The Airline Blog

More on Baltia Airlines

2010-05-31T14:58:00.000-04:00

My first post regarding start-up Baltia Airlines has generated quite a few comments, and now that more information about the airline is available, I figured that I'd write a follow-up post. For those of you who aren't familiar with Baltia, it was originally established in 1989 but has only made real strides towards getting off the ground within the last year and a half or so. (I do recommend that you check out my previous post - it gives a better history of Baltia.) I'd say that the airline's odds of long-term success are pretty long, but the company has continued to make progress.

I wrote back in December about how Baltia got a used 747, pictured here thirty years ago in Pakistan International Airlines colors and, more recently, sitting in the Arizona desert awaiting service. (There's a recent set of photos on Flickr showing the airplane getting prepared for service with Baltia.) Well, the airline recently released a video featuring that 747 - those green stripes are still a dead giveaway that the plane is ex-PIA - as well as the airline's CEO and what appears to be a number of their employees.

No doubt the video is meant to reassure potential investors - see, we have an actual plane! and employees! - and certainly it looks as though something is up and running, if not yet fully operational. Supposedly they're still raising cash and are trying to get off the ground now by the fall, but I'm not too optimistic. (Some interesting points from the SEC filing: $2 to $4 million is expected to be raised this year, while their CEO, Igor Dmitrowsky, received $123,395 in compensation last year.)

In my opinion, the choice of aircraft could have been better. Unless things have changed since I last spoke to them in August, they're planning on having 296 seats on the main deck of the 747 in a four-class layout. And there are only going to be 12 seats on the upper deck, according to VP of Finance, Barry Clare:

"First class has only twelve seats," explains Clare. "It's sort of a gimmick because we want to show that we have that kind of service available. Even though service will be superior throughout the entire aircraft, first class service will really be far superior. The entire upper deck... will be dedicated as a first class lounge, with a bar and gourmet chefs, live entertainment, strictly for the first class passengers... If the [first class] seats get filled, great; if not, it's there to show that Baltia Air Lines has that kind of service."

If they can make it happen, it certainly does sound luxurious. But one has to wonder how much money would be lost if the first class seats (which ostensibly could be replaced by a bunch more coach seats) fly empty.

Looking at their 747 from an age aspect - it isn't necessarily much to worry about, since there are some impeccably maintained DC-3s out there that are sixty years old and perfectly safe to fly on. But airplanes, just like cars, require more maintenance (and therefore, more cash) as they age. The Boeing maintenance cost model dictates that as a plane's flight hours increases by 1%, its total airframe maintenance costs increase by 0.25%. This plane is 35 years old, so chances are that it will need some work. That's not to say that you can't successfully use an older aircraft; Northwest (now Delta) has a couple of DC-9s in the 40-year old range, although those are scheduled to exit service by the end of the year. If the aircraft are cheap enough up front - the Baltia 747 cost $475,000 - then perhaps it could work.

A better idea might have been to pick up a smaller aircraft with better economics - maybe a used Boeing 767-200ER, since there are a couple of them sitting around, or some other sort of twin-engine jet. Capacity would be diminished, to be sure, and since it seems like Baltia is planning some sort of cargo service, it could have an impact. But Baltia has also been championing direct, point-to-point flights that - let's face it - aren't likely to attract a whole lot of people, or at least not enough to consistently fill up a 747 enough to make it profitable. It might have a monopoly on the New York - St. Petersburg route, but some other routes that it's seeking to enter, such as New York - Moscow and New York - Kiev, are already flown by two airlines each (Delta and Aeroflot with the 767-300 and A330 for Moscow, and Delta and Ukrainian carrier AeroSvit, with the 767-300 for Kiev). In the instance of New York - Moscow, for example, Delta and Aeroflot operate more efficient aircraft and are able to offer connecting flights, along with frequent flier miles that can be used on a bunch of different airlines (SkyTeam), and probably will be able to offer a lower price.

So, we'll see when they can finally get off the ground. Baltia has some interesting ideas ("Dinner will be served by invitation on the Captain’s Deck in the fashion of the grand trans-Atlantic ocean liners," or "On Westbound flights, we will serve a continental lunch after takeoff, a mid-Atlantic lunch halfway across, and a New York deli meal an hour before landing"), but I'm not optimistic about their viability. (If you have any further information about Baltia that you'd like to share, please feel free to drop me an email.)

The end of Virgin Atlantic's 'splendid isolation'?

2010-05-28T07:48:00.004-04:00

photo by 900hp from Flickr, licensed under CC

The proposed tie-up between British Airways and American Airlines is moving closer to getting the green light from US authorities, and as such, Virgin Atlantic President Richard Branson is apparently ~~worrying~~ (saying - Branson doesn't seem like the type that worries a lot) that his airline might have to find a partner in response.

He's no doubt speaking in response to the continuing trend of consolidation in Europe. Air France and KLM have been merged for six years now, and the Lufthansa Empire has expanded its reach into Belgium (Brussels Airlines) and the UK (bmi) in addition to Austria (Austrian Airlines) and Switzerland (Swiss). Closer to Virgin Atlantic's home turf, British Airways and Iberia have already announced an intention to merge, and it's the prospect of a three-way combination between BA (Virgin's longtime archrival), Iberia and American that has been giving Branson the most grief.

He's been outspoken against the BA-AA deal for quite some time, but it seems now as though he's come to terms with its apparent inevitability - and what that means for his airline in terms of survival. Virgin Atlantic has remained fiercely independent for its entire existence (although Singapore Airlines owns 49% of the airline, the maximum amount allowed), and while it has codeshare agreements with a handful of airlines, it has never joined an alliance. But if it wants to compete with a larger British Airways, it might need to look at finding a partner. “If it becomes impossible for us to remain an independent airline and survive, we may come to a situation where we have to consolidate," Branson said.

Naturally, this begs the question - with which carrier would Virgin Atlantic consolidate with? bmi (also known as British Midland) would appear to be the logical choice, according to Branson: “I don’t think bmi has a future as a stand-alone airline if it stays in the same shape... something will happen – the two of us would be stronger together than separate.” On the surface, this seems like a good match. bmi is a member of Star, the alliance that Virgin Atlantic seems to be on good terms with (stakeholder Singapore Airlines is also a member), and is also a rival of the dreaded British Airways. Virgin Atlantic is also strictly a long-haul carrier (much like Singapore), meaning that it loses out on some passenger traffic that would be connecting through Heathrow or Gatwick on their way to other European destinations (although codeshares do help here). bmi, on the other hand, has a few longer-haul destinations but for the most part sticks close to home. So, Virgin's long-haul network should perfectly complement bmi's short-haul - right?

Complicating things is the fact that Lufthansa now owns bmi outright, and is in the process of restructuring it - and, in the process, cutting quite a few inter-European routes. Gone are Paris, Brussels, Amsterdam - service to some of these, as well as few other cities, has been supplanted by Lufthansa-owned or operated carriers. For example, the 'bmi' flights from Heathrow to Frankfurt and Milan are operated by Lufthansa. This is all well and good for bmi, perhaps, but it makes it less attractive as a merger partner, as it wouldn't have many European routes of its own to bring to the table. And bmi wouldn't have all that much to gain from a merger, either. Virgin Atlantic has a nice long-haul vacation getaway network set up at London Gatwick, but their other long-haul service at Heathrow, while substantial, pales in comparison to that of British Airways. Its relative isolation (i.e. no alliances) also makes it less attractive as a merger partner, since bmi could ostensibly benefit from being an alliance member (as it currently is, in Star).

So while bmi might seem the obvious choice, it's not necessarily an ideal fit. But if Virgin Atlantic faces a 'merge or die' scenario, then bmi might start looking a lot more attractive.

A tidbit to ponder: according to the Times article, Singapore apparently is seeking to sell its stake in Virgin Atlantic, which might expand merger possibilities. And another interesting point about Virgin Atlantic: Branson has stated that its new strategy will be to look towards leisure travel for growth, rather than business travel. Right now, he says, the airline's business is 70% at London's Heathrow airport and 30% at Gatwick, although "this will have to start balancing out."

And Branson is still sticking to his trademark optimism. He has still promised to battle it out in court against the BA-AA deal's regulatory approval if needed - however much of a 'done deal' it already is - and he has also noted that BA's ongoing labor strife (they're "shooting themselves in the foot," he says) has only helped to benefit his airline's revenue.

Is US Airways the 'ugly girl'?

