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.
to aggravate, irritate and disappoint customers one customer at a time.
One FlyingColors reader just let me know about yet another American Airlines blunder that occurred yesterday. This same reader spurred this POST just weeks ago. This time, the Dear Reader had scheduled a family trip to Connecticut and because he’s an AA Platinum member, he used his miles to get 3 First Class tickets for his wife and 2 daughters and decided to purchase a Coach ticket for himself on the assumption he could readily get an upgrade.
I know, you’re thinking this is about not getting an upgrade, aren’t you? Wrong. About a week and a half prior to departure, our Dear Reader tried to confirm their travel via AA online only to discover that, suddenly, his wife didn’t have an assigned seat. Not only that, the online portal wouldn’t permit him to get another assignment for his wife.
Undaunted, Dear Reader phoned American Airlines at their AAdvantage phone number to get it taken care of. Once he had a reservations agent on the line (after 15+ minutes of waiting), he was told by this agent that no seat would be assigned until the day of the return trip from Connecticut and would not discuss the reason why. When probed for more information, the agent simply replied “I’m not at liberty to discuss this further with you.” All done with a secretive and somewhat hostile tone.
That’s when Dear Reader called me and asked what I thought was going on. After hearing his account of the cryptic dialog with the agent, I responded it really could be anything but that it almost sounded like a security problem. Dear Reader wanted to address that before the trip but I explained that likely no one would address the issue until they decided to address it with his wife. Indeed, I also advised that it would likely turn out to be not a problem once they arrived and checked in for the flight.
Well, I was kind of right. It wasn’t a security problem. It was a First Class is oversold problem. At check-in, they continued to decline to assign a seat to his wife and spent their time instead offering a rather generous $300 voucher and guaranteed space on the next available flight via Chicago (he was traveling from Connecticut to the DFW area.)
However, since he was traveling with family and had committments to keep in the DFW area, they declined such a reward and waited. Only after everyone else was boarded did they assign his wife a seat and they were able to return. Dear Reader got to ride in Coach and get harrassed by amateur travelers but they got home.
Yes, his wife and kids were traveling on points. So what? That’s the reward for spending enough money and flying enough trips on AA to become an AA AAdvantage Platinum member. Besides, those seats are so hard to come by that, if they do have them and they do guarantee them and issue a ticket, this is one problem that should *not* be presented to a Platinum member. At the end of the day, American Airlines made up the game and set the rules, let’s not be sympathetic if it doesn’t work out to their AAdvantage.
What’s more, they created a hostile environment for the Dear Reader and his wife by implying it was so much more a problem than it was. Ironically, if they had been told what the problem was, they would have readily re-booked the flight either for later in the day or the day later. Yes, American, your customer could have been made happy by just *telling them* what the problem was. Instead, you chose, once again, to act like information was a golden nugget to be hoarded and induced concern and worry over a flight.
You did it to one of your best customers. And people still ask me why I’ve chosen to take my business elsewhere. Airlines won’t start improving their service and treatment of you, the customers, until you do start taking your business elsewhere. Remember that.
So, I repeat once more: Really American Airlines . . . is that the best you’ve got?
Delta announced a 2nd quarter profit of $467 million. That’s not an annual profit. That’s a quarterly result and an impressive one at that. That is coming from the merger of Delta and Northwest that formed a $28 Billion a year company less than 2 years ago. It’s notable that both Delta and Northwest managed to restructure their costs through bankruptcy reorganization.
American Airlines, a company with revenues of nearly $24 Billion, is not expected to earn a profit this year. This disparity really highlights the disadvantage American Airlines has with respect to costs and its failure to contain and restructure those costs even during the last 2 years of crisis in the airline industry.
And this is why ‘Continental and United want to merge so badly. It shows a pathway to greater profitability and that’s something that has to exist in this industry going forward. In fact, I find that Delta result so impressive, I really wonder if it won’t make LCC’s start looking at each other as well.
There are several reports out now that Emirates Airlines is going to announce an order for 30 Boeing 777 aircraft at this year’s Farnborough International Airshow in the United Kingdom this week. I’m sure that this will further strike fear in the hearts of airline executives and I’ll repeat THIS response. Just because they order it doesn’t mean they’ll know what to do with it when the time comes.
Another interesting piece of news is that Air France has invited Airbus and Boeing to respond with a proposal for supplying as many as 100 widebody aircraft over the next decade. The assumption is a mix of both the Airbus A350 and Boeing 787. I suspect conventional wisdom will give Airbus the upper hand (we are talking about Air France based in France where Airbus aircraft like the A350 will be made and where the French insist on buying local) but I like Boeing chances for this. Boeing could win this order by offering a mix of 787 and 777 aircraft with GE engines. Air France already has a large fleet of 777 aircraft, experience with the GE engines and may well be attracted by the expected quick and relatively cheap transition for pilots to move between the two aircraft.
Steven Udvar Hazy has his new company, Air Lease Company, and reportedly will be at Farnborough on the hunt for building his new portfolio of lease aircraft. While money is starting to flow back into the lease business, I do wonder if the game hasn’t changed since the early 2000’s. Airlines have seen the benefits of owning their aircraft because in bad times, they can leverage those aircraft for more operating capital in those bad times. In addition, I don’t think Airbus and Boeing are in the mood to offer huge discounts to the lessors anymore. If Michael O’Leary of Ryanair can’t get a deal for 200+ aircraft, why should we think lessors will?
