Southwest Airlines reports that it flew slightly less passengers than this time last year but managed to earn 18 to 19% more in revenue for each mile a passenger flew. In other words, Southwest is doing better due to higher fares and fees.
But wait, Southwest doesn’t charge bag fees, right? Well, it charges $50 for the third bag and it does have additional fees for extra services such as priority boarding.
Southwest saw just a 0.6% decrease in the number of passengers which is way less than most airlines. It saw a considerably higher amount of revenue which is way better than most airlines. It would appear that their strategy of no bag fees may in fact be working very well for them. It’s time for legacy airlines to quit saying they see no evidence that their passenger counts are eroding.
There is some new speculation and reports that Boeing is now leaning towards a new development aircraft to replace the 737 instead of a re-engine project. See the Seattle Post Intelligencer blog post HERE. The best of business cases for a re-engine project are usually fraught with risk and I’m sure that is no different in the case of this aircraft. Although the 737 dates back to the late 1960’s, current versions date only from the 1990’s and continue to sell very well.
There are a few variables at play here. First, Boeing doesn’t want to hurt its backlog of 737 orders and that’s understandable given the high profitability they provide. Airbus is in the same position and neither company prefers to blink first. On the other hand, if Boeing moves forward with a new design, it’s fairly certain that Airbus would blink rather quickly.
Airlines want new, more efficient aircraft and they would prefer a leap in efficiency equivalent to what was seen in the mid 1980’s with new models. Newly developed aircraft at that time were offering a 35 to 40% improvement in efficiency (cost per passenger seat mile) over the first generation of aircraft still flying. They would like to see that leap again and, unfortunately, that’s unlikely.
The curve on engine and airframe technology advancements has reached a point where it is smoother and less steep. Our knowledge of aerodynamics, engineering on airframes, new materials and, yes, engines, has become more stable. There is less of a learning curve than there was with our first two generations of aircraft. That means gains of 15 to 25% are probably what is achievable in the next round and that’s still very, very good.
Engine manufacturers are much more confident of their ability to deliver on their end than they were just 2 years ago. Circumstances have changed and that leads to a company like Boeing examining the future and seeing less risk. That’s a good thing. At some point, the risk becomes appropriate and I think they’re approaching that point and realize it.
Boeing has a great deal of new knowledge on using new materials and I suspect that their one challenge in using, say, CFRP for a B737 style aircraft is in figuring out how to scale it down. Now that the 787 program is in production and testing, they likely see that it is a problem they can solve.
Finally, making a move to build a new aircraft is timely for two reasons. First, they’re development work on both the 787 and 747 is winding down. New variants of the 787 will require a fraction of the development staff that the original design required. They have resources that are freeing up and who could be put to use on new programs.
Second, it would potentially put Airbus in a very constrained position. Airbus is constrained on resources and money at present. The A380 program is not earning them money and, if anything, is badly hurting their cash flow. That program refuses to scale up into planned production and, what’s worse, airlines continue to defer their orders without ordering any additional aircraft.
Airbus also is in the middle of developing the A350 and faces a number of technological challenges there, too. They’re as new to the CFRP fuselage as Boeing is and it’s taking time to figure out how to build that aircraft right. While production delays haven’t been announced, there isn’t an analyst out there who believes that this aircraft will show up on time and on budget. It will most likely have as many challenges facing it as the 787 did and that means another program sucking up resources and money.
Finally, Airbus has problems with its military A400M aircraft development and a number of countries are very upset with Airbus performance there as well. To add more fuel to the fire, Airbus/EADS will be attempting to win the KC-X tanker program at all costs and that requires still more resources that are in scarce supply.
If Boeing announces a new build in the next year, it puts the fire to the feet of Airbus to come up with something in response and makes Airbus react to Boeing instead of the other way around. Will they announce a new build? Yes, I think in the next 12 to 18 months we’ll hear of the launch of a 737 replacement program probably taking something on the order of 5 years to complete.
