One comment from travelers that constantly defeats my imagination is the comment about an experience on an airline that was terrible and that they therefore will never travel that airline again.  I inevitably ask when this experience occurred and I inevitably find out it was 10 or more years ago.  In one case, a woman I met admitted she stopped flying Continental as a result of such a bad experience back in 1993.  She said so in 2010.

Airlines change.  In the case of the Continental Woman, had she tried Continental just 3 years later, she would have been pleasantly surprised.  Furthermore, stories of bad experiences become anecdotal folklore out there and particularly so over the past 10 years.  The world wide web and social media have not only spread anecdotal stories but have encouraged them to flower and provided them with staying power that would have been unimaginable in the 1990s.

You can’t judge an airline based on a single experience.  In fact, I would argue that you have to try the airline at least 3 times to start making a judgement.  Things happen on every airline.

You also can’t judge an airline entirely on experiences based in one hub.  I find American Airlines flight attendants to be old, surly and unpleasant out of DFW but I also know that they’re much better out of New York City bases.  The hub has an effect.  One can expect a higher number of problems from hubs such as Atlanta, Chicago or New York City than one can from hubs in Denver, DFW or Salt Lake City.

But even if you have had a few bad experiences on an airline, if its been 10 years, you’re experiences are likely out of date and you’re hurting yourself.  I myself expended a lot of effort to not fly US Airways (America West) as recently as 2008.  It’s 4 years later and I would heartily recommend them to travelers at this point.  In fact, I would strongly recommend them over airlines such as American Airlines and Delta.  Your chances of a good experience would be higher on US Airways.

Airlines change over time and its worth looking around for current comments before ruling them out as a choice.  You may not only save money but experience less impact to your schedule and arrive in a happier state of mind.

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It’s notable that not a single analyst, commentator, blogger, newsman or businessman really is enamored of American Airlines’ plan for improving revenue.  The plan, at the top level, is:  Farm out more flying, try harder at our embattled hubs, rely on our Oneworld relationship.

What is continually pointed out is that working harder and doing more isn’t a plan.  Relying on partner international airlines to provide feed isn’t very solid and where it has been deployed as a strategy, it hasn’t yielded the projected results.  There are few new partnerships American can engage in at this point as well.  They’ve done that work already.

American Airlines has a real problem in several of its hubs.  JFK aka New York City is under assault by Delta and United and American is losing more and more traffic there.  LAX really isn’t a hub and it too is under lots of competitive pressure.   In Chicago, American is #2 against United at O’Hare airport and it is seeing its traffic decline there, too.  Southwest is nipping at American from the bottom side by deploying routes out of Midway Airport that offer a real alternative to the businessman traveling to or from Chicago.

Yes, they have Dallas / Fort Worth.  American is, by far, the dominant airline at DFW airport and it shows in the fares offered from DFW today.  However, other airlines (Virgin America, JetBlue) smell blood and are entering the market place with a service product that is highly attractive to businessmen.  Southwest Airlines will slip its leash at Love Field in about 2 years and then American really feels pressure from Southwest at two of its hubs.   It’s also the hub with the most expenses.  Labor is senior at that hub and recalcitrant at best.  You can’t expect American Airlines to maintain its dominance there either.  It will remain the major airline there but its share of the marketplace can be expected to decline rapidly over the next 2 years and then its routes will be under assault from all directions.

There is a reason why Delta put a large parcel of flights on the DFW-La Guardia route.  They can compete on that route and American is limited in how it can respond.  Creditors won’t be amused at American Airlines losing money on those routes to fight off competition.

American has other things against it as well.  Its IT system is aging.  Its service product is substandard even to LCC carriers.  It’s fleet is old and while it will be renewed, much of that renewal doesn’t take place for several years yet.  Its website is atrocious and can’t even let a person pre-pay a checked baggage online if a customer so desires.  There is no ancillary revenue strategy (there are ancillary revenue products in place but no strategy to truly win passengers.)  It’s an airline that, today, is designed to offend passengers and no one is talking about how that gets fixed.

That’s the reason everyone continues to contemplate a US Airways / American Airlines merger.  The US Airways team has done all that despite being hamstrung with labor woes and inferior hubs.  They know how to make it work and the competitive landscape makes American Airlines hubs in certain areas look much more attractive when someone else is running the game.

I think we’ll start to hear real talk of mergers with US Airways in about 2 months.  It won’t take long for creditors to lose their patience at this point.

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Just about everyone under the sun has offered an opinion on American Airlines’ top level explanation of how they intend to enhance revenue in their bankruptcy restructuring.  The Cranky Flier has an interesting take on things as a function of what American offers in terms of a network.  Jamie Baker of J.P. Morgan has critcized the ideas roundly.  Even I offered extreme scepticism on the subject.

