The current economic climate doesn’t speak well for airlines who depend upon business travelers to meet their expenses on a flight.  For the past several years, airlines have been introducing airline seating that specifically caters to the business traveler and, quite frankly, a product that meets or exceeds anything that represented First Class even in the 1990’s. 

The airlines are always faced with a difficult set of priorities to balance.  On the one hand, catering to the business traveler is essential because they do pay for a good portion of each flight and they must compete for those travelers very aggressively.  On the other hand, filling those last 100+ economy seats is also essential because that is the difference between profit and loss.   Typically, an airline will woo the business traveler with comfort and the economy flyer with price.  In order to compete on price, that means reducing your costs per seat to the lowest possible and offering a ticket price that bests anyone else on a route.

Or does it?  In the late 1990’s, American Airlines began a program of more space in coach.  MD-80 aircraft were reconfigured to offer as much as 34″ of seat pitch and as someone who was flying a great deal at that time, I can confirm that it made a huge amount of difference.   Unfortunately, the post September 11th terrorist disaster forced American to reconsider its configuration and the aircraft were reconfigured back to a 31/32″ pitch.   But how many seats did that gain them?  Only about 9 seats.

The one thing airlines never seem to try to differentiate themselves on is seating.  While some airlines have tried an economy plus seating (offering about 34″ to 36″ of seat pitch), no one really advertises the advantage of more seat room.  It is never heavily marketed like many other airline qualities.   That is a lost opportunity.   I do not believe people would necessarily choose a flight on an airline on the basis of only price if they were fully aware of a more comfortable option at a minor extra cost.   Airlines such as United Airlines often only take the opportunity to tell a customer of these seats after they’ve already made a purchase and only as an upgrade. 

Offering an increased seat pitch and explaining its comfort and, possibly, better position in the aircraft would, I think, be an attractive offer. 

The question is how much extra do you have to price that seat per leg?   I suspect about $20 per flight segment would work.   Possibly as much as $30.  But why not offer it by the hour?  Would you pay $10 / hour for a better seat?  Chances are you would.  However, that upgrade must be presented BEFORE the purchase to be attractive on price and that upgrade must be described in what it offers the customer.  More leg room, a better position in the cabin which makes for easier entry and exit from the aircraft. 

More room does not necessarily have to mean fewer seats either.  I’ve written before about Delta’s adoption of the Thompson Cozy Suite seats on their 767 aircraft.  There are other options as well.  Airtran offers a Recaro aircraft seat on the Boeing 737 aircraft that is unparalleled currently as an economy seat.  Its design offers just a tiny bit more leg room and yet configures easily to the same 31/32″ seat pitch airlines want to use.  It provides a more conventionally thick seat cushion on the bottom and upper half while offering a better contoured lumbar area that while thinner, is much more comfortable and yet offers the passenger behind you that little bit of extra room.

Sicma Aero is concentrating its efforts on a more ergonomic seat but I question that direction because how do you create an ergonomic seat that feels comfortable to both the 5′ tall 100lbs woman and the 6′ 2″ tall, 270lbs man?  It requires adjustability and that quite likely is going to cause trouble both with maintenance and the customer who doesn’t understand how to adjust the seat.

Avio Interiors has taken an approach more like Recaro by offering a seat that is properly cushioned in the right points but sculpted to again offer that small but important extra space for legs. 

 Thompson Solutions offers both the Cozy Suite as well as a more conventional but ergonomic economy seat.  The key to their offering is a staggered or herringbone style layout that allows airlines a 15″ gain in capacity or greater width and seat pitch.  Since aircraft are generally limited by either their load or the maximum seating they are certificated for, Thompson’s solutions (no pun intended) allow an airline to offer a new seat that is competitively priced, less maintenance intensive and vastly more comfortable than a conventional seat.  The key obstacle here is that airlines are afraid of making the investment and facing customer rejection of a design that is admittedly fairly radical in appearance.  With Delta introducing this on their 767 aircraft, I suspect the airline’s fears will be reduced and there will be a push to find similar solutions for new fleets.

Weber Aircraft, based in the United States, is offering a much more conventional product that, unfortunately, seems pointed towards high density seating without any emphasis of comfort.  Make of that what you will.

While airlines will no doubt seek to maximize their loads on aircraft and match pricing from their competitors, it becomes increasingly obvious that market capture can be based on these new seating options provided that the airlines themselves will actually market their product.  People still want comfort and the success of a la carte pricing indicates that people will still pay for what they want. 

The challenge is in airlines changing their marketing model both on their own websites as well as through popular travel sites.  When a customer can make their choices from an a la carte menu and choices include better, more comfortable seating that is well described, airlines will both differentiate and sell their product better.  Airlines even have the chance to sell such a product as a business offering to companies that do understand the value of taking care of their employees but who have to now measure that against the often 4 times greater cost of a business class seat.

Filed under: Airline Seating by ajax
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These days there is much ado about various First Class and Business Class services on a variety of airlines.  The introduction of the A380 brought a new level of first class service from Emirates, Singapore and QANTAS.  Even their business class on those aircraft are more in line with First Class on any other. 

A week ago, I visited the Fort Worth air show at Alliance Airport.  While that show (and most others) tends to be oriented around military aircraft, I did get to tour the new Pink Ribbon American Airlines 777.  Like all 777’s tend to be, it was an impressive 3-class aircraft.  At least for First Class and Business Class.   Indeed, I actually thought that the Business Class arrangement on that aircraft was as good as First Class with respect to how I would value it on space and comfort.   AA’s First Class separates you more from fellow passengers but I don’t think its seat or entertainment is necessarily any better.

In any case, what I wonder about is Economy Class.  In this airline world, Economy Class remains largely what it was 30 years ago.  If anything, instead of rising in service or comfort, it has, perhaps, fallen just a bit.  Seat pitch is reduced.  The seating itself tends to be older and less comfortable on most airlines.  There is rarely entertainment and only on international flights.  

In my world, I put a premium first on seat pitch, then seat width and then on seat location (the opportunities to get either a window or aisle seat.)  In almost every case, entertainment means nothing to me.  While I acknowledge that it *does* excite some people, I would wager that if you gave a person a choice between a 34″ pitch seat with no entertainment and a 32″ pitch seat with entertainment, you would sell more of the former.  At least on most domestic flights. 

There appears to be no game changer for Economy Class.  There is no incentive to improve economy class service for almost any airline.  American’s 3-class 777 offers 2-5-2 seating (imagine sitting in one of those 3 middle seats) that is not one iota more comfortable in any way.  The one amenity, that I could observe, was a personal entertainment screen.  That was it.  I sat in the economy seat and it did not seem, to me, to be any different in pitch, width or general comfort than a AA MD-80 seat. 

There really isn’t any incentive for most airlines to improve this experience either.  By operating fortress hubs, the airline knows that most economy class passengers are a captive market.  There really isn’t much choice when choosing an airline for most destinations.  The only incentive for an airline to change seating comes from either being able to fit more seats onto an aircraft or to provide a seat that lasts longer.  