2010-05-05T14:28:00.000-04:00

flickr photo by Caleb's Photography

It's been posted elsewhere already, but in case you haven't heard, Continental CEO Jeff Smisek got in a little hot water after referring to US Airways, in decidedly un-diplomatic language, as an 'ugly girl.' “I recognized that United was the best partner for Continental, and I didn’t want to marry the ugly girl; I wanted to marry the pretty one,” he said.

A bad choice of words, no doubt. Smisek evidently apologized to US Airways CEO Doug Parker, who called the words "chauvinistic and offensive." "Jeff sent me an apology, stating that he “got carried away in the moment,” “really felt badly” and “had no good excuse.” I believe Jeff was sincere in his apology, have accepted it on behalf of all of us and am ready to move past it," Parker wrote in a letter to US Airways employees (you can read the whole thing at the end of the post).

Parker also defends US Airways' performance in the letter, pointing out that his airline's profit margins, on-time performance, and stock performance were all better than Continental's recently. But why did United, which had recently considered a merger with US Airways, ultimately choose Continental instead? Why did US Airways get dumped? Two things to keep in mind, according to Parker:

United chose Continental because it has "dominant positions in major business markets like Newark and Houston that allow them to collect even higher revenues than we can with our network," which is presumably more leisure-based.
Even if US Airways did get dumped, it doesn't mean that it isn't a "valuable standalone company" with "strong" prospects.

In closing, Parker notes that he's "looking forward to aggressively competing against the new United Airlines – and winning." He has effectively shrugged off the 'ugly girl' remark, and done so in a professional and detailed manner. But could US Airways be considered the 'ugly girl'? Here's the text:

May 4, 2010

Fellow Employees:

A number of you have contacted me asking about Continental CEO Jeff Smisek’s “ugly girl” comment yesterday. In case you haven’t seen it, when announcing their plans to merge with United Airlines yesterday, Mr. Smisek said, “I didn’t want him (United CEO Glenn Tilton) to marry the ugly girl. I wanted him to marry the pretty one.” The ugly girl was a clear reference to US Airways. Like me, many of you found his comment both chauvinistic and offensive to the hard-working people of US Airways.

First, you should know that Jeff sent me an apology, stating that he “got carried away in the moment,” “really felt badly” and “had no good excuse.” I believe Jeff was sincere in his apology, have accepted it on behalf of all of us and am ready to move past it.

Having said that, the emails I’ve received from many of you suggest this comment hit a nerve so I wanted to give you my views. As one of you simply put it, “Why are we the ugly girl?” The answer, of course, is we are not and there’s no better evidence of that than our recent performance.

In fact, we are performing better than Continental on almost all of the important metrics of our business. Financially, we each reported first quarter financial results in the past two weeks, and while we both lost money, we both lost much less than last year. However, US Airways’ rate of improvement was much better than Continental’s driven by both higher revenue growth and better cost control. On an absolute basis, our profit margins are now higher than Continental’s.

Operationally, we’re performing much better than Continental in the primary customer service metric of on-time performance. US Airways jets arrived on-time more often than Continental’s during the first quarter 2010, and we also outperformed them in on-time during all of 2009 and 2008. We are also now neck and neck with Continental in areas like baggage and complaints.
This is all being noticed by the outside world, as US Airways stock price is up 42 percent so far this year, while Continental’s is up 15 percent, even after announcing their merger.

Bottom line, I think both of our airlines are doing a great job in a challenging business – but if I were them I wouldn’t be pointing fingers.

So why did United choose to merge with Continental rather than US if we’re performing better financially and operationally than they are today? I think the answer is straightforward and one we’ve discussed many times – while we have a strong route network centered around PHL, CLT, PHX, DCA and the Shuttle, Continental has dominant positions in major business markets like Newark and Houston that allow them to collect even higher revenues than we can with our network. United preferred that network to ours and while we may disagree with that decision, it was United’s to make and we need to respect it and move on.

None of this means we don’t have a valuable standalone company. To the contrary, we’re producing better standalone results than our peers like Continental. We announced last week that we expect to report a profit in the current quarter of this year, which is further evidence of our standalone value. As consolidation makes our industry less fragmented and more efficient, our standalone prospects will only become stronger.

As we move forward, let’s not worry about the words of our competitors – no matter how inappropriate they may be – but rather let’s continue to show the world what we can accomplish by working together and performing our jobs in a professional and focused manner.

Thanks so much for your commitment to US Airways. I’m proud to be a part of your team and am looking forward to aggressively competing against the new United Airlines – and winning — for many years to come.

 Doug

A few thoughts on the United-Continental merger

2010-05-03T15:08:00.000-04:00

I thought I'd share a few thoughts on the just-announced United-Continental merger. There's a lot out there about the terms of the deal and other specifics, but just to recap, the $3 billion merger (which has yet to be officially approved) would create the world's largest airline. The airline would be based in Chicago and keep the United name (but the Continental logo) and would be led by Jeff Smisek, the current Continental CEO.

(Yes, that is a 787.)

Here we see the consummation of Glenn Tilton's dream - for several years now, nearly every other word out of his mouth has been either "merger" or "consolidation." And it's a great fit, network-wise: there's little route overlap, which should help the deal get anti-trust approval pretty easily. (For another perspective, check out Dan Webb's post at Things in the Sky.)

But I'm going to focus on one aspect of the merger here: branding. There's a picture of Jeff Smisek and Glenn Tilton shaking hands in front of the new United logo, which is nothing more than the Continental logo with "United" in there instead. And the paint job would be exactly the same as Continental's - again, with the name "United."

Maybe it's just me, but it looks pretty bad. I've come to associate the United name with that familiar block typeface and the "tulip" logo, which has been around for almost 35 years now. I can see that perhaps management wants to appease Continental employees concerned with the disappearance of their name. And this would certainly be a relatively low-maintenance rebranding, too; just replace the word "Continental" with "United" everywhere and you're done. Apart from the fact that United's the one that's technically doing the buying here (despite the 'merger of equals' talk), one of the reasons that the United name is the one that's staying is because it has a stronger global reputation.

I'm hoping that once the merger gets final approval, some more time and effort goes into designing a better brand - if they're going to keep the United name, they should also keep the logo.

Baltia moves closer to launch

2009-12-16T00:03:00.000-05:00

A few months ago I wrote about start-up Baltia Air Lines, which seeks to initially connect New York with St. Petersburg, Russia. It seems like they're moving closer to getting off the ground, now that they've registered and taken delivery of their first aircraft, a Boeing 747-200. The airplane, which was delivered in 1975 to TAP Air Portugal and has subsequently flown for Pakistan International Airlines, is to be registered N705BL. Baltia paid $475,000 for it (and it came without engines, apparently), but the airline has announced that it has started overhauling the plane, "preparing [it] for upgrades to conform to the company's business model, and for maintenance."

I haven't been able to find out much more about Baltia's progress, although apparently the Wall Street Journal is getting interested, which could add a bit more credibility to the start-up operation, not to mention some more facts about the subject. (If you do have any updates on Baltia, please do let me know.)

A British Airways-Iberia merger: what does it change?

2009-12-11T23:03:00.002-05:00

The fact that Iberia and British Airways are planning to merge isn't news by now. The deal's going to mean that the combined airlines become the third-largest airline group (behind Air France-KLM and Lufthansa), and there's the usual talk of synergies and cost savings, etc. We are laying the foundations of what will be one of the most important airlines in the world, a real global airline, said Iberia CEO Antonio Vázquez. I believe that, thanks to this transaction, which is the most important in the European airline industry in recent years, we are more prepared than ever to face future challenges. Meanwhile, British Airways CEO Willie Walsh has said that the merger will create a strong European airline well able to compete in the 21st century. Both airlines will retain their brands and heritage while achieving significant synergies as a combined force.

Sound familiar? Check out what the CEOs of Northwest and Delta had to say back in 2008. And I'm sure it's been said many times before. But besides giving graphic artists the chance to create some hybrid BA-Iberia tails, what does the deal really do? What do these types of mergers do nowadays, anyway? Sure, the deal will help both airlines stave off the other two big airline groups in Europe, but will it effectively deal with BA's oft-publicized woes? Or, as one comment on the BBC's website asked:

Will the cost of jet fuel be any cheaper if they merge? Will the service be better? Will things go back to the golden days of air travel when you could take just about all the luggage you wanted for free, and the onboard meals where for free as well as the soft drinks? Will there be more legroom in economy class? Will we be treated slightly better than cattle? Will they ban cell phone chatter and lap top tickering on planes - finally, thankfully? Will there be Peace and Quiet? No? Why merge?