American’s idea is that through codeshares and a far higher percentage of flying being contracted out, they’ll gain more revenue. 

Codeshares aren’t a network.  They can add some incremental revenue but they are no substitute for having a strong network.  American’s network was pretty good until about 5 years ago.  Coincidentally, that’s when their profits nosedived.   American Airlines has their “cornerstone” strategy of sending traffic through Los Angeles, Chicago, DFW, New York or Miami.  Sadly, that leaves some gaps that other airlines don’t have.  (And this is the foundation of the Cranky Flier analysis.)

For instance, Miami doesn’t serve the Southeast.  It’s a gateway city for South America but it doesn’t act as a hub for the Southeast.  Not like Atlanta or Charlotte do.  There was a time when American tried using Raleigh, NC for this and it wasn’t a bad choice all in all but I would have contended that fighting US Airways for Charlotte would have been better. 

Los Angeles doesn’t serve the West Coast.  Again, it’s a gateway city for trans-Pacific flights but it isn’t a West Coast hub.  Phoenix is a hub and Salt Lake City is a hub and even Denver is a hub but Los Angeles isn’t a hub.  Now we have 2 significant portions of the United States being underserved by American in comparison to both United and Delta.

I even question the strength of New York City for a network.  Again, New York city is primarily a gateway and a final destination.  It’s not the best place to connect traffic to other domestic destinations.   Now we have weakness number 3 in the equation.  Codeshares won’t make up those deficits in those regions. 

Contracting flying isn’t going to provide more opportunities to connect people from those underserved areas either.  Whether the aircraft is 50 seats or 80 seats, no one in the Southeast is going to perceive the benefits of flying from, say, Birmingham, Alabama to DFW or Chicago to connect to a flight to New York City.  Nor are they going to be thrilled about Miami as a connecting point.  Now, Atlanta or Charlotte or Memphis doesn’t look too bad but American doesn’t have hubs in those cities.  Delta does.  US Airways does.  Even Southwest does. 

How did Southwest recognize the need for Atlanta in its system for serving the Southeast and American hasn’t yet seen a need for a true Southeast hub?

If you rely upon hubs and networks, you have to recognize that they come with some real inefficiencies.  Those inefficiencies can make connecting flights look very, very unattractive unless they lie more or less directly in the path of getting from Point A to Point B via Hub C.  

Will American merge to gain a better network?  Well, I think the current management will not seriously consider those options.  They see American as an airline great that should be the consumer, not the consumed.  On the other hand, I think American’s creditors are already frustrated with American’s ideas in bankruptcy and they may well force a change in thinking on that end. 

Who will it be?  There is only one decent choice: US Airways.  I like them for both their management team and their core strengths in the network just as Cranky Flier does.  However, the only way that merger succeeds is if US Airways is the consumer of AA and not the other way around and not through a “merger of equals”.  

Delta isn’t going to be the merger partner.  Too many regulatory issues exist in that marriage for it to be practical.  United isn’t going to be the merger partner because, again, too many regulatory issues exist.  A smaller airline can’t consume American and American has a terrible track record in buying small airlines and truly getting the value they present.  The only airline who has the gumption, team and, potentially, the money is US Airways.

My one issue w/ that merger is the huge labor issues that will exist.  There needs to be a plan in place to resolve both AA and US Airways labor conflicts that exist today.

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At this point, we hear of Delta, TPG and US Airways all doing their work on investigating an acquisition and/or merger of American Airlines.   While many think Delta is credible with significant carve outs of the AA system, I do not.   It isn’t just about competition on routes, it’s about size becoming so much larger that pricing power comes along with it in the markets.  A realistic combination of Delta and AA would realize a company that is 1.5 times larger than the next largest airline and massively larger than virtually any other airline in the world.  That kind of dominance can influence much more than just the price on a particular route and I don’t think the US government or the EU is interested in seeing that kind of pricing power.

As for TPG, I think they’ll play things very close to the vest and keep their intentions unknown until the last possible moment.  I do think we’ll see them look for partners in such an acquisition.  I also think that TPG might do what’s best for the company in the sense that they’ll oust management and directors who have long term tenure and who aren’t advocating for change and new leadership.   American needs more revolution than evolution and I think TPG knows that.

US Airways has the best management team for American Airlines, in my opinion.  That team knows how to fix things operationally and knows how to extract profits and revenue from sub-par conditions.  That said, I think the prospect of merging those two companies given the labor problems on both sides is a bit daunting.  Such an integration needs to be able to take full benefit from all the synergies a merger offers and having not one, not two but three pilot groups at odds with each other would not be healthy.  The same would be true for flight attendants.  I struggle to imagine how even the US Airways team makes that work well.

