The Associated Press is reporting that United has decided to order (25) Boeing 787-8 and (25) A350-900 aircraft with deliveries starting in 2016.   Options for 50 additional aircraft (of each type) are also included. 

The order isn’t a surprise in that it has been commonly known that United was considering a purchase.  Even the split between types doesn’t really come as a surprise.  United Airlines is already an Airbus customer and United Airlines is *not* a party to the gentleman’s agreement to buy only Boeing aircraft.  American Airlines, Delta Airlines and Continental Airlines are parties to that agreement which gives them access to early positions on the production line(s) and preferential pricing.   That is how AA managed to land early delivery slots when they made their order for the 787 earlier this year.

Some will be surprised that United didn’t buy more 777 aircraft but I’m not sure that would have made sense for them.  They don’t necessarily need the cargo lift that a 777 offers and, frankly, this order wasn’t for 777 replacement aircraft.   These aircraft will replace 747s (with more frequency) and 767s (one for one) as United retires those two types from its fleet. 

 I suspect United decided to not keep all their eggs in one basket and chose the A350 because it would be newer and more efficient for the type of routes United serves.  Nothing more, nothing less. 

Lack of a firm offering for the 787-10 is starting to become visible.   This is the dawn of that omission and it will be a glaring one in another 12 to 18 months.   Airlines would like to have some confidence that they can purchase a fleet that spans the three basic types for various missions and which doesn’t require a different pilot rating for each type.   Confirming the 787-10 and preparing an offer to airlines wouldn’t be an unwise thing on Boeing’s part.

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At the first of the year, I wrote 3 blog posts shown HERE, HERE and HERE.  It was really just my random speculation on what to expect over the next 12 months.  Well, now it’s December of 2009.  Let’s see how I did.

Boeing 787:  I guessed at an April 2009 first flight.  It still hasn’t flown although speculation has it flying this month either by December 14th or December 22nd. 

Airbus A380:  I guessed they would make their goal of producing 21 aircraft this year.  As of November 30th, 2009, Airbus says they have delivered 7 A380 aircraft this year.  Ouch.  This is a program that is in financial trouble.  No, I don’t think it will be cancelled.  Not yet but please don’t try to tell me this program will make a profit. 

My deathwatch had Midwest Airlines going away most likely by a sale.  That did happen and while the airline has essentially evaporated (from its original form), it does remain as a brand being run by Republic Airways.  

I speculated that Frontier Airlines would be bought out of bankruptcy but I guessed that jetBlue would be the buyer.  In fact, Southwest Airlines and Republic Airways were the suitors and Republic won.

I thought that United Airlines and US Airways would announce a new merger with Continental a dark horse candidate for buying United.  In fact, Continental became a member of the Star Alliance and firmed its relationship up with United but wisely kept its distance otherwise. 

I said that Southwest Airlines would maintain its status quo but that Gary Kelly would be under fire from both employees and outsiders and he was.  However, that view is already being reversed again by Southwest’s resurgent strength in the business.

I thought that the Middle Eastern airlines such as Emirates, Etihad and Qatar wouldn’t see a bankruptcy or merger but would slow their growth and aircraft deliveries.  That, in fact, has happened and now we see Emirates working hard to distance itself from Dubai World’s financial woes.

China:  I said deferred orders.  Pretty much what happened.

The Far East:  I said airlines from that region would maintain their status quo, probably would not defer orders and might make new orders to replace existing equipment for greater effiency.  Again, pretty much what happened.

Australia:  I saw QANTAS slowing growth, deferring some orders and fighting hard against new entrants.  Again, that’s pretty much what happened.  I also saw two weak competitors on the US-Australia routes:  United and V Australia.  That is pretty much what is happening although V Australia has been pretty smart in working into a relationship with Delta where it appears the two airlines will cooperate with codeshares.  United remains alone and with weakening demand.

South America:  I said the Argentine government would take Aerolineas Argentinas back from Grupo Marsans and the airline itself would muddle along or contract rather severely in some areas.  Bingo.  Exactly what happened.  I also predicted Azul would become the jetBlue of Brazil and its not hard to guess that that airline is pummeling its competitors.  A future prediction was for the airline to fly internationally in 2014 with Airbus equipment.  We’ll see.

Africa:  I saw Delta continuing to pursue flights to major African cities (true) and SAA (South African Airways) issuing a small RFP for 777 aircraft to replace its rather inefficient A340 aircraft (didn’t happen.)

India:  I thought Jet Airways and Kingfisher might merge with the name Jet Airways being retained.  In fact, both airlines continue to exist but both are suffering severe financial problems, deferring aircraft deliveries and generally flailing about trying to find a way to continue.   One of these airlines will still ultimately have to exit the market and I continue to think it will be Kingfisher.  They have the wrong aircraft and the wrong aircraft on order.  However, Jet Airways is suffering badly from labor actions among its employees. 

United States:  I picked United to fail.  It hasn’t happened and while they continue to live, their cash holdings are being reduced, they still have severe labor issues, their service product continues to suffer and I still think they should be the ones to disappear.  I also thought Glenn Tilton would be ousted and, possibly, replaced by Doug Steenland.  That didn’t happen but John Tague has been groomed as Tilton’s replacement.  I still think Tilton should go if United can’t fail.

Europe:  I thought we would hear of a surprise from Lufthansa.  I didn’t like their purchase of SWISS and I didn’t like their flying the A340 in competition against the 777 being flown by many of their direct competitors.  They’re still here, still making money and they bought BMI.  I still think we’ll here of misfortune from them but apparently it will take a while longer. 

Random Speculations:

• I thought Southwest might add another aircraft type.  It didn’t happen but I think their interest got perked up when they looked at buying Frontier and saw the economics on the Q400.
• I thought Delta might order more Airbus A330 aircraft.  Instead, Delta is parking them in the desert for the winter season.
• I speculated that both China and Japan would defer or drop their regional jet programs.  That didn’t happen but the Chinese jet program appears to be a bad aircraft and unlikely to be used by anyone except Chinese airlines forced to buy it.
• I thought Bombardier would see a major order (20+) for their Q400 series aircraft from a US customer.  Horizon Airlines did up their orders  for 10 more but there were no other significant orders. 
• Airtran to form a small midwestern hub.  Yup, that happened.  In Milwaukee where they’ve taken over from Midwest Airlines and now face Midwest (brand owned by Republic) and Southwest Airlines entry into the market.  I think Airtran will hold on here and continue to develop business.
• Last, I hoped that jetBlue or Virgin America would enter the DFW market.  Virgin’s CEO, David Cush (formerly of American Airlines) did recently speculate about adding flights to either DFW or Austin.   I suspect they’ll choose Austin and DFW will remain a fortress for AA.