Randy Tinseth, VP of Marketing for Boeing, will be releasing Boeing’s most recent current market outlook at Farnborough and it’s quite a positive one. Boeing sees a need for 30,900 new aircraft between now and 2029 of which they expect 21,000 to be single aisle airliners. They’re forecast is based on a growth rate of 5+% per year in the airline industry and that’s based growth rates since 1978 deregulation in the US (which have averaged 5% per year.)
What’s interesting to me is that they see the regional jet share of that outlook as being significantly less than in the past. I think that depends on what you call a regional jet. If you’re speaking of 50 or less seats, I agree. If we’re talking about 75 to 110 seats, I’m not sure I do agree. Indeed, I think that the 90 to 130 seat market is going to be very hot and I think that Boeing and Airbus ceding that market is a mistake. Even car manufacturers have discovered that it’s wise to cultivate customers at the entry level as opposed to waiting 20 years for them to be able to afford your product.
Finally, I understand that Boeing’s 787, ZA003, has landed in the UK and that marks its first appearance in Europe. FleetBuzzEditorial.Com got some photos of the 787 landing at Farnborough which can be seen HERE. I still really dislike the demo interior they’ve installed in that aircraft.
The Boeing 787’s introduction to a fleet is something that anyone who follows the aviation industry has been looking forward to. It was greatly disappointing that it did not meet its first flight schedule originally but anyone who follows this business was hardly surprised.
What was a bit surprising was a 2+ year delay in that first flight. However, Boeing was pushing its limits when it came to both technology and vendors. In many cases, both were factors in various delays. Boeing was right to push its limits, however. If Boeing expected to be an aviation leader, it needed to stretch itself and it quite rightly did so in this project. In addition, it was right to push its outsourcing as well. Boeing had already experienced good partnerships in outsourcing other airliners production work such as on the 777.
Even with all that has happened over the past 3 years in the 787 program, I still think Boeing was right to push its technology development for this aircraft. It remains a revolution for aircraft and continues to promise a great deal for airlines who use it.
However, perhaps Boeing pushed its vendor outsourcing too much. Actually, we knew they did when they purchased some vendor operations for the 787 outright. I think that, perhaps, Boeing didn’t have as much knowledge about outsourcing as it thought it did. It was, perhaps, viewed more like outsourcing on defense projects where such projects are often pushing the limits in every direction and commercial viability isn’t necessarily a key driver and meeting requirements is.
The latest announced delay finally frustrates me. The vague references to instrumentation and the fact that “test programs” experience unknowns just doesn’t fly anymore. As someone who works for a major aerospace and defense company, I’ve seen good programs and I’ve seen bad. This one is starting to stink from an execution point of view.
The truth is, a lot of risk could have been reduced in the test program using time before the first flight to ensure systems were extra mature. To a degree, it’s clear that was done in some areas and completely neglected in others. Issues with the horizontal stabilizer and how it was manufactured and/or installed should have been identified before first flight. There was so much time to staff and plan the flight test program, it should be going *faster* than its schedule, not slower.
In short, I don’t think Boeing has done nearly enough to reduce risk on this program. They keep getting surprised by things that just point to a too lean program and not enough investment in retiring risk. Airlines have a right to be frustrated at this point. Boeing has yet to have gotten their production up to anything above low rate initial production and its delays to allow manufacturers to catch up is shameful at this point.
Those partners have had 3 years to figure out how to ramp up production and prevent traveled work from happening. Having to “pause” the production to prevent traveled work at this point ought to be resulting in at least a few project managers getting fired. At this point, the only thing that should potentially delay entry into service is flight test revealing a near catastrophic development found only in real flight test. Seriously, all the systems should have an exceptional maturity and all the vendors and manufacturers should be capable of spinning up production beyond 2 to 2.5 aircraft per month.
Lean is good but this program’s project planning and execution stinks of being run on the absolute best case scenarios with very little provision for managing risk and retiring risk along the various waypoints of development in a sensible and, more importantly, responsible manner.
This aircraft will be a successful one. I firmly believe it remains a game changer for airlines. However, I’m left with a sense that Boeing continues to treat this program as “just another program” instead of treating it with a sense of urgency and acting as if its future depends on it.
The fact that there is as little outcry over these latest announcements demonstrates just how little this industry has come to expect from Boeing and this program when it comes to doing what Boeing says it is going to do.
I like to watch the fare prices on various routes that I fly from time to time but none more so than the Dallas to Milwaukee run. To me, it’s an example of what real competition can do and I’ve written about it before. You can read my earlier post HERE.
Well, I took some time to see what was going on with that route now by sample fares and flights for mid-week departures between the two cities in August. First, the good news: Fares are holding steady at or about $170 for advance purchase tickets.
Second, the better news: Airtran is using the Boeing 717 on that route already. No SkyWest CRJ-200 regional jets, we get the real Airtran on a real aircraft that is really pretty comfortable. I figured Airtran would move in with the larger aircraft if only to put pressure on Midwest Express.
Now some bad news: Airtran is only flying an early morning and late afternoon flight on the DFW to MKE run. It’s worse on the MKE to DFW segment with a plain morning departure and late evening departure. I’m guessing it’s the best they can do for now but they’re going to need at least one more flight to make that really work. Their current offering via Atlanta is *not* what I meant by needing another flight either.