At the end of the day, I think every party will move slowly and wait to see how things develop with American Airlines.  What they win in terms of concessions in bankruptcy will determine just how attractive an acquisiton they may be.  Right now, I continue to think that the most likely outcome is American Airlines as a stand-alone company.  Why?  The cash holdings they have allow everyone to maintain the status quo at this moment.  AA has no need to go to anyone hat in hand to ask for DIP financing.

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US Airways and its pilots have come to an agreement to drop the lawsuit that US Airways filed against its union for a work slowdown.  A permanent injunction will be entered into the record, US Airways will be the “winner” and both sides pay their own legal costs.

Color me wholly unsurprised.  This was a bad move on the part of the pilots union as there was already precedent in courts going against them and it wasn’t a good way to get the company’s attention. 

Instead, the union should be working to unify its membership and get them on an integrated seniority list and then a new agreement with the airline.  These pilots have been working off two different seniority lists and without a new negotiated agreement since 2005.  That’s 6 years of bickering that admittedly, has benefitted US Airways in that it has kept pilots wages relatively lower than its competitors. 

The dysfunction shown by US Airways pilots has stunned me at times.  Particularly that of the “East” pilots (aka former US Airways pilots and not America West pilots).  First rejecting an ALPA negotiated integration and then forming a new union that could be under the control of the “East” pilots, no one has benefited from this behaviour. 

Furthermore, it’s hurt the company as well.  Until its labor problems are smoothed, US Airways doesn’t look like a good merger partner to anyone else.  After all, who wants to have three different pilots agreements and a labor group that has to be operated like three different airlines?

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2011 wasn’t the worst year for airlines and 2012 won’t be either.  Instead, I think we’ll see more of the same in most respects.

Airlines will continue to constrain their capacity and that will show more discipine than I thought they had 3 years ago.  They’ve proven me wrong and I think the results are too good for them to not to continue over the next 12 months.

Fuel costs will continue to be a difficult thing for airlines to manage.  There will continue to be volatility but I don’t think we’ll see anything like 2008/2009.  The financial crisis in Europe will reduce some demand on oil but I see no real economic growth in any part of the world that will drive demand either.  The truth is that the emerging economies are largely dependent upon demand from both Europe and North America and neither of those economies will see high growth in 2012.

Airlines will continue to make large orders for more fuel efficient narrow body aircraft.  This only makes sense as the gains are more than enough to justify the purchases and now is the time to gain an advantage in bargaining with both Boeing and Airbus.  Furthermore, airlines need to hedge against their labor costs which will only grow over time.

Aircraft manufacturers have a much more sure path for the next 10 years now.  Boeing will be biding its time on improvements to the 777 until it sees more definition of the A350-1000 and it will throw its resources into ramping up 787 production, 787-9 development and 737MAX development.  It’s possible that we’ll see a real 787-10 announcement in 2012 but, if so, probably not until the latter part of the year.

Airbus has to get its act together on the A350 and try very, very hard to prevent too much schedule slip.  Despite its efforts, I think we’ll see more schedule slip and it won’t reveal the entire picture as that unfolds.  While I don’t expect quite the same delay as the 787 saw, it will be a significant delay and it will impact Airbus.  They’ll also try to flog the A380 as much as possible and may even succeed with small orders in parts of the world it hasn’t penetrated much to date.  I do not see any US based orders for the A380.  Furthermore, Airbus made some big promises for the A320NEO and it’s got to work hard to deliver on those.  They’ve made it out like the A320NEO is a no-brainer for development and while it is an incremental improvement, the engineering to deliver is non-trivial.

Bombardier will work its tail off to sell more of the CSeries and I think it may even succeed.  The sweet spot its lineup offers will become more attractive to airlines once they see Bombardier actually perform in the development and test of this aircraft.  The CS100 isn’t the attractive aircraft but its the one that will fly and deliver first.  Once the performance of that aircraft is established, I think we’ll see orders from US and European airlines come in large numbers.

Embraer has got a nice grip on the regional airliner business but it also has a problem in that, right now, there is no growth path into a larger plane for purchasers.  It has plans to work on re-engining the E-Series but I think they’ll concede the need to develop a larger airliner as well.  The Bombardier CSeries presents just a touch too much threat in the future. 

I don’t think we’ll see much from the other regional airliners being developed.  The Mitsubishi MRJ doesn’t feel quite right for airlines to me and doesn’t offer a growth path into a larger airliner.  The orders its racked up so far are fairly paltry and at risk, in my opinion.

