Southwest Airlines has announced that it is canceling its codeshare agreement with WestJet due to numerous and untenable changes requested by WestJet to the original agreement. Read the Dallas Morning News story HERE.
Why am I unsurprised?
It would appear that WestJet’s new leadership wants a new direction and, more important, wants to play with Delta. The upside to that is who wouldn’t want Delta feeding you traffic? Delta is huge and has a large network. The downside is that when you play with Delta, you are, by definition, the junior partner in such an arrangement. CEO Saretsky of WestJet and formerly of Alaska Airlines probably sees multiple codeshares with WestJet as being the best route going forward. Coincidentally, this is a strategy that Alaska Airlines has followed for many years.
Also, coincidentally, Alaska Airlines has recently made moves to be closer to Delta.
Is this good for WestJet? Actually, I really don’t think so. They had an opportunity to be an equal partner in a 3 way North American partnership that would have linked Canada, Mexico and the United States with 3 very good LCC carriers. Service types would match, service philosophies would match and each partner was potentially already prepared to cooperate on things more than just a codeshare. I’m sorry to see this happen as it would have been a great experiment and one I thought had lots of potential.
So, where does that leave SWA? Well, they aren’t saying much other than to just leave the door open to the possibilty of international flights which they’ve done for years now. It doesn’t really reveal anything. However, I suspect they’ve already made a subtantial investment in bringing this capability to their IT systems and they’ll probably pursue it to its conclusion if only to continue on with Volaris, their Mexican partner in this deal.
I think that SWA will pursue flights to Canada. It’s just too easy for them not to do so. The logistics are surmountable in this case. They may pursue the start of codeshare cooperation with Volaris to Mexico as their first goal but I suspect their very next goal will be flights to Canada and lots of them at that. In fact, Volaris can fly those US/Mex flights to SWA focus cities and let SWA carry traffic onward to Canadian destinations. There is a lot of Canadian / Mexican travel these days. I’m not sure if current treaties would allow codeshares via SWA between Canada and Mexico but I already see one way of getting around that.
One thing that does stand out is Southwest’s recurring statement about how “hard wired” they are for domestic travel. No one doubts that but they’ve been saying that for 2 years now. Most airlines would have gotten past that hurdle by now and it makes me wonder that SWA appears no closer to engaging in their Mexican codeshare yet. In fact, the WestJet codeshare was supposed to start first and even now SWA’s statements make it sound as if they’re just getting around to the challenge. Not good.
Also interesting is that, so far, I’ve not found any statements by WestJet on this new development. They are curiously quiet and I wonder about that.
In a BusinessWeek story today, which can be read HERE, I noticed a paragraph that gives some hint as to who wants to be in charge of the new airline if a merger agreement does come about. It says:
UAL, based in Chicago, and Tempe, Arizona-based US Airways are discussing an all-stock transaction to combine the companies, with the smaller US Airways being the acquirer, said the people familiar, who asked not to be identified because the talks are private. The merger would help United steer travelers to international flights from US Airways’ domestic routes, said one of the people.
That sounds like US Airways management being the “lead” group in a merger and, more importantly, Doug Parker as CEO. However, I don’t know where US Airways has the financial capability to be the surviving entity either. (Note: Just because US Airways is the surviving entity doesn’t mean that the name United Airlines goes away. They may well choose to keep that name.) In addition, where does that leave United President John Tague? He is arguably the executive who has best managed United and who is arguably the one to succeed Glenn Tilton as CEO.
Doug Parker and team have done a fairly admirable job in keeping US Airways afloat and viable but they still have unresolved issues with their labor unions at present. Such a merger would mean 3 different groups of pilots who would have fairly strong ideas on which union should represent them and how much they should be paid. The AmericaWest/US West group is the minority group at present but could potentially regain some leverage and power if they could agree with the United pilots. I find it hard to believe anyof the 3 groups would agree with another.
If they really wanted to do this, I suspect they’ll have to give up some substantive group of routes and, possibly, equipment to gain approval. The Washington D.C. area is the trouble point since US Airways has a strong position in Washington, Philadelphia and Charlotte and United has a strong position in Washington as well. I’ll bet Southwest could be interested in paying for routes into and out of Washington National airport but I’ll also bet that UA/US doesn’t want Southwest having a foothold there either.
None of this makes really good sense. If this is a real negotiation for a merger, I don’t see it happening without giving up lots of advantage in Washington which hurts the merger potential. If it is an attempt to bring someone like Continental to the table, I think Continental is smarter than that. That leaves American Airlines and they just don’t seem to like mergers like that. They don’t mind acquisitions but mergers aren’t their cup of tea. However, one could make a case for an AA/US merger that might actually have some benefits similar to the Delta/Northwest merger.