Granted, no one's expecting the glory days of air travel to come back; nor does the merger have much to do with cell phone use or legroom, of course. But it did make me think about how airline CEOs sometimes talk about mergers as silver bullets - even if they don't really change much, as the BA-Iberia linkup will probably do.

Editorial: Glenn's gotta go at United

2009-08-26T08:08:00.003-04:00

There has been a lot of stuff out there written about United Airlines, and most of it isn't positive. We're all familiar with the United Breaks Guitars video (the second of three is out on YouTube, by the way), and the infamous "Untied" complaint website has been a thorn in the airline's side for many years now. I was on the website of United's Association of Flight Attendants the other day when I came across an account of how AFA members picketed the airline's 2008 shareholder meeting. I figured that it would be another story about angry union protesters, but then the last part of the article caught my attention:

The worst part of the meeting was when Los Angeles Customer of the year, James Anderson, stepped up to the microphone and respectfully addressed [United CEO Glenn] Tilton as a shareholder and a loyal customer who spent $100,000 at United just last year. Employees clapped and cheered for Mr. Anderson. He explained to Tilton that he felt caught in the middle of all of this and expressed concern about the discord at the meeting and the state of employee morale at the airline. He questioned whether he should continue to buy tickets on United Airlines. Tilton shrugged his shoulders and told him it was his prerogative if he wanted to take his business elsewhere but that it was going on at every airline in the industry - so where would he go? There was a shocked silence from the room and Mr. Anderson seemed bewildered at having been so easily dismissed. He paused before quietly stating, "What I’m trying to say is that I’m concerned about this. You talked about aircraft enhancements in your presentation – and they’re great – but they don’t put smiles on the faces of your employees.”

I haven't been able to independently verify the above story, and an email I wrote to the AFA requesting further details remains unanswered. But if the story is true (and I have no reason thus far to believe otherwise), then Tilton should be ashamed of spouting that kind of crap. First of all, it's not going on at every airline in the industry. And secondly, what kind of CEO, airline or otherwise, tells one of his best customers to go ahead and shove it? Maybe if you're Michael O'Leary, CEO of Ryanair. But O'Leary can do so because his airline's fares are so low that people will always come back, regardless of service. If the price is right, service doesn't really matter. But United's no Ryanair, and the airline can't afford to alienate key customers (let alone the rest of us).

That's the attitude that Glenn Tilton conveys - we don't really care about you. And you know what? Chances are that attitude is going to trickle down to the rest of the employees. And while I know that there are thousands of United employees that take pride in their work and do their best, I've also experienced a lot of less-than-stellar service on United. And you can't really blame them too much, either. I'd probably be pretty cranky, too, if my pay and benefits were slashed while Tilton & Co. raked in the dough. A great article over at Forbes, entitled "United Airlines Shows You How Not to Run Your Business," has this to say regarding employee morale:

United's workers... have had their wages, pensions and benefits cut even as the chief executive officer has been paid nearly $20 million dollars over the last five years (despite United's stock dropping 43% during his tenure)... All employees share the pain equally. If there are big cutbacks anywhere, senior management should take substantial pay reductions and limits on its privileges, such as fewer business class flights and trips on private jets. The troops look to senior management for direction. If those troops see the top brass caring for itself at the expense of others, the spirit of the entire organization erodes.

And there you have it. It's no secret, Glenn - perhaps you should look across the Pacific at another airline that's in trouble. JAL has been bleeding red ink as of late (posting a $1 billion Q2 loss). But their CEO takes the city bus to work and gives himself just $90,000 a year in salary (less than the pilots make), as CNN reports:

United's long-running financial troubles show no sign of abating. Tilton's strategy has been to try to polish up the airline enough to sell it off or merge it. Delta was always seen as the likely choice, but it opted for Northwest. And Continental figured that it would be better to just "remain good friends" with United (as evidenced by the new alliance between the two airlines) rather than a full merger. Nobody wants United, and that throws a wrench in Tilton's plans. United's fleet of planes is starting to get a little long in the tooth, and despite the airline's recent talk about shopping around for a big airplane order, it's clear that the airline would have a difficult time obtaining financing. As is pointed out in this Chicago Business article, United has billions in debt, and Tilton's already burned most of the furniture already. There's not much left.

Which means, quite simply, that it's time for Glenn Tilton (and probably a lot of the rest of UAL management) to go. I don't want to play armchair CEO, but it's clear that whatever's going on in Chicago needs to change, and change soon. Times are tough, sure, and everyone's hurting. But United has consistently been a loser in many categories - financial performance, customer service, etc. Firing Tilton wouldn't fix all of these problems overnight, but it would be the first major step on United's much-needed road to strength and stability.

Edit 8/26 7pm: I managed to get in touch with Sara Nelson at the United AFA, who provided me with the following: We do not have a video clip of the meeting. However, Mr. Anderson, himself wrote about his experience on FlyerTalk. And, he appeared again at this year's Shareholder meeting. I personally witnessed both meetings and his interaction with Glenn Tilton. This year Chicago Tribune reporter Julie Johnsson wanted to meet the man Tilton had dismissed and hurried to greet him once the meeting was over.

Baltia Air Lines, the 20 year old startup

2009-08-19T14:52:00.001-04:00

A few weeks ago, I stumbled across a press release that said that a New York-based startup, Baltia Air Lines, had signed a letter of intent to purchase a Boeing 747. Who the heck is Baltia? I did a little research (mostly in the form of 10-Q filings with the SEC) and turned up some basic history about the airline.

Baltia was founded on August 24, 1989 (that's right - a startup airline older than I am) with the goal of connecting New York-JFK to the then-Soviet Union. In June 1991, the carrier received permission from the DOT to start flying between New York and St. Petersburg (then Leningrad). They also were to fly between JFK and Riga, Lativa, and from there serve Kiev, Minsk, and Tbilisi, Georgia. That same month, Baltia expressed interest in grabbing two Boeing 767s to fly to Riga and St. Petersburg, as well as some 737-200s to use on connecting flights to the three other destinations from Riga. That was all in 1991 - and then the news articles about Baltia stopped, until just recently. It was as though Baltia just dropped off the radar for the better part of the last twenty years.

So now for the obvious question - why, twenty years later, are they still in the startup process? What's taken them so long? In a nutshell: lots of financial problems. Let's take a look at the timeline (which has some holes in it, but should be helpful nonetheless):

1991: The airline's "financing efforts were destroyed" as a result of the August 1991 attempted coup d'état in the USSR, according to an SEC filing. "Subsequently the route authorities terminated for dormancy."
1995: Baltia reapplies for the JFK-St. Petersburg route.
1996: DOT reissues JFK-St. Petersburg route authority to Baltia, "based upon reexamination of the Company's operating plan and fitness as a US air carrier." By then, the airline had apparently dropped plans for Riga and instead focused on serving St. Petersburg with a single Boeing 747.
1998: Baltia makes a $100,000 down payment on a Boeing 747-200 owned by Cathay Pacific.
1999: Baltia finally "had all the variables" needed for flight operations in place, except for enough working capital. The airline was supposed to raise the cash through an IPO, but that failed, and the DOT revoked its route authority, telling it once again to come back when it had the money.
October 2007: Baltia files once again for non-stop service between JFK and St. Petersburg. The third time must really be the charm, because it's granted by the DOT.
December 2008: DOT declares Baltia "fit, willing and able" to fly.
Currently: Baltia is "conducting the FAA Air Carrier Certification process under Part 121. Upon completion of the Air Carrier Certification, Baltia intends to commence scheduled non-stop service from its Base of Operations at Terminal 4, JFK... to Pulkovo II Int'l Airport of St. Petersburg."

I called up Barry Clare, Baltia's VP of Finance, to ask him about his carrier's long, long history. Why has it taken so long, and why will this latest attempt be the one that works? Clare said that the airline had many setbacks raising capital in the 1990s, and part of that had to do with the fact that the airline wanted to launch with several airplanes. The latest attempt, Clare notes, will see Baltia starting out with only one airplane, a Boeing 747 purchased from an American carrier (since the deal is still in the works, he could not divulge which model or from which airline it was purchased).

"It was always a lack of capital, not a lack of know-how... it's been a bunch of fiascos with Wall Street professionals who make promises and never delivered," he said. "This time around, we went out and raised the capital that we felt was necessary to launch, even before we submitted our application to the DOT in 2007. We raised $2.7 million... it looks like this time around, Baltia Air Lines will fly." Clare expects that the first flight will take off before the end of the year, and that the airline is seeking to codeshare with a "major American airline" to provide some feed into JFK.