Midwest aka Frontier aka Republic is hanging in there. They have 3 flights using the E-170 Embraer jets and that’s really not a bad aircraft for that route. With 2×2 seating and a bit bigger cabin, it works for what is essentially a long and thin domestic route. Well, long-ish anyway. The bad news is that Midwest aka Frontier aka Republic has its first flight on the DFW-MKE run after 10am in the morning. That’s about 2 hours later than necessary.
American Eagle is hanging in there. This is a route that used to often cost as much as $300 round trip just 3 years ago and that was the best fare you could get. Often the only tickets to be had were in excess of $500 and the only choice you had was to fly to Chicago and take the bus if you wanted to save money. But here is the interesting part: American Eagle has its 5 flights a day and I will say they’re well laid out in terms of departure and arrival times. However, American Eagle is now using the CRJ700 on 3 of those five flights (the remaining two use the clapped out ERJ-140) and their fares are as competive as anyone’s.
And then there is Southwest. Southwest’s cheapest fares are competitive with everyone else’s and continue to be one-stop flights with no plane changes. Those flights are now running about 3 hours, 25 minutes however and that’s a bit longer than they were taking earlier this year. The non-stop flights of the other airlines are doing it in 2 hours, 20 minutes. Still, they are the bargain choice for 2 reasons. First, Love Field is cheaper to fly from for more people in the DFW area in that its taxes and fees are slightly cheaper and the travel to Love Field and parking at Love Field is cheaper too. Second, Southwest still isn’t charging for baggage. That means for someone checking a bag, the savings could range from $35 to nearly $80 and that’s real savings.
In practical terms, for me as a passenger to that destination, I probably could save as much as $50 each way in “real” savings by using Southwest. And I’d do it in the aircraft that had the *most* seat pitch of those serving the routes. That’s worth the extra hour of transit time on a leisure flight and might just be worth it on a business flight too. Why? Because my door to door time in the Dallas area is likely to be about the same using Love Field or DFW. I don’t have to drive as far to Love Field airport, take as long to park and/or transit into the terminal, check in quite as early or frenetically and that amounts to probably as much as an hour gained making the trip from the door of my house to the door of my family’s homes in the MKE area about the same no matter which airport and airline I take.
But I can save about $100 round trip if I’m flying with checked baggage and that’s a deal.
If Airtran wants to win Miwaukee, this is an important route for them to succeed on. They’ve got the right equipment for the route now but they’re going to have to work on their frequencies and departure times a bit to really win. Right now, their schedule looks like a compromise.
Midwest is probably continuing to do well but let’s see how they do when the brand changes to Frontier. I’m not saying they’re out of the game. To the contrary, this whole competition thing on this route could end up being Midwest/Frontier and American Eagle again in a year or two. Midwest has good frequencies, good flight times (mostly) and good service. However, Southwest will win this route, I think, when they can start flying it non-stop But that opportunity is still 3 1/2 years away.
The GAO report on airline fees is, frankly, more concerned with lost tax revenue because of de-bundling of “services”. Baggage fees as well as other fees aren’t subject to the excise tax that are paid on the fare price of the tickets. I’m wholly unsurprised that this hole is being revealed and talked about and I do expect that we’ll see that situation “fixed” some time in the future although I would point out that the airline indudstry is already highly taxed and the decrease in revenue over the past 2 years likely has to do with depressed traffic levels far more than lost revenue on de-bundling.
However, it makes both a good and official observation that the systems for purchasing a ticket at this point are in disarray. An area that I’ve already addressed once this week prior to the release of the GAO report. I’ve wondered whether or not the systems currently in place are legal. I suspect they are legal but I also suspect that they dance awfully close to the line when it comes to fair trade practices.
Regardless, this is an area where some regulation is appropriate. Customers are at a great disadvantage because of they cannot identify *all* the fees they are potentially subject to when arranging for their trip. Baggage fees are, in some cases, not revealed until after a purchase. If they are revealed prior to the purchase, they’re revealed just before consummating the transaction and long after price comparisons have taken place for a trip.
But it’s not just baggage fees. It’s fees for assigning seats, for getting good seats, for making a reservation via phone vs the internet and many others. Some regulation that enforces transparency for pricing and which allows the consumer to make a reasonable comparison in prices is appropriate in this case. No, airlines don’t want that transparency because they know that if they can get you to the moment of truth, getting your credit card out for the purchase, they are almost certainly assured of the sale.
But our government isn’t here to serve airlines purposes solely. By all means, allow them to compete on price and I’m willing to concede the point on baggage fees at this point (which doesn’t mean I like 1st bag checked fees one bit at all). However, enforce transparency so that the consumer can make an informed purchase.
We require this when it comes to purchasing an automobile or an appliance or most anything else. Why shouldn’t it be required for purchasing transportation?
A number of airline and aviation bloggers have been writing posts about the 3 Hour Rule since statistics for on-time departures, arrivals, cancellations and delays came out for the first full month under this rule. The Cranky Flier feels certain that this rule is inconveniencing more people now. Dan Webb writing Things In The Sky thinks it might be too early to make a final call on the rule. PlaneBuzz speculates on whether or not the FAA will send a fine to the airlines who exceeded the 3 Hour Rule in that first full month (There were five 3 Hour Rule “violations” in May).