The Sukhoi SuperJet, on the other hand, has a real chance, I think.  It’s Westernized, it’s flying and it does feel like its the right size.  The real challenge in this aircraft is ensuring support and with Boeing as a consultant, it may well have some help in that arena.  If it does succeed, that success will begin in Europe as well as for airlines of lesser developed areas such as the Middle East, India and the Far East.   If any orders come from the US, it will be years in the making.

If anything stirs in the US airline industry, I think it will be in the LCC arena and I think it will be small(ish) if anything.  I do not think we’ll see any legacy consolidation despite wishful thinkers for a US Airways / AA merger.  Something like that becomes much more likely in 2013.

I think American Airlines will plod through its bankruptcy in 2012 with a bit of scandal here and there.  I think its labor force is about to take a beating on wages and benefits and I think the resulting bitterness will last for years.   I also think that United and Delta will be growing a bit more concerned about AA late in 2012 once they have a picture of what AA’s cost structures are likely to be.

2011 was largely a “rebuilding” year for the airline industry.  2012 will be largely so as well.  Until the world economies recover, the best the industry can hope to do is manage its problems and earn a bit of money.  That’s eminently possible for them to do.

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Over the past 12 months, FlyingColors has doubled its readership and has seen nearly 1000 blog entries reached with enough words written to equal a book with over 1700 pages.  But enough about me, let’s look at the last year in the airline world.

North America:

Southwest Airlines did its deal with Airtran and bought itself an Atlanta base of operations and some very valuable landing slots at Northeastern airports.  As if that wasn’t enough, it made a firm deal on a bunch of 737MAX aircraft and agreed to take on even more 737-800 aircraft for its routes.  However, the airline wasn’t without some trouble:  Airtran pilots tried real hard to step on their on feet in a seniority deal with Southwest Airline pilots.

American Airlines struggled (more) and lost more than a Billion dollars (again).  Instead of making any real progress with its labor force, it decided to file bankruptcy but not before having made a historic order for aircraft from both Airbus and Boeing for the A320 and 737 series aircraft (with both A320, A320NEO, 737 and 737MAX in the mix).  2011 also saw long term CEO Gerard Arpey depart the company (to work with former Continental CEO Larry Kellner) and AA President Tom Horton took over.

Virgin America has horned in on American’s routes, Frontier has struggled more and more under Republic Airways leadership and US Airways still doesn’t have pilots or flight attendants integrated onto one seniority list.  JetBlue decided to fly more to the Caribbean, entrench itself even more at JFK airport and blew it during an October snowstorm (again).    United and Delta made money.  Quite a bit actually.

I think we’ll see Frontier either spun off rapidly in 2012 or the rapid decline of the airline necessitating bankruptcy of Republic Airways.  I don’t see a real strong suitor for Frontier except, perhaps, JetBlue but since Frontier isn’t based at JFK airport, I do wonder at JetBlue interest in an airline like Frontier.

I think we’ll see Alaska Airlines find even more odd partners for its success and still manage to cozy up close to Delta while doing it.  Southwest will start painting Airtran aircraft in its colors and operating even more great deals to more places from Atlanta but I also think that if any slots at JFK, LGA, EWR, IAD or DCA come available for purchase, Southwest will bid the cost of a Boeing and lose again.

I think it’s possible that Virgin America will make money in 2012 and I think it is really possible that we’ll all be pleasantly surprised by that.  The determining factor?  Cost of fuel. 

United will order a nice chunk of aircraft and I’ll bet that it will be an order similar in mix to the American Airlines order from both Airbus and Boeing.  However, I do not think it will be similar in size.  I think it will be a partial fleet replacement with lots of options for incremental change in the fleet.

I think Delta will continue to make a big pile of money with very little controversy surrounding it except that I think Delta will look for and execute a plan to encroach on more Legacy and SuperLegacy airline routes as it has announced its intention to do so from La Guardia Airport.   I also think that Delta will decide its not afraid of Southwest and it will decide to give Southwest a taste of bullying it hasn’t experienced before.   Particularly in Atlanta.  It’s not just an opportunity for Southwest to succeed in Atlanta but it is also an opportunity for Delta to capture lost customers.

I think we’ll see capacity restraint for another year and higher air fares than seen in a long, long time.  I do not expect to see another new airline show up and I think we may well see one true LCC depart the picture if things get particularly rough with respect to fuel prices or competition.  Milwaukee will become the regional airport it was intended to be instead of a bloody battleground between LCC airlines.

Tomorrow:  The rest of the world

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Before and after American Airlines bankruptcy filing, there has been a great deal of speculation on American merging with another airline.  Most often, US Airways is cited as the candidate.