Baltia's planes will be configured in a four-class layout: Voyager Class (coach), Super Voyager (what Clare calls a "step up from regular coach), business, and first. "Service aboard the plane will be second to none," says Clare, noting that there will only be 296 seats on the main deck of the 747.

The airline plans to gradually ramp up its schedule. Baltia is only planning on flying one round trip between JFK and St. Petersburg for the first month; the second month will see three round trips per week, to be increased to five trips by the third month. After the first four months, the airline plans to take delivery of a second 747 and start service to Moscow and start with the same schedule frequency, to be followed by Minsk, Kiev, and so on. "Within a two year period, we'll have five aircraft in the air servicing the Baltic region, generating close to $500 million in revenue."

As for finances, Clare claims that one 747 will generate $40 million in profit off of $100 million in revenue annually, even with a 64% load factor. Voyager tickets will be between $800 and $1,200; Super Voyager seats will be around $2,000 apiece. Business class seats will go in the range of $4,000 to $5,000, while first class seats will set you back a slick $16,000. "First class has only twelve seats," explains Clare. "It's sort of a gimmick because we want to show that we have that kind of service available. Even though service will be superior throughout the entire aircraft, first class service will really be far superior. The entire upper deck... will be dedicated as a first class lounge, with a bar and gourmet chefs, live entertainment, strictly for the first class passengers... If the [first class] seats get filled, great; if not, it's there to show that Baltia Air Lines has that kind of service." The airline is hiring "stewards" from "fine restaurants, not flight attendants who work for other airlines that have bad habits. The experience will be incredible... like the grand old ocean liners."

But I've got a feeling that this isn't the best time to be starting up a premium-travel carrier. Remember that whole slew of premium transatlantic carriers a couple years back? Silverjet, eos, MaxJet? They're all gone, and BA's OpenSkies is on life support. Baltia may not be business-class only, like those airlines, but it's clear that they're going after the upscale traveler here. Premium travel has taken a huge hit, and it's not likely to bounce back anytime soon. And while the airline understandably touts its non-stop New York to Eastern Europe service, is it going to be able to compete with the likes of Lufthansa and Air France, which offer frequent connecting flights to the same destinations that Baltia will serve? It's trying to be a niche carrier, but I'm not sure that that niche is big enough, even for a small carrier like Baltia.

(Oh, and you'd think that an upscale airline would choose a better name for its frequent flyer program than Freeloaders, but that's what Baltia's done. Not kidding.)

Southwest lands in Boston

2009-08-18T09:35:00.002-04:00

I had known that Southwest Airlines was going to start service from Boston for a while, but it wasn't until my good friend Dan at Things in the Sky talked more about it that I started thinking about how I could go and see it happen. Dan kindly sent a last-minute email to the wonderful Paula Berg at Southwest, who put me on the list of attendees for the weekend's festivities.

On Saturday, Dan and I showed up at Terminal E at Logan Airport. We got our gate passes and wandered over to the Southwest gates, which used to be the old Northwest gates before they made the move over to Terminal A with Delta. Having used those gates before, I can say that Southwest certainly did a good job of sprucing up the place and adding a bit of color.

We waited around for the ferry flight from Dallas' Love Field to arrive; Southwest flight 8500 touched down around 4:30 on Saturday afternoon and received a water cannon salute as it pulled up to gate E1A. Unfortunately, we weren't allowed to join the folks down on the ramp.
Cheering Southwest employees and friends of Southwest streamed into the terminal, and Southwest PR Manager Paul Flaningan made a short speech. Then Southwest's Boston station manager, Brian Kunkel, told the crowd, "Five years from now... it's going to be one if by land, two if by sea, and if by air, Southwest it will be!"
Next, it was off to the House of Blues (right near Fenway Park) for dinner with a wonderful bunch of both Southwest employees as well as a few great Southwest fans from FlyerTalk. Paula Berg and Christi Day, both from Southwest's Emerging Media department, were there, as well as Ginger Hardage, Southwest's SVP of Culture and Communications. They all exuded Texas-style hospitality, even though I was the 'local'. Dinner was followed by some fantastic karaoke.
I got up bright and early the next morning to meet up with Dan and Drew (curbcrusher on Twitter and FlyerTalk) to take the subway over to Logan. By the time we got to the gate, passengers were already boarding the very first Southwest flight from Boston - flight 1309 to Chicago Midway, a Boeing 737-700. The plane pushed back shortly thereafter, and took off around 8:40.
We also stuck around for the first arrival, which flew in from Baltimore/Washington late that morning. In the meantime, Southwest had put out quite the breakfast spread near the gates, handing out pastries, bagels, muffins, and coffee. I observed quite a few passengers saying how excited they were that Southwest was finally coming to Boston - it's an airline that really knows how to build up a solid fan base.

Monday morning I ventured over to Logan one more time for the airline's press conference, which was held outside of the airline's check-in area in Terminal E. The nice thing about this area is that Southwest is the only domestic airline there. Because all of the other carriers are international, their flights (with the exception of the morning BA flight to LHR) all leave starting in the mid-afternoon, meaning that the terminal is pretty empty for a good part of the day. Matthew Brelis, Massport's Director of Media Relations, was kind enough to take me from Terminal E over to the water taxi stand, where Southwest employees and the news media had gathered. A Massport fire boat switched on its sirens and started spraying water as soon as the boat carrying Southwest CEO Gary Kelly (you can see him in the picture below, waving) came near.
Once everyone had disembarked from the boat, we walked over to where a duck boat was waiting for us, complete with Southwest banners on the sides. I was lucky enough to grab a seat in the back. The boat (really an amphibious tour bus) drove us over to Terminal E, but the driver, unfamiliar with the layout of the airport, accidentally took us on a brief detour on the highway. But we pulled up in front of the terminal soon enough, and the "Lexington Minute Men" were there, playing drums and flutes.
Here's a video with a few clips from the duck boat ride (note the driver asking Gary if he's really in charge of Southwest) and one from inside the terminal, where the airline was presented with an official citation from the Commonwealth of Massachusetts.

Inside, Ginger Hardage, Massport CEO Tom Kinton, and Gary Kelly all addressed the assembled crowd, which was mostly comprised of the media and employees (although I did notice a few curious passers-by who stopped to watch, too).
Southwest also handed out some delicious clam chowder and iced tea following the speeches, and I even had the opportunity to have my picture taken with Gary himself.

I had never been to an station opening before, and it was really a wonderful experience. I met a lot of great people who were both Southwest employees as well as those who were just Southwest fans. I was able to observe first-hand the immense brand loyalty that Southwest has, and based upon the incredible company culture that I saw, it's not difficult to figure out why. The employees are genuinely excited to be working at Southwest, and it shows. The airline also extends a welcoming attitude to bloggers like myself, which is quite refreshing. Right after he got off the boat at Logan, Paula introduced me to Gary as an aviation blogger. Gary put his hand on my shoulder and said, "We're glad you're here" - not something that I expected from an airline CEO. A big thanks to all of the folks at Southwest who worked hard to make the opening weekend here at Boston a successful and enjoyable one!

US Airways and Delta work out a trade

2009-08-12T10:06:00.001-04:00

Some interesting news today - US Airways has announced that it is going to swap slots with Delta and get some international routes from them as well. Under the terms of the deal, which is still pending regulatory approval, US Airways gains 42 pairs of slots at Washington's Reagan Airport and will be able to start flying to Sao Paulo, Brazil from Charlotte and Tokyo from Phoenix. In return, Delta will get 125 pairs of slots at New York's LaGuardia airport.

US Airways was quick to point out that the slots that Delta is getting are currently being used by the US Airways Express operation, and that mainline US Airways service (including the Shuttle) won't be touched. Still, it's possible that mainline traffic could take a hit if there's less traffic being fed into LGA by the Express carriers, which will stop flying to 26 destinations from LaGuardia. And there will be around 300 layoffs at the airline's Piedmont regional subsidiary.

But the airline also gets some interesting assets in return. US Airways will start serving some major destinations from Washington DC (Cincinnati, Montreal, and Miami, among others) as well as smaller cities (Savannah, Pensacola, Ithaca, and more). The airline also noted that it would boost the number of seats that it flies to Washington by using "larger dual-class jets." And the deal also gives US Airways two key international routes. US Airways currently does not fly to Asia, and the airline has repeatedly delayed the start of Philadelphia-Beijing service. But Phoenix-Tokyo, which will be flown by Airbus A330s but not until 2012 at the earliest, would be a great way for the airline to offer another international connection at its western hub. US Airways will also launch Charlotte-Sao Paulo service next year.