That’ s it for my 2009 predictions.  I’ll make more at the start of 2010.  On the whole, I probably did as well as anyone in making predictions in this business.

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The Seattle Times is reporting that Korean Air Lines has signed a Memorandum of Understanding to purchase five 747-8 Intercontinental aircraft, the passenger version of the 747-8.

Amazingly enough, it’s been 3 years since Boeing landed an order for the passenger version of the aircraft and while this signals some movement on that model, all is not what it seems here.  You see, without background, this is an order that should have been Airbus’ to lose given the density of many of Korean Air Lines routes. 

Does it make a difference that Korean Air Lines also makes part of the Boeing 747-8?  I’m sure it does.  While I’m confident Korean Air Lines wouldn’t make an order for an aircraft that was fundamentally unsuitable for the airline’s routes, I’m equally sure that this was Boeing’s to lose.

Nonetheless, it’s nice to see the passenger version notch up another 5 orders.   Presently there are 32 orders for the passenger version comprised of a Lufthansa order for 20, Korean Air Lines order for another 5 and 7 unidentified VIP orders.   An additional 78 orders for the freighter version exist and first flight of the 747-8F is expected sometime soon.

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On November 18th, The Atlanta Journal-Constitution published THIS story of an account written by a man known as “Ted” or “Tedd” Petrunas claiming that there was a “terrorist dry run” on an Airtran flight (Flight 297) he purportedly took from Atlanta to Houston.  Journalist Terry Maxon of the Dallas Morning News wrote a post on the newspaper’s aviation blog which can be read HERE.

Frankly, the story immediately struck me as false and you’ll find my comments responding to the story on the Dallas Morning News blog entry linked above.  Anyone who has traveled regularly has seen odd things happen on a flight and I’m no exception.  However, the account was notably racist in my opinion and didn’t contain any of the “normal” reactions by airline crew and staff that one would see in such a situation.   The account of this man storming down aisles and taking charge is in direct conflict with any flight attendants normal reaction to a situation.  Flight attendants are not weak and frail creatures and even a FA who has only a year on the line has already become a immune to odd behaviors on the part of crew.   They don’t burst into tears when yelled at.  They certainly don’t allow passengers to take over for them.

But what really bothered me about the story was the racist descriptions of “muslims”.  First, how do you identify a muslim?  I’m sure that I cannot do so with any certainty.   And what is the attire of a muslim?  I ask because muslims quite literally come from around the world and a muslim from Indonesia or China is a very different person from one from Pakistan or Yemen.   In short, this story of a terrorist dry run stank. 

Terry Maxon followed up on the story on December 4th with a post that can be read HERE.   He noted a story done by TV station KHOU (found HERE) .  In this story a Chaplain Dr. Keith Robinson (no relation) is quoted extensively about witnessing some of this story and claims to have spoken to Mr. Petrunas.    It was notable that, by this time, Mr. Petrunas had refused to speak on camera to KHOU citing that financial considerations keeeping him from doing so.  Imagine my complete lack of surprise at that.   However, Chaplain Robinson’s account lacked a certain genuine feel to me as well.  If you watch the video, this is a person who does not seem to be relating a first hand account or even doing a good job of relating a second hand account given to him. 

I’ll also point out that Chaplain Robinson is in the uniform of a law officer in the video and a search on Google reveals that Chaplain Robinson has some kind of association with several right wing websites.  Just one example of that is HERE.  His own authored account on that website is quite self serving and lacks credibility when you read it in its entire context as well.  I would not be surprised to learn at some point of an existing relationship, even a slim one, between Mr. Petrunas and Chaplain Robinson.

Additionally, the KHOU story quotes Airtran saying that the account given by both Chaplain Robinson as well as Mr. Petrunas did not track with statements obtained from the flight crew.  Mr. Petrunas also said to KHOU:

Petruna stands by his statements, with the exception of his description of the men’s attire. He also said he never witnessed the men watching porn, as he said in the e-mail.

 

and we have this:

In a statement to 11 News, AirTran said, “A number of the allegations included in the article posted by Mr. Petruna conflict with the statements obtained by the flight crew.”

 

A ha.  Suddenly we’re backing away from the most obviously outrageous parts of the account. 

By this time, I had decided that this had been a run of the mill conflict on the aircraft which required the airplane to return to the gate.   Airtran wisely decided to make a statement after investigating further which can be found HERE toward the bottom of the Dallas Morning News blog post.  However, conspiracy theorists were quick to mis-interpret Airtran’s statement with respect to the crew change.  Namely, Airtran said: 

The crews were swapped. This is a common occurrence in the aviation industry for any number of reasons. If a Crew Member cannot or will not continue a flight, we must replace that Crew Member.

My first thoughts were that Airtran may have made an error with the phrasing of that last sentence since it could lead to open speculation and it did.  Conspiracy theorists immediately grabbed on to that part of the statement as an “a ha” moment.  Again, any person who has traveled regularly on airlines and certainly any aviation enthusiast or airline employee knows that crew changes such as this can happen for many more plausible reasons such as the delay causing the crew to “time out” on its available duty time.  This happens almost daily and I suspect that is what happened this time as that flight was likely a “turn” from ATL to HOU (Houston) and back with no reserve crew available in Houston to take over.

But wait, there is more.  This morning the Atlanta Journal Constitution published this STORYand the Dallas Morning News (Terry Maxon) posted this entry on the Dallas Morning News Aviation Blog HERE.  In short, it seems that Airtran has discovered that Mr. Petrunas wasn’t even on the flight.    The Atlanta Journal-Constitution said:

In its continued investigation into the incident, the AJC made several attempts to speak to Petruna about the incident. He has declined throughout the week to respond to repeated e-mail and phone attempts by the AJC to talk to him.