The truth is, there isn’t a perfect candidate at this point.  Prior to the Delta / Northwest and United / Continental mergers, American Airlines was vastly larger in size by any measurement you would care to use.  Now there are 3 airlines roughly the same size in the United States and a larger number that are greatly inferior in size to those.

A merger should add value before anything else.  How it adds value is subject to debate.  American Airlines acquisitions never really added value so much as they eliminated nuisance competition.  American, in a sense, bought airlines more to pay off people from competing with them.  To be fair, Southwest Airlines has done this as well.

With the state American Airlines is in today, a merger doesn’t add value.  The first order of business is to get the house completely in order.  Unfortunately, this means quite a bit of pain for everyone involved and I include the executive management in this as well.  If anyone thinks they come out of this bankruptcy unscathed, they are kidding themselves.

US Airways might be a candidate for merger with American Airlines but where US Airways adds value is in conflict with the very people who are running AA today.   What I mean is that US Airways has the management team (and I do mean team, not just Doug Parker as CEO) that knows how to run a competitive, revenue positive airline in today’s marketplace.  Unfortunately, the current management team at American Airlines shows no evidence of knowing how to do so thus far.  They know how to manage money and an airline is a whole lot more than money. 

The only conceivable situation where US Airways adds value to American Airlines in a merger is if most of the executive team at AA is let go. 

Are the systems compatible?  Frankly, I think so.  Far more than I think many appreciate.  US Airways is in possession of a system that is fairly complementary to AA’s system.  US Airways has strengths in marketplaces where AA is weaker (the Southeast and Southwest) and in cities that are weaker in the American Airlines system (Philadelphia, Washington D.C., Phoenix come to mind.) 

Must the fleets be compatible?  To some degree, yes.  They need not be perfectly compatible.  Frankly, I think American Airlines could use the A330 in its system and I think US Airways could use the 777 in its system.  Both will have Airbus A320 series aircraft in a short time. 

The real challenge is labor.  Can you take one airline that has yet to see its pilots and flight attendants integrated into one system (US Airways) and merge the seniority lists with an airline’s employees that are viciously disappointed in its own company (American Airlines)?  I think that is a very, very tough job for anyone. 

In short, I think we won’t see a merger with AA and anyone else for the next 2 to 3 years.   Over that time, it is quite possible that circumstances will have evolved considerably and a candidate for merger with AA may appear.  It is entirely likely that US Airways may be that candidate.  But to expect those two to merger over inside the next two years is, I think, unreasonable.

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There is a bit of hot talk again about more consolidation among US airlines as a result of American Airlines (AMR) President Tom Horton responding to a question about whether or not they included in such a consolidation.  He replied “Yes, it could.”

Does it mean they’re actively seeking a partner?  No, it does not.

I suspect that Horton’s response was more off the cuff than anything and simply not closing doors on the idea.  I do not think the current management team is seeking that kind of consolidation simply because it really does mean that many of them must go. 

Does it mean US Airways is a suitor to American Airlines?  No, it does not.  Even Doug Parker realizes that American Airlines tends to simply buy companies to shut them down from competing with AA.  He knows that the management isn’t about to give up the reins in a merger of equals and he knows that they are the one airline that has far bigger problems than US Airways.

Mind you, I continue to think that AA could stand a dose of US Airways management.  But a merger doesn’t begin to look attractive until there is a deal with the various labor groups and one can see what the financial impact is of those deals. 

In short, I don’t think there will be anymore consolidation in the near term (12 to 18 months).

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With the heat up on American Airlines’ financial situation as well as the strict scrutiny its share price has gone through, the old dog called merger has started to pop up again. 

The truth is, financial analysts and investors want to see something more happening at American Airlines.  Something that goes beyond “we’ll stay the course with our fixed strategy and hope other airline’s costs rise to ours before our money runs out.”   That really is what has been communicated thus far. 

There is a new culture at some airlines.  It’s a culture of fiscal responsibility that is fostered by airlines leaders such as Richard Anderson (CEO of Delta) and Jeff Smisek (CEO of United).  It’s the idea that a stready return on investment is necessary for airlines going forward.  It is refreshing and it does seem to help as a basis for decision making at airlines.  Enough so that they’re starting to convince me that capacity discipline really will continue in the United States.

On the surface, it would appear that American has the right executive leadership to execute that strategy.  It’s an airline that has a strong reputation for financial management and one would expect that they would lead on this subject.

However, as much as I do think the strategy has value, it ignores the human element of airlines.  We all too often talk about the capital requirements for airlines and the huge amount of cash flow necessary to keep operating and even the huge labor component.  What we don’t talk about is the people.