Let's look at Delta, which already has significant domestic and international operations across town at JFK. The airline's press release notes that the airline will "build a hub operation at LaGuardia that will increase the number of customers served... without increasing congestion." It'll do the same thing that US Airways plans to do at Washington - operate larger planes. "In every slot where US Airways operates small turboprops today, Delta will operate larger jets," said Delta. "These new markets and larger aircraft would allow more than two million additional passengers to transit LaGuardia each year without increasing the total number of takeoffs and landings... Many small- and medium-sized communities throughout upstate New York and New England will benefit from service upgrades where Delta will operate larger regional and mainline jets."

The airline also plans to spend $40 million on a project to upgrade and rebrand the US Airways and Delta operations at LaGuardia, so it's clear that they're planning on making this a hub. At the same time, "Delta will continue to invest at its hub at New York's leading international airport, John F. Kennedy International," the airline said. So now the airline will be pursuing a rather interesting strategy of operation two hubs in the same city, one of which is primarily international and the other domestic. This could pose some interesting challenges; what happens to passengers seeking to connect between the two airports for an international or a domestic flight?

For more information, check out the US Airways press release here and the Delta release here.

photo by ChrisI1024 on Flickr

United's wheel of fortune

2009-08-10T08:35:00.000-04:00

I didn't know about this until it was pointed out to me yesterday (thanks to @derekwhit and @melissaiscool on Twitter), but it seems that for the last couple of months, United Airlines has set up a 'spin the wheel' setup at key airports. More after these pictures from FlyerTalk:
Apparently, you can spin the wheel and claim your 'prize', which is either one of United's new "Travel Options" or a promotional item:

An Economy Plus upgrade for all of your flights that day
a Premier Line pass (you get to use United's Premier check-in and security lines as well as priority boarding)
A Red Carpet Club pass (clever clever - they won't actually give you a pass, but instead stamp your boarding pass - that way you can't sell the pass)
A 'game book' (crosswords and Sudoku puzzles)
A bottle of water
Playing cards - this one surprised me; I thought that the days of airline playing cards were long over.
There's also a "luggage tag" event, where United laminates one of your business cards and on the back throws in a promotional Economy Plus message.

Judging by the wheel, the most likely option that you'll land on is Economy Plus. People might be asking why United would give away more seat upgrades than bottles of water, but it all comes down to price - if there are available Economy Plus seats available for a flight, the cost to United to give it away is nothing.

At first, I thought that this 'spin the wheel' was kind of dumb - after all, it's nothing more than giving away a few cheap freebies and promoting the various ways that United can take more of your money. And it really only benefits existing United customers (after all, someone traveling on American isn't going to be able to take advantage of the game, unless they win a bottle of water). But I had a change of heart, and now I think that this could be one of United's rare good marketing ideas. United isn't focusing on passengers on other airlines; nor is it focusing on its highly-valued "elite" travelers, who probably already have those benefits. Instead, United's targeting the casual flier by giving them a 'free sample' of one of their Travel Options, with the hope that they'll 'upgrade' more often. The cost to them is very little (giving away an otherwise vacant Economy Plus seat, letting another person into the Red Carpet Club, etc.), but if it convinces a good number of passengers to start upgrading their Travel Options more frequently, it would be a marketing accomplishment that United could be proud of.

JAL loses $1 billion in second quarter

2009-08-07T11:56:00.001-04:00

You thought Delta's second quarter loss of $257 million was bad? Or even American's $390 million loss during the same time? Even perennial money-loser Alitalia's financial performance pales in comparison to Japan Airlines' whopping $1 billion loss between the months of April to June, which is larger than the amount it lost for all of 2008 (only $35 million). As a result, the airline has announced that it will reduce flying or switch to smaller planes on 25 international routes, although I'd think that more cuts will have to follow in short order.

Can JAL sustain these heavy losses? The airline got a $1 billion bailout from the Japanese government in June, although it asked for twice that amount. The government will probably end up ponying up more cash to keep JAL afloat. It's true that JAL was hit pretty hard by swine flu fears earlier this year, not to mention the ongoing worldwide recession. Even Singapore Airlines, usually a rock of financial stability, has warned that it could post its first full-year loss since 1972, the year it was founded. But JAL is in much worse shape than its arch-rival ANA, which lost almost $300 million during the second quarter. While everyone's hurting right now, JAL clearly has some problems of its own that it needs to clear up quickly. Traffic (especially business traffic) isn't going to rebound anytime soon, and while JAL has made some progress at cutting costs, it's going to have to do much more if it wants to stick around.

photo by St Stev from Flickr, licensed under the Creative Commons

Lufthansa's rainy day fund

2009-08-05T11:49:00.000-04:00

Never mind Lufthansa's current financial difficulties, which I wrote about yesterday - the German carrier is intent on keeping clouds out of the picture with its new "sunshine guarantee". If you're on vacation and your day's a washout, don't worry - Lufthansa will give you 20 euros (approx. $30) for each rainy day of your vacation, up to 200 euros. "If the sunny stay hoped for by many is spoiled by rain, maybe 20 euros compensation ...will brighten the mood," the airline said, quoted by AFP. In order to qualify, the German weather website wetteronline.de must show at least five millimeters of precipitation at your vacation destination (one of 36 eligible cities), and your flights have to be booked between now and August 18 and must be flown from Germany between September and October.

Some of the destinations - Abu Dhabi, Tel Aviv, Dubai, Cairo, Madrid, Barcelona - all seem like pretty fair weather cities, so the money that isn't spent there can be spent on other cities that are also covered in the deal, like New York and Washington, which have a lot more rain (especially this summer!) than those other cities.

photo by So Cal Metro from Flickr

Lufthansa allowed to purchase Austrian

2009-08-04T11:24:00.000-04:00

German carrier Lufthansa recently got the go-ahead from the EU Commission to purchase Austrian Airlines, but maybe it will have reason to re-think its decision in a few months. After all, Austrian recently reported a 78.5 million Euro ($113 million) loss between April and June, and has lost 166.6 million Euros ($239.8 million) for the first half of the year. Lufthansa, on the other hand, managed to obtain an operating profit of 8 million euros ($11.5 million) from January to June, although it also posted a net loss of 216 million euros ($311 million). The EU Commission has approved the takeover, and although a final decision is expected in a couple of weeks, the deal's pretty much as good as done. Of course, Lufthansa had to make some concessions in order to avoid running afoul of the European antitrust policies, giving up some prime take-off and landing slots at Vienna's airport.

Some remain optimistic about Lufthansa's financial future. "We remain optimistic from a mid-term perspective," said one analyst. "Lufthansa has impressively demonstrated that it is able to reach a small profit even in a disastrous environment." "Based on its superior financial strength and its anti-cyclical approach to acquisitions, we expect Lufthansa to emerge as a long-term winner from the current global economic crisis," said another. Yet it's clear that in the short term, Lufthansa faces some serious struggles; not only does it have to cope with the weak demand for travel, but also the purchases of Austrian, bmi, and Brussels Airlines. Austrian, for its part, has been quickly racking up debt - almost two billion euros of it, which is over five times its equity.

Still, Lufthansa apparently thinks that it can turn around Austrian and make it profitable. And while this isn't an unrealistic expectation (and it helps that a new cost-cutting program was introduced at Austrian last week), this particular acquisition poses some interesting challenges. Two of Lufthansa's earlier purchases, Swiss and Brussels Airlines, are relatively new airlines, having been formed in the past decade. They were both created out of the ashes/assets of two historic but loss-making carriers, Swissair and Sabena, which both failed in 2002. This allowed Lufthansa to take over some choice assets without dealing with the incredible debt burden that caused the two airlines to collapse.

Austrian, as I mentioned before, has almost two euros in debt, and that number isn't likely to shrink anytime soon. A 200 million euro government bailout earlier this year is the only thing keeping the airline afloat, and it's already burned through two-thirds of that cash. Niki Lauda, founder of Austrian subsidiary Lauda Air and now founder of budget airline flyniki, has claimed that the deal is the "biggest catastrophe [for Austria] since World War II." "It takes no skill to give away an airline and then still pay 500 million euros on top of that," he said, referring to the fact that the Austrian government has agreed to absorb a third of Austrian's debt.

Still, Lauda got some good slots at Vienna thanks to the deal, so he can't be all that upset. And Lufthansa, if it manages to get Austrian's house back in order, could end up profiting from Austrian's extensive Southern and Eastern European route network. So it will take quite a bit of work, but that's something that Lufthansa and its CEO, himself a native Austrian, is willing to put forth.