For readers of this or any other blog on airlines, there are a few things to keep in mind about this rule and the statistics. First, this rule wasn’t put into place because of statistics. If statistics had driven the rule making, we wouldn’t have a rule. The rule was driven by egregious delays that far exceeded 3 hours and it was far more political than fact driven.
Second, the first month of statistics on this mean absolutely nothing. Frankly, if you were going to use statistics to judge this rule, I think you would need, at minimum, 24 months of contiguous data at the least. A 5 year data set would be far better. It isn’t just airline decisions driving these statistics. It’s weather, passenger trends, disrupted airport operations (for non-weather related reasons) and other factors. The variables in play here are far too many to make a judgement based on statistics.
Third, airline fans tend to favor airlines or, rather, they favor airline operations. And that subset of airline fans we know as frequent flier freaks are even more favorably disposed to airline operations. We’re a biased group because we see things from both the inside and outside and we tend to excuse events that appear to occur because of one-time conditions. We tend to excuse what isn’t in the norm because of conditions that are outside of an airlines’ control. While we may think we have far more than average knowledge and therefore better equipped to make that judgement on a 3 hour rule, we really aren’t. We have the same bias that airlines as a whole have.
A politically driven rule generally occurs because of a general public perception, not statistics. The general public perception, whether its based on fact or fiction, is really the controlling factor and the public perception of these delays is *bad*. It’s bad because airlines have done nothing to change that perception and its bad because those who are trying to explain these delays are coming off as apologists for airlines rather than as subject matter experts. There is a disconnect between the airline industry and the public consumer in that industry.
In many ways, this problem of delays could have been solved by some saavy marketing. The defensive posture airlines have taken during these events has done them no good and apologizing profusely and promising to “fix it” going forward now sounds hollow because these events continue to happen and airlines continue to often appear to have no clue about the passengers being affected by it.
Airlines have received a lot of bounty from the public over the past several years. Special considerations have been granted to the industry over and over, particularly since the tragedy of September 11th, 2001, and the airline industry has not acted very grateful nor very responsive in that same time period. To the contrary, airlines have generally responded with acts that, to the public, appear overtly hostile to the customer. The general public, right or wrong on its facts, is now entirely resentful of the entire industry.
This is much more an airline marketing and PR problem than it is an airline operations problem.
The rule isn’t going to go away and anyone who thinks there is a chance that it will is enjoying a nice fantasy. The rule is a consequence of airlines doing a poor job to fix an admittedly tiny problem and then acting officious with anyone challenging their behaviour. Failure to self regulate and respond *and* communicate during these problems created the rule. There is a lack of public trust when it comes to airlines and that will take a decade or more to fix. The best any airline or the industry itself can ever hope to accomplish is to hold off even more restrictive rules in the future and that will only be done by being better public citizens themselves.
Do I think the 3 Hour Rule is a success or failure? I have no idea. I would note that, anecdotally, the public isn’t crying out to the news media about being delayed an extra 12 hours because of a 3 Hour Rule cancellation. Until they do, I am extremely hesitant to declare the 3 Hour Rule a failure.
I’ve thrown a few punches at Virgin America lately and their seeming cowardice when it comes to flying the markets they said they would fly. Over the past few weeks, each time I’ve done so, I’ve realized that, in many respects, the same applies to jetBlue.
David Neeleman has been gone for nearly 3 years and I see an airline that is kind of stagnate. I’ll grant that times have been hard for the past 2 years but it’s notable that the airlines who’ve seen profits even in those times are the ones who have grown, not contracted. They are the ones who had some vision to risk some new routes, not contract and play it safe.
jetBlue, as an airline, has always impressed me with their courage and their vision. They started in markets where there was more than adequate service and they made a difference not just because they were an LCC charging the lowest fair but because they developed an immediate and exceptional reputation for how they treated their customers. Their amentities were innovative but it was how jetBlue valued you as a customer that won people over.
But where is that risk and vision and, frankly, customer treatment today? The Cranky Flier recently had a post on their new food offerings. You can read that HERE. It really is illustrative of just exactly how jetBlue has evolved in the past 3 years. They aren’t competing, they’re now simply matching what other airlines have to offer and holding on to what they have instead of growing themselves into markets where they genuinely have something to offer.
If an airline has the courage to get started in the New York City area and compete on some of the most important routes out of that area (and other major metro areas) and succeed, shouldn’t we see that as a successful model for the future? jetBlue appears to now be sidestepping any opportunities to compete and instead defend their marketshare.
A partnership with American Airlines is a visionary step? Really?
I think it hardly surprises us that the stock price of jetBlue isn’t reflecting its former glory anymore.
How about coming down to DFW airport, setting up shop in Terminal E and going head to head with AA and Southwest. If you can win in New York, you can win here.
Instead, I read about “possible” nerd routes between Austin and San Jose. C’mon jetBlue, you’re on the East Coast and the West Coast and down in the Caribbean. Is it really possible that you’re afraid to enter into markets like Chicago, St. Louis, Denver, DFW or Houston? And by enter, I don’t mean a couple of flights to your hub cities. You have one of the best service products around (although it has been eroded some) and it’s time to find new focus cities and quite ignoring the middle US hub cities. You can play there if you have some vision and courage.