At the end of the day, airlines are made up of people.  It is a labor intensive business and it requires many different kinds of people and it continues to be an industry that generally grabs you and holds onto you once you work for an airline. 

To drive those tens of thousands of people into the same direction and achieve success requires a bit more than being a good numbers man.  It requires a certain vision, a certain charisma and the ability to get people to follow you. 

American Airlines hasn’t got that.  It’s got a clinical, almost detached view on its labor and leadership that continues to ignore the human component to their success.  

What investors and analysts want to see is some revolution, not evolution.  Steady is the course has simply seen debt rise, cash holdings drop and angrier employees.  Those who know airlines, know that that is the precursor to a long, ever quickening drop into failure. 

You can manage those pennies all you want but if you can’t get your people to turn an aircraft quicker or your pilots to work more productively or get your staff to treat customers better, you’ll still fail.  Even analysts know that. 

American won’t engage in a merger with its current leadership.  However, CEO Gerard Arpey won’t stave off a coup with his present course either.  There will come a time when the board will decide new leadership is necessary.  It will happen rapidly and it will be a result of a sudden consensus view by the board that they’ll be held responsible for further failure.  I would argue that that set of circumstances may be closer than Arpey & Co thinks.

While I don’t think a merger is on the horizon, I do continue to wonder what the executive team at US Airways could do with American Airlines.  They’ve worked wonders with enormous challenges and a disadvantage to virtually every other legacy airline.  They’re reponsible to providing a return on investment and they seem to have figured out how to please customers better every place improvement was called for.

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US Airways and its pilots union, USAPA, got a hearing to discuss what US Airways says is an illegal work slowdown.   In that hearing, the judge pretty much agreed with US Airways and told USAPA to cut it out and get their membership in order.   What the judge actually said was:

“USAPA and its members, agents, and employees, and all persons and organizations acting by, in concert with, through, or under it, or by and through its order, are enjoined from permitting, instigating, authorizing, encouraging, participating in, approving, or continuing any interference with Plaintiff’s airline operations, including, but not limited to, any slowdown, strike, work stoppage, sick-out, work to rule campaign, or any concerted refusal to perform normal pilot operations in violation of the RLA, pending a hearing on the permanent injunction.”

Beyond that, the judge also ordered the union to make a concerted effort to communicate to its membership that such activities were illegal and punishable. 

This is where USAPA wants to pay real close attention to things because it was the APA (American Airlines pilots) who got hit with a large judgement against it for the very same kinds of actions in the 1990s.   There is ample precedent here and it will be the pilots who pay for that kind of judgement against them. 

So here is my question:  When does USAPA quit acting like children and get to work representing and, more importantly, *leading* its membership to a unified seniority list and a new contract with US Airways?  What’s the plan?  When does action take place?  Right now, if USAPA got its act together and started down that path, union members *might* see a new contract by 2015.   That’s only 10 years after the merger.

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US Airways went to court to get an injunction against its pilots union for conducting a “safety campaign” designed to slow the airlines operations and put pressures on US Airways.  The judge didn’t grant immediate relief but he did something else that does signal that the pilots union would be well advised to reconsider its actions.  He granted a quick hearing date and refused to move jurisdiction to a union friendly US Federal Court in New York. 

US Airways “East” pilots (former employees of the airline before it was purchased by America West) seem to enjoy shooting themselves in the foot.  This isn’t an action that is likely to find patience with from a US Federal Court and it’s an unwise move in general.  You don’t sucker punch your own company smugly while demanding a new contract when you can’t even get half of your membership to go along with you.

Doug Parker and America West should have eliminated the US Airways name and signaled who the regime was when it bought US Airways.  Sadly, US Airways pilots (EAST) think they still work for the same old airline and in the same old airline industry.  It would be wise to take a look at what happened to American Airlines pilots’ union, Allied Pilots Association, when it did something similar more than a decade ago.  It cost them millions of dollars in fines after a “sick out” campaign that failed completely.

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Delta and US Airways will get to consummate their revised slot swap deal between each other which grants Delta dominance at La Guardia Airport / NYC and US Airways dominance at Reagan National Airport / Washington, D.C.

The airlines will have to sell off a small set of slots to airlines that have little or not competition at either airport in order to satisfy the DoT. 

Is this good for the consumer?  Depends on who the consumer is.  Arguably, more sensible connections from regional airports into those airports will be good.  However, I do not know why we, as a country, participate in allowing airlines to form fortress hubs in this day and age.  Fortress hubs are neither efficient nor good for the consumer in the long run. 

Selling off a paltry number of slots to small airlines with no presence at those airports does not foster competition.  It fosters a tenuous toe hold that could take years and millions of dollars of investment to ever grow into something else. 