Southwest wants to buy Frontier

2009-07-30T13:28:00.002-04:00

In a pretty surprising announcement today, Southwest Airlines has said that they've submitted a proposal to purchase Denver-based Frontier Airlines, which is still under Chapter 11 bankruptcy protection. Southwest will bid for the airline in a bankruptcy auction next month, along with Republic, which said last month that it would bid for Frontier. There aren't too many details out right now, but some interesting information is available over at the Southwest blog. Some excerpts:

What’s in proposal?
What we can say is that we are interested in a substantial investment in Frontier and to operate Frontier as a wholly-owned subsidiary, independently and separately from Southwest Airlines, for a period of time until the carrier could be combined into Southwest.

Is this a response to Republic’s bid?
Frontier has been in bankruptcy since April 2008, and we’ve been considering a bid for some time, independent of any action Republic took with its bid proposal. In the past month, we began an intensive study of the airline and expressed that interest to Frontier.

More details will emerge soon, but this has some big implications for service at Denver, where Southwest has been going up against well-established United and hometown carrier Frontier. One question that I have - what happens to the Airbuses that Frontier operates? Would Southwest keep them for a while, or swap 'em out eventually for Boeings?

As for what this means for the Republic deal, here's an excerpt from a press release issued today:

The Republic investment agreement provides for an auction period, during which Frontier may seek higher or otherwise better competing bids. If Frontier identifies such a bid, it can terminate the Republic investment agreement and accept the other offer. Under the auction procedures approved by the Court, interested bidders must submit an initial proposal by Aug. 3, 2009, and a final proposal by Aug. 10, 2009. Frontier and its advisors, in consultation with the Unsecured Creditors’ Committee appointed in Frontier’s Chapter 11 cases, will conduct an auction, if necessary, on Aug. 11, 2009, to consider all qualified proposals and determine the highest or otherwise best proposal.

photo by Taurus Photographix from Flickr

Big changes in store at Aeroflot

2009-07-29T13:30:00.003-04:00

Big changes are happening over at Aeroflot - a new CEO, no more Russian jets, better in-flight service, and a plan for a slimmer company (as well as slimmer flight attendants). And if you have a complaint, simply email the CEO himself.

By the end of this year, all of the airline's Tupolev Tu-154s - previously the backbone of the medium-haul fleet - will be retired, replaced by Airbus A320 family aircraft. The airline also has retired its Ilyushin Il-86 fleet (to be replaced by three leased MD-11s), leaving the Ilyushin Il-96 as the sole Russian type left. Aeroflot has been itching to get rid of those for a long time, as they're rather expensive to operate. The Il-96s will leave the fleet by October, along with the Tu-154.

Meanwhile, the airline, like most others, is struggling to cut costs. CEO Savelyev revealed in an interview with the Russian business paper Vedomosti that 40% of the airline's routes are unprofitable, with the worst being Moscow-Los Angeles, losing $14 to $21 million a year. "But we aren't looking at abolishing the route," he said, stating that the airline is closely reviewing all costs and is planning on making money on the route by June 2010. "If there's demand and good capacity, then why dump it?" The airline is also seeking to slim down, and plans to trim 6,000 of its 15,000 employees. "This number doesn't come from the ceiling," said Savelyev. "We invited the international consulting firm Bain to develop a new corporate structure... The optimal ratio is 1 million passengers for every 1000 employees. In 2008, Aeroflot carried 9.2 million passengers, so the company should have just over 9000 people."

The size of the company itself isn't the only thing that Savelyev wants to make narrower; he's set his sights on the airline's flight attendant corps. “These will be very eye-catching, very striking girls,” he says in the Moscow Times, which reports that they will not exceed a Russian size 48 (US, 12 to 14). New uniforms are also in the works, with orange on the way out: “A sociologist told us that, unfortunately, the color of our old uniforms was a repulsive color, that it made passengers nervous." His son, studying in England, sent him a video of Virgin Atlantic flight attendants (seen here on YouTube); "in bright red they look like professional models," he said. In-flight service is also looking to get a much-needed overhaul; apparently a Singapore Airlines hospitality trainer flew on a couple of Aeroflot flights to judge the service. “We scored a C plus or a B minus," said Savelyev, "but the good news is that our mistakes are easily correctable."

The familiar hammer-and-sickle logo will still be around, though - Savelyev has said that he "likes" the "bird with the hammer and sickle." Back in 2003, when the airline introduced its current color scheme, branding experts suggested that the airline drop the logo since it carried rather negative connotations. The first planes to get the new livery actually flew around for awhile with the logo applied as a sticker, so that airline management could get rid of it if desired. But the hammer and sickle wings are so synonymous with Aeroflot that the airline decided that they might as well be retained, the last vestige of the airline's Soviet past. Things have changed - for example, customer service. "As for all of the complaints," said Savelyev, "passengers can write to my email address, which is listed in the Aeroflot in-flight magazine.

photo by Aleksander Markin from Flickr, licensed under the Creative Commons

Sydney-Los Angeles game of chicken continues

2009-07-28T09:12:00.000-04:00

If you're a passenger thinking about flying between Sydney and Los Angeles, things can't get much better. If you're one of the four airlines that fly that route, things can't get much worse. Earlier this month Delta became the fourth airline to fly between the two cities, joining Virgin-backed startup V Australia, which had entered the market this past February. They joined Qantas and United, which have shared a cozy duopoly for the past 15 years on the route (since Continental stopped flying it), and the result is a four-way game of chicken and a fare war that won't end until one airline drops out - all amidst a dismal business travel climate.

The airlines are resorting to tactics that have an air of desperation to them. Qantas is allowing kids to fly for free on the route, and when you buy a business class ticket, you get two for the price of one - deals that the airline has labeled "unprecedented." Said a Qantas spokesperson: "This is the first sale of its kind for many, many years." Qantas, which used to control nearly 75% of traffic on the route, now flies around half. Before things got bad, the airline made around a quarter of its cash on the route, and even though it's losing money there like everyone else, Qantas has interest enough to stick it out and wait for the situation to improve.

Then there's United, which has come out with the uncharacteristically ballsy proclamation that it would match any competitor's fare between Sydney and Los Angeles. "United is determined and committed to matching the initiatives of other carriers and we'll compete aggressively on price if that's what's required for us to protect our business here," said their Pacific vice president, James Mueller, quoted in The Australian. "I look at our services to Australia as sort of our southern cornerstone of our overall Pacific product offering... [we] fully intend to keep operating here indefinitely." According to the article, United's revamped premium cabins have paid off, with the airline's market share on the route holding steady (for now). United has been flying the route for nearly 25 years, ever since it purchased Pan Am's Pacific route network in April 1985.

And then there are the new entrants: V Australia and Delta. Things have become more complicated now that Delta has announced a joint venture with V Australia parent Virgin Blue, to say nothing of the latter's codeshare agreement with United on domestic flights from Sydney. Some analysts are predicting that one of the airlines could leave the market as early as October, but which one? Both Qantas and United are so well-entrenched in the route that I don't see either giving it up; this leaves Delta and V Australia. Some have said that Delta, being the larger of the two, won't be the one to pull out, but I'm not so sure. If Delta does drop LAX-Sydney, they might lose their claim to flying to all six inhabited continents, but right now it can't be much more than another international route for them. V Australia, on the other hand, doesn't have anywhere else to turn to if they drop the route, apart from service to Los Angeles from Brisbane and Melbourne.

So, if you're planning a trip to Australia, book now while prices are low - before the game of chicken comes to an end.

photo by code20photog from Flickr

BA loses $2.3 million a day as OpenSkies cuts back

2009-07-27T11:43:00.000-04:00

Dow Jones is reporting that British Airways is burning through £1.4 million, or $2.3 million, a day, according to the airline's CFO, Keith Williams. Williams said in February that the airline was losing £2.7 million of cash a day, which is almost $4.5 million, so I guess that's an improvement. But William is also warning that the "cash burn isn't sustainable," and that rate is likely to increase during the winter. So BA is by no means out of the woods yet.