I still don’t like this merger too much. I like that the identify remains mostly Continental and I like the fact that the Continental management appears to be the group that will run the airline. However, I see quite a few risks here.
1) While I have more confidence in the Continental management team than United’s, I’ll point out that Jeff Smisek is still a somewhat untested airline CEO. He’s had about 4 months in the job at Continental and he’s been pretty aggressive in just those 4 months. So far, I think I would be a bit more comfortable with Larry Kellner in control. He wasn’t quite so “in your face” but still managed to be very tough when it came to making decisions.
2) Glenn Tilton appears to be given a nice cushy position as non-executive Chairman of the new company but I’m not so sure he won’t try to influence the direction of the company. He was brought in to execute a bankruptcy and always appeared to want to sell the company and move on but his actions said a bit more. Is he ready to take a back seat? I’m not so sure he is. This isn’t a man who is used to taking a back seat to anyone.
3) Employees and labor. United employees might have something to look forward to in a management team that acts like it wants to run an airline. However, Continental employees appear to be having some trouble figuring out why this is good for them. They had it good and now they can look forward to some rather bad karma and aggressive behaviour from their brothers and sisters at United.
I also have trouble seeing United’s labor unions cooperating. They’re pretty militant and often remind me of American Airlines’ labor group. While Continental’s labor groups generally accept that it is a new world out there, United’s seem to want to return to the glory days of the mid 1990’s. And who decides seniority integrations? Better yet, is the bad example set by US Airways EAST/WEST groups going to set a precedent for becoming recalcitrant if they don’t like the decision? Part of me believes that United’s labor groups will most likely attempt to shove their desires down Continental’s groups’ throats.
4) Fleets in these airlines show some opportunities but they also show some risks. In the Boeing area, there is some room to “harmonize” the fleets. Both operate 767’s, for instance, but different variants. That’s a good thing if the pilot and flight crews are able to agree on seniority lists and get on with things. It’s a bad thing if you have to use one part of the company to operate one variant and another to operate another variant. The same is true on the 777 and 757 fleets.
Both have orders for 787 aircraft and I suspect those will remain on the books . United ordered A350’s and I kind of think those orders might just go away. It’s the domestic fleet I wonder about. UAL uses primarily A320 series aircraft and CAL uses primarily 737 series aircraft. Again, if the pilots and flight crew can get together on labor agreements and seniority, it would be good to settle on one type. The two aircraft are so similar that it is silly to operate two different fleets serving the same purpose. (This really isn’t the case in the Delta/Northwest situation where the fleets were dissimilar enough to offer some opportunity for “right sizing”.)
5) Regional airlines. United has relied more and more on regional airlines to serve mainline routes. Continental has used them much more in the model of a traditional feeder network and primarily because of scope clauses with their pilots. There are more than 10 different regional airlines serving the two airlines. They need to consolidate and, frankly, they should consider buying 2 or 3 of those regional airlines and harmonizing their services a bit more. Right now, I see a mad scramble to keep a lot of different kinds of regional aircraft in service with the two and I think those regional airlines are going to do anything they can to keep their contracts. Service will suffer with so much competition.
6) Service products. Continental has a nice, focused service product for two classes (economy and business) that has worked fantastically for them. United has 3 or 4 depending on how you count them. First, business, economy plus and economy. How do you harmonize these service offerings and keep both frequent flier groups happy. A lot of Continental OnePass members already feel a bit cheated with the entry into Star Alliance and what it entitled them to on United and US Airways. Those travelers count and you have to find a way to keep them happy. Whose program survives and, at the same time, how do you keep from diluting the program(s) by being all things to all people?
Call me crazy but if I had been Continental, I would have encouraged a US Airways / United merger just to watch that organization melt down while I made plans to capture their business the old fashioned way: By competing with good service.
I just saw THIS Seattle Post-Intelligencer Blog entry with the photo of the proposed livery for UAL/CAL. I have to say that it is a pretty handsome look. Everything is Continental (including the typeface I believe) except the name.