Additionally, interviews between the AJC and people on the plane,  airline officials  and federal agencies did not corroborate his story of what occurred on the flight.

 

and also had this:

Nancy Deveikis was seated in seat 29A aboard Flight 297, directly behind an unidentified man who she believes spoke Spanish. Deveikis said the man was looking at pictures on a camera, and did not understand a flight attendant’s requests to turn the device off.

 

and also this:

Keith Robinson didn’t make it to the gate in time to board Flight 297 for its initial attempt to depart.

 

How many people miss their flight and notice something on a monitor that indicates a flight is coming *back* to the gate?  The short answer is no one does.  I’m even pretty sure that no status on an airport monitor would show that flight coming back to the gate.   Indeed, it takes airlines quite a long time to update status on those monitors when everything is going well. 

It would appear that anyone who decided to jump on this train and speak to the media early on decided to have their 15 minutes of fame instead of contributing to the truth.  Shame on both Mr. Petrunas and Chaplain Robinson for lying and contributing to racists fears when it comes to air travel.   Shame on them for their characterizations of the air crew and staff as well.

I offer a big thank you to the Atlanta Journal-Constitution for doing what a newspaper should do (investigate and get the truth) instead of buying into the sensationalism of fear.  In addition, kudos to Terry Maxon for following this and keeping it balanced rather than buying into the sensationalism of fear.   Shame on KHOU for racing in to fan the flames.    Finally, thanks to Airtran for being brave enough to investigate, make a statement and do their best to moderate this situation as well. 

I wish I could say I was shocked to read these revelatioins as the story unfolded but I am not.  This kind of fear mongering poorly serves the country and I do hope both of these men hang their head in shame but I somehow doubt that that will happen.    Nonetheless, it remains quite safe to fly in this country and I hope anyone who is flying soon has a great trip.

Filed under: Airline News by ajax
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Well, actually, the one thing that is certain about Southwest Airlines is that it continues to surprise everyone on a regular basis.  Almost always in a positive way. 

It wasn’t that long ago that quite a few people were very critical of Southwest and its CEO, Gary Kelly, for not being a lemming and following industry trends such as charging checked luggage, changing a ticket or even beverages.   Indeed, I’ve seen a number of posts on various airline websites offering glum predictions for both Southwest and Mr. Kelly.   It has grown a bit quiet in the past month, though.

Bucking trends and doing it their way is Southwest’s model.  It’s worked for them throughout the history of the company and while, yes, it is true that they’ve made a few mistakes here and there, they’ve also seen great success year in and year out.   By sticking to their plan for attracting customers on the basis of offering their base product at a great value and with no extra charges, they seem to be gaining quite a bit of steam.   The Associated Press is reporting that Southwest has announced a significant uptick in traffic and revenues for the last month.  Again.

Throughout the first part of the year and even through the summer, pundits and financial analysts have hammered Southwest for sticking to its strategy and Mr. Kelly has steadfastly reaffirmed that they’ll be sticking to their plan and that they are starting to see positive results from that plan.  I think those results are in and this is good for Southwest for a few reasons.

First and foremost, that uptick in traffic has to contain quite a few new customers for Southwest.  Customers that have either never tried Southwest or who tried it so long ago that they are, for all intents, new customers.  And I suspect people are discovering that it isn’t your father’s Southwest Airlines from the 70’s and 80’s and it is a great value for all kinds of travelers.   For the customer looking for a reliable airline with a good record of both safety and on-time arrivals a swell as a convenient schedule, Southwest is an excellent answer.  They’ve got good, new aircraft with comfortable seats (still some of the most comfortable in my opinion) with friendly staff.  That’s what people want. 

It’s good for Gary Kelly too.  He’s coming into his own as the leader of Southwest and, to his credit, he has shown little inclination to engage in change for change’s sake and he’s demonstrated quiet confidence both in himself and the direction of his company.  I have no doubt that he’s earning even greater respect from his employees as well as his shareholders.

Sure, Southwest has made a few mistakes.  Most notably their fuel hedges have been a liability a few times in the past 18 months and, of course, there was that little Frontier Airlines fiasco last summer.  One thing that bothered me about their attempt to win Frontier Airlines was that it was *too* much of an amateur performance for the Southwest executive team.   That team is not a bunch of huckleberries.  They are a very saavy group of managers that would be an enormous credit to any airline in the world.  In hindsight, I wonder if the Frontier purchase attempt wasn’t just an attempt to get a great bargain with the approach of “it isn’t a deal if it isn’t a deal”.   Certainly you didn’t see Southwest walking away hurt or pouting.  Instead, they continued on with their business and never looked back.

One minor prediction:  I would be wholly unsurprised to learn that Southwest either adjusts or deletes their new priority boarding option.  Overwhelming conclusions to date are that it doesn’t really net you all that much advantage with the way it is presently structured.   I suspect a fee change (lower) or a rules change may come along after another 6 to 12 months of it being deployed.

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That isn’t a big surprise to most readers of this blog and one very good reason why I’ve said little about the event.  Despite the long program delays and disappointing news of certain developments about this aircraft, I remain extremely excited about this aircraft.   Perhaps for different reasons than most, though.

Mainstream press continues to speak about the 787’s increased comfort potential for the passenger and sometimes mentions the efficiency the aircraft will offer airlines.  All that is true but it excites me for different and more specific reasons. 

First and foremost, it is the first truly new aircraft to come from Boeing since the 777 made it’s first flight in 1994.   Since then, there have been improved variants of the 737, 767 and 777 introduced but this is the first “from scratch” aircraft to show up in 15 years from Boeing.  That is exciting to me.

One of the most disappointing results from the Boeing / McDonnell Douglas merger is that, in many respects, Boeing was taken over by McDonnell Douglas managers rather than the other way around despite the fact that, for all intents and purposes, it was really a Boeing takeover of McDonnell Douglas.   Since that merger, Boeing has been much more intently focused on developing its defense businesses almost at the expense of investing in Boeing Commercial Aircraft.   That has been disappointing and a bit perplexing to me given Boeing’s ability to build fantastic aircraft for the commercial world.