And in related news, BA subsidiary OpenSkies has announced that it will drop its New York - Amsterdam route next month, leaving the premium BA offshoot flying just one route (New York - Paris). OpenSkies CEO Dale Moss has said that "while OpenSkies developed more than 16% market share during only nine months, it was not enough to sustain a profitable service at this time." "We tried very hard to make it, but the current market forces were just a bit too difficult," he said on the company's blog. "My most sincere wish is that someday OpenSkies will return to Amsterdam and make it another signature route." But despite Moss' optimistic outlook, parent British Airways has hired an investment bank to find a buyer for the airline.

photo by bribriTO from Flickr, licensed under the Creative Commons

How to make money from Ryanair

2009-07-27T11:00:00.000-04:00

The Times recently shared a clever way to take back the money that you might have lost with Ryanair's £5 online check-in fee. A cup of coffee on board sets you back either £3 or €3, so you can pay for your coffee with either currency and ask for your change back in either currency. If you pay with a €50 bill, you could get €47 back in change, but that's only worth around £41. Instead, pay 50 euros but ask for your change back in pounds sterling - and instead of getting £41 back, you get £47 and make a profit of £6. Not only do you get back your online check-in fee, but you get an extra quid on the side (depending on the exchange rate, of course). I'm surprised that Ryanair boss Michael O'Leary, famous for his fanatical low-cost approach, hasn't removed this loophole yet, but I'm assuming that it's only a matter of time.

photo by jon gos from Flickr, licensed under the Creative Commons

Wi-fi and the future of inflight entertainment

2009-07-24T09:05:00.002-04:00

US Airways announced yesterday that it will become the latest airline to offer in-flight wi-fi, starting next year. It'll be provided by Aircell's Gogo Inflight system and only available on the airline's A321 fleet for now, but Gogo is already present on the entire fleets of Virgin America and AirTran. United, American and Delta are also looking at installing Aircell's service, while Southwest and Alaska are currently testing the competing Row44 service. (As an aside, US Airways removed power outlets on its A321s, so if you're planning on using the internet for awhile, be sure to bring a spare battery.)

Some airlines, like American and AirTran, have been offering free wi-fi for a limited time on certain routes (after all, that is the most effective way to get people hooked). But there's no doubt that in-flight wi-fi is here to stay, and it could be that pretty soon laptops could replace the TV as the key means of entertainment.

And wouldn't airlines like this? An excellent article in Reuters points out that there would be significant cost savings for airlines. After all, they've got to pay for the installation of the systems and any upgrades, as well as the extra fuel costs related to hauling around all of that extra equipment. And next time you're watching a movie on a transcontinental flight, keep in mind that the airline had to pay a licensing fee to the movie studio. Which means that NBC pockets a bit of cash every time I watch an episode of The Office on United.

There's even another bonus. From the article:

Passengers engrossed with their laptop PCs and mobile entertainment devices that can be used continuously as a result of the power sockets on every seat could also free up cabin crew. "I've heard stories about the number of crew on board each flight being cut by airlines after they introduced personal TVs on every seat," said Anthony Prakasam, an aviation consultant.

So basically, the internet would help further distract passengers from the ever-declining level of in-flight service? Perfect! Makes you wonder why airlines haven't rolled out wi-fi already. Maybe because it costs at least $100,000 to outfit an aircraft? I'm not sure, but perhaps airlines should trim down their current inflight entertainment systems to just long-haul routes and hand out free wi-fi access instead. They might be able to recoup their costs pretty quickly with all of the savings of getting rid of the conventional IFE systems on some flights. Of course, I'm not a bean counter at an airline so I'm not sure if that would make economic sense. What do you think?

photo by DrewVigal from Flickr, licensed under the Creative Commons

What's next for JetAmerica?

2009-07-23T15:21:00.000-04:00

It's been a week since much discussed startup JetAmerica announced that it was shutting down operations, blaming difficulties with securing slots at Newark. Still, there's the possibility that the airline could always start up again. From a Florida Today article:

The airline’s chairman vowed to return to service this fall, however, with Melbourne [Florida]’s airport serving as the base for the operation’s lone Boeing 737-800 jet. “Melbourne will be our focus city,” Steve Schoen said in a telephone interview late Friday from Clearwater, where the airline is based. He later added that the airport in Lansing, Mich., will also be a “target city.”

That's right - we might not have seen the last of the JetAmerica yet. But airports would probably be pretty wary of giving JetAmerica (or its latest incarnation) another chance. The Melbourne airport allocated $25,000 to help promote JetAmerica, and most of that's been spent. And the Toledo-Lucas County Port Authority, which was JetAmerica's focus city, has already spent $119,000, and that amount could end up being as high as $150,000.

I recently asked Toledo Airport's President and CEO, Michael J. Stolarczyk, a few questions about his airport and JetAmerica. If JetAmerica were to start up again, "we would certainly hope that Toledo Express is considered," said Stolarczyk. "If Steve Schoen starts another air carrier, we would welcome the discussion and would fully vet the proposal as we did the first time. The operations team that Steve Schoen compiled was comprised of professionals from the industry and there were several points in their model that will prove to be viable. Fortunately, I’m sure they have learned some valuable lessons from this experience – as have we - and I fully hope Mr. Schoen reemerges with a strong product and that he considers Toledo Express as a service corridor."

Stolarczyk also notes that JetAmerica should have gone with a less aggressive schedule. "Daily service to the New York area is provided from Detroit and we truly wanted to capitalize on that and capture some of those travelers. We can capture those travelers; however, we may not be able to fully load daily service to New York right from the start. In the future, we will begin with three to four times per week service to this market…and then grow that service to its maximum potential."

And as for Toledo and those other airports which were seeking new air service, Stolarczyk remains optimistic. "The team at Toledo Express is going to continue to be diligent in our efforts to secure air passenger service. We will continue to bring the best offer to the table that we possibly can for our partners in these efforts –just like we did with JetAmerica... We bring the same spirit of enthusiasm and support that we showed to JetAmerica to all potential passenger air service partners. It is not a matter of if we will obtain additional air service; it is truly a matter of when."

A Manhattan airport in Central Park? Not really

2009-07-21T17:50:00.002-04:00

Today's epic airline prank is brought to you by The Manhattan Airport Foundation, which wants to bulldoze Central Park and put up an airport in its place. Yes, you must be thinking that this is a joke, and yes, you're right.

Beyond the sheer implausibility of razing Central Park to make way for an airport, let's look at the details. Their address is "233 Broadway, 58th Floor," which is in the Woolworth Building. But the building, which was completed in 1913, only has 57 floors. Perhaps the 'Foundation' has open-air offices on the building's rather angular roof. They've also secured financial backing from the "Waalwijk Charitable Trust" and the 'Tokyo-based holding company' Yamanote Ltd. Problem is, neither entity actually exists. However, that's not preventing the Foundation from accepting a thousand dollars in return for naming rights to a bench. You could throw in some cash, but you'd end up feeling more burned than a JetAmerica investor.

The Foundation claims that it exists to promote "the immediate development of a viable and centrally-located international air transportation hub in New York City for the benefit of all New Yorkers," claiming that "Central Park squanders 843 acres of the most valuable real estate in the world." It touts Central Park's location as a more convenient alternative to JFK, LaGuardia, and Newark, and even claims that "Environmentalists Rally In Support Of Manhattan Airport." Perhaps most hilarious, however, are excerpts from the laughable Frequently Asked Questions:

Q: I own an apartment alongside Central Park. What will Manhattan Airport do to my property value?
A: History has proven that bringing a transportation amenity to an underserved region elevates the perception and economic well-being of the area... [Right, like having 747s flying into Manhattan is going to raise property values on the Upper East Side.]

Q: What about the environmental impact of building Manhattan Airport?
A: Research shows that single-passenger car-service and taxi trips between Manhattan and JFK/EWR/LGA account for up to 9% of automobile-created carbon-based emissions in the region... [Research also shows that 86% of non-cited statistics are made up on the spot.]

Q: Will taxpayers shoulder the financial burden of building and operating Manhattan Airport?
A: No. Manhattan Airport is a privately-financed corporation. To date, nearly 100 investors have signed on to provide approximately $130M in equity with another $80M from the bond market making Manhattan Airport the most ambitious privately-funded airport development project in US history. [Because 100 investors are really going to invest in a fake airport.]

It's impossible to figure out who's actually behind the prank; the website is deliberately vague. Still, I wonder why someone would come up with such an elaborate ruse. Are they trying to send home a point, or do they just have too much time on their hands? Perhaps we'll find out; in the meantime, check out some pictures of the proposed 'airport':

El Al's new "low cost economy" experiment

2009-07-21T09:47:00.001-04:00

Capitalizing on the willingness of travelers to pay more for a (theoretically) better passenger experience, a lot of airlines have added "premium economy" products over the last several years, with Air France, British Airways, Virgin Atlantic and United Airlines among them. And on other end of things, a lot of airlines have also launched (and also abandoned) their own no-frills, low-cost carriers, in an attempt to emulate the success of the standalone LCCs. Remember Delta's Song? Or United's Ted? Or Continental's Continental Lite? (Well, not many may remember that last one.)