Delta is going to introduce such a seat using Thompson Cozy Suites.  You can see more about it HERE.  It is more comfortable and it does allow Delta to add some seats to their aircraft but they also have contract to use it exclusively (at least for a while).   jet Blue and United do offer some economy plus seating but they market it poorly.  Most passengers are unaware of it as an option to search for and only learn about it at check-in as an upgrade option. 

Wouldn’t it be nice to see a game changer for economy class for once?  A seat that offers some comfort and space even if it costs just a bit more to purchase.   Keep the free soda and coffee.  Keep the entertainment because I can carry a tiny MP3 player for music and I really prefer a book to a TV show anyway.   Keep the food and the pillows and the blanket because I can dress appropriately and probably sleep better with just a touch more room.  Find us a seat that we can sit comfortably in for 3 hours and I’ll buy your ticket every time.

Filed under: Airline Fleets, Airline Seating, Airline Service by ajax
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The stock markets have slipped considerably again today (Friday October 10, 2008) and things continue to remain very volatile and probably will for another 10 days or so.  The consequence is that oil prices are plummeting.  Why?  Because a lot of speculative money was invested in oil as the value of the dollar dropped and inflation began to increase over the past 2 years.  Oil was an investment that preserved some value and for the past year has yielded some high profits for investors.

Now those same investors need their cash to cover other investments and they are selling their oil futures like crazy to recover their liquidity.   Today oil is selling at about $80 / barrel and that means much cheaper gasoline and jet fuel for the near future.    For airlines without fuel hedges or with few fuel hedges, that’s good news.

Oil could decline to as little as $60 / barrel but most likely will stabilize between $70 and $90 / barrel over the long term.  By the way, most airlines operating models are currently built to make a very decent profit with that oil price. 

For airlines who got a bit aggressive over the last year and bet on oil continuing its hurried rise towards $200 / barrel, that’s bad news.  You see, some airlines have already been reporting fuel hedge losses because of the slow decline in oil prices.   To better understand hedging and what has been going on, you can read THIS.

United Airlines appears to be particularly vulnerable to the fuel hedge losses.  It’s a good news / bad news thing for them.  For the near future, fuel should be cheaper and if revenue stays about the same, they should be fine.  They’ll be hit by fuel hedge losses but they’ll recover some of that loss in better profits from running an airline. 

If, on the other hand, revenue declines, then airlines like United (and there are others) will suffer from both fuel hedge losses as well as a decline in profits.    I suspect most airlines of any size will weather that problem because it is unlikely that they are hedged at high prices for very far in the future.  Maybe a year to a year and half. 

For those of you wishing evil on Southwest Airlines, don’t.  They’ll largely be unaffected one way or another.  They might experience some slight fuel hedge losses (unlikely) but more likely they simply will make less money from fuel hedges and more from profit.   Their revenue is far less dependent upon the high priced business class fares and that means their demand is more inelastic than most airlines.  They might see a slight decline in leisure travel but I suspect that that will hold more or less as people who want to travel transition from a legacy carrier to an LCC such as Southwest.

We live in interesting times.  At least gasoline will be cheap for a while.

Filed under: Airline News by ajax
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Almost all airlines in the United States operate from hubs.  Going from West to East, they are (in no specific order), Phoenix, Salt Lake City, Denver, Dallas / Fort Worth, Houston, Minneapolis / St. Paul, Chicago, Detroit, Cincinatti, Memphis, Atlanta, Cleveland, Philadelphia, and NYC.  There are a few other cities that some might argue are hubs but which I think are more “focus” cities than the above cities.

One way airlines have reorganized themselves to meet the cost pressures of non-deregulation on the costs side of the airline industry is to simply start “connection” and/or “feeder” airlines or to contract with those airlines.  Some examples are American Eagle, Mesa Airlines, Comair, Compass and Express Jet.  There are others too.  These airlines fly regional aircraft (regional jets and turbo-prop aircraft) on behalf of the mainline airlines.   Unions permitted these airlines by getting “scope” clauses in the contracts that limit the size of the aircraft to be operated. 

Often those scope clauses originally limited airlines to flying regional aircraft that had 50-odd seats or less.  What they didn’t do was limit the kind of flying such aircraft might be asked to do.   As things evolved post-1978 deregulation, airlines began to establish large hubs with multiple banks of flights each day.  They did so in order to “concentrate” their operations and take advantage of economies of scale.   Over time, mainline aircraft departing from a hub either went to other hubs or to larger 1st and 2nd tier cities.  Mainline aircraft stopped serving the smaller third tier cities (for example Des Moines or Jackson, MS.)  It never occured to unions to limit both scope and distance in those contracts because originally it was assumed that regional aircraft couldn’t serve route sectors of much more than 200 to 300 nm. 

Instead, mainline airlines used their feeder airlines to pick up traffic in those cities and carry it to a hub where the passenger then transferred to a mainline aircraft or another regional flight to get to their final destination.  For instance,  a passenger might fly American Eagle from Des Moines to Chicago, transfer to an American Airlines flight using mainline aircraft and continue on to a final destination such as Los Angeles.  

Prior to 1978 deregulation, American Airlines might have flown a route from Chicago to Los Angeles with intermediate stops in Des Moines and, say, Salt Lake City.  Remember this is a hypothetical example.  While hubs were beginning to develop or had developed, those entities really resembled what we call focus cities today.  It was a concentration of traffic and opportunity to rotate aircraft through maintenance facilities but it wasn’t a fortress hub that we see in places such as DFW or MSP today.

Over time, new aircraft such as regional jets that had greater capacity and speed than original “feeder” aircraft such as the EMB Brasilias or SAAB 340 aircraft were introduced.  These regional jets were capable of mainline aircraft speeds and altitudes and were capable of flying route segments in excess of 400 nautical miles.  Since the cost structure for such aircraft was an order of magnitude less than that for mainline service, airlines began to realize that they could use these aircraft to serve routes that contained a lot of O&D traffic for more point to point flying. 

Suddenly, American Eagle wasn’t just serving cities from DFW that were in Texas and surrounding states.  With regional jets, it began serving medium haul, thin traffic routes from DFW.  One example is the one I gave yesterday:  DFW to MKE.   That route has a lot of O&D traffic (Origin and Destination) but very little connecting traffic.  What that means is that people flying from MKE to DFW were terminating their trip at DFW instead of necessarily continuing on to another destination and vice versa.  If a MKE passenger wanted to get to Denver, they would fly either to Chicago or MSP to connect or possibly direct on a United Airlines “connection airline”. 

The feeder/connection airlines evolved into the “point to point” service provider for small to medium markets.  The reason is that airlines can only afford the flight crew labor costs for routes where the yield (profit from revenue) justified those costs.  The only way to find that yield is to concentrate flights through hubs.  One example, again, is DFW.  American Airlines “feeds” traffic from all over its network (including American Eagle’s network) into DFW where they “concentrate” that traffic and redistribute it to other routes.  This means that those routes load factors remain very high for each flight. 