But I seriously doubt AA’s unions would cooperate with a merger like that.
Some analysts see Continental making a bid. I don’t. Merging with United doesn’t give them any advantage they don’t already have and saddles them with labor problems and a fleet that is aging and which doesn’t mix with Continental’s well at all. People keep pointing to United’s position on Asian routes but I would point out that if Continental had the equipment, they could probably siphon off United’s customers without buying the company. Coincidentally, Continental has early 787 positions that could allow them to do just that. I just don’t see Continental going for this.
I was thinking about the lack of empowerment and common sense in airlines (with one or two exceptions) these days and remembered something from this WIKI entry about Robert Six and Continental. I’ve also read it in Robert Serling’s book about Continental. The quote is:
According to Six biographer Robert Serling, quality was the watchword in every detail of Continental’s operations in the 1960s and 1970s.In one anecdotal indication of Six’s passion for premium customer service, every page of the airline’s Customer Service Manual was inscribed with these words: “Nothing in this manual supersedes common sense.”
Imagine that being in an airline manual today. Kind of hard isn’t it?
Midwest Airlines is off my deathwatch. Why? Because it is dead, Fred. Republic Airways has shocked no one by announcing that it will be the Frontier brand that will represent both Frontier and Midwest going forward. See news on the anouncement HERE.
No one will be really surprised by this because at the end of the day, two brands wasn’t going to work with one shared fleet and the Frontier brand is the stronger national brand. In addition, what national recognition Midwest did have has eroded tremendously in the past 2 years. Finally, Frontier was just the bigger airline.
Are the animal spokespersons sticking around? Yes. Not surprising since the person leading the branding now is the person who developed the aninal campaign for Frontier originally. The next new animal will be the badger, an animal icon for the state of Wiscosin.
Midwest? I am sorry the Midwest brand is gone now if only because Milwaukee is my birth town and I always felt that the people working for Midwest really did put something special into their airline. It wasn’t the cookie for me. It wasn’t the large seats. It was the nice people. When you called to make a reservation on Midwest, you got a very friendly and very knowledgeable person. That had a lot more value to me than a cookie.
Unfortunately, an airline based in Milwaukee isn’t a recipe for success. An airline based in Milwaukee and using Kansas City as a focus city isn’t a recipe for success either. I do wish Midwest had gone over to Airtran. While the brand would have been gone still, I believe the people working for Midwest would have been appreciated more.
With the Frontier brand sticking around, I do hope we’ll see a return to a more focused and innovative Frontier identify that, in my opinion, has been muddied quite a bit already. That Frontier was competing very well in Denver and could continue to compete well so long as we see its unique offerings come into focus again.
US Senator Charles Schumer is shouting out against fees for carry-on bags today and, if anything, he sounds sillier than Secretary LaHood. Senator Schumer is threatening to introduce legislation prohibiting charging fees for carry-on luggage. Read about it HERE.
Both of these gentlemen haven’t really studied up on what Spirit Airlines is doing and if they had, I suspect they would not have managed to stuff size 11 feet into their mouth. I would say more but I prefer to refer the Honorable Gentleman from New York to my post on Sunday shown HERE.
I read THIS about Transportation Secretary Ray LaHood being outraged at Spirit Airlines’ newly announced carry-on bag fees. It would appear that he thinks this should be stopped or mitigated by the government and says the FAA is looking into what it can do.
Well, those who know me know I am *not* a fan of bag fees in general and I’m certainly not anti-government either. In this case, Secretary LaHood is way off base. It is not the job of the FAA or the government in general to prevent these kinds of fees from being implemented. If these fees are as bad as some think (and I don’t think they are for this particular airline), the market should respond accordingly.
What is the government’s job is making sure that these de-bundled fee based services on various airlines is transparent and currently it is not. When a consumer is attempting to shop various options on traveling to a destination whether by most airlines’ websites or by an online agency (Orbitz, Travelocity, etc), they really only get to see the base fare plus taxes and fees. This is a lack of transparency in pricing because the various fees are being implemented in conjunction with other desired services and some, although not all, are not advertised in the price.
For instance, one does not see the convenience charge for using a credit card or the online booking fee that some charge. Others don’t see how much it costs to transport a checked bag or, now, a carry-on bag. If we’re going to have de-bundled fees for various “services” on airlines, I think it’s time we also be able to see the “all in” price of making that trip. In other words:
How much is that base airline fare?
How much are the taxes?
How much are the airport fees?
How much is the fuel surcharge (if any)?
How much does it cost to pay a checked bag fee at the time of ticket purchase?
How much does it cost to pay a checked bag fee at the gate?