So I hope that this aircraft, the 787, represents a return to innovation and development for Boeing Commercial Aircraft.   I hope that a new, younger group of managers is being born from this program that will lead Boeing’s development of new aircraft such as a 737 replacement, a 757/767 replacement and, yes, a new 777/747 replacement too.   But I remain concerned if for no other reason than Boeing seems to be ignoring new competition from Bombardier and EMBRAER who are now challenging the 100 to 130 seat domestic segment in the US and elsewhere.   If Bombardier can build its new C-Series aircraft with union labor in Canada, Boeing should be more than capable of developing a new family of aircraft to compete against those two companies.

While the first flight is truly on track to happen in the next two weeks, the burning anticipation of that first flight has, if anything, died down in many respects.  Those who have followed it tortuous path to first flight recognize that it isn’t the first flight that means anything now.  The aircraft is so mature in its development that we know it will not only fly but fly very successfully.  We know that the major teething problems are almost certainly over now.   There isn’t any need to speculate on its performance on a first flight and really nothing to wonder about for its testing over the next 12 months.

The real anticipation comes from seeing it perform with an airline.  We want to see it enter an airline’s fleet and see how it performs during real world use.   We want to see if airline CEOs proclaim it the game changer we all ferverently hope it is.  We even just want to see what the airlines’ liveries will really look like on it.  The real next “moment of truth” for the 787 is when it enters a fleet in its new livery.  The launch customer is All Nippon Airways (ANA) and we should see ANA put the 787 into service sometime in late 2010.

The 787 should see service with a US airline in late 2010 or early 2011 and it will be Delta Airlines who has the honor by virtue of inheriting Northwest Airlines’ orders.   I suspect we’ll see Delta order more shortly after the 787 begins operating in its fleet.  Continental Airlines will put the 787 into service a short while later.

This is the most anticipated large volume aircraft to be designed and built since the 1960’s.  That’s exciting. 

What’s also exciting is what this aircraft means to Boeing and its future development projects.   Will these same technologies be used on a 737/757 replacement?   Is it conceivable that they’ll be used for a Very Large Aircraft to replace the 777?  Both are possibilities.   Detractors say there isn’t as much “gain” to be had in using carbon fibre based fuselages for a 737 replacement with respect to efficiency and that is probably true.

However, these new techologies may mean that Boeing can produce the 737 replacement even faster.  The composite carbon fibre fuselages may mean less maintenance and longer maintenance intervals for airlines like Southwest and Ryanair.   The new engines coming into development will demand some changes too.  Larger by-pass ratio engines or, if developed, open rotor engines means more clearance will be needed between the wing and the ground.   The next aircraft will  have to stand taller and that might mean a little more time spent on ground handling.  

The next generation engines and Boeing decision to produce an “electric” airliner may see those approaches used in the 737 replacement.  Have we reached a point in reliability that we can expect these new systems to survive the punishing schedules of a domestic airline?  I think so but the 787 is the aircraft that must support that supposition. 

The 787 won’t be exciting because of what it potentially offers the customer in comforts.   Yes, no matter what we’ll have larger windows and a little bit more fresh air and pressurization in the cabin but if you think you’ll be getting more spacious seat pitch, you’ll be disappointed.   This new aircraft will be as packed as any in service now.   Overhead bins will still be crowded. 

My birthday is December 12th.  There is speculation that the 787 may fly as early as December 14th.  That’s close enough that I find myself kind of hoping that Boeing might pull a fast one and send it up into the sky 2 days early.  It would be exciting to have an airliner born on my birthdate.

Filed under: Aircraft Development, Airline Fleets by ajax
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What if you have to re-schedule your travel while in the middle of it?  Any regular flier dreads any changes to their flight schedules before leaving on their trip but needing to make a change in the middle of a trip is positively terrifying.

But should it be?  Perhaps not.  Legacy airlines are charging exorbitant fees to change flights with some reaching $150 just for the privilege of ringing the airline and asking to return a day later or two days earlier.   On American Airlines (and most legacy airlines are similar), if you change your ticket, you’ll be liable for the new one way fare plus a change fee ($150 in most cases for domestic travel) which, if you bought a non-refundable advance fare, could be exorbitant.    But you do you have options if you are willing to work a bit.

Recently, a friend traveled to the Northeastern US for Thanksgiving.  While visiting family, one of his parents was injured and he decided he should stay over a while longer to help out.  Changing his ticket cost him a small fortune and, unfortunately, he didn’t think to look outside the box.   If he had abandoned that ticket and simply shopped for a new ticket on Airtran, jetBlue or even Southwest Airlines, he would have saved hundreds of dollars.  Ironically, there were sudden last minute fare sales for immediate travel instituted on the very day he chose re-ticket.  

Flexibility, as always, is the key.  Yes, you may have to accept 1 or more connections or even explore ticketing on two different airlines but the savings is often far greater than what your time is worth.  If you feel intimdated by having to do battle with the airlines or pressured by the need to resolve the issue quickly, I highly recommend trying the Cranky Concierge service that I’ve blogged about HERE.    Airline geeks are creative thinkers and the fee you’ll pay Cranky for thinking for you will be paid for in huge savings in most cases.    What could take you 3 or 4 hours to explore (even if you’re relatively sophisticated at searching for airline fares) can be solved by someone like him in a matter of an hour or less in many cases.

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1. It seems to me that our government and Congress in particular has far bigger pressing problems to deal with than attempting to swat at airlines over frequent flier miles.  
2. Levying fines on Continental, ExpressJet and Mesaba for the Rochester, Minnesota incident is surprising everyone because it lays blame on everyone we, ourselves, would blame. 
3. Voting Midwest as a best airline (Zagat) is just strange given that it really isn’t an airline so much as a brand now. 
4. Nothing sells an aircraft like the head of state for the manufacturer.

Filed under: Airline News, Trivia by ajax
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A couple of weeks ago I wrote about Airtran’s decision to enter the Milwaukee – Dallas / Ft. Worth market using Skywest Airlines.  That post is HERE.