On the surface, that sounds efficient.  However, there are some underlying factors that reveal it to be inefficient to operate such hubs.  First, it means that you have to schedule your traffic in banks of flights.  You want your flights to arrive at about the same time and then take off again at about the same time.  In order to manage that, your departure times at outlying stations may have to be excessively inconvenient to passengers.   Your airport service staff tends to work in concentrations with excessive idle time in between banks of flights.  You still have to pay them and they remain there because you service large banks of flights at one time.  An airline must have that staff in place over the full duty period to accomodate those peak periods.

Such hubs also tend demand fleets that are largely homogenized.  American Airlines, for instance, standardized on the MD-80 for these flights (and now is doing so on the B737-800) and therefore has to find routes that fit the aircraft instead of aircraft that fit the routes.  Because they must fill so many seats on mainline routes to make a profit, it drives them to feed more and more traffic into the hubs.

Hubs also can cause system wide service disruptions.  A bad weather day in Chicago can wreck two major legacy carriers systems (United and American Airlines) for multiple days because any disruption ripples outward through the whole system.  Since all flights go to or depart from the hub, there is no flexibility to “route around” the problem city.  

All of those issues inhibit a legacy carrier from earning long term profits and they haven’t earned reliably for over 20 years now. 

The best example of how best to operate in today’s airline market is, no surprise, Southwest Airlines.  While they do have several cities that look and feel like hubs, they really aren’t when compared to other airlines.  They are focus cities.  Those focus cities permit some concentration but they really exist to provide some operational flexibility and maintenance. 

Southwest Airlines focuses on flying point to point routes and high frequency commuter flights.  If you try to get from one city to another on Southwest’s system, you are very likely to fly there direct and in many cases non-stop.   The percentage of traffic on flights from focus cities that is “connecting” is relatively small compared to legacy airlines. 

When a flight from Southwest Airlines departs DAL (Dallas Love Field) for ABQ (Albuquerque), it isn’t coming back that day most likely.  Instead, it will continue on to, perhaps, Phoenix and then to Portland where it will turn and head to Los Angeles and then, maybe, to Denver.  The plane  goes through 3 focus cities but at all times it is carrying O&D traffic primarily. 

That point to point system with focus cities permits them to offer highly convenient flights that fly direct (in other words, a passenger doesn’t have to get off the plane and board another one) and they get a higher utilization rate out of both the aircraft and crew because they aren’t sitting at hub for 1 to 2 hours waiting for their flight to depart again.  Instead, Southwest crews do fast turnarounds at focus cities (20 to 40 minutes) and depart for still another city.  Southwest not only gets high utilization from their aircraft but they also get high utilization from their flight crews. 

Southwest Airlines’ crews are paid competively and even generously but the airline also gets far more productivity from them in a given duty period.   Ironically, Southwest crews also fly less fatiguing schedules overall and spend more nights at home than most other aircrews.   Southwest captains earn as much or more than any other Boeing 737 captain but because they negotiate not just raises but flexibility in their contracts, their standard of living is quite a bit higher than it would be at most legacy carriers.   They offer more productivity in return for working an easier duty period at a competitive salary. 

They also don’t fly small commuter aircraft and they don’t avoid flying to 3rd tier markets.  Southwest flies B737 equipment to cities such as Indianapolis, Odessa, Corpus Christi and Brimingham.  Every other airline serves those markets with primarily regional jets and Southwest manages to earn more profit flying to those same cities using mainline aircraft that is more than 100% larger.   Not because their crews are “cheaper” but because their crews (and their unions) bargain for more than just money.  It’s a competitive negotiation with real give and take and, as a result, Southwest gets high productivity without working their crews longer hours, bad morale or high turnover. 

Next we’ll look at why seemingly “fair” fares can’t earn real profits for most US carriers. 

Filed under: Deregulation, Trivia by ajax
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USA Today’s Today In The Sky is reporting that Frontier Airlines has gone to their bankruptcy judge and asked him to break the Teamster’s contract in order to allow some heavy maintenance to be done off shore (Central America most likely.)

 I’ll confess that I have so far been surprised at Frontier’s relatively smooth, up to this date, reorganization.  This latest development seems to indicate that all is not as it seems and they may only just now be working on the hard stuff.  The hard stuff is, quite honestly, renegotiating labor contracts and getting commitments from all the stakeholders to play nice in the emergence from bankruptcy. 

They remain on my death watch simply because they continue to be squeezed on both sides by Southwest Airlines and United Airlines in Denver.  In addition, they no longer have any fuel hedges (they had to be given up on going into bankruptcy) and while oil prices are lower than their peak just a couple of months ago, they remain volatile. 

Even with renegotiated labor contracts and concessions from lenders, they still have to compete with their system based in Denver and that’s a tough market.  Denver really isn’t large enough to support 3 major airlines battling it out in the long run.  A quick look at what happened in Hawaii between go! Airlines (A Mesa Airlines subsidiary), Hawaiian Airlines and Aloha Airlines (who went into liquidation) is all you need to read the tea leaves.  Whoever has staying power wins and, right now, that would be Southwest and United.

Filed under: Airline News, Death Watch by ajax
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I received some photos of a United 737 taxiing through high water at Chicago’s O’Hare Airport when it was inundated with rain from the remnants of Hurricane Ike.

This is the photo:

I can only imagine how those engines were babied as they moved through the water.  And I can only imagine just how miserable it must have been to be working as ground crew too.

I’m back from a brief vacation trip and I’ll be posting regularly again.

Filed under: Airline News by ajax
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The Dallas Morning News Aviation Blog just had this post.  United Airlines has just made it known that they expect some rather heavy losses in their fuel hedging program.  Fuel hedge are common practice among airlines to make fuel prices predictable (rather than necessarily always cheaper) and therefore allow airlines to financially plan for their needs.   Southwest Airlines is arguably the most successful at this strategy.

A fuel hedge is a kind of bet.  An airline purchases contracts and options to buy fuel oil (not jet fuel but fuel oil which tracks in line with jet fuel prices) at a specified price.  If an airline thinks fuel prices will go up, they will buy options and contracts for these fuels for a current market price for delivery some time in the future.  If in fact the prices go up, they sell these contracts for a profit and use the money to offset their jet fuel costs.   If the prices go down and the airline bets that they’ll go up, they suffer additional losses and the cost of their fuel goes up against their plans.

Since hedging is a risky business, a wise airline only hedges a portion of their fuel costs per quarter so they are not completely exposed to the risk of having bet wrong.  In addition, they’ll bet conservatively on prices so that the risk they expose themselves to is minimized as much as possible.  To manage all of this properly requires an army of financial analysts and hedging experts. 

The problem with hedges is you can both make and lose a lot money with them.  When you make a lot of gains, it becomes intoxicating to any airline.   The temptation is to hedge more and more and bet on directions that seem pre-ordained.  Just 1.5 months ago, everyone was betting that oil might go as high as $200 / barrel.  Just this last Monday (September 15, 2008), oil was trading at $97 / barrel.   United bet wrong and now has to report that they have had both real and unrealized losses involved with the trading.  Unrealized losses require them to hold cash in reserve to meet those potential costs.   That is “restricted” cash.