Now, this morning, I’ve seen several reports that the new combined airline will use the Continental livery and logo but the United name. If nothing else, at least I can look forward to not seeing that horrid United livery anymore.
There are now reports that the boards of both United Airlines and Continental Airlines have approved an agreement that sees UAL buying CAL for approximately its current market price of $3.2 billion. It is an all stock deal where Continental shareholders will receive 1.05 shares of United for their Continental stock.
The Washington Post reports that the new company will have a 16 member board with 2 seats reserved for labor unions. The combined companies will have employees number over 90,000 and a combined fleet of more than 690 aircraft.
Official announcement of the deal is said to come on Monday morning.
It’s basically the deal we’ve all been hearing about for 2 weeks now. UAL buys CAL, the company uses the United name and the Continental executive team runs most of the show. Read the CNN/Money Magazine article HERE.
This news story HERE from Reuters indicates that United Airlines and Continental Airlines have agreed on stock pricing and the share price would seem to indicate that Continental got what it wanted. If true, that would seem to indicate that Continental is for most purposes running this show. I still wonder what becomes of John Tague at United.
One story coming out this week is about comments from WestJet executive John McCleod stating that WestJet would still like to get a deal done with Southwest on codesharing. Southwest terminated their original agreement a few weeks ago after WestJet supposedly asked for modifications that were untenable to Southwest and after WestJet’s new CEO, Greg Saretsky, indicated his preference for doing a codeshare with Delta. What muddied the waters even more was a comment last week from Richard Andersen of Delta during a financial analyst call about how they had executed a codeshare agreement with WestJet which was then “clarified” by Delta PR people. Delta PR people said they did not, in fact, have an agreement in place.
This sounds like a romance drama my 15 year old daughter would get caught up in.
I never thought WestJet’s moves over the past month made sense. It felt like WestJet considered itself bigger than it was and more of a player than it was. Let’s remember that WestJet is a Canadian airline operating in the Southwest LCC model. And even though it is Canada’s second largest airline, that ain’t saying much when you consider the population of Canada and the size of Air Canada as compared to airlines in the US. Canada is a country of 34 million people or roughly 1/10th of the population of the United States.
Southwest’s home state of Texas has a population of 24 million people.
Southwest, on the other hand, would be considered a major player on any continent. They carry a lot of people every day and they do it with high marks for service, reliability and value. And they’ve done it for nearly 40 years. They are also not complete strangers to codeshares and we have already seen what a life-giving experience it is for Southwest to participate in a codeshare with an airline. As an airline, they are definitely not participating in their first rodeo. They make their mistakes but they are definitely a world class competitor too.
I can only imagine that Delta (and the rest of SkyTeam) look at WestJet and wonder when it will grow up enough to have the training wheels removed from its bicycle. They play Texas Hold ‘Em poker for high stakes in the airline world and it’s kind of hard to believe that WestJet really thought they would be taken seriously by the likes of Delta, the world’s largest airline by any metric.
Could Southwest do a deal with them still? Yes, I think so. Southwest is friendly, a great place to work and it treats its staff well. It doesn’t like to be taken advantage of but the people running Southwest are businessmen and businesswomen at the end of the day. A deal still provides both partners with something good. But WestJet is going to have to decide who it wants to be a bride to and stick with it. I’d say the signal was sent but it wasn’t exactly loud enough or specific enough. I expect another overture by WestJet before Southwest turns its attention back to WestJet.
I want to go on record for coining a new phrase. A Super Legacy airline shall be known as an airline created from 2 or more legacy airlines. I used it HERE.
American Airlines is a pretty conservative organization. It doesn’t hire from outside the airline very often and it manages itself pretty closely. It is, in many ways, the IBM of the US Airline industry. Well, the IBM of the 1970’s anyway.
Mergers and acquisitions haven’t been a very successful pathway for American. One look at the TWA “merger” which was really a purchase and you’ll understand why. They tend to focus on their core strengths and it is particularly difficult for them to adopt new staff and destinations. Purchases, for them, seem to be more about keeping dominance in a particular area rather than growing their business.