What limits does this airline impose on both carry-on and checked baggage?
Can one pre-purchase a meal and, if so, how much is that?
There are many more questions that should be answered in advertising those fares so that there is transparency instead of “gotchas”. That is what should be imposed by the government. Mind you, when the government does begin to impose such rules, the airlines will scream, holler and stamp their feet that they can’t afford the infrastructure to do this. Sorry but if you’re going to have fees, you need to have the infrastructure to support a fair and transparent communication of what those fees are. That’s the job of the government.
Airlines would abhor such a thing because the very next development in online airline shopping will be websites that present the “all in” price for making a trip and that will make things hypercompetitive among airlines at present. All I can say is that life is hard in the big city.
There are other areas where transparency could and shood be better. Codeshares are one area of that. I don’t object to codeshares at all but I do object to the lack of transparency in how those codeshares are presented currently. What is presently being done is the equivalent of offering one brand of flavored rice at a price and then giving the consumer another brand of flavored rice after the purchase. Both brands may be great brands but what if you *really* wanted Rice-A-Roni instead of Lipton’s? An airline isn’t going to let you change your ticket upon discovering that you really aren’t flying on their airline for particular flight.
There has been a lot of laxness in allowing airlines to operate for 2 decades or more with this lack of transparency. The argument that it would take time and money to present this in a fashion much like we expect virtually every other retailer or service provider to do is cost prohibitive just doesn’t fly. Shame of the government for ignoring this for so long but shame on the airlines for doing it too. The FAA has long been under the influence of exceptionally airline friendly forces for an very long time and they, more than anyone else, permitted this to happen. I’m glad that Secretary LaHood wants to stop some of this abuse but I would suggest that he needs to be a little less media friendly in his words and a little more active in promoting fair for both airlines and consumers. This is one part of the house that is long overdue to be put back into order.
I”m a very experienced shopper for air fares and I’m exceptionally well acquainted with strategies to find a good fare and even I am finding it exceptionally difficult to do this in a manner that allows me to compare the cost of a trip in an apples to apples manner. It takes an exceptional amount of time to make an informed purchase for air travel and if it is that hard for me, how hard is it for just the average consumer?
I never want to let an airline have its cake and eat it too.
With the news that US Airways and United are in merger talks, the subject of mergers and industry consolidation among US airlines has been reheated to a high temperature again. For the past several years, there has been a lot of talk about the need for consolidation among airlines in the US in order to return to profitability and there are many advocates (such as Doug Parker and Glenn Tilton of US Airways and United respectively).
New fees seem to have brought in additional revenue but no one can seem to really claim that it has changed the equation for earning a profit for airlines. Advocates say these new fees are helping airlines find a path back to earning a profit and I certainly think that experimentation with these fees isn’t over.
Oil is always a frequent component of profitability. Soaring oil prices just two years ago nearly brought several airlines to their knees but also brought huge profits to other airlines who engage in hedging their fuel costs. I don’t think anyone would disagree that a more stable oil market would not only benefit the airlines but a lot of other industries. The wide oscillations of fuel prices have brought a big element of uncertainty to many parts of the economy.
I’m not sure consolidation is really the answer, however. Frankly, I think one big mistake of the 1990’s and 2000’s is that we have permitted airlines to go through bankruptcies (some multiple times) and reorganize themselves rather than being more insistent on a liquidation or two. It’s politically difficult to do so because liquidating a large legacy airline means tens of thousands of people suddenly becoming unemployed.
Yes, the airline industry is a network business to a large degree and network businesses can do better if they grow larger and capture more market share. I question how viable that is over the long term without restructuring other legacy costs as well. I think it is a nice, immediate answer and certainly offers short term (2 to 5 years) gains in share prices but there are other issues that need to be decided as well.
Seniority is king in the airline business and I’ve really come to believe that that is a huge obstacle to health for many airlines. Airlines have to compete on price in the market place but are not allowed to compete on salaries in the employment market place. Union contracts based on seniority are killing many airlines. Mind you, that isn’t to say that airline employees don’t have legitimate issues too, they do.
Airline employees are expected to quite literally work for poverty wages for years before starting to earn a real family supporting wage and then finally make it to a level for their last 10 or 15 years of work careers where they earn extremely generous wages for the exact same work that a junior level employee does for a salary that is unable to provide modest life. This disparity has to stop. Entry level wages should be higher and senior level wages should be lower. Airline crew should be able to move between airlines without having to re-set to the lowest wage scale again. We have enough airlines in this country that it is somewhat absurd to believe that a strike at one major airline threatens the national economy. It doesn’t. Airline employees deserve to be able to agree on a contract in a much more timely fashion. Failing to do this results in an even greater tenacious hold to seniority since it is the only thing that raises wages.