Lately you hear airlines talk about how much unrestricted cash they have on hand.  Southwest Airlines, American Airlines and others will have quite literally billions of unrestricted cash.  That is the money for which there are no real or potential obligations attached.  Going into a period of economic uncertainty, having a large amount of unrestricted cash is good because you can suffer short term losses and still operate sensibly.  If you have too little, you’ll quickly be forced to constrain your operations which quite often leads to a cycle of contraction for an airline.  Because they don’t have the cash, they become smaller and because they’ve become smaller, they have even less cash.

American Airlines continues to survive these industry contractions because they have a huge amount of unrestricted cash held in reserve.  It gives them maneuvering room and they are probably the best in the business when it comes to managing their finances.  That is one reason why they did not have to go into bankruptcy in the post September 11 industry crisis.

To return to hedges.  A hedge becomes risky when you are buying contracts that approach the forecasted market price of the fuel.  Ideally, you want to have options and contracts that are substantially lower than your current year’s price of fuel.  That way, if fuel prices drop your contracts will still realize a gain.  If you buy too close to market prices, particularly in a volatile market such as what oil is experiencing, you run a very real and damaging risk of being obligated to buy those commodoties at prices that are higher than the current market rate.

Hedges have often been described as an insurance policy against high fuel prices.  They aren’t.  They are a way of smoothing the peaks and valleys of fuel prices.  If you smooth those peaks and valleys, you can more accurately plan your financial obligations and that potentially allows you to make more money available for purchasing goods and labor.

The losses reported by United Airlines are just one more reason why I watch them carefully.  You can’t suffer those kinds of losses very often and, once again, it appears that their business plan is not accomodating the current market conditions in the airline industry. 

Filed under: Airline News, Death Watch by ajax
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Given the semi-success of the all business class airlines that formed around flying from NYC to London, I’ve wondered if there wouldn’t be a demand for such service between Los Angeles and NYC.  Frankly, I wonder if an all First Class service between those two cities wouldn’t be in demand. 

I could see an airline such as American Airlines or Delta Airlines or United Airlines fitting out a 737-800 or A320 with their international business class or first class product and offer a customized service from the curb to the airplane as well.  If one flew from LAX to EWR, it would be as convenient as convenient gets and serve industries such as the entertainment business with near private jet service. 

The airlines would simply need 2 or 3 dedicated aircraft refitted and could draw upon senior staff for such flights.  With lie flat seating, the airline could offer both morning and evening departures from each city and by flying into EWR, put their customers close to Manhattan.  They likely could charge a small premium (10 to 20%) over their existing product just to allow people to avoid flying with the masses and the associated delays that come with more people on one airplane. 

That is the one city pair that could support such service.  I do believe it could have potential for profitability but I also believe it would raise the profile of the airline as well.  

Filed under: Airline Service by ajax
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In the late 1990’s, I worked in a general contractor partnership with two other men.  We reached a particularly bad period where despite all our efforts, our clients weren’t giving us business.  After almost 2 months of giving ourselves $200 paychecks every other week, it was clear that it was time to do something else. 

Our particular situation seemed to be based on our costs.  Things like sheetrock and doors had been rising in costs to the point where it became necessary to raise our prices to support the work we did.  There were other competitors, one man shops with a pickup for an office, who were undercutting our bids just enough to win the business.  We faced a choice of lowering our prices to win the business and not have any money or to stand firm and not win the business.  Or so we thought.

One of my partners and I were motorcyclists and decided to take a ride during this period that lasted 18 hours.  At one point, we were taking a breather alongside a very quiet road and began talking about our business troubles.  We realized a couple of things that changed our game.  First, the people that were undercutting our business were formerly from larger construction companies setting out on their own.  They were winning on price, not quality and dependability.  Second, we had an operation that had grown some and no longer fit well with some of our clients. 

The next business day, we renewed our effort to check in with clients on a regular basis and continued to bid every job available.  By doing this, we began to underline our ability to a project better and for a reasonable price.  We also began to go out and seek new clients who better fit into our business.  This meant asking for the business and delivering exactly what we promised on each job.  The result was that old customers that continued to fit our model came back and we gained new customers who were looking for a company that performed.

This should sound remarkably familiar to those who follow the airline industry.  There has been a cycle of attempts to enter the industry by people thought they had a game changing business plan and some were successful while others haven’t been.  Jet Blue brought a new LCC model based on the Southwest turnaround and fleet efficiency but that was also focused on a higher level of comfort and service.  They introduced two types of fleets to right size their routes but stuck with only two in order to benefit from economies of scale. 

Skybus came about based on the single fleet, pay for everything model that Ryanair of Ireland built.  They promised rock bottom fares and engineered a plan to accomodate that by flying to secondary cities and airports that offered lower operational costs.  Skybus failed partly because of rising fuel costs but also from a failure to recognize that distances in the US make it much more inconvenient to fly into those secondary cities. 

Airlines who identify their niche and develop a plan for it are more likely to survive.  You cannot be all things to all people in this business because that means you have to compete against every other airline at the lowest common denominator.    Why would American Airlines wish to compete against Allegiant Airlines when doing so puts them at a competitive disadvantage?  Allegiant is based on a business model that addresses low frequency, leisure travel combined with ancillary revenue derived from charging for every convenience.  Their labor costs are low and their fleet capital costs are low.   American Airlines isn’t built to compete for that business.

Continental Airlines is an excellent example of a company serving the people that fit their niche.  It doesn’t operate a low cost airline, it operates a high frequency, high service system that serves business travelers.  They understand that maintaining a modern fleet with modern conveniences is important to that customer.  They fly where their customers want to go and worry a lot less about being all things to all people when it comes to destinations. 

Southwest Airlines has found itself evolving over these past several years.  Often identified with the first time flier in the past, business travelers have realized that Southwest Airlines offers something that many don’t:  dependability.  When they fly Southwest, they know that there is a very high degree of probability that they’ll be able to get to their destination on time and, often, closer to their needs in a particular city.   While Southwest still offers a very low fare compared to its customers and still attracts those first time fliers, they’ve also begun to serve the needs of the business traveler by remodeling their gate areas to offers business conveniences such as laptop power ports.  They are in the process of testing in flight internet connections for the business traveler as well. 

In contrast, you have United Airlines who has pursued the “be all to everyone” philosophy and it shows.  With a huge network to leisure destinations, they get soundly beat by other airlines who compete on price.  Their national and international business traveler destinations are served by older, unrefurbished equipment and their service model denies the conveniences a business traveler expects such as meals, beverages and even charging for checking the first bag.  Notice that Continental hasn’t ignored the incremental revenue from such fees in general (they charge $25 for the 2nd bag checked) but they haven’t offended the business traveler with 1st bag checked fees either. 