One thing I’ll say about Southwest over the past 2 years is that they haven’t been afraid to explore opportunities. Even as they slowed their growth, they still sought out opportunities and took on some risk to make things happen. I’m not advocating that any airline bet the farm on anything. I am, however, advocating that LCC’s like jetBlue and VirginAmerica really aren’t engaging where they can play and compete and I wonder what’s holding them back these days.
I speculate often about that and I do wonder if it isn’t the CEO’s of those two companies. Both Dave Barger and David Cush have long and significant histories at legacy airlines. Continental and American Airlines respectively. It can be very hard to break habits you learn at that kind of airline. They’re both much more suited to a Chief Operating Officer role than a CEO role in my opinion and the boards of directors at both airlines could stand to start looking for someone who isn’t tied to “that’s how we do it in this business”. A new David Neeleman or Herb Kelleher is what leads those airlines to the next level. They’re out there, you just have to find them.
Sean Menke might just be available, it is certainly worth calling him.
Do we need regulation for better passenger service in the airline industry? Well, I don’t think we need regulation for price or route frequency or food. We don’t. We’re fine. Aircraft are transporting people just fine every day and doing it credibly.
However, where we could stand some government oversight is in how airlines meet or, rather, don’t meet obligations that are implied in the sale of a seat on a flight. If airlines are going to charge baggage fees and term it a service, then there is an obligation on their part to transport your baggage as reliably as they are transporting you. I do think some government regulation on this is appropriate. For instance, if you don’t transport a customer’s baggage and deliver it back to them upon arrival, you should be required to refund that fee in full and get them their bag as soon as possible.
Do we need them to regulate how they conduct their flights? No but we do need a minimum service standard for things like delays on tarmac. We have the 3 Hour Rule and while I think the jury is still out, there is some strong evidence that this rule is having its intended effect.
Do we need to insist food be served? No, not for free certainly. But providing some kind of food and water in the event of a long delay isn’t unreasonable.
Should airlines be allowed to set their prices? Absolutely. But when they set those prices, we should have a standard that enforces that *all* costs and/or potential costs are displayed *before* the purchase rather than just a base fare with taxes and fees.
If an airline has to cancel a flight should the be obligated to transport you on another aircraft immediately? No, they shouldn’t. Airlines would have to carry tens of replacement aircraft at every major station and that’s unreasonable. However, should be able to put you on a flight 5 or more days in the future? No, they shouldn’t. Once flights commence, 24 hours or less should probably be the standard in most cases.
Yes, there is a place for regulation but it should be miminum standards and in areas where the airlines make a service promise but write contract language to absolve them of the very obligation they imply that they have.
I found a column in the Philadelphia Inquirer today that discusses whether the airline should or should not be considered for heavier regulation. You can read it in its entirety HERE.
We regulate the airline industry on safety matters (but not without a lot of groaning from the industry at times) and we definitely have found that it is appropriate to regulate interstate commerce on some level. However, a return to the days of pre-1978 deregulation would, in my opinion, be a mistake.
People often long for those days in the perception that things were better all the way around and that really isn’t true. Today, we really do have more choice in most cases when it comes to travel on a particular route. In the so-called golden years, the CAB decided who got to fly what routes and at what price. We often forget that those prices were regulated as well and an airlines profit was determined on their costs. However, so was the price. Airlines often made a justification for raising prices on routes based on their costs and an appropriate profit level. Not unlike how many electrical utilities are still regulated today.
Airlines are, if anything, far more safe today than 30 years ago as well. That’s despite the drum beating going on about airlines sacrificing safety for profit and it is a product of our regulation in that area and its influence on both manufacturers as well as airlines themselves. I do also believe that safety remains a top concern with airlines today despite the competitive environment because of how much impact on profit there can be as a result of a crash or safety incident.
But airlines do use a variety of public assets and as a result of that, they should, in my opinion, be subject to some regulation. For instance, airports are a public asset and, yet, we allow airlines to dominate airports by leasing/purchasing terminal space and holding on to underutilized assets. In a sense, we allow airlines to bully both airports and other airlines who would make use of those public assets. I wouldn’t propose that we tightly regulate terminal space but I would propose that these assets should periodically be subject to some sort of competitive bid for them. That shriek you just heard is the airlines.
The airways are a public asset as well. How much traffic a particular part of our airspace can withstand is determined by our infrastructure and our airports both of which are public assets as well. There is, in my opinion, a duty on the part of the government(s) to see that these assets are used as efficiently as possible. Where airports are slot controlled, those slots should also be subject to a periodic competitive bid for use. When airlines find it “profitable” in a competitive sense to hold on to those slots by using them for high frequency and/or small regional jet routes, they are potentially being underutilized.
That means that when there are 20+ frequencies between two cities among 2 or more airlines, there is some indication that those assets (i.e. slots) are being underutilized and with just a few less frequencies, slots could be opened up to provide new or improved service to other destinations and also improve competition on routes being “dominated” by a couple of airlines who are controlling prices via frequency. If you think this doesn’t happen, just look into how major airlines respond to new competition by “small” competitors on these and non-slot routes. They add capacity via larger aircraft and or additional flights to “buy” the business.