When Delta and Northwest started off on their merger, it was easy to understand why AA was unruffled by the development. There was no assurance of success on any level be it financial or operational. Being the biggest isn’t AA’s game nearly as much as being the strongest and I’m sure their management corps looked at that merger and decided it wasn’t something to worry too much about.
But Delta has had better financial success than AA and it seems to be “right sizing” aircraft to routes and enjoying better yield and that has got to be attention getting on some level. It got Continental’s attention apparently. If the Continental / United deal does go through, I have to wonder who AA starts to look at. It’s one thing to have an aberration in Delta but it is a whole other bag of bananas to have Delta/Northwest and United/Continental next door to you.
So, is it US Airways? They aren’t just the logical choice because they’re the only legacy airline left. There is a certain sensibility to the idea. AA has no hubs out west (just a large presence at LA) and, in fact, has no dominance in any of the areas where US Airways does operate. Well, Philadelphia is close to Washington DC and NYC but it isn’t the DC or NYC market either. AA has no southeastern presence either. Miami is a hub but it isn’t an regional hub like Atlanta or Charlotte.
There isn’t much fleet compatibility there and I’m not sure there needs to be. Delta has shown that as long as you have an economy of scale in the aircraft type, you can have it in the fleet and use it to your advantage by rightsizing your aircraft to the route.
Labor problems? Well, AA is kind of used to labor problems and their labor unions are so strong that I kind of wonder if they wouldn’t smack all those US Airways EAST/WEST conflicts into shape. If nothing else, it would give the EAST/WEST unions something to unify over.
Say, did you know that US Airways CEO Doug Parker used to work for AA? His wife still does. Guess who US Airways’ President Scott Kirby used to work for? Sabre when it was a division of AMR, the holding company for AA. Two more of the executive team come from Northwest Airlines from an era when they really weren’t that different from AA culturally speaking.
Both airlines have a lot of debt. The US Airways team has actually proven itself to be pretty scrappy in many areas. They cleaned up the Philly problem from US Airways EAST, managed their finances carefully and have continued to be a player despite unresolved challenges. Neither has really made money though.
However, a real merger, not just a purchase and dissolution but a merger, has some potential even if AA’s team retains most of the control. It has some of the same potential that Delta / Northwest had and fewer of the risks that a United/Continental merger has. It helps the Oneworld alliance as well.
While I think AA could do it, I also think the chances for them to screw up a real merger are far higher than I would give many other airlines. I think they would approach it as a takeover and attempt to dominante everything. And as a result, I think we would see the hubs in Phoenix, Philadelphia and Charlotte slowly fade away over time with nothing much to show for its effort after 10 years.
The 3 hour rule officially starts on April 29th, this Thursday. The media is starting to bubble with lots of quotes from spokespeople at various Airlines and many of those quotes are about cancelled flights. There appear to be about 3 levels of fury in these quotes. Level 1 isn’t really fury more than it is resigned acceptance and is represented mostly by Southwest and American Airlines (which kind of surprises me).
Level 2 is what I’ve started thinking of as the “Happy Threat”. These airlines are announcing in cheery PR tones that they’ll “try hard” but it is likely that lots of flights might get cancelled. Then there is Level 3 which really isn’t from the PR department so much as the CEO (Can you say Jeff Smisek) who are basically attempting to make it out to be the FAA evil plan to wreak havoc on the airline system.
Here is what I think you’ll see happen on Thursday and Friday. The sounds of crickets chirping. This rule is only going to affect a small portion of flights over the course of a year and is likely to only affect a small-ish portion of flights on a day of catastrophic weather. It is notable that despite a pretty bad winter in the Northeast, the airlines dealt with it much better with proactive measures that, yes, included some cancellations but also included things like encouraging people to rebook and leave earlier and later or postponing their trips. The airlines did a great job of handling the weather delays this winter and let’s give them a small round of applause.