American Airlines and United Airlines have pursued a strategy that offends or, at the least, disappoints their core customers.  Continental, on the other hand, recognizes that the opportunity cost of forgoing that 1st bag fee is paid back in customer loyalty when it comes to choosing Continental. 

The last thing the business or frequent flyer wants to hear is that the airline resents them and wants more.  Indeed, many have said publicly that if an airline wants more money, charge a higher fare but don’t insult them by charging for a bottle of Ozarka water on a flight.  It strikes such people as petty and money grubbing.   At the same time, these travelers don’t need to be singled out as the ones to carry the burden of paying for a flight.   Don’t charge exorbitant business fares simply because the company is paying for it rather than traveler.  These business travelers are smart people and generally the ones traveling are some of the smartest.  They will begin to recognize that the fare to travel somewhere on business becomes inefficient at a certain point.

I suspect that it is time for airlines to begin eliminating some perks in the business class cabin as well.  Often the business cabin is occupied by many travelers who purchased full fare economy class tickets and used their frequent flier status to upgrade into that seat.  Airlines will have to begin to find ways to differentiate their service and charge accordingly.  Perhaps a full fare economy ticket should be upgradeable to an Economy Plus seat rather than a business class seat. 

Service is important to the frequent flier but what is that “service” that is most important?  Is it a hot meal?  A business class seat?  A friendly flight attendant?  No doubt each of those things has some importantance but I’d argue that the primary measure of service is whether or not you can dependanbly transport your customer from point A to point B on time.   That is, after all, what the airline is contracting to do.  Deliver that and the customers bags as well, and you’ll likely win their hearts and minds.

Filed under: Airline Service by ajax
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A number of airlines have been asking for permission to delay the start of flights to China from the United States.  The Dallas Morning News reported that American Airlines now has filed for such permission on their Chicago-Beijing route authority. Both US Airways and United Airlines have also asked for the same thing on their recent route authorities.

US Airways lacks the aircraft type for making the trip from Philadelphia and United Airlines, who does have the equipment, simply doesn’t want to fly to their new destination in the current economic climate.  These kind of routes cost a tremendous amount of money to operate and without some certainty that they’ll make money, the risk doesn’t seem worth it right now.  To the winners of these authorities at least.

The airline industry has played the “save us” card on these routes by making the argument that just because their economic situation changed, they should be given a second or third chance to find a more convenient time to operate these routes.  Yes, the entire industry has experienced a lot of challenges and, yes, the cost of fuel is certainly the biggest. 

However, we are not without other airlines who I suspect would be happy to operate these routes.  Why wait for an airline to decide its ready to fly them when we can identify other airlines that are willing to fly them right now.  I suspect that both Delta and Continental Airlines would give serious consideration to even removing equipment from a different route in order to be able to fly these routes.  Northwest, who already operates a large number of Asian routes, might well be tickled to death to offer more service.

It is time to go back to a “use it or lose it” model.  Giving airlines 2nd and 3rd chances only removes the incentive to figure out how to operate in today’s climate.  An airline should have no more than 12 months to operate a route authority from the date it is awarded.  If it cannot or will not, then its time to seek other “bids” for these routes.   When you deny such routes to Delta (who asked for ATL-Beijing) and give the to American Airlines (who wanted DFW-Beijing but ultimately asked for and got Chicago-Beijing) who then asks to defer their operation, you are putting Delta at a competitive disadvantage and American Airlines gains. 

Let the airlines who can and will operate these routes, have the routes.  Don’t permit large legacy airlines operating in fear the opportunity to “sit” on the routes and prevent that economic growth to someone else. 

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V Australia, a new subsidiary international airline of Virgin Blue is due to start new routes from Sydney to Los Angeles in December of 2008. They will be using new build Boeing 777-300ER aircraft configured in an economy, premium economy and business class setup. Many question the viability of successfully flying that route against the likes of QANTAS, Air New Zealand and United Airlines but I have a feeling these guys are approaching this route with more right sized equipment.

QANTAS and United Airlines both use 747-400 aircraft that typically have 343 and 374 seats respectively. V Australia’s 777-300 aircraft will have about 300 seats in their mix. However, V Australia will fly the most fuel efficient aircraft in its class and offer a brand new cabin whereas the QANTAS and United aircraft are older, less fuel efficient. In addition, with the coming fracturing of the US-Australia market, the 777 and 787 will fly those routes with lower seat costs and higher load factors than the 747 can offer.

QANTAS will be placing the A380 on that same route in the near future and while its seat costs will match the 777, the real question is whether or not they can fill the aircraft. The QANTAS A380 has 450 seats to fill every flight. The V Australia only has to fill 300. Allowing for similar departures and seat demands, the 777 makes money a lot earlier in the game.

Convetional wisdom is against V Australia and the 777. I remember that the only airline to participate in the design of the 777 and not buy it was QANTAS. There is a reason why the 777-300ER and 777-200ER have the range and efficiency that they have today. It was designed for those US-Australia routes. If V Australia keeps a good schedule and are able to manage their fuel costs well, they’ll likely succeed. Those routes could use a more economy minded competitor.

Here is the new V Australia 777 on the Microvolt / Paine Field website.

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United just announced a new Buy on Board food program for both their domestic and international flights.  You can read all about it here.

The basic summary is that snacks will be eliminated on domestic flights in favor of selling Buy on Board food in economy.  In domestic business class, beverages remain complimentary but now they will charge for food.  In addition, meal service on international coach service will, on many trans-atlantic flights, be reduced to Buy on Board as well.  Best of all, Buy on Board prices will be going up too.

What’s more, flight attendant staffing will be reduced to FAA minimums on such flights. 

So, United Airlines is reducing service in business class (coach already gets FAA minimums), reducing or eliminating more food service and charging more for their Buy on Board product while having fewer fight attendants available to sell the over-priced product.  This stunning and bold new move has earned United 1st place on my death watch because any airline stupid enough to do such things to their service product and particularly to their business class customer deserves to be out of business by Christmas. 

I’d say this was too painful to watch but it isn’t.  I’m going out to buy popcorn for this one.

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The Dallas Morning News Airline Biz Blog has This Story today.  I’m certain there are a number of reasons why airline traffic will be down for labor day but I’m equally certain that airlines are starting to feel the effects of far higher prices when it comes to travel demands. 

If this is true, LCC carriers such as Southwest and Airtran are probably grearing up to add even more capacity in existing and new markets.  These carriers can offer low prices on a sustained basis in addition to a basic service level that doesn’t quite show contempt for the consumer.  Legacy airlines such as American Airlines, United and DeltaNorthwest has cut service, introduced a number of new fees and raised fares considerably so far this year.  There isn’t nearly as compelling a case for travel on a legacy carrier as there once was. 

In fact, I’m  not sure what the argument is for traveling on a legacy carrier unless you seek a business class accomodation (available on Airtran, however) or a highly convenient direct flight.  Even the basic frequent flier no longer enjoys many of the privileges accorded to him or her in the past.  Fees for redeeming frequent flier miles are now designed to “buy” the ticket and the seats available for frequent flier redeemers is more reduced than ever before. 