This is why if an airport is slot controlled, I firmly believe those airports should be required to “auction off” those slots on a regular basis.  Allowing airlines to “own” slots and preserve them as an asset has just fostered anticompetitive behaviour such as airlines “sitting” on the slots by operating unprofitable (but not very expensive) regional jet flights into the airports until they want to use the slot for something bigger.   Imagine what would happen if lower cost airlines could buy into those airports through auctions and offer lower prices.

Competition doesn’t come in the form of an airline getting to operate 2 or 3 daily flights into an airport dominated by an airline that has hundreds operating into that same airport.

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In what I will declare to be the most greedy of moves for 2011, most US airlines have decided to raise fares to offset the FAA taxes that have (temporarily) disappeared as a result of Congress’ inaction on a new bill for the FAA.

By most US airlines, I mean airlines such as American, United, Continental, Delta, US Airways, Southwest, AirTran and JetBlue.  By raising fares, I mean they’ve raised them about 7.5% to offset the taxes that disappeared.   A few airlines such as Virgin America, Frontier Airlines and Alaska Airlines have so far not raised fares to grab that cash.

I am immensely disappointed in this development and particularly disappointed that I find both SWA and Airtran in that group.  Airlines don’t deserve this money and it is shameful behaviour to run and grab it.

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Airlines establish call signs to identify themselves while on radio.  Most airline call signs are fairly predictable.  American Airlines, for instance, uses “American”.  Delta Airlines uses “Delta”.  

There is one New Mexican airline named New Mexico Airlines that uses “TSUNAMI”. 

Can you name the call signs of these airlines:

• British Airways
• Aer Lingus
• South African Airlines
• The original Pan American
• The former America West / now US Airways
• Airtran Airway

Answers after the fold: (more…)

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US Airways has been the focus of controversy for a few weeks since it banned a young man for inappropriate dress (he wore his pants extremely low with some underwear showing above his pant line which is a Hip Hop style.)  We found out that just days earlier, a male cross dresser who was dressed mostly in lingerie was allowed to board another US Airways flight. 

Now we see some claiming that US Airways was racially profiling people, sending mixed messages and other politically charged things. 

Thing is, I think both should have been banned from flying.  An airliner is not a public bus.  It’s an environment where 100 or more people sit in close confines for multiple hours.  It’s no more appropriate to dress in that manner (on either’s part) for an airliner than it would be for showing up to a court. 

I don’t expect people to wear dress clothes.  I don’t expect them to be uncomfortable or unable to access their own style.  However, both parties should have known their dress was inappropriate for their travel and if they didn’t, shame on them for being clueless.  I do expect people to dress somewhat properly for boarding an aircraft.  In fact, if airlines would like to start banning pajamas and sweat suits, I would be fine with that, too. 

At a minimum, I expect people to dress to a standard that would be expected for dining at a better restaurant.  By restaurant, I don’t mean the luxury McDonald’s either.  Furthermore, I don’t expect airlines to have to drive themselves crazy to administer such a dress code.  If someone is inappropriately dressed, give them the opportunity to rectify it, let them travel on another flight, etc.  This really isn’t any different than a hygiene issue.

Let me point out that while the inside of an airliner *feels* like a public space, it isn’t.  Not quite.  It’s no different an area than a restaurant and, yes, we allow restaurants to decide what is minimally accepted in how someone is dressed too. 

People don’t own the airliners.  Airlines own the airliners.  Shame on US Airways for permitting the cross dresser on a flight.  That man was dressed wholly inappropriately for man or woman . . . period. 

And for those of you who think flying on an airliner is the equivalent of being in your bedroom in your own home, grow up.  You know right from wrong and it’s up to you to act like an adult and show that you do.

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It’s somewhat difficult to believe that the America West / US Airways merger was closed in 2005.  It’s 2011 and the US Airways pilots still don’t have a unified contract to work from.  There is no doubt that a good deal of primary fault lies with the pilots themselves who:

• Couldn’t agree on how to merge a seniority list between the two unions.
• Couldn’t agree that ALPA was their representative.
• Elected a new union in place of ALPA in order for the US East pilots to take over the union.
• Sued each other multiple times.

Now they’re suing US Airways under the supposition that US Airways has been materially altering the contract under which they’ve been working by unilaterally imposing changes.  US Airways says they think the suit has no merit.  I think the suit has merit but before it can progress, I think the pilots need to get their house in order first.  Without that done, who has standing to bring such a suit?