But does the consumer really benefit from that? In short term spurts, yes they may benefit. In the long term, no, they don’t. If you control the route, you have some influence on the price and losing control of that route could quite possibly mean it turns unprofitable very quickly.
In pre-deregulation days, it was thought that the nation’s infrastructure couldn’t withstand the loss of a trunk airline via bankruptcy and/or strikes. So the government regulated price on their behalf and assured a stable system. During that time, that made sense since those trunk airlines held much more regional segments of the United States. For instance, in those days Delta might have been perceived as “essential” to the south east and its removal from the system might have meant a major economic loss to the area.
We think there are fewer airlines and to some extent that is true. However, our system is also vastly more flexibile today than it was 30 years ago. A loss of a major legacy airline doesn’t mean the nation’s airline infrastructure becomes paralyzed. We have enough airlines who are already serving those routes and who already have the flexibility to either serve them with more frequency or more capacity or both. A correction via the remaining airlines would take days in some cases and mere weeks in others. Not months and years. Deregulation has provided that flexibility.
One argument many legacy airlines make for being allowed more dominance at hubs is that they serve the public good with flights to small, outlying areas in regions that no one else would serve if they were gone. In a few cases, they’re telling the truth. In most cases, they serve those areas with very high prices and very low frequency and they do little to stimulate commerce in those areas. This is because those airlines serve those areas inefficiently with the wrong aircraft and schedules so that they may “feed” their hub systems. Hub systems have to grow to remain profitable. They are the animal that simply grows hungrier every year.
Should a place like Abilene, Texas have 3 or 4 direct flights to hubs like Dallas or Houston? I’d argue that it isn’t really justified. However, you could justify it as a whistle stop on a multi-city route being served by a turboprop as opposed to a regional jet. Does service suffer as a result of that? In most cases, no. Airlines would earn more profit, service the same number of passengers or possibly more due to lower prices and the cities themselves wouldn’t suffer any economic impact.
Abilene, Texas is served by no less than 7 flights a day to DFW all on ERJ-140 aircraft. 2 pair of those flights have departure times that separate them by less than an hour. Does an isolated city in West Texas with a population of 120, 000 really justify that kind of frequency? Probably not. There are larger city pairs that don’t have that kind of frequency. Could the 5:50am and 6:35am departures be combined into a single 6:00am flight? Absolutely. Would those passengers be impacted if the flight originated in Midland-Odessa at 5:50am and made a simple whistle stop in Abilene on its way to DFW? No, not at all. Would the Midland-Odessa passengers be impacted by a flight that was, at best, 20 minutes longer? No, they wouldn’t.
We hurt the public by not regulating the industry for more competition and by the public, I mean the greater good for all, not just the 2 bankers in Abilene who get in a snit if they don’t have 4 morning flight choices. Promoting competition by regulating access to our public assets isn’t a bad thing and there are decades of evidence to show that this is an area where the government can regulate very successfully and profitably.
Do I think the airlines service levels should be regulated? Let’s take a look at that tomorrow.
Last Tuesday, the regular Delta Airlines flight from Portland, OR to Amsterdam experienced a bit of mechanical trouble with cabin pressurization. The Airbus A330 had to be diverted when it had already started out over the Atlantic and chose Goose Bay as its diversion, the closest airport available.
After landing in heavy rain, the passengers were house in the military base housing and fed in the military base cafeteria and generally killed time on base by doing things like playing tag in the parking lot. It was an idyllic vacation.
A substitute aircraft didn’t arrive until Wednesday and, when it did, the crew for that aircraft timed out and couldn’t make the remaining 5 hour trip to Amsterdam.
Several passengers whose purpose in Europe had already passed were unable to simply turn around and go home but, instead, had to finish their trip to Amsterdam instead. The original crew flew the now repaired original aircraft with passengers late Wednesday evening.
The American Airlines pilots union, APA (or Allied Pilots Association), has new leadership now and the President of that union, David Bates, is already sounding like someone far more reasonable than his predecessor, Lloyd Hill. Bates acknowledges that to recover all the salary cuts given years ago is not possible to do in one fell swoop. That’s a signal of a willingness to find some common ground in an agreement.
However, I remain concerned about a few things. First, this continues to be about salary above anything else. I understand that there continue to be pilots who are resentful of not earning a pre-2001 salary today but it seems unproductive to focus only on that.
A better approach would be getting quality of life improved in return for productivity gains in the next contract. I know of a blog written by a pilot who has spent 11 years at AA and the best he can do is hold a reserve line as an FO on the MD-80. That has to be highly unsatisfying to him and others in the same position.
One complication is American’s focus on its core cities: LA, New York, Dallas, Chicago and Miami. Those are very expensive cities to live in with the possible exception of Dallas. Finding a better way to avoid longer commutes and longer duty days that occur day after day might just help pilots feel a bit more satisfied. While these pilots get to ride aircraft for “free” to their duty stations, there are a number of associated costs that come with that option that are paid for by pilots. Little things like food or a crash pad or a hotel room.
In fact, I’ve never understood why an airline like AA doesn’t offer some sort of accommodations in its large base cities to help with quality of life issues.
Finding a way for a pilot to do his duty hours, get to and from home reasonably and otherwise be a productive member of the crew would go a long way towards making pilots feel appreciated. If this approach was offered, pilots should take a long look at it instead of just counting dollars up.