Should you be worried? Nope. Not right now. There is no sense in worrying about something that, statistically, is less likely to happen to you than a traffic accident. Worry when you’re approaching your travel date. Look at the weather expected from about 3 days out. If it looks a bit catastrophic in its potential, start looking into your options such as leaving a bit earlier (your airline may be happy to waive change fees to do so), leaving a bit later (why not book on a flight the day after the weather and be the first to have re-scheduled instead of the last?) and monitor the situation a couple of times a day until departure.
Even if you have no options, don’t panic. Just because the 3 hour rule is in effect doesn’t mean your flight is getting cancelled. It DOES NOT MEAN THIS. The overwhelming chances are that your flight will leave. This isn’t a rule that governs when you must board and take off. This rule governs the time it might be taking to transit from the gate to the runway and then takeoff. 3 hours is a *long* time to make that transit.
In addition, just because you are out there and about to take off but approaching the 3 hour limit doesn’t mean your flight is getting cancelled. If it is unsafe to return to the gate and disembark people, pilots can continue on. If air traffic control determines that it is unsafe for your aircraft to leave the line or that it will impact other aircraft too much, they can give a waiver for the 3 hour rule too. There are plenty of outs.
Seriously, this isn’t anything to get worked up about as a traveler for 99.5% of the time. It simply isn’t. And even if you are in the that 0.5% period, you still have a very small chance of seeing your flight outright cancelled. If you’re traveling on critical business and you really do need to get out, then watch the weather, check your options and, frankly, I’d suggest consider using the Cranky Concierge as a lifeline in the event you do get a cancellation.
Should you be worried with respect to the NYC area? Well, JFK does have that runway under construction and just about everyone thought the plans for mitigating against delays were a bit optimistic. Essentially, the two big players (American and jetBlue) agreed to retain a winter schedule until mid-summer. A better plan would have been to cut everyone’s slots by some percentage and then tell the airlines to plan a schedule around that. Adding a bit of safety margin into that by extending it to the end of July or first of August would be smarter still.
Are there going to be some extra delays and/or cancellations here? Yes, I think so. However, I don’t think the primary “cause” of those is going to be the 3 Hour rule. The primary cause will be an overscheduled airport missing a critical runway and airlines without a plan to realistically deal with that. The secondary cause may be the 3 hour rule.
Bottom line: Avoid departing JFK if you can. If you can’t, try scheduling for non-peak time departures (such as the morning instead of the afternoon or evening. Monitor the weather, have a backup plan, set up an account with the Cranky Concierge. Personally, I find it difficult to believe that the NYC traveler *must* go through JFK to go somewhere. I suppose there are a few limited circumstances requiring it but I’d look strongly at traveling via La Guardia or Newark instead of JFK when making plans.
This is *not* a time to be married to the idea of traveling on an airline because you like accruing their miles. Seriously, are miles that are worth probably no more than $20 for a trip of 1000 miles so important that it takes precedence over everything else? Is it not better to avoid incurring the expenses that a delay brings such as food, lodging, potentially lost baggage, etc?
It’s been reported that United Airlines and Continental are at an impasse in their merger talks over how shares of each company would be valued in a transaction. Essentially there are several ways a price can be set on a share and much of it depends on the day or date they agree upon. For more on that complexity, you can read THIS. The short story is that United favors a methodolgy to their advantage and Continental favors a methodology to theirs. No big surprise except that whatever is decided can affect the value of the deal to certain shareholders by millions.
Oddly enough, my concerns about this merger don’t get past the several other issues. Rumour has it that the agreement has Jeff Smisek (CEO of Continental) becoming CEO of the new company and Glenn Tilton becomes non-executive Chairman. The new company retains the United brand and remains in Chicago. My question is why?
United is an inferior brand to Continental among the favored high revenue passengers. It’s name recognition abroad isn’t so much greater than Continentals that that is a good reason. And why would anyone want the costs of being headquartered in Chicago? Continental has a nice HQ down in Houston where they control an airport and in a right to work state.