LCC airlines have managed to remain profitable and grow but only by keeping their business model flat with respect to equipment and staff. This allows them to keep productivity high and prevent creeping wages based on a structure that makes weight and distance the prime factor in pay. Actual work loads and skill sets are secondary in paying flight crew.
No, I’m not sure we need more consolidations and mergers and, frankly, I don’t think such things would substantially raise airfares given that LCC’s are pretty adept at spotting opportunities and entering markets. Virtually the only thing that keeps them from certain routes is legacy airlines holding monopolies on airport space or slots. Even then, those LCC’s are very good at looking for ways around those problems to gain a foothold. Notice how vigorously Delta and US Airways are trying to keep Southwest Airlines from gaining more slots in NYC?
The saga of the conflict between Southwest and WestJet continues with Southwest implying that they’ll consider direct competition with WestJet on flights from the US to Canada if the agreed upon codeshare falls through. Many speculate that Southwest is just blustering and that they’ll never fly those routes themselves. A frequent flying friend who has made many trips to Canada and through Canada asked me if I thought they would ever really do it.
I do.
First and foremost, this isn’t Southwest Airlines of 1989. This is Southwest Airlines of 2010 and a very different beast. If you had predicted to people that Southwest was going to institute flights out of NYC’s La Guardia airport in 2006, almost no one would have believed you. Guess what?
Second, Southwest has something that not a lot of airlines have. Employees who relish competion. When this initial codeshare was announced, some of the loudest opposition came from Southwest employees. They recognized that flights to and from Canada could easily be flown by them rather than another company. The pilots were particularly peeved about that and made it known during their contract negotiations. But all employees saw that the company could and, perhaps, should fly those flights themselves. Most also rightly recognized that similar flights to Mexico probably weren’t as easy to do for SWA and were, at best, a long term goal. My point is that SWA employees are very aware of their capabilities and very motivated to succeed as a company.
I think that in the 2 years since this codeshare pact between Southwest, WestJet and Volaris were announced, even Southwest management has realized that they can do more and try more and succeed. That said, Southwest is also an honorable company and I feel certain that their preference is to work out differences and continue with the initial plan. Don’t mistake that for SWA being afraid though.
I think they’ve made some mistakes in the past year. I think delaying the codeshare as a result of re-prioritizing IT upgrades was, in hindsight only, a mistake. However, given the dire conditions SWA was facing when they made that decision, perhaps it was the right decision at the time. Remember that WestJet didn’t have to face those same economic problems at that time, already was experienced with flying internationally and it is somewhat disingenuous to act as if they’ve done all their work while their partner is lagging behind. WestJet knew what it was getting into when it made that agreement.
Southwest recognizes that future growth is going to come from entering markets that previously they avoided. That isn’t abandoning their model, it is accepting that the future is different. As a function of entering these kinds of new markets, there will be new challenges for them and they’ll make mistakes. They have made some mistakes. That said, they’ve also stayed true to themselves and not allowed their mistakes to drive themselves into more mistakes. Indeed, they are quite humble about internally acknowleding their mistakes and not too proud to reverse course and make something right or at least not repeat a mistake.
So, yes, I do think that SWA can and would enter into Canadian markets. They have a number of focus cities where that would make imminent sense for them such as Detroit, Chicago, Baltimore and even Seattle and Denver. They could change the NYC – Toronto market if they found enough slots at La Guardia to start flights on that route.
Southwest’s real business model is about earning a profit consistently. If adding routes to Canada can be done a consistently profitable basis and it yields profits that are better than other opportunities, they’ll do it remarkably quick.
Personally, I think this WestJet spat will get worked out but I think that will happen at the chairman level rather than the presidential level.
I just saw this report on a New York Times blog HERE today. To summarize, supposedly people writing this blog have had it confirmed by insiders that United and US Airways are in merger talks. Mind you, this wouldn’t be the first time this rumour has gone out although it has been some time since I’ve seen it.
It would make sense on several levels. I’ve always thought that those two companies were more compatible than United and Continental both from a fleet point of view as well as a hub point of view. It would definitely have some challenges in front of it as a merger in certain markets (Washington D.C. for instance) and labor issues that exist at both companies would kind of worry me about getting a real deal done.
I also wonder at who would run such a proposed entity. Doug Parker of US Airways hasn’t shown much interest (if at all) in being second fiddle to anyone else in any proposed mergers. United’s Glenn Tilton would likely be amenable to stepping up to a non-executive Chairman role or leaving altogether but there is a firm “second in command” at United in John Tague serving as President already and who likely expects to rise further with some real justification. Since he and Mr. Parker are essentially contemporaries, they would definitely be in competition with each other to get the top executive job.