The pilots, both East and West, need to agree on union representation and seniority merging and then get to the business of negotiating a contract.  Sadly, the business of negotiating a contract can take from 2 to 4 years and that means this may not be done before 2015 or 10 years after the merger.  You can’t blame US Airways for taking advantage of that situation either.  Who wouldn’t?  It keeps costs low and they’ve clearly found a way to operate their airline on two different contracts.

The biggest enemy to US Airways pilots is the pilots themselves.

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The US Airline Pilots Association representing all of US Airways pilots is calling for the resignation of US Airways Vice President of Safety and Regulatory Compliance Paul Morell citing unaddressed lapses in safety as the primary reason.

This is what happens when you don’t have respectable relations with your labor union groups.  Safety is popular target for airline unions because it is very difficult for the airline to address the topic without appearing to be on the defense for something that may not have even been going on.

And airline unions target their company when they haven’t gotten a deal and it looks as if they aren’t going to get one soon.  It applies pressure. 

Is US  Airways unsafe?  No, it isn’t.  The airline is clearly running a safe operation.  Whether or not it could be even safer is a question I cannot answer (and nor can the airline pilots either.)  That calls for an objective third party audit of US Airways safety.  Coincidentally, it appears that US Airways declined to participate in such a study because that is what USAPA talks about in its public complaints.

I am a big advocate for there being as much transparency and objectivity possible in evaluating safety at airlines.  I think participation in programs where pilots can self report safety incidents without consequence is an excellent idea and I firmly believe that airlines should participate wherever possible in third party studies. 

That said, US Airways may have had an excellent reason for declining participation and we’ll leave that up to them for a response.

I have to take a shot at USAPA for this:  It is no less responsible to make safety a political issue than it is for an airline to decline participation in third party safety studies.  There are plenty of issues to talk about but casting aspersions on the safety of airline to apply pressure is over the line.

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Southwest Airlines’ and Airtran Airlines’ pilots unions have agreed to agree on the process for integrating their seniority lists. This isn’t an agreement on merging the lists but simply an agreement on how they’ll go about doing so.

They’ll first negotiate and then if they don’t get an agreement, they’ll have mediated talks and if those don’t work, they’ll have arbitration with a binding agreement. Standard stuff between unions but what I like is the fact that they’ve set deadlines for all these processes and those deadlines all fall within 2011. Good on both of them.

This process is governed by the McCaskill-Bond Act which was passed by Congress after the AA-TWA merger and the flight attendants union simply stapling on employees to the bottom of their list.

A curious question comes to my mind on US Airways as a result of this. I believe such a process was followed by US Airways and America West pilots unions. The result was an arbitrated result that the US Airways pilots didn’t like. The process was hijacked by US Airways pilots who initiated a vote amongst *all* pilots for new union representation. Since US Airways pilots outnumbered America West pilots, they got their way at the end of the day. At least until America West pilots sued. It would seem to me that federal law may well have been violated in this. If any readers here know the status of this, please comment.

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Airline CEO Doug Parker says that there is one more big merger deal to be done in the United States and that is with his airline, US Airways.    Parker’s comment was made during US Airways recent media day.

The question is, who?  I’ve said before that US Airways and AA could actually do a nice deal when it comes to the complementary nature of the two airlines but I have also noted that you would be combining two airlines with very bad union relations right now.    Furthermore, neither has the cash to do the deal and a stock swap is just swapping one so-so share for another. 

The truth is, I think US Airways has something AA needs.  The executive team.  The US Airways executive team manages to deliver profits despite being an airline with not a lot of international traffic and an airline with no hub that anyone views as particularly strategic.   I would like to see that team manage American Airlines’ resources.  I think we would all be pleasantly surprised financially.

I actually don’t see a partner for US Airways.  Not right now.  It isn’t an low cost carrier (ironically enough, US Airways stock symbol is LCC) as the models are two widely apart.  It isn’t an airline that shares a similar fleet as US Airways flies Boeing and Airbus and within the Airbus fleet, it flies two somewhat dissimilar fleets of A320 series aircraft. 

I cannot identify an airline that has a strategic position that would complement US Airways routes without being a clash in every other way.  JetBlue owns JFK and an Airbus fleet but the clash in cultures and everything else makes me shudder.  The same is true for Frontier Airlines.

Southwest has no interest in them.  They simply identify where US Airways is strong and then move in to compete with them.  Southwest wins and US Airways moves along to another place.

SuperLegacies?  They don’t need US Airways.  There is no real route rationalization to be had in many cases and the few places where one SuperLegacy might want more dominance are places where anti-trust regulation is unlikely to grant it.

Right now, US Airways is on its own and that’s OK.  This is a profitable airline and, in many cases, more profitable than SuperLegacies.  5 years from now may prove differently but I don’t see it in the next 2 years or even 3.

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