Most importantly, Continental has good relations with its labor unions and United has abysmal relations with its unions. Why would you want to preserve a status quo that sees United labor taking over with seething resentment?
The Delta / Northwest merger did result in a company that was valued more than its two separate companies. That new company has not yet made a profit. Bigger equals better has not really yet been proved in that merger and they managed to accomplish it by taking care of labor issues (or at the least the dealbreaker labor issue) first. And only then with the assistance of a pilot’s union chairman (Lee Moak) who “got it” when it came to what the airline industry is today.
There is no evidence that the labor unions of either company are going to be happy about this. How do you think Continental labor is going to feel about being taken over by the Bitter Unions of United? Not good I suspect. What is Continentals management team going to think of having to move to Chicago and deal with the mess that is United?
It almost seems as if Continental is suffering from an inferiority complex. There is no need for this merger on their part and there is no need to entangle themselves with a company that hasn’t got a single good thing going for it as it is. Yet they appear willing to submit themselves to a fading airline glory who hasn’t done much right in the past 20 years.
United’s shares are up since the merger rumours about it has started. Considerably up. Continental’s not so much. There is a message there. United’s owners see hope in a good company like Continental being mated up with their jalopy of an airline. Continental’s owners don’t seem all that thrilled with the idea. This isn’t potentially increasing the shareholder value for Continental’s shareholders. There is no guarantee that this marriage will result in a company valued more than its parts. There isn’t any concrete evidence that this will result in a profitable company. Isn’t time we be concerned a bit with airlines being profitable rather than shareholder value rising temporarily anyway?
I’d actually feel more positive about a merger if Continental took over US Airways instead. This potential merger just smells bad to me and it feels like no good can come from this.
During American Airlines earnings call yesterday, one financial analyst got a little rough with AA and, more specifically, Gerard Arpey and Tom Horton. By rough, I mean the question posed was “Is that all you got?” The Dallas Morning News Aviation Blog has a good description of the exchange HERE.
They make a good point. American Airlines has really been a disappointment for a decade and the leadership has frequently leaned on multi-year plans and talks of how well things are going and what can be expected from new deals and new alliances. Sometimes it is talk of how one time expenses got in the way of a profit, etc. At the end of the day, you really should deliver something now and then. I would point you to Continental as an excellent example of this.
American Airlines didn’t file bankruptcy. Everyone talks about how they did the right thing and didn’t file bankruptcy. The employees gave back 30% or more of their salary instead. Problem is, when your competition (United, US Airways, Northwest, Delta) does file bankruptcy and does lower its costs and does streamline its operations and does reinvigorate its workforce, they’ve got you boxed in. All the airlines in that list gained a permanent advantage over AA and regardless of the talk of “doing the right thing”, AA has a big disadvantage.
What’s really frustrating isn’t that disadvantage. What really irritates people is the leadership’s habit of deferring and delaying to another day many of the problems that do, at some point, need to be solved. It’s the risk created by ignoring, deferring or delaying the resolutions of these problems that makes one so irritated and, dare I say, now a bit unconfident about AA’s long term future?
They have an old, fuel inefficient, passenger inefficient fleet. Much of that renewal has been deferred resulting in a fleet of aircraft that is more maintenance intensive, which carries fewer passengers per segment and which burns more fuel doing it.
There isn’t a labor group at AA that isn’t spoiling for a fight at this point. The risk of one or another getting their way and having a strike is increasing month by month. For 4 years, we’ve seen AA labor groups have their contracts become amendable, negotiations begin and then . . . nothing. There is no sense of urgency on AA management’s part to have this settled.
These issues and more make it appear as if no one is really solving problems. They’re deferring them, delaying their resolution or, in some cases, just ignoring them but no one is showing up, raising their hand and saying “We solved this problem. It won’t be on our plate anymore going forward.”
The thing is, bankruptcy would have done that for them. There would have been final solutions and the airline would be coping with immediate problems instead of being bogged down with what is really nearly 20 years of baggage. My point is, I’m not sure bankruptcy *was* doing the right thing.