At this point, a traveler has about the same or better experience on one of the low cost carriers, sometimes enjoys *better* amenities (Hello Jet Blue, Airtran and Frontier) on newer airplanes all for a fare that is, at the least, competitive with any legacy carrier. 

Many airlines have already begun their capacity reductions and they probably total about 5% in their markets.  So, we have a 5% reduction in travel demand matching a 5% reduction capacity which means there is about the same amount of people (per seat) chasing a low fare as before.   That means that air fares won’t go up anymore and some airlines will likely begin to look at attracting customers by reducing or eliminating these new fees going into the fall/winter season.  My prediction is that one or more legacy carriers will eliminate or reduce the first checked bag fee for travel sometime in November and December.

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United Airlines, an airline that has offered spotty-at-best service for more than 10 years, seems to have the 9 lives of a cat to most people.  Unfortunately, of all the legacy airlines, it is the one that should have melted away some time ago.   It emerged from bankruptcy in 2006 after spending 3 years and over $300 million reorganizaing itself to operate in a world with $50 / barrel oil without a realistic plan to deal with contingencies.

The problem is, oil was already at $60 / barrel when it started fresh.  Since 2006, United has been the one airline that always manages to arrive to the party in rumpled clothes and only a $5 bill to pay the door charge.   Those rumpled clothes are an aging fleet (although all of the truly old Boeing 737s are now being withdrawn from service to cut capacity) of aircraft that do not match the interior quality or service level of most of its competitors. 

The management team, most importantly CEO Glenn Tilton, has spent more than 2 years maneuvering to merge this airline with another and, yet, has been rebuffed by all potential candidates such as Continental, Delta and US Airways.  Indeed, they took a particularly condescending attitude towards US Airways’ offer to explore mergers when Glenn Tilton implied that he and his team would remain in place and “mentor” the US Airways management team including Doug Parker. 

Say what you will about US Airways but it isn’t the company we knew in the 90’s or even 3 years ago.  Doug Parker and team are really America West and they’ve been better at executing to plan than virtually any other management team at a legacy airline.  If anything, Mr. Tilton would be well served by Mr. Parker’s mentorship. 

Now the marriage dance in airline mergers is essentially over.  Delta and Northwest are walking down the aisle, Continental has chosen to stand alone (wisely in my opinion) and American Airlines has decided to pursue trans-atlantic partnerships with British Airways and Iberia Airlines.  There is no one else left for United to pursue a merger of equals and they lack the cash and operating plan to purchase a smaller airline as well.  Indeed, Continental Airlines is joining the Star Alliance (of which United is a founding member) and that may benefit United but if they think they will remain the shining star in the US market for that alliance, they are sadly mistaken.

Continental’s management team is stable, smart and agile in this market.  They are uniformly the choice of airline among business travelers (and that is who pays the bills) and possess a young, modern, harmonized fleet of aircraft that serve the routes efficiently.  Continental has hubs that will serve that alliance well in both NYC, Houston and Cleveland and offer Star Alliance members excellent codeshare options throughout the United States.

United Airlines has a fleet of 747s that are some of the oldest -400 models and by all passenger accounts they are in desperate need of refurbishment (unplanned for 3 years and not recognized for another 2 years while United showed its legs to potential suitors).  They possess a large 777 fleet which, on the surface, would imply some modernity there.  However, about half of that fleet are early model “A” market 777s powered by the less powerful and efficient Pratt & Whitney engines.  No lip gloss found there.  The other half are 777-200ER models that would at first glance appear to be more modern intercontinental aircraft.  They aren’t, really.  They’re what Boeing originally referred to as “B” market 777s and, once again, they are powered by the less reliable and efficient Pratt & Whitney PW4000 series engines.  I would point out that every other operator of this aircraft in the US is using the more powerful and efficient Rolls Royce Trent or GE90 engines (American Airlines, Delta Airlines and Continental Airlines.)

Their 767 fleet, a large one comprised of 767-300ER models, shows the same flaws as their 777 fleet.  While some were built as recently as 2001, they are all powered, once again, by the less fuel efficient Pratt & Whitney engines.  I’m sure a theme is beginning to reveal itself here. 

The same also remains true for their 757 fleet in that they are powered by the lesser Pratt & Whitney engines while other airlines are utilizing the real rocket of that type, the Rolls Royce RB211 powered 757 that, with winglets, is capable of ETOPS trans-atlantic operations.

Ignoring the soon to be gone 737 fleet (which is old and dingy but not powered by Pratt & Whitney for once), the remaining aircraft are various Airbus A320 types.  While they are not old by airline standard, most are more than 10 years old and some are approaching 15 year of age now. 

An old airplane is not an unsafe one but, in United’s case, it is an uncomfortable one.  While other airlines have paid attention to maintenance, comfort and even tuning engines, United has spent its time navigating bankruptcy and its management team has bet their golden parachutes on a merger.  With no other really suitable partners, they are now faced with operating an airline that by most standards, is not competitive.  What’s worse, they have lost 2 years time that could have been spent executing a service plan that might work.

If the cost pressures airlines are facing continue for another year, they (United) will be faced with another potential bankruptcy and, this time, it should be a liquidation.  There is no argument for this airline continuing its operations under the present regime nor is there an argument for it continuing to operate simply to support air transportation in the United States or abroad.  There are plenty of air carriers that can take up the slack and operate more coherently than United.   In fact, the only part of United ceasingly to exist that I find distasteful is that it potentially offers American Airlines an even greater lock on Chicago’s O’Hare airport.  Since I experience that kind of fortress here in the DFW area, I know just how expensive that can be for a consumer.

Successful airlines share a few qualities that I’ve noticed over the years.  They generally possess a young, fuel efficient and harmonized fleet.  They buy the airplanes configured for performance on a variety of routes.  They have leadership rather than just executive management.  They focus on a clean, comfortable flight experienced that is defined by the service provided by its employees.  Such an airline also carefully watches its money and nurtures its finances to avoid running cash short on the wrong day.  It takes care of its employees not by offering the best salaries but by offering a living wage, a hospitable workplace and with fair treatment in both hard times and good.

That is the antithesis of United Airlines and, so, they go on the Death Watch.

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The latest on-time statistics are out on US airlines and the Dallas Morning News has them here.

I’m struck by  more than one item. First, how strange is it that 2 commuter airlines that fly for legacy airlines have better on-time numbers than any 48 state legacy airline? These airlines fly aircraft that is subject to more technical delays and cancellations. It boggles my mind that SkyWest and Pinnacle Airlines are at the top.

Skywest flies for United, Delta and Midwest as their feeder “connection” airline using CRJ200/700ER/900 aircraft (and a few Embraer EMB-120 turbo-props).  Ordinarily, the Bombardier aircraft is not universally known for its dispatch reliability but the new(er) CRJ700/900 must be doing much better than its older cousin the CRJ200. 

Pinnacle Airlines flies the CRJ200/440/900 aircraft, all similar or the same as Skywest, for Northwest Airlines and Delta.  Right now, you could drop me with a feather.  In addition to the aircraft, these airlines fly out of major hubs that are often disastrously affected by summertime weather. 