One comment I’ve read does bother me. Bates made the comment that many of these pilots families “had to pull their children out of school.” What the hell? It’s poor form to complain about taking your children out of school when that can only possibly mean you took them out of PRIVATE SCHOOL. Sorry but a lot of people have had to readjust that way and you won’t get much public sympathy for not being able to afford private school for your children.
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.
Since the widely known WTO ruling on Airbus and it’s launch aid from member countries came out, there has been a lot of speculation on its implications for the airliner market, Boeing, the KC-X tanker and what the WTO might rule against Boeing on in its counter-claim. Conventional wisdom is that both parties will get slapped heartily and that might end up being somewhat true although I suspect that far less will be found against Boeing.
The difference is in the business models. In many respects, Airbus/EADS has been run much like a state owned entity and its financing has largely derived from loans from member countries or with member countries’ backing. Boeing, on the other hand, operates much more as a commercial entity and while it does benefit from things like tax breaks (on a state and local community level) as well as from participating in research and development efforts on the part of the government, it’s primary method of financing its commercial product line is from the financial markets.
When Boeing needs money, it goes to the markets and obtains market rate financing in the form of loans, bonds or through stock sales. That’s the key difference between Airbus and Boeing. Boeing follows a traditional and, more importantly, acceptable model for its financing. A model that makes it difficult to show harm to Airbus/EADS.
I think both parties will have to modify their behaviour going forward but I think Airbus’ compliance will have far greater and far more long lasting effects on its business model than anything Boeing will have to do. I also think that Airbus/EADS remains tied to answering to its member countries on things like exports and employment and that makes it much more difficult to outsource (a la Boeing) and/or manufacture their aircraft in other countries.
In the long run, Airbus’ compliance will make them a stronger and more competitive business because they’ll retain the advantage of selling to their member nations but they’ll also understand how to respond to their financial needs as well as their customer markets.
In the short run, it just got a lot more difficult for Airbus/EADS to launch new models because they’ll likely have to “pay back” that launch aid and obtain commercial rate financing. In addition, their commitments to the A380, A350 and A400 projects make it very tough for them to obtain financing for and launch a new project such as an A320 replacement or a model that competes more effectively with the bottom end of the 787 model lineup.
For Boeing, it probably means forgoing or even paying back tax incentives and it will mean Boeing having to examine where it builds its aircraft much more closely in the future. Don’t be surprised if more of their production moves out of Washington State over the next 20 years.
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.
It’s the cheap and easy thing to do, right? Instead of parking, you save money and since you cannot accompany someone into the gate areas, why bother hanging around?
Well, it might still be easy but now two airports in Europe are charging fees for dropping off a passenger. Both Belfast and Edinburgh airports are instituting a fee to drop someone off. Not park quickly and let them out. The mere act of dropping someone off at a terminal will now cost £1 at both of these airports.
Both airports are justifying the fee as a “service” and offering that the fee helps them pay for improvements to attract more business.
In other words: We want you to pay us to invest in the infrastructure that your taxes are already supposed to pay for.
Let me offer that this comes dangerously close to being as insulting as a fee based lavatory on an aircraft.
The air travel industry is grossly overtaxed and overcharged with fees. An airport is a public asset and benefits the public and is supported already by taxes paid by the public.
To act as if it is a nuisance to have passengers actually drop off people is more than one step over the line.
After 4 months of furious construction, JFK airport in New York City hs re-opened its longest runway, 31L/13R, for business again.
The asphalt surface was replaced with concrete projected to last 40 years. Since its closing, JFK has operated under heavier than usual movement restrictions to keep congestion and delays down and with great success on most day. This runway is important to the airport since most days the prevailing winds align with it and its parallel cousin on the other side of the airport. In addition, its additional length (14,000+ feet long) provides an extra margin of safety for the heavy, widebody international flights that usually take-off from it.
Notably, the project was delivered on time and on budget and improves the airport infrastruture for the future. A credit to airport management, the FAA, the airlines and, most notably, the air traffic controller’s working at the airport.
It’s hard to find any video on the Boeing 727 that is truly interesting. That’s a shame because if there is one commercial airliner that lights my fire more than any other it is the 727. I’m prejudiced, however, because it’s the aircraft I flew for hundreds of thousands of miles as a child and teenager when my father was an executive at Braniff International.
Designed in the early 1960’s, the idea was to meet requirements for the trunk airliners in the United States which were pretty diverse. Eastern Airlines wanted more than 2 jets so it could fly overwater routes longer than 60 minutes. United wanted superior takeoff performance because of its flights to and from Denver. American Airlines (and most other trunk airlines) wanted 2 engine efficiency. The three engined 727 answered all of the requirements.
It would suprise most people to learn that it was the 727 that long held the record for most aircraft built and its production spanned 20+ years with 3 basic variants. The original 727-100 (seating about 150 people), the 727-200 (seating about 180 people) and the 727-200 Advanced which seated the same number of people but had better range and take-off performance over the original -200.
To me, the aircraft always had the same sex appeal that a sports car has. It was sleek, slow the to ground and the very swept wings had a very racy look. This aircraft, in all 3 forms, was the mainstay of the Braniff International fleet from the mid-1960’s until the early 1980’s and the time I spent on them remains a very fond memory. Despite the fact that Boeing’s cabins from the 707 to the 757 are all the same in width and basic configuration, the 727 always seemed a bit “bigger” and “wider” to me. Indeed, the only aircraft that feels similar to me is the 757.