Spirit Airlines has announced new fees for carry-on luggage. Yes, carry-on luggage. If you want to know who the *real* Ryanair Airlines is in the US, it is Spirit. If you’re a member of their $9 Fare Club and pay for your carry on online, you’ll pay $20 for a carry-on bag. If you don’t book your bag online but pay for it up to the ticket counter, you’ll pay $30. If you don’t belong to the Fare Club and have to pay at the gate, it’s $45.
Mind you, Spirit also charges $19.00 for 1st bag *checked* too.
In general, I disapprove of baggage fees for any 1st bag but in Sprit’s case, I’m OK with it. Why? Look at their air fares. If you play their game, you still save an incredible amount of money on their flights. Only fools pay additional fees on their airfares that make the total cost approach other airlines.
In a twisted way, Spirit’s fees kind of make more sense to me. They’re unabashedly charging for the right conveniences and with scaled levels. It is hard to argue against that approach.
Will other US airlines adopt this approach? Maybe. Frankly, it may well be the more sensible approach to fees but if you do see an airline adopt this, you’ll see them lower or eliminate their 1st checked bag fee I suspect. Airtran could be a good candidate for this approach perhaps. I suspect the legacy airlines may avoid it as it targets their favorite customers: the business traveler. I definitely see Ryanair taking this challenge on in the near future. It fits perfectly within their strategy.
On April 16th, Republic Airways will unveil its choice of brand going forward to use on both Midwest and Frontier Airlines flights. Does anyone here think it won’t be Frontier?
On another note, here is a video shot from inside a QANTAS A380 showing a tire blowout and subsequent fire during a landing in Australia.
Southwest Airlines issued THIS press statement on April 1st in response to WestJet’s comments on forming a codeshare agreement with Delta. The part that really catches my eye is this:
“A codeshare between WestJet and Delta, as indicated in media reports, could be inconsistent with the agreement presently in place between Southwest and WestJet.”
It’s not good when one party is responding to the other in the press. One would presume that someone at SWA attempted to find out what is going on at WestJet and was either ignored or given no substantive information. Ordinarily, SWA doesn’t really play things out like this in the press. Clearly a message needed to be sent.
And the message does clear up some things with respect to SWA. Apparently there has been communication and agreement going on between the airlines in this partnership and apparently SWA is on schedule (at least internally) to start this codeshare. Well, that’s good news.
A little context on WestJet’s part. Their CEO, Saretsky, is brand new in the job and made his comments before officially becoming CEO on April 1st. Their former CEO, Sean Durfy, is relatively young and relatively new in the CEO position (about 2.5 years). I’m beginning to wonder if there is some dissatisfaction with the leadership of this airline on the part of the chairman (and founder), Clive Beddoe. I’m also wondering if Saretsky wasn’t speaking a bit out of turn when indicating a preference towards Delta rather than Southwest.
I also question whether WestJet can really be bought off by the world’s largest airline with an offer of a few New York City slot pairs and the promise of some feed into the Canadian network of WestJet. The more I think about this, the more it occurs to me that Delta quite likely is already flying to most destinations it requires in Canada via connections in Salt Lake City, Minneapolis/St.Paul, Detroit and New York City. In other words, is Delta playing WestJet in order to make Southwest uncompetitive in New York City and is WestJet really that naive?
Southwest’s announcement also seems to indicate that they’re willing to press on to Canada and why shouldn’t they? With the IT upgrades done, there really isn’t a reason why they can’t start flying to quite a few destinations in Canada and no reason why they can’t do it as economically as they would any US destination. I’m sure we’ll hear more about this relationship in the coming weeks.
The Dallas Morning News ran THISstory on Wednesday about new cooperation between American Airlines and jetBlue. In short, the two airlines will swap slots at JFK airport (AA to *gain* 12 slot pairs) and Washington Reagan National Airport (jetBlue to *gain* 8 slot pairs) and start cooperating (interline agreement) on flights where they do not compete.
It will become possible for a passenger in Burlington, VT to fly jetBlue to JFK and then seemlessly transfer to American Airlines to fly to London Heathrow airport. This is a good thing for both airlines. AA gains the opportunity for more feed into its major trunk routes (not flown by jetBlue) and jetBlue gets feed for its more obscure routes not served by American or American Eagle. These feeds will take place both at JFK and Boston’s Logan Airport in the Northeast and, most importantly, these “complete” flights are only available via American Airlines at the present. jetBlue doesn’t have the capability to offer such things yet.
Both airlines get to increase their potential strengths at airports where they want to compete harder and it’s a deal that is much more likely to happen with the FAA’s blessing than the Delta/US Airways deal currently under proposal. The deal also likely works to keep an airline such as Southwest Airlines or Airtran marginalized at those three airports without appearing to suppress all LCC competition since the deal is with jetBlue after all. This is smart.