What is a bit more surprising (if you can believe it) is that US Airways is the top on-time non-LCC legacy carrier.  There are reports that they’ve made drastic improvements at their Philadelphia hub.  Right now, they are neck and neck with Southwest Airlines and, frankly, I’d say you are doing pretty good to be playing ball in Southwest’s neighborhood.

What I have to ask is this:  Is it an anomaly (unlikely as US Airways has been climbing steadily) or is because they’re able to depart on-time more often since instituting charges for checking bags?  If this climb in reliability is due to changes in customer baggage habits, look out. 

Three LCC carriers, Southwest, Frontier and Airtran, are virtually neck and neck in these ratings and, again, I wonder if this might be due to people traveling with more carry-on luggage than in the past. 

American Airlines is dead last (even beat by American Eagle) in the ratings and that, to me, indicates graver trouble at that airline.  There have been some reports of pilots becoming slightly inflexible with respect to work rules.  I believe it is more a symptom of an airline that has become sick in morale and flexibility.  Gerard Arpey won’t fix this with more mattressmakers.com analysis, better financing or capacity constraints.  It gets fixed with leadership.  Something that American Airlines really hasn’t been blessed with since Robert Crandall retired. 

Finally, if you offered me a bet that Mesa would have better on-time ratings than American Eagle, I’d have taken the bet with glee.  When you are worse than Mesa, you’ve got real problems.

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The competition that exists between Boeing and Airbus has to be one of the fiercest fights ever seen in commercial aviation.  Among aviation enthusiasts, most are dedicated only to one or the other and just visit an aviation enthusiasts discussion website and you’ll discover debate that is even more heated than what exists between Airbus and Boeing.

Family and friends have, from time to time, asked me whose airplanes I like the most.  I probably lean towards Boeing more than anyone but for different reasons than many have.  Before going further, I should say that I think Airbus builds a modern, competitive airliner and is in no way materially inferior.

I like Boeing’s approach to an aircraft.  I think they value customer experience just a bit more whereas I think Airbus tends to value an airline just a bit more.  One example is the difference between the 737 and the A320 aircraft.  Both are made for the identitical market and both are modern, fuel efficient jets.  Both have had rough spots over the years and both companies work incredibly hard to sell these jets to all kinds of airlines.

I should say that I admire how well Airbus has done at making their aircraft families cross-compatible when it comes to flight crews.  A pilot for an A320 can upgrade to an A330/A340 with a lot less training than a similar upgrade from a B737 to B767/B777.  Airbus makes owning their entire aircraft family highly beneficial *if* their aircraft family can fill all of your missions. 

However, I do find the 737 just a hair more comfortable.  I’m a rather tall and big person with longish legs.  Having flown numerous examples of both aircraft, I find the aisle seat experience roughly similar and the window seat experience very different.  The A320’s fuselage is more “circular” and therefore curves inward more at the shoulder to head height of most people.  At the window, my perception is that my head must lean away from the fuselage and that feels uncomfortable.  The 737’s fuselage is more ovoid and that same curve is more gradual and starts more above the passenger than next to him. 

The seats should be roughly the same but my perception is, again, different.  This simply may be a function of what US airlnes are using for a seat on the Airbus vs the Boeing.  My perception is that the A320 class of aircraft typically have a seat that is a touch thinner, a touch harder and therefore a touch less comfortable on flight durations of 2+ hours.  I have felt it on America West aircraft, US Air aircraft, United Airlines aircraft and Northwest Airlines aircraft.

I once had a chance to fly from PDX (Portland) to DFW (Dallas / Fort Worth)  via DEN(Denver).  My flight from PDX to DEN was on a United Airlines A320 that appeared to be older but not “old”.  Within 1 hour, I found myself fidgeting and since I was in Economy Plus next to a window, I expected to feel more comfortable.  I didn’t.  The next segment was on a United Airlines 757 (not a 737 but it does have the same fuselage dimensions and uses the same seats) in plain old Economy rather than Economy Plus.  I was simply more comfortable.  The window seat felt more accomodating and I was finally able to relax enough to nap despite less legroom. 

Each aircraft manufacturer tries hard to find the right niche for aircraft and I would argue that as a result of this competition, they actually are more complimentary these days than directly competitive.  An airline could be well served by both Airbus and Boeing without sacrificing efficiency. 

If I were to pick a fleet for the upcoming Delta / Northwest merger, I would center on using the 737 family for domestic service (using a combination of 737-700 and 737-800 aircraft, the 767 (or 787-3)  for domestic transcontinental and Hawaii service, the A330 for trans-atlantic (Europe and Africa) and South American service, the 787 for South American / Southeast Asia and trans-pacific service and the 777-200LR and 777-300ER for long haul, high density international traffic from hubs like ATL (Atlanta), MSP (Minneapolis / St. Paul), DTW (Detroit), JFK (New York City) and LAX (Los Angeles). 

It’s hard to say where the new Airbus A350-XWB will fit in “mission-wise” when it comes to such an airline.  While it’s passenger economies may be a tad better than the 777, it won’t haul nearly as much cargo.   At present, it cannot quite adequately fill the 777 mission role and it might just be a tad too big to compete directly with a 787-9/10 either. 

One thing I admire about Boeing is that they tend to “right size” their aircraft for various markets.  Often people directly compare Boeing and Airbus aircraft on the criteria that one aircraft can carry more people on the same mission than another.  Occasionally, that’s valid.  More often, not.

An airline needs aircraft that “fit” the passenger and cargo demand of various routes.  Boeing has 40 years of experience helping airlines plan their fleet on these needs and does it well.  The 787 was never intended to be a 767 or 777 replacement.  It was developed to fit an emerging demand that really fell in between those two aircraft. 

The next replacement for the 737/757 series will fall somewhere new as well and probably will not fill a need below the 737-700 and probably will not fill a role that exceeds the 757-300.  That’s a 2 class aircraft that will probably have a family range accomodating from 150 passengers to 220 passengers.  Real aircraft range will probably include transcontinental capability for all variants at about 3500 to 4000 nm (nautical mile) max range.  Airbus will likely target a similar set of criteria with the next generation aircraft.

The discriminators in the next battle between Airbus and Boeing will be things like the best operating efficiency, dispatch rates and passenger comfort.   I would give the edge to Boeing when it comes to efficiency and dispatch rates and it is anyone’s guess on passenger comfort.  I’m certain that both companies will sell an amazing amount of the next generation single aisle aircraft and I’m equally certain that airlines will praise both.

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The Runway Girl blog just posted this report on SAAB, Embaer and China with respect to the growing demand for turboprops. 

It’s *very* interesting to me that Embraer has begun studies on a new family of turboprop aircraft.  This is an industry they cut their teeth on and many may still remember their small commuter aircraft from the 80’s and early 90’s. 

