put political pressure on the government to fix this asap. Sadly, I think this is going to get much worse before it gets much better.
I am a huge fan of Mexico. I genuinely enjoy its people and much of its culture and I want them to succeed every day. That said, success isn’t going to happen until its current government and, more importantly, its businesses and citizens come together to insist on excellence. They have, quite literally, a major conflict going on in their drug war and a crumbling financial infrastructure and waning exports to countries like the US and Canada. This development in aviation puts them at a further disadvantage with its partner trading countries and it needs to get fixed fast.
Mexico needs to ask for help from the US and other countries fast. Or they can contact Swaziland or the Ukraine and ask for advice on how to dig one’s grave even deeper.
I’ve been on vacation for the last week and a half but now I’m back and there are many things I want to comment on. Instead of one subject, here are a few quick observations on recent airline news.
Mexicana: Blaming labor is probably appropriate in some respects but this is an airline with other problems as well. And let’s not forget that management allowed those salaries to climb as high as they did. If the numbers being cited in media are anywhere near correct, salaries are outrageous and would have been ultimately untenable 8 years ago or more. Is there a solution? Only if labor unions are willing to negotiate new contracts that are probably 40 to 50 percent less than existing ones and only if another company is willing to come in and buy the airline. Dubious on both points.
Frontier: I see that Frontier Airlines is moving their Houston operations to Hobby Airport and this is probably smart. They’ve already seen that they can compete with Southwest and it makes them more convenient for the HOU/DEN business traveler who is primarily concerned with oil. It also makes me think of the current Love Field plan and just how restrictive it is for another airline to enter that market. Dallas has hurt itself on that one but the hurt will only be realized in another 4 years.
JAL and American Airlines: The Dallas Morning News Airline Biz Blog is reporting that JAL has sent 100 of its managers to American to learn, well, management. AA is encouraging JAL to use the financial analysis systems that it uses and which were instrumental in weathering the financial storm. While I agree that AA was more agile than many when it came to weathering that storm, they’re also somewhat boxed into a corner now too. Delta would have taught them to suck it up, take the hit and get on with life instead of prolonging the status quo.
American Eagle: There is now more talk of “spinning off” American Eagle from AMR and while that would put some money into AMR’s pockets (quite a bit, I suspect), it leaves both airlines with not a lot going for it. American Eagle goes independent and has to fight for its contracts in a world of regional airlines that are becoming increasingly competitive with equipment that is largely dated and inefficient and a labor force that is pretty well paid compared to most. American Airlines then has to find new partners (potentially) with lower costs but also with equipment to match existing scope clauses and the ability to work the American Way. Keep American Eagle, it fits, it works and you don’t need that trouble right now.
Delays: Here we are in August and, still, no real problems with tarmac delays. Airlines seem to be able to restrain themselves and keep their ops going just fine. Remember, the real problem occurs when customers start complaining about cancellations and that makes it news. Right now, all seems to be going OK. Let’s see how the Q3 financial numbers turn out too.
When I saw the 787 land at the Farnborough Airshow, I was very impressed at how fast and cleanly it stopped. Even if it was relatively empty. So I found a few videos of aircraft making impressive stops around the world.
The 787 at Farnborough and courtesy of FlightGlobal.
South African Airways 747SP – notice how narrow the landing runway was.
During and after the Farnborough Airshow, there has been a lot of speculation and commentary on Bombardier’s inability to announce a new order for their C-Series. Many speculate that it is because it’s a bad aircraft and it has no hope of competing.
I think it’s because what orders did show up at Farnborough were for immediate needs, not future fleet replacement and/or growth. Those who bought aircraft, bought them for near term delivery and they bought aircraft that fit into existing fleets. While the industry is recovering, it isn’t exactly flush with cash for making long term purchases yet.
Will the C-Series fly? Yes, I think so. In fact, I’m a bit unsure of why everyone is so ardently against this aircraft. Bombardier knows how to make a jet and they know how to grow a jet from a base model. Their current aircraft are well liked, frequently purchased and as efficient as any other in their class.
I am a bit dismayed that Boeing and Airbus have decided to cede the 100 to 130 seat market. I think there is more opportunity there than is being identified but I’ll also concede that it requires a sub-737 class development that neither company likely has the money for right now. On the other hand, a partnership with another manufacturer to design and build an aircraft for that market that would allow fast transition between one jet and another would be very advantageous. It’s doable.
The 3×2 economy seating layout is a bit of a risk for them but not as much as many seem to think. Frankly, it’s my preferred arrangement vs a 3×3 layout. Let’s face it: anyone who has owned DC-9/MD80/MD90/717 aircraft knows that the arrangement can play well.
Range is the real concern. I’m not sure these have to have trans-continental capability but I think they need the ability to fly at least 2/3’s the width of the country fully loaded. Nominally, they have that capability as “max range” at the minimum. Practically, I don’t know if they do and I suspect they may be a bit deficient. I also suspect their cargo capability may be a bit anemic as well.
The real risk on this platform is the engines. Pratt & Whitney Geared Turbo Fans are the choice and we have not seen engines that are meeting their fuel consumption targets yet and it remains to be seen if those engines are as reliable as they need to be. They cannot be merely “reliable” for that class. They need to be CFM-56 reliable because those aircraft are going to see a lot of cycles each day. I think that is far from proven when it comes to the P&W engine.
Yes, I think the aircraft will be built and I think it will be used here in the United States. Successful? I don’t know. It depends on what you define as successful. I don’t see this aircraft selling thousands of units but it isn’t fully defined yet either.
Look for similar speculation and derision about Embraer building a similar aircraft. I think people just don’t want to see these guys moving in on traditional Boeing/Airbus territory.