I noted that American Airlines has virtually owned this market with Midwest also having a nice chunk and AA hasn’t really had much in the way of competition for that route.  Well, the American Airlines of old has responded.  According to the Airline Biz Blog, AA is adding flights to that route using American Eagle and those flights match up closely to Airtran’s announced times.  No one should be too surprised that AA has responded this way since it’s been their strategy to flood new competition with capacity and frequency and to capitalize on their hub connections. 

Will it work?  Many would give AA the advantage in this battle because they do have a tremendous number of connections through Dallas.  The problem is, my sense is that the main part of this route is traffic that originates and ends at those two cities.   I’m not sure there is a whole lot of connecting traffic.  Certainly there is some. 

However, American Airlines has kind of abused Milwaukee for several years charging very high fares for that route and Midwest has never challenged them much instead choosing to enjoy an uneasy level of detente.  Now we see Midwest, Airtran, American Airlines and, indirectly, Southwest Airlines in this market.  Interesting. 

The next move is up to Airtran.  If they keep Skywest aircraft (50 seat CRJ-200)on this route and don’t upgrade it to their own aircraft, I suspect American Airlines will win this fight.  If Airtran chooses to move their B717 or even their B737 (I suspect the former is a better fit) on to the route, I think American Airlines might just see their traffic erode badly.  Milwaukee to Dallas consumers are accustomed to the B717 and, I think, would enjoy the relative comfort and opportunity to upgrade to Business Class (cheap and easy to do on Airtran). 

Midwest is the unknown.  Frankly, they are using their Embraer E-170 aircraft (76 seats, all coach) on this route now and while it is certainly better than American Eagle’s ERJ-145s (50 seats, cramped coach), they still aren’t what those customers are accustomed to enjoying on that route.   Until less than a year ago, Midwest flew very comfortable 717 aircraft that included both a comfortable business class as well as a comfortable coach seat.  Airtran can offer that now.

Would AA add MD-80 or B737 aircraft to the route?  No, they don’t have aircraft available and the best they could do is, perhaps, a CRJ-700 via American Eagle.  However, those aircraft are already very busy on other routes. 

American called Airtrans’ bluff and even raised the stakes, so to speak.  American Airlines is not in the habit of giving up either so we can expect that they’ll keep these frequencies (and the lower prices) as long as they think they can to preserve the market share.    Right now, they are offering a matching $89 fare (each way) for advance purchase.  However, their remaining economy fares are $678 and $863 each way (there is a First Class fare for over $1700 each way but which requires a connection to someplace like Chicago so you can fly on a mainline aircraft).   I think we see where Airtran can offer real value here. 

So, we know two things.  First, it is up to Airtran to make another move or accept the status quo.  Second, there is way too much competition going on for Milwaukee traffic.  Some airline will have to quit.

Filed under: Airline News, Airline Service by ajax
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Michael O’Leary, CEO of Ryanair in Europe has been demanding a new deal for up to 200 Boeing 737 aircraft between 2013 and 2016 according to Reuters.  Keep in mind that up to 200 aircraft likely means a firm order for between 50 and 100 aircraft with options for more.   Boeing, on the other hand, has so far refused to negotiate what is by all accounts a rock bottom deal on their 737.   More amusing is that Airbus has so far refused to offer a better deal on their aircraft since they’re already familiar with Mr. O’Leary’s tactics when it comes to negotiating.  He likes to play one manufacturer off another.

There are likely several things at play here.  First, Ryanair has often made a profit by “turning” their aircraft rapidly and selling them for a profit to other, smaller players.  A situation that has no doubt irritated Boeing as they are looking to sell to users, not distributors.  The original pricing for Ryanair was negotiated at a time when commercial aircraft sales for the industry and Boeing in particular were pretty flat and there is no doubt that Ryanair offered a serious opportunity for cash flow at a time when Boeing was in need of filling slots in its delivery schedule.

Not so much anymore.  Boeing has a health backlog of orders and many of them for airlines who will pay more per aircraft and be happy to receive their 737s early.  American Airlines has continued to up its orders for the 737 in light of the fact that no new next generation 737 replacement is due anytime soon from either Airbus or Boeing.   Other airlines are likely to do the same over the next year or two.  There is no incentive for Boeing to make an even better price to Ryanair.

And I think Mr. O’Leary knows it.  But by making his threats and going public with them, he has begun to set an argument for why Ryanair will likely do a couple of things in the next few years.  One will be slowing their growth.  The truth is, growth opportunities for them in their market(s) are becoming few and far between.  Second, they really can’t continue to “flip” aircraft in the next few years as there are plenty of other sources developing  for second hand NG 737 aircraft.  Slowing their purchases will give them a public rationale for slowing growth and reduced profits from sales of the 737. 

I also doubt that Mr. O’Leary will distribute money to either his executives (in the form of bonuses) or to his shareholders.  If there is one thing he knows, it is that an airline lives and dies by its cash holdings.   It’s a weapon that I don’t believe he would give up.  Instead, they may choose to invest it.

Mr. O’Leary has publicly spoken about creating a new trans-Atlantic airline in the future.   Whether or not it is just talk, we’ll never know unless he does it.  However, he does need the right kind of aircraft for developing his self-described premium/economy airline for the markets he thinks he can access.  Part of his plan includes flying to secondary airports again in the US to save money.  A plan that, I think, he’ll learn isn’t nearly as feasible as it might be on the European continent.   There are no secondary airports with good transportation to their major market centers.   You can take passengers to Hartford, Connecticut, for instance, but there isn’t a cost effective way to get from there to Boston or NYC. 

However, that doesn’t mean Mr. O’Leary can’t access a number of markets and do so profitably.  He is a master negotiator and there are plenty of US airports that would potentially welcome such an airline.  With lots of cash, reduced capital requirements for the Ryanair fleet and good timing, they can establish such an airline if they can find the right equipment to use. 

And that leads us back to Boeing.  I think Mr. O’Leary recognizes that the 787 might be just the right equipment for such an airline.  Both the 787-8 and 787-9 offer the right kind of efficiency, size and economics for make such a venture a success.  There is no way that he’ll buy second hand aircraft such as the 767 or the A330 for such routes.  Its difficult to find new(ish) aircraft on the used market that are worth purchasing and the A-330 probably is just too big for the routes.  But the 787 potentially offers the right package.  And I wonder if the current bluster about a deal isn’t about getting Boeing “prepped” to do a deal on the 787 with earlier delivery slots at great prices. 