It’s OK to describe problem resolutions as ongoing for a year or two or maybe even three. It’s been going on a lot longer than that at AA and JP Morgan analyst Jamie Baker has noticed. And I think this is just the beginning.
The FAA has denied exemptions for their 3-Hour Rule at NYC area airports. They replied:
“Passengers on flights delayed on the tarmac have a right to know they will not be held aboard a plane indefinitely,” U.S. Transportation Secretary Ray LaHood said in the department’s announcement. “This is an important consumer protection, and we believe it should take effect as planned.”
” In denying the requests, the Department concluded that airlines could minimize tarmac delays by rerouting or rescheduling flights at JFK to allow the airport’s other three runways to absorb the extra traffic.”
“The Department also noted that it has the ability to take into account the impact of the runway closure and the harm to consumers when deciding whether to pursue enforcement action for failure to comply with the rule and the amount of a fine, if any, to seek as a result of non-compliance.” *
And that is really what I both expected and hoped for as a reply. I am certain the war of words is not over, however.
* These quotes are from the Dallas Morning News Aviation Blog entry which can be read HERE.
Airtran has expressed how happy it is that they did not win their fight to acquire Midwest Airlines a fwe years ago and notes that they are the dominant player in Milwaukee now. My feelings as well. It is sometimes difficult to grow a business because of the capital requirements but it’s also very, very hard to integrate two airlines and it rarely realizes the expected benefits often touted during merger talks.
Bob Fornaro, CEO of Airtran, has also expressed interest in what might be happening with industry consolidation through purchases and mergers and says they want to play a part. However, it isn’t the role you think. Airtran sees those developments as opportunities to pick up assets such as aircraft, slots and routes that may have to be divested as a result of a merger between two entities.
I’m pretty sure that Gary Kelly (CEO of Southwest) would add a “hell yes!” to that.
The airline industry has seen a lot of growth among the LCC carriers (and whatever you think, US Airways is *not* an LCC carrier despites its stock exchange identifier) and virtually all of that growth has been organic. These airlines do the work of identifying good business targets and building the business of the route properly. Each route between two cities is rally a “mini” business of the airline. To build that business requires investment, time and good analytical skills. Maintaining that business requires good analytical skills and agility.
Legacy carriers shun executives from LCC carriers. If I were to take over as CEO of a legacy carrier, I would head hunt avidly among the LCC carriers. Those are the industry executives with the talent and skills to run an airline today. Unfortunately, legacy carriers tend to promote within and stick with their legacy management corps.
The Dallas Morning News Aviation Blog has THIS story about Delta possibly deferring or cancelling its (inherited from Northwest) 787 orders for 18 aircraft (and 50 additional options.) And this kind of makes sense to me.
Northwest probably did need those 787 aircraft for its trans-pacific routes. Its 747 fleet was adequate for some routes but others just couldn’t stand a 747 and Northwest doesn’t have any 777 aircraft. The combined fleet of Delta and Northwest is a different matter, however.
If anything, I think Delta might have one long haul aircraft type too many. That said, they have 767 (Delta) and A330 (Northwest) aircraft for medium haul routes and configured so that each is nearly ideal for passenger density. They have the 777 (Delta) and the 747 (Northwest) for long haul, high density routes as well. Frankly, I think Delta might be better off adding the 777-300 to its fleet and retiring the 747 but that isn’t their plan. They are refurbishing the 747 aircraft and extending leases on them. Clearly Delta sees a profitable use for them at this time.
The 787 isn’t going to be a trans-Atlantic aircraft. Certainly not on the first routes for any airline. A new(ish) build 767-300 or A330-300 can do those routes just as economically. The 787 is better suited to routes like NYC to Tokyo or LA to Sydney or Atlanta to Rio de Janeiro or even the US to India. Delta has the right sized aircraft for those routes.