However, it greatly disappoints me that jetBlue has taken this route. It isn’t unprecedented since jetBlue is already cooperating with airlines such as Lufthansa (who owns 17.5% of jetBlue) and Aer Lingus but it is disappointing because it shows jetBlue willing to be a 2nd tier partner with a legacy instead of building upon its own successes. Can you really see jetBlue adding flights from the NYC area to destinations in Texas or Chicago now? That would be highly unlikely.
It would appear that jetBlue has decided the status quo is good enough instead of challenging other airlines in new markets as was their mandate and focus when starting the airline. It’s a safe play and even profitable in the short term but it limits their ability to compete and deliver new service in the long term. Now it sounds as if their strategy is to be more like Alaska Airlines (friend to many, enemy of very few) and a lot less scrappy like Southwest, Airtran or Frontier/Midwest.
Southwest Airlines has announced HERE that beginning in the 1st Quarter of 2011, they will begin flying all of US Airways domestic routes. US Airways, unable to get its pilots to agree among themselves much less on a contract with the airline, has decided it would be more profitable to turn over their domestic network to Southwest Airlines and form a joint partnership that has Southwest feeding traffic into US Airways robust international system of flights.
The aircraft Southwest will use for these new routes will feature Southwest colors with the US Airways logo on the tail. In return, US Airways will keep its own colors on its international aircraft but add the name “Southwest” along the upper portion of the aircraft fuselages.
No US Airways flight crew will be moved over to the Southwest system nor will existing aircraft fleets be exchanged. In a related announcement, Southwest has accelerated its existing orders with Boeing and announced a new 225 aircraft order for 737-800 and 737-900ER aircraft to be used to serve the former US Airways system.
Two days ago, the new CEO of WestJet stated that WestJet would be pursuing a code share agreement with Delta with the potential to implement this either before or in place of their existing agreement with Southwest Airlines. Several reports tie this in with the proposal to give WestJet some slots at (5 pair) at La Guardia Airport in the Delta/US Airways slot swap deal currently being discussed.
First, I continue to be skeptical that there will be an agreement between Delta and US Airways for this major slot swap between La Guardia and Washington National airports given both the FAA’s and Department of Justice’s attitude towards this deal. Other than Delta and US Airways, no one is thrilled about the idea of Delta and US Airways getting to “pick” their competition by granting these slot swaps to airlines who aren’t poised (and never really will be) to compete with these two legacy airlines. If a deal does go through, I expect it will look different than the current proposals and it will involve a transparent auction of these slots to a high bidder.
Nonetheless, this is a bad announcement for Southwest airlines for a few reasons. First and foremost, the thundering silence that continues from Southwest since this announcement was made sort of indicates they were as caught off guard by this as anyone. It isn’t good for such a large airline to appear as unprepared for this development as they seem to be.
Second, the original deal between Southwest and WestJet is part of a 3 nation alliance between Southwest, WestJet and Volaris, all airlines operating in the tradition of being LCC carriers and all with a model similar to Southwest’s own. Southwest was clearly the leader in this alliance and it appears that it’s delays in getting themselves positioned to start this alliance have hurt this agreement. Acting like the 800lbs gorilla and then not getting the job done in time doesn’t make you appear to be an agile player in the airline community.
Southwest has said the delays came from making other changes a priority within their IT system. Whilethere are some changes such as new business class options, none of those changes to date are the kinds of things that should have delayed such an alliance for a year or more. No other airline would have taken nearly as long to integrate into that kind of alliance and that points out problems with Southwest’s IT system. Southwest is accustomed to going it alone on their systems (they do not, for instance, participate in a global reservations system) andhave done so for nearly 20 years. Now, that departure from industry norms is starting to hurt them apparently in being unable to make these kind of changes and integrations in a quick and agile fashion.
Third, Southwest’s image of leadership among LCC carriers is further hurt by this. Many founders of LCC carriers have pointed to Southwest as their inspiration for how to run a modern airline. No doubt that this is true but it also points out that these 2nd and 3rd generation LCC carriers have become more responsive to both their customers and the potential for new business than Southwest has managed. Losing that image of leadership is a bad thing for Southwest both externally and internally.
Making substantial partners wait to engage in a strategic alliance that, by all accounts, should be very beneficial as well as ground breaking is neither smart nor a good show of leadership. Canada really only has 2 airlines capable of entering into an agreement like this and the last thing you want is to annoy the 2nd largest airline of Canada into exploring options with a heavy hitting airline such as Delta and its associated alliance, SkyTeam. Volaris may prove to be more patient but you have to wonder if they aren’t asking themselves if there is another partner in the US who might be interested in them. A partner such as jetBlue or Virgin America or even the Republic Airways two-headed beast, Frontier/Midwest.