Time will tell.  One thing I’m entirely certain of is that Michael O’Leary doesn’t have nearly as much contempt for Boeing as his bluster indicates.  Both companies have done very well with each other and both understand that its in their interests to find a way to continue to do business.

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Several airlines are implementing surcharges for peak travel days such as American Airlines and Continental Airlines but others too.

This strikes me a bit like the fees for checking the first bag.  In this case, airlines are advertising fares but charging surcharges for those peak days most attractive to the traveler.  It makes me wonder a bit on whether or not taxes are being collected on the surcharges and it makes me wonder if the surcharges aren’t a bit deceptive when it comes to advertising.   

If those surcharges are needed, why not just raise the fare $10 (or whatever the surcharge fee is) for those particular days.   Because then they would have higher fares when being shopped against airlines without surcharges.

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The Associated Press is reporting that US Airways pilots are asking for mediation in their contract negotiations, a step which is one of several on the path to going on a strike ultimately.   No, this doesn’t mean a strike is imminent.  I suspect that a federal mediator is going to be held off until the courts decide who actually represents the pilots. 

US Airways pilots have been in a dispute between the former America West pilots and the former US Air pilots since the merger of the two airlines.   Former US Air pilots refused to recognize a binding arbitration ruling that integrated the seniority lists and ultimately they held an election to de-certify their original union and create their own in the model of American Airlines pilots.   Originally, the two groups were represented by different branches of ALPA originally and the former America West pilots have refused to recognize the new union and have so far won court battles against the new union. 

Now each group is awaiting an appeal to be heard by the  9th Circuit Court of Appeals and the legacy US Air pilots are hoping to see the original ruling against them overturned.    The central issue at stake is that the legacy US Air pilots favor merging the pilots’ lists strictly on seniority.  This move would favor them because most of those pilots (legacy US Airways)  have considerably more seniority based on hire date than the former America West pilots.  The America West pilots favored a “blending” of the seniority lists with some jobs and opportunities fenced off for each group and that is basically what the binding arbitration ruled for.  Since that date, US Airways has been unable to completely merge their operations because each pilot group has been working under a different contract.

It’s my guess that the National Labor Relations Board will wait to assign a mediator until the 9th Circuit Court rules on who actually represents the pilots and under what conditions.  My suspicion is that the 9th Circuit Court will in fact rule in favor of the former America West pilots again mostly because the arbitration between the two groups was legal and binding and won’t want a precedent which allows for nullifying an agreement and changing unions if you don’t like the result.   In some ways, I’ve been surprised that US Airways hasn’t gotten involved in this dispute if only because it keeps their potential savings from fully integrating the two airlines from being fully exploited.  Given that this conflict has been going on for almost 4 years, I would think that the company would have lost patience by now.

Ordinarily, a company would not want to be involved in such conflicts because they’re a bit like getting in between husband and wife during a domestic dispute.  They’ll both turn on you.  However, enough time has passed that the company could legitimately advance the argument that they are being materially harmed by a group of employees who are advancing their own interests against both the companies as well as the other pilots.    There is no doubt that there is “economic harm” at this point. 

This situation is precisely why many airline executives view mergers unfavorably at this point.  Pilots’ unions hold the most power of any labor group and obviously  hold the power to severely impact a company’s ability to operate profitably to the detriment of every other  interested party.  A problem that has existed since the 1960’s really and a problem that should be solved if this industry is to find a way to thrive in competition.

Even if the 9th Circuit Court does find in favor of the former America West pilots, it is likely that the legacy US Air pilots will file an appeal with the Supreme Court.  However, that case is unlikely to be heard and most likely will get settled quicly with the Supreme Courts refusal.   Unfortunatley, the legacy US Air pilots have harmed their case at every turn with rash behavior.  First they rejected binding arbitration, then they filed suit against their national organization and when it appeared they may lose, they then de-certified their union and established a new one to represent their interests by holding a company wide vote in which they were the numerical majority in hopes that that would resolve the issue.   Courts don’t really like venue searches like that. 

What is certainly also sad is that both groups of pilots have been operating under old contracts and have had no opportunity to enter into contract discussions with management.  This has, so far, been to the management’s advantage in that if those discussions had been held 4 years ago and a contract in place 2 years ago, they would likely have seen raises and not had to negotiate under the cloud of the worst economic recession in decades.  No one won here and a pox on all three houses for not settling this 2 years ago. 

I’ll add a personal note by saying that I think the worse part about this is the US Air pilots refusal to even acknowledge that without the merger they would likely have gone bankrupt a third time.  So far, no airline has survived a 3rd bankruptcy and given the dire straits that US Airways was in prior to the merger, a third bankruptcy would have almost certainly meant liquidation and the loss of pensions and other benefits for all the employees.  It is never nice to admit that you were in a weak position to begin with but sometimes its necessary for succeeding in the future.   The only people in sympathy with them are themselves and their families.

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USA Today’s Today in the Sky blog is reporting that Vietnam Airlines is ordering 4 A-380 and 2 A-350XWB aircraft from Airbus and this strikes me as a bit odd.   The airline says it will use the aircraft for possible long haul routes to the United States and Europe but a little background into the airline tells me this might either be a vanity order or a political order.

First, while Vietnam Airlines does own and operate Airbus aircraft already (A-320 series and A-330 series), it’s chosen high capacity, long haul aircraft is the 777-200 at present (it owns 12) and has orders for the 787-800 and 787-900 (16 total with an original entry into service of 2010).   The 777-200 is an excellent aircraft for the airline for long haul, high capacity routes it might fly to both Europe and the United States already and if additional range or capacity is needed, they could add the 777-200LR or 777-300ER to the fleet and keep commonality in their fleet.  In addition, their soon to be arriving 787 aircraft are also already capable of the distances needed and engine type selections (not yet indicated) could already permit them to experience savings from similar (although not exactly the same) types being operated between the two aircraft (GE or RR).