The report takes note that most demand for turboprop aircraft is currently in Europe and Asia.  However, it seems like there will be rising demand here in the US over the next 2 years.  Horizon Airlines, the commuter feeder for Alaska Airlines is phasing out its older DH-8-200 aircraft in favor of an all Q400 (really a DH-8-400 Quiet) fleet.   Also, Continental now owns several Q400 aircraft (and has orders for more) that are operating out of Newark with great success. 

The real demand will begin when legacy airlines who contract with regionals (Mesa, Pinnacle, ASA, ExpressJet, Air Wisconsin, etc) ask for turboprops and better revenue.  My guess is that Delta/Northwest will lead here but it might be Continental.  American Airlines and United will be followers, not leaders in this if I’m guessing right.

The economics of operating these aircraft on short hops and commuter routes is just too good to ignore and even if oil does drop below $100, it will never be $30 a barrel again. 

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I got asked today what airline(s) I thought might be in real trouble.  Thinking about it for a few hours, I’ve come up with a sort of “death watch” list.

First on my list is Midwest.  They just announced they’re grounding their MD-80 aircraft and, as a result, cutting several important routes while expanding their codeshare with Northwest Airlines (who now owns a “passive” 47% stake in Midwest.)

Giving up routes such as Milwaukee – Los Angeles does not bode well.  With only Boeing 717 aircraft, they have limited themselves to routes that are “heartland” oriented.  For instance, the 717 can’t make it from MKE to LAX.  It can fly from Kansas City to Los Angeles (that route stays for now) but who wants to fly from MKE to LAX via MCI (MCI stands for Mid Continent International by the way)?  The airline business is, first and foremost, a network game and Midwest just cut 40% of its network putting itself below the critical mass in my opinion.

The proposed merger with Airtran would have saved them but they made a deal with the devil (Northwest) and Northwest has no interest in Midwest surviving really. 

Next up is Frontier.  Their hub is Denver and they have already cut back their focus cities.  While their fleet is new and fuel efficient, part of their business model counted on being the only LCC (Low Cost Carrier) game in town.  Not so true anymore. 

They have United Airlines above them as a legacy carrier operating a substantial hub in Denver and offering a nicely segmented set of seat choices and a global frequent flier program.  Below them is Southwest Airlines.  Southwest has entered that market with a vengeance and contrary to denials on te part of Southwest, it is crystal clear they intend to put Frontier out of business.  Much of Southwest’s growth has been focused on Denver and their CEO has already stated their intention to put more capacity into that city.  Denver can support two airlines, not one.  Since Frontier is already in bankruptcy, they’re my pick for going away. 

The only saviour is an airline that fits into their network and I can’t identify one that really meshes well with both their route network and their fleet. 

My third pick is Virgin America.  This is an airline that doesn’t quite know what it wants to be.  On the one hand, they want to be a trans-continental, high value, high service airline.  On the other hand, they want to be perceived as the west coast version of Jet Blue.   Trans-continental flights can’t make money using the equipment they have (Airbus A319/320) and their base, SFO (San Francisco) can’t support a real hub operation with good traffic given the competition they have from both legacy carriers and established LCC’s.

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In the late 1920’s, a small airline named Pacific Air Transport decided to sell itself to another airline.  One advisor talked them into selling to Boeing Air Transport.  The Boeing Aircraft Company owned its own airline at the time (Boeing Air Transport) which later became a little enterprise named United Airlines.  When Bill Boeing agreed to buy Pacific Air Transport, he did the right thing in buying *all* the stock as opposed to just buying a controlling interest and forcing the sale.  The last 2 shares purchased were owned by an Oregon prostitute who asked for and got over $550 / share for them. 

Here is a photo of the first Boeing Air Transport airplane model:  Click Here.

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Not first class.  Not really.  To misquote the movie Jerry McGuire, today’s first class is really a whole different lifestyle, not just a more comfortable seat.

It’s a whole different show in coach, however.  Just for kicks, I looked up the seat pitch on a Braniff 727 for coach in the 70’s.  Today’s seat pitch on a legacy carrier is about 32″ with an inch variance.  For a 6’2″, 260lbs man, like myself, that means a pretty uncomfortable ride.  Braniff’s seat pitch was 38″.  (in the future, I’ll provide some cites for such information but I looked that up 3 or 4 months ago and I can’t remember where I found it now.) That missing 6″ drives me crazy. 

The truth is, a 32″ seat pitch makes sense economically.  The average flight sector here in the US is less than 2 hours (Why do I always seem to be on 3+ hour flights?) and 32″ is plenty tolerable for 99% of us for the price and time spent in the seat.  There are even some airlines who are adopting better seats for once.  Not harder, thinner, flatter seats.  Seats that are a bit more ergonomic, better contoured and, best of all, designed in a way that a 32″ seat pitch offers just a touch more space.  Airtran’s Recaro seats on their Boeing 737-700 fleet are a great example of this. 

For a time, American Airlines *increased* their seat pitch from 1 to 2 inches in the late 90’s / early 00’s.  (Later reduced again post September 11, 2001 to provide a greater potential load density) I’d rate that current Airtran seat the equivalent and that means a lot coming from me.  I should also mention that Airtran offers affordable upgrades to their Business Class product priced about $40 to $80 per segment and I’ve found them quite easy to get even at the gate.

Delta is about to install a new seating product from Thompson that is a kind of herringone pattern that offers greater legroom, an armrest for both arms and even greater privacy.  Still more surprising is that this new seating configuration actually allows them to *increase* the seat count on an airplane.  Look for this in their international 767 airplanes first although I suspect favorable customer acceptance will cause it to show up on other airplanes in the future too.

I think that one day we’ll see  a greater number of choices for seating on many airlines.  It’s already starting now to some degree.  Airlines such as United Airlines and Jet Blue and US Airways have started selling seat locations that have greater seat pitch and/or favorable location(s) for slightly more premium prices.  United Airlines offers Economy Plus with greater seat pitch as a sub-section of their coach cabin and having tried it I’d say it was worth the extra $30 / segment I paid.  US Airways is selling location on existing configurations such as exit aisle seats, bulkhead seats and aisle seats all for a slight increase in price.   Jet Blue has been reconfiguring their aircraft to offer a choice in seat pitch at varying prices. 

Jet Blue’s model is where I expect the majority of legacy airlines will go.  Over time, new seating products such as Delta’s (described above) combined with varying seat pitches will allow the airlines to price discriminate among their customer and generally *increase* their revenue without necessarily a loss in total passenger capacity. 

30 years ago, the model was to price discriminate on the basis of flight convenience.  A passenger who bought far in advance paid less than an impulse buyer.  Then airlines such as American Airlines realized that an unfilled seat was lost revenue and began offering unfilled seats at prices that includes restrictions on flight times and days (convenience). 

Next we’ll see far greater choice in our prices based upon seat pitch, location, service, advanced purchase, travel dates and times and even based upon how much luggage you want to carry (already happening.)  My prediction is that seat choice will be the prime discriminator.  Today’s passenger most wants a decent seat and a flight that takes off and arrives on time.  The airline that provides that wins.

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