This doesn’t mean that a wholesale change in leadership is called for at Southwest but it may well indicate that it is time to find ways to become a leaner, more agile competitor. The days of simply having to show up and winning customers are over. Witness the competition that SWA is seeing in new markets such as Denver and Milwaukee. In this industry, winners attack and grow rather than ponder and play it cautious.
Now that the 787 has entered into flight testing and has shown itself to be what was predicted and, possibly, even better, eyes are turning towards what happens next. With entries into the market by Bombardier and Embraer with aircraft that isn’t quite a regional jet and almost a mainliner of today, new pressure is on Boeing and Airbus to start defining the future.
New Boeing 737 and Airbus A320 replacements were expected to be announced by now originally and airlines were disappointed when both manufacturers stated in 2008/2009 that such aircraft won’t arrive before 2020 or beyond. Airlines have asked that the next generation of aircraft have 20 to 30% better efficiency than the current aircraft or even more. In the past, those kinds of gains were actually possible.
Since both airlines feel that that date is so far in the distance, there has been new talk of re-engining both aircraft lines with new, more modern engines from Pratt & Whitney (GTF) or CFM (Leap-56). Unlike many conversations, this isn’t about offering these engines on existing aircraft but about offering these engines on new build aircraft for the future.
Everyone anticipated a CFRP Boeing being announced just 2 years ago. Another blogger and journalist, Flightblogger, wrote this entry HERE about comments made by Boeing’s new Commercial Aircraft CEO, Jim Albaugh, about the difficulties in “scaling down” CFRP for smaller aircraft. CFRP current requirements make it ideal for medium to large aircraft but present difficulties in making a smaller aircraft because you cannot “thin” the material as much.
Both Boeing and Airbus are studying re-engine concepts at present and the Airbus A320 line is actually a better candidate for this since it stands a bit taller off the ground and is able to accommodate a new engine without necessarily re-designing landing gear, etc to fit a larger engine underneath the wing.
I actually think we will hear about a new 737 replacement sooner than what Boeing has indicated. It’s clear they’ve become more comfortable with the emerging engine technologies or they wouldn’t be talking about a re-engine effort. They’ve also come a long way in using CFRP and learning about its properties and challenges than they were just 2 years ago as well.
The truth is, there won’t be a 40 to 50% gain in efficiency in the next models. Those kinds of gains were attained at a time when jet engine technology, wing technology and aerodynamics were still in their infancy relatively speaking. With the passing of nearly 30 years since that phase, we’ve seen great gains in efficiency but nothing approaching what we saw prior to 1980 or so.
I suspect that Boeing will identify what is straightforward engineering and what needs to be developed to bring an aircraft online sooner than later and may well make the investment. Timing is everything on these efforts and the company is poised to complete two long, challenging projects in the near future (747-8 and 787). What remains are derivative developments of the 787 (definitely a -9 and probably a -10) which will be reasonably easy jobs compared to the last 6 years. Now there is room to work on the next big thing.
Many have speculated that the next big thing is another widebody. But with Boeing poised to continue to reap benefits from the 777 as it appears it will continue to outperform the A350 in many missions, a 737 replacement suddenly looks more logical. More to the point, it’s a response that Airbus cannot afford to make at present given its heavy commitments to the A380 (can’t scale production up adequately), A350 (barely defined as the -900 and with almost no real definition for the -1000) and A400 (way over budget and potentially diminishing orders as they enter into flight test) development projects.
I don’t think we’ll see this announcement this year or next. I do think 2012 might be the year we begin to hear Boeing make noise about a new aircraft vs the Airbus A320.
First there was this video from Southwest Airlines promoting the fact that the first 2 bags on SWA fly free. The “competitor” is blurred out but quite obviously Airtran, their closest rival in the LCC wars. (In fact, there is an interesting mistake in the interior scene of the “competitor’s” aircraft.)
Then Airtran came back with their own video and I have to say that their response was, in my opinion, a direct hit on Southwest Airlines. Well done, Airtran. Now we’ll see how Southwest comes back (and you can believe they will.)
Yesterday, I explained what we’re dealing with now in the United States for air traffic control. Today, I’ll explain what NextGen ATC can do and why airlines want it so badly.
Since developing an air traffic control system in the 1950’s, our technological capabilities have expanded exponentially. We have fast, compact computers, excellent software, GPS, better radio systems and a better understanding of how best to move aircraft. It’s time to develop a system that makes use of these capabilities. One reason the FAA has been so unsuccessful is that each time its walked down a path with a set of technologies, the technologies became obsolete before they could even fully test them in a new system.