In addition, the current economy has reduced leisure travel to Vietnam from both Europe and North America so much that one really does wonder how Vietnam Airlines expects to keep those A-380 aircraft full year round.  It is an aircraft that best serves high density, long haul routes that see lots of traffic all year.  In addition, the A350-900XWB doesn’t really offer them more in capacity over the 777 and offers less lift for cargo on similar long haul routes.   The kinds of routes that Vietnam Airlines is most likely to fly are already best served with a fleet in place (777) and a fleet about to arrive (787).

I have an odd feeling that this order is political.   Airbus hasn’t seen a new order for the A-380 since 2006 and its been a very dry season for the A-350 as well.  With the political ties that exist between France and Vietnam and the report that Vietnam will also see Airbus contract to have certain parts made in Vietnam, this feels like France once again bolstering Airbus and a much smaller state with economic ties to France giving in to pressure.  I suspect the likelihood of an Airbus A-380 ever showing up in Vietnam Airlines blue livery is very small if at all.  

France is one of Vietnam’s largest trade partners at present and it’s notable that this order came after France’s Prime Minister made a personal visit to Vietnam to promote trade between the two countries.  It has been quite common for French Prime Minister and French President to make visits to seal deals on behalf of Airbus in the past.

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You did book your air travel a couple of months ago, right?   Don’t expect to find much available at this point for holiday travel because airlines are now either blocking their sale fares for those dates or adding a premium to them for certain days.   In short, they intend to maximize the income from peak demand days any way they can.

That said, there are a few strategies you can employ for a less expensive trip.  Traveling with a family?  If so, see if you can send your family ahead of you on a non-peak day while you travel on a peak day later so you can finish your work week.   Look for early departures to your destination.  A 6:00am flight might not sound attractive but if you save $100 per ticket, that’s a tidy sum for a family of 4.   Look for connections through a non-traditional city that might take longer but cost less. 

What if you have a lot of air miles and you want to use them?  Again, you’re likely out of luck but there are some thing you can check into.  See if your frequent flier program has any partners that travel the route you want.  They may have availability.  The Star Alliance now has not 1, not 2 but 3 partner airlines in the US (United, Continental and US Airways) and Sky Team has the rather huge network of Delta/Northwest.  Oneworld, I’m afraid, is limited to American Airlines but if you’re traveling to an international destination, you may still have a chance.

International destinations require some creative thinking for a cheaper fare.   Perhaps if you are traveling to the UK you might ordinarily use American Airlines but they’re rather expensive for the dates you wish to travel.  It might be possible to fly via one of the Oneworld partners using a different hub.  You may make 1 or 2 connections instead of flying non-stop but, again, the savings may be worth it particularly if you have a family.  It might be possible to fly Iberia to Spain and connect via Madrid or Barcelona for instance.  Or if you ordinarily use Northwest Airlines, you may have better luck checking KLM or Air France’s schedules for connections via Paris or Amsterdam. 

Holiday travel is also the time when checking luggage is certainly more of a risk.  Try to send gifts ahead of you via UPS, FEDEX or the USPS.  Consider what you are taking along for clothes.  Maybe you need to wear nice, dressy clothes once on your trip.  If so, considering wearing them for the flight so you can pack an extra shirt and tie into a smaller suitcase that you can carry on instead of checking.   This is a good strategy for taking along a bulky sweater or coat too.  

Finally, consider where your flight(s) may be connecting through.  Try schedule your holiday travel connections through southern hubs such as Dallas, Houston, Atlanta, Memphis, Charlotte or Phoenix.   This doesn’t completely eliminate the risk of bad weather but it does help mitigate it considerably.  Try to leave as early as possible in the day as delays only get worse through the day when weather is involved.   Check your flight status the day before your trip.  Is there weather affecting one of the cities you are traveling to or through?  If so and you find your schedule flexible, try calling the airline and seeing if you can change your schedule to something better without penalty. 

If you find yourself stuck at a connection, look for opportunities to fly to a nearby city instead.  For instance, if you’re traveling to Chicago and weather has massive delays being experienced, perhaps your airline also flies to Milwaukee.  If so, they may let you change your destination to Milwaukee where family can pick you up or you can rent a car to travel down there.   Even if your chosen airline doesn’t fly to someplace nearby, perhaps a partner airline of theirs does.  Suggest that as a option to the gate agent if you are trying to re-book.

Have a strategy.  See what your options are *before* you leave and have a couple of backup plans you can suggest to an airline agent in the event of a cancellation.  Yes, they are supposed to have more resources than you in that situation but they also have limited time to think a problem through.  If you have a suggestion or two they can try, you may make your life and theirs much easier since you are signaling some flexibility and trying to work with the system instead being in war with it. 

I’ll also suggest this service.  It’s Cranky Concierge found HERE.  It is a travel service offered by Brett Snyder of the Cranky Flier blog.  For a low price, you get an ultimate airline geek who will help you with all those strategies I named and more.    I think for holiday travelers, this could be a huge value in the event something goes wrong with your flight(s).    I myself do this kind of thing for friends and family but chances are you don’t have an airline geek in your circle.  The Cranky Concierge can be your own personal airline geek and help get you there more reliably.

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I find it interesting that of the established LCC carriers in the United States, only one of them seems unafraid to compete with major legacy airlines at their established hub and/or focus city airports.  Airtan. 

Every other successful LCC airline has followed a model of ducking and weaving away from the home territories of established major legacy airlines and, they, too have been successful.   However, I think Airtran has managed to prove you don’t need to be afraid of a legacy airline if you have the right product and prices.   I would applaud loudly if they ever came into DFW and provided some real competition to American Airlines by making DFW a focus city.

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The Dallas Morning News Airline Biz Blog is reporting that Airtran is arranging for commuter airline SkyWest to fly new routes on behalf of Airtran from Milwaukee, WI to several destinations including Dallas / Fort Worth and Washington D.C.

SkyWest will be using 50 seat Bombardier CRJ-200 aircraft for these flights and that interests me for a few reasons.  Due to long time personal connections to Milwaukee and living in Dallas for the past 40 years, I’ve long monitored what various airlines offer between the two cities.  Strangely, it’s a city pair that does have a lot of traffic but it has never been served very well by any one airline.