Designed with a clean wing and the ability to produce a lot of “lift” at low speeds, the 727 had a fairly high sink rate that caught several early 727 captains off guard resulting in accidents. One captain said “You didn’t try to grease the landing, you just flew it into the ground. If you did have a smooth landing, it was a complete accident.”
Its take-off performance was equally fun. A take-off resulted in being pushed *very* firmly back into your seat and then a very high angle of attack seemed to shoot you into the sky. It was noisy too. It was really, really noisy and I must say that it was these jets that really caused a lot of the pushback on aircraft noise. Many younger people marvel at how loud a MD-80 aircraft sounds on take-off. The 727 was far louder than that.
The 727 was also fast. Of course, in its hey day, pilots didn’t worry too much about fuel either. Nonetheless, it cruised at a far higher speed than is typical of today’s mainline domestic aircraft. I frequently flew between DFW and Chicago in the 1970’s, for instance, and that trip, gate to gate, was at or just shy of 2 hours flat. I also frequently flew between DFW and PDX nonstop and those flights were often done in at little as just over 3 hours. Today, those same flights take nearly 4 hours on an MD-80.
Its undoing was the 3-man cockpit and the 3 jets it had. I think airlines could have survived the 3 jets a bit longer but the 3 man cockpit wasn’t a tolerable condition anymore and airlines looked elsewhere. It’s next generation development was the 757 but I think it’s unfair to refer to it in that way as the 757 is clearly more than just another evolution.
Here are a couple of videos that I did find interesting and I hope you do too.
Delta says goodbye on its last 727 flight.
The restoration of the 1st 727, N70001U.
A Boeing 727 Rocket Assisted Take Off (RATO) Test.
Now that more than a week has passed, I want to revisit my first post about the Virgin Atlantic flight diversion to Bradley International Airport last week. You can read my original post HERE.
First, I think both Congressional and administration officials have grossly overreacted to this event. This was not a 6 or 7 hour event. It was a 4 hour event. And the primary cause of keeping people contained on the aircraft was weather and then no available customs and immigrations officers to process passengers. You see, it might be called Bradley *International* Airport but it’s “international” aspect derives from relatively short flights to Canada.
Now we have Senators and Secretaries demanding that we impose a 3 Hour rule on international carriers and decrying the inhumanity of what those poor people experienced. Indeed, the more these people pound desktops, the more they reveal their ignorance.
Folks, I’ve sat in an aircraft waiting 4 hours to take off a number of times. It’s boring. It’s tedious but it isn’t inhumane. The same is true of a flight that likely took about 7 hours from London to the NYC area.
The real issue here is what we allow when it comes to a diversion and the reason for that diversion. I said it in my first post and I’ll say it again: Virgin Atlantic’s chief mistake was in putting themselves into a position to have to use Bradley or choosing Bradley for its relatively low cost to land, refuel and take-off again. There were plenty of better alternatives and VA didn’t choose one.
If we presume a 200 nautical mile diversion capability, let’s look at what was in range from Newark (EWR). Click THIS MAP to see what was available.
This flight could have made Boston, Baltimore, Philadelphia, any of the NYC airports, Washington Dulles and maybe even Pittsburg. Short of a real fuel emergency, this flight should have made for one of those major airports that has full facilities for a widebody jet carry international passengers.
The fact that we don’t distinguish what is and isn’t a legal diversion in a non-emergency event is a bigger part of the problem for international flights. We make any airport that has the ability to land the aircraft a legal airport for diversion and I’m not so sure we should. Perhaps a better rule would be to insist on the ability to divert (for non-emergency reasons and weather ain’t an emergency in most cases) to a *capable* airport designated as such for an international flight.
Regardless, one of the reasons given for the delays was lack of customs officials. The airport would not dis-embark the passengers until they had staff. I may be wrong but I believe they could have allowed them off the aircraft *if* they were kept in a sterile area until customs officials arrived. Whether or not they had a sterile area large enough is another question but also reinforces the need for diverting to airports that are properly equipped for these events.
Who is at fault? Virgin! Bradley! The FAA! The passengers! No one!
The better question is how do we fix this so that passengers can reasonable expect reasonable treatment in a reasonable time period in non-emergency diversions. And reasonable really is probably some amount of time between 3 and 4 hours.
Look, no reasonable passenger is going to be outraged by many hours of delay when the aircraft engine shuts down and the flight has to divert to the first and best available airport during a real emergency. Sure, there is always the chance of a crank or arrogant passenger being outraged no matter what but in those events, they just don’t count and virtually all passengers understand the nature of a real emergency.
The real failures are in events like these where the pilots gambled (on circling and hoping they could land too long), the airline and pilots choosing a poor airport, the FAA not distinguishing what is and isn’t an appropriate diversion airport in an event like this (and the FAA has no right to be “outraged” at VA since they themselves make an airport like Bradley legal for this kind of diversion) and where airlines continue to be ill prepared to respond to passenger needs during such events. Might I point out that I would find it extremely hard to believe that someone couldn’t deliver a little food or attach ground air conditioning (if that airport has it) or a ground power unit (which I’m sure they have) to help provide power for air conditioning?