Now our technologies are more compact and object oriented and can be used in more of a “plug and play” system and that means it is time to get going. Our current GPS system can navigate aircraft with an accuracy of less than 10 feet of error. We know that we can and will develop future GPS systems that will be even more precise but our current system is perfect for our needs and if it does become obsolete, the next system can be “plugged in” to the new system we’re designing. The same is true for virtually all the other systems we’ll have.
Using the precision of GPS and the computing power we now have available, it’s possible to design a system that requires less than a mile of “margin of error” for our ATC system. We can have planes take off and land every 45 seconds or less now. In addition, our aircraft can fly “blind” with such a high degree of precision, it’s possible to land the aircraft in completely blind weather conditions that otherwise would ground almost all aircraft today. Because our system relies on this new technology, we don’t even have to slow the pattern of traffic when weather occurs because this precision lets us navigate, communicate and aviate with complete comfort.
Aircraft can be allowed to fly more directly from departure point to destination without following all those intermediate pinpoints first. Because we’ll no longer need so much separation between the aircraft to keep the same margin of safety, more aircraft can fly on those routings too. That means substantial savings in fuel for airlines and fuel is the second highest expense an airline has. Not only does it save fuel and raise the capacity of the airways, it helps prevent bottlenecks at congested airports by raising the capacity to land and take off using this precision.
Will this stop delays? No, not completely. At the end of the day, the pilot still has to land the aircraft and the aircraft still can only land within its specification of conditions. If it is too windy, it will still be too windy. If there are thunderstorms right in front of a runway with microburts in them, its still too dangerous to fly through those. Delays will still happen but they’ll happen with less frequency and intensity.
Currently, when aircraft near an airport, say within 80 to 100 miles, they begin working their way down from high altitude to progressively lower altitudes to be ready to land when they arrive. If you looked at the profile of this approach, it would appear to be an inconsistent set of stair steps leading downwards more and more. It’s inconsistent because it is at the whim of conditions, traffic and the ATC controllers ability to manage traffic. The result is that aircraft reduce power, go lower, stabilize at a new altitude, raise power and await permission to lower their altitude again. The do this over and over again until they’re at the height at which they can land at the airport. This practice is the same for take-offs as well although generally there aren’t as many “steps” to climb up.
Problem is, this approach is slow and uses a lot fuel. Each time those engines have to spool up to power to hold an altitude, a massive amount of fuel is used. Just like in a car, the more you change the throttle position, the more fuel gets used.
Airlines have been practicing something called a continuous descent. This kind of descent means they’ll start descending a bit later in the approach but they’ll essentially pull the throttles to “idle” and kind of “glide” down one continuous slope until they land generally only applying some power in the last mile or two of the approach. They’ve also been practicing take-offs like this as well. But by practicing, I mean they’ve proved the concept and proved it saves *massive* amounts of fuel and is actually less stressful for the pilots as well. Mostly this has been done with long haul flights taking off from coastal cities and going to coastal destinations elsewhere in the world. How much fuel does it save? It can save tens of thousands of dollars of fuel on a flight using a large, widebody 4 engine aircraft.
It can save thousands of dollars even on smaller, single aisle aircraft flights too. NextGen ATC will allow these approaches and departures to become the usual as opposed to the extremely unusual. Again, that saves fuel, time and allows more aircraft to flow in and out of an airport than ever before.
This is why airlines want it so badly. Improvements such as this could literally save them tens of millions of dollars on annual fuel costs. Airports with congestion problems could, for the most part, become uncongested. With this precision, we can design how aircraft approach airports in busy areas such as NYC and allow for safer, better flights in those areas. There is no downside to this at all except the cost. Over the next 2 decades, such a new system will cost about $35 Billion dollars.
Is it worth it? Absolutely. In fact, $35 Billion dollars is rather cheap all in all. Our economy is highly depedent on our air systems and it will be choked a bit if we continue on with our present system.
Is the FAA capable of contracting for and implementing such a system? Certainly. Contrary to most media criticisms, the FAA biggest problem was the advancement of technology rather than the implementation. Yes, they are a large, monolithic agency but they also have a vested interest in getting this done. There is a growing shortage of ATC controllers and this kind of system would help with that shortage tremendously.
Will it get done? Yes, I think so. Our technologies have reached a stage of maturity that allows us to design a system that can accomodate new technologies in the future and avoid becoming obsolete even before the new system is turned on. We really only got there about 6 to 8 years ago. Now we can do it and we can do it safely and pretty efficiently. It’s still a big job but it’s a relatively straight foward job now.