I suspect the establishment of this route is really for a few reasons.  One, it allows Airtran to compete with the current “dominant” player on the route which is American Airlines.    American Airlines at one time had as many as 5 frequencies on the route until the current economic decline.  Presently, they are serving it with 3 flights a day using Embraer ERJ-145 aircraft.    The flights haven’t been well served that aircraft because the flight duration exposes a lot of discomfort for the passenger during the 2.5 hour flight.  In addition, it has often been necessary to deny boarding to passengers due to weight and balance issues for making the flight.   The airplane often cannot carry a full load and enough fuel for the flight.

But American’s only real competition for non-stop flights has been Midwest Airlines.   Midwest has flown about 4 frequencies per day using the Boeing 717 and now the Embraer E-190.   Anyone who has flown Midwest on that route knows that that is a very comfortable flight and generally staffed with much nicer people.  Midwest has a loyal following on that route and I suspect Airtran wants to try to eat into it using price. 

Finally, by offering the non-stop flights, Airtran gets to tweak the nose of its newest competitor in Milwaukee, Southwest Airlines.   By starting this route now, Airtran has an opportunity to grow the business and offer a competitive distinction between themselves and Southwest in the Milwaukee market.  Southwest Airlines cannot fly that route as a non-stop yet because of restrictions placed on it due to their using Love Field airport in Dallas instead of DFW. 

Airtran is likely to be very successful on that route because American Airlines has never treated it as anything but an unloved step-child and much of the traffic between the two cities is O&D rather than follow on traffic.   American may retain some passengers for follow-on travel to regional destinations around Texas but I suspect that will be done by using 2 flights a day in the near future. 

In addition, Airtran has managed to endear itself to Milwaukee despite the ugly picture painted about themselves when they were attempting to take over Midwest Airlines.   Locals in Milwaukee like them and have found them to be a real alternative to Midwest Airlines both on price as well as quality. 

I think Airtran will manage to grow this route (as well as the others being served by SkyWest) and ultimately take them over with their Boeing 717 aircraft in the future.    Airtran will likely erode AA’s traffic first and then take over some of Midwest’s loads on price allowing them to ultimately become the dominant player in that city pair.  It’s doable using a CRJ-200 for now and upgradeable to a Boeing 717 pretty quickly in the future.

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I found a fun quiz on world airlines on another blog this morning.  It’s timed and does include a lot of different world airlines.  You match the city it is headquartered in with the airline.  You can find it HERE.

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In the Cleveland Plain Dealer, Continental President Jeff Smisek was quotes as saying that Continental may re-visit the idea of merging with United Airlines in the future.  The story can be read HERE.

Continental has experienced a rather rough dip in unit revenues over the past year even compared to other US legacy airlines.  The airline was much more devoted to the business traveler (particularly in the international segment) and the decline in business travel has hurt it more than some other airlines.   A merger with another airline could help Continental diversify its revenue sources and experience synergies much like the Delta/Northwest merger appears to be providing that mating.   To date, Delta / Northwest has not been profitable but it does appear to be weathering the economic recession in the airline industry quite well and its new found flexibility with both equipment and passengers seems to have benefited the airline.

However, I didn’t like the idea of Continental merging with United in 2008 and I don’t like it now.  United is saddled with a lot of debt, an angry labor pool and aging aircraft.  Continental, on the other hand, is much the opposite.   While Continental has a well trained management corps and their own employees are much happier, I don’t see what United brings to the table that they can’t already develop on their own over time.   The Denver hub would be of little value to Continental and is already a battleground between two LCC carriers and United.   United does have the better system over the Pacific but lacks the aircraft to modernize it while Continental has the better product for Pacific travel, it doesn’t have the spare equipment to spruce up those routes to compete against the likes of Delta/Northwest. 

To me, it seems that Continental would benefit more from smaller, more tactical mergers that dovetail more closely with their service and aircraft fleet.  Alaska Airlines is one partner that, in my opinion, would be an excellent fit for Continental.  It would give them an West Coast route structure, a fleet that meshes (mostly) with Continental’s, an employee group already accustomed to be treated well and a management corps that is doing remarkably well and which could augment Continental’s own management leadership nicely.    Even more important, Alaska Airlines is profitable at present.

The next best strategy for Continental is to start planning for the future.  They have a number of new long haul aircraft due over the next 4 years and despite how everyone feels in the airline world, this recession will be over someday in the future.  Continental could capitalize on their strengths and aircraft fleet by targeting United Airlines and its Pacific destinations for 2011 or 2012.  By selectively targeting United and US Airways, Continental could fair very well without taking on all the baggage any other legacy airline has to offer it. 

Joining up with United Airlines really doesn’t offer Continental much that it can’t already achieve except the Chicago hub for both domestic and international flying.  Continental’s Cleveland hub is a very distant second to United’s Chicago but I wonder if having that kind of market dominance in Chicago is worth the trouble of bad labor relations, old aircraft fleets and a group of executives that have shown themselves to be mediocre in everything they execute.   In fact, by joining the Star Alliance, I suspect that Continental will reap almost as much benefit with little trouble.

Continental’s new home in the Star Alliance is interesting to me in that Continental’s product seems to much more closely match that of other Star Alliance partners (Lufthansa, Singapore Airlines, Thai, Air Canada, Air New Zealand) than either existing US based Star Alliance member aka United Airlines and US Airways.   I suspect that member airlines will be quite willing to book more traffic on Continental for US domestic destinations than on United or US Airways.   If anything, US Airways becomes the odd man out and should begin considering finding a new home.  I’d suggest OneWorld.   Nonetheless, I’ll be monitoring Continental’s experiences in the Star Alliance for the next year as I do think it’ll make a positive difference in their fortunes.

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Air France just received their first A-380 and Lufthansa is right behind them.  Lufthansa is unusual in that it has orders for both a considerable number of A-380 aircraft as well as the new Boeing 747-8i. 

You can view a rather great video on Lufthansa’s new A-380 HERE.  It’s actually one of the better videos of an A-380 that I’ve seen.

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American Airlines announced that they will be closing the Kansas City Maintenance Base in about a year.  The maintenance base was begun by TWA and has existed for oer 50 years servicing aircraft that include the Lockheed Constellation, the Boeing 747 and the McDonnel Douglas MD-80.    The Kansas City newspaper has a photo gallery of this base HERE.

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