Delta can probably sell those orders profitably at this point. There are a number of airlines who don’t have new(ish) 767s or A330s and there are several more who need to downsize from a 747 or 777 on long haul routes. Airlines such as Continental and AA come to mind.
Mind you, the enthusiast in me wishes all US airlines flew the latest and great aircraft. The practical side of me says we’ll probably only see Continental take up its orders on schedule and even AA will likely take its time adding the 787.
It’s been several days of largely no air traffic across northern Europe and the natives are getting restless. Airline CEOs (Willie Walsh) are going on “test flights”, mammoth airlines (KLM) are sending up their cargo aircraft and the UK government is now sending naval ships to get Britons home.
Is it reasonable to have this ban? I really don’t know. I somehow think that there was an overabundance of caution deployed at the beginning and I do think that no country wants to be the one to blink on safety right now either. The log jam is not so much the ash in the air at this point as it is politics I suspect. You have all of western Europe wondering if they should or should not allow flights and everyone knows that if they do and an aircraft runs into trouble, all fingers will point at them.
The disappointing thing about this is that no science has been conducted (to the best of my research) to make a determination if things such as a flight ban are really warranted. No one is doing real atmospheric testing and tracking to make a rational decision on what might be the right thing to do. From what I can tell, no one even seems to be contemplating such a reasonable act and that’s disappointing for the consumers stranded across Europe.
Europe isn’t one country but we have a tendency to think of it as one country. It’s lots of countries each with its own political leadership, aviation agencies and airlines. I don’t think this is going to get sorted out for another 48 hours or more and even then we’re talking about 40% to 50% of the flights getting back on track to start with. This could take another 4 to 8 days afterwards to bring operations back on line completely. All of this is, of course, contingent on that Icelandic Sparkler not erupting with more fury too.
Don’t blame the volcano. Don’t blame the airlines. Blame the political leadership this time.
One friend called me this morning asking for guidance on him getting to Frankfurt leaving from DFW on Saturday. I certainly think his flight has a shot as of today. I think if we haven’t seen flights start to resume by Wednesday morning, it’s time for a backup plan. His backup is to fly to Madrid, catch a connection to Milan and then take a train to Frankfurt. Doable but that’s a long few days of traveling and no assurance of getting out when his business conference is over.
Senator Charles Schumer has obtained “commitments” to not charge fees for carry-on luggage from several major legacy airlines. Read HERE for the entire story.
There are a couple of things I notice. First and foremost is that each airline making the commitment (American Airlines, jetBlue, Delta Airlines, United Airlines and US Airways) each have significant operations at La Guardia or JFK Airports (or both.) Airports in the state of New York and both of which are within Senator Schumer’s power base.
Also notable is that Continental has been quiet. Continental’s operations for NYC are concentrated at Newark Airport located in New Jersey. Well, I also suspect that new Continental CEO Jeff Smisek is sensible enough to ignore the Senator.
Of course they made the commitment. It doesn’t fit within their business model and is impractical for them to try. It costs them nothing to make the commitment and get their name in the news much as Spirit has had theirs in the news since making the announcement that they would charge carry-on fees.
The only people benefitting from Senator Schumer’s diatribes is Spirit Airlines. I leave Senator Schumer out of that equation because the more he speaks, the more it becomes clear that he doesn’t know what he is talking about and that this is more about his name in the press that advocating something for his constituents.
Imagine the good that could be done if he shouted as loudly for redefining NYC’s air traffic area and getting better air traffic control systems in place.
Instead he leads the charge against an airline who has no New York bases and who flies just 14 flights from NYC (La Guardia) to destinations such as Detroit (2 flights), Fort Lauderdale (7 flights), Myrtle Beach (4 flights) and Atlanta (1 flight).
Hard to view them as a threat to NYC area consumers particularly since they offer flights on the NYC – FLL route as low as $60 each way with a checked bag fee of $19 and who *still* allows personal items free on board if they fit under the seat in front of them.
Let me point out that several airlines who he received commitments from charge *more* for checked baggage.