The Israeli newspaper Haaretz is reporting that Israeli carrier El Al is introducing something that I've never seen before: a stripped-down version of its economy class product, but within its existing economy class. This comes as low-cost carrier easyJet announces service from London to Tel Aviv; British airline bmi has already entered the market. German LCC Air Berlin also serves Israel, and El Al, being a 'traditional' carrier, is apparently feeling the heat. But instead of launching its own LCC (a concept which Haaretz says the airline's previous management explored but ultimately rejected), the airline will be turning a block of seats in regular economy class into a low-cost economy class.

The new sub-economy class will take up about 10-20% of all seats on the plane, and those seats will be grouped together, not located around the cabin. Although the seats are the same (no Ryanair tricks here), amenities like checked baggage, meals and headphones will cost those passengers sitting in sub-economy extra cash. "Our plan is to open on the planes another class, the low-cost economy," said El Al CEO Haim Romano. "While leg room will be the same as in the rest of the economy class, low-cost passengers will receive no free services. They will have to pay for every suitcase they check in, for food and beverages on board, for headphones or any other entertainment service, for blankets and pillows and for reserving seats." Which could work well for the airline, although how they're going to prevent a sub-economy passenger swiping a headset from a "regular" economy seat or going to the galley to get a free coffee might need to be worked out.

As of right now, El Al is only planning on rolling out the new low-cost economy class on its European flights, which makes a lot of sense; the airline doesn't face low-cost competition on its longer routes, where profit margins are usually higher. But the airline has said that if the experiment is successful, El Al might introduce it on its long-haul flights too.

photo by caribb from Flickr, licensed under the Creative Commons

JetAmerica shuts down

2009-07-17T19:13:00.002-04:00

I'll be writing more about this soon, but for now, here's the news release:

JetAmerica Suspends Sales
$900,000.00 in Refunds to Passengers
Clearwater, Florida - July 17 – JetAmerica, the public charter air carrier operator, announced today that it is suspending sales to all markets and that it would immediately begin to notify affected customers and process refunds to all customers who have booked seats on its flights.

“We are reluctantly suspending our public charter operations effective today,” said John Weikle, CEO, who has been with the company since April. “Finalizing the slots required to support our charter program at Newark has taken longer than expected and we have decided to suspend our flights in order to refocus on different markets. We still strongly believe that there is an unmet need for affordable air service to secondary markets and we look forward to offering this option again in the near future," concluded Weikle.

"We will be refunding more $900,000 in ticket reservations for flights from August 14 through the end of September," said Bryan Glazer of World Satellite Television News and Media Relations, which represents JetAmerica.

Glazer's firm, which previously represented JetBlue and Virgin Atlantic Airways, was retained by JetAmerica in May. The firm's national media blitz generated headlines across America that helped sell more than 20,000 tickets during the first JetAmerica's online e-commerce operations.

"It is unfortunate that so many consumers' will be affected. This was unavoidable. I worked closely with the executives of JetAmerica for several months and know they did their very best to overcome the challenges that the slot situation posed. But in the end, the business plan never called for paying for more than a half million dollars for slots," said Glazer.

He added, "Don't be surprised if JetAmerica comes back with new routes and new destinations."

All customers will receive automatic refunds within 7-14 business days. Any customer not receiving a full refund in 14 days should call 727-451-3970.

Air France dismisses report of a "black year" in 2010

2009-07-17T14:57:00.001-04:00

Air France executives have dismissed a report in the French financial newspaper Les Echos which claims that the airline could face a "liquidity problem" in 2010. The report, published under the headline "Air France: les risques d'une année noire" (the risks of a black year) says that accountants from the accounting firm Secafi, hired by Air France's works council, have painted a couple of pictures regarding the airline's financial strength, none of them very pretty.

Under the first scenario, an upswing in traffic occurs at the end of the 2009-10 financial year and oil stays around $61 a barrel, and Air France, taking advantage of reduced costs, could keep its losses to a minimum, or even break even.

More realistic, says the report, is the second scenario, in which traffic numbers stay sluggish, revenue declines 9%, but oil stays low (around $58 a barrel), which is "more or less" what the airline faced in late May. But the airline would still post a loss that's much higher than the 184 million euro loss posted in the 2008-2009 financial year, and revenue declines in the past month have approached 20%, not 9%.

Then there's the worst scenario, which a decline in revenue of over 9% but oil reaching $70 a barrel. "In this scenario, the operating loss would cause us to consume more than 1.5 billion euros in cash in 2009... this means that it wouldn't be a year before the company runs out of cash," says the report. A "black year" indeed.

Pretty serious stuff, especially as oil is currently trading in the low sixties. Even if oil sticks around $61-63 a barrel, scenario #1 isn't likely, as air traffic probably won't rebound for the airline before the end of the 2009-10 financial year. And it's unlikely that oil prices will be around $58 a barrel for a long period, as they are in scenario #2. Still, it might be taking things too far to say that the airline could run out of cash within a year; the airline issued over 600 million euros worth of bonds last month to finance new aircraft purchases, and perhaps they could do the same in the future if needed.

Unsurprisingly, Air France management isn't buying the gloom-and-doom forecasts. In a statement, the airline said that "the Executive Management of Air France-KLM wishes to make clear that in no respect does it validate any of these imaginary scenarios [and] that its financial position is, and will remain, extremely healthy in the coming years." The statement went on to say that Air France had 4.5 billion euros on hand at the end of June, along with 1.2 billion euros in available credit lines.

photo by caribb from Flickr, licensed under the Creative Commons

Lufthansa struggles with Austrian purchase

2009-07-16T09:18:00.001-04:00

Lufthansa has been really putting together quite the airline empire over the last few years, acquiring Swiss Air Lines, Italian carrier Air Dolomiti, and German carriers Germanwings and Eurowings outright, as well as purchasing large stakes in British airline bmi and Brussels Airlines (and will own the latter outright by 2011).

It's also trying to wrap up a deal to take over Austrian Airlines in its entirety, although the plan has dragged on for a long time, thanks to roadblocks from the anti-trust unit of the European Commission, which is concerned about a lack of competition on some European routes. Lufthansa has already apparently agreed to more concessions, including dropping flights between Vienna and Frankfurt and Vienna and Geneva, but it's unclear whether or not this will be enough for the EC.

Austrian has been bleeding red ink recently; the airline lost 429 million euros last year, has more than one billion euros in debt, and has already burned through two thirds of a 200 million euro injection from the Austrian government that it received this spring. Its chairman has said that if the Lufthansa deal falls through, the airline would need over one billion euros in new capital. Austrian's future is being increasingly called into question as the prospects for the deal's success look dimmer.

And meanwhile, Lufthansa is also struggling (although not to the same extent as Austrian). The Austrian deal, with a deadline of July 31, is still dragging on and on and becoming ever more expensive, and Lufthansa is looking at ways to lower acquisition costs. It also reluctantly purchased fifty percent of bmi from its founder, Sir Michael Bishop, who for many years held an option that would force Lufthansa to buy his stake. Bishop actually ended up suing Lufthansa back in May in order to make Lufthansa proceed faster with the deal.

But the deals with Austrian, bmi and Brussels have contributed to Lufthansa's increasing financial pressures. The airline today announced that it would roll out a costs-saving initiative called "Climb 2011," which calls for savings of one billion euros ($1.4 billion) per year starting in 2011. The plan focuses on lowering passenger costs as well as shedding 20% of its 2,000 office jobs in its passenger airline core business. Lufthansa has also said that it will defer delivery of some aircraft from 2010.

Depending upon how many further obstacles it receives from the EC, Lufthansa might just decide to axe the takeover of Austrian, especially as the costs of a takeover mount and Austrian's financial situation becomes more and more perilous. Austrian could be looking less and less attractive, especially while Lufthansa digests the the financial burden of taking over bmi and Brussels. With the global airline industry stuck in a deep downturn, Lufthansa needs make sure that it doesn't bite off more than it can chew, and should concentrate on solidifying its core operations - after all, that airline empire is no good if the carrier at the center of things isn't strong.

photo by caribb from Flickr, licensed under the Creative Commons

AirTran's 'Internetiquette' for in-flight wifi

2009-07-15T11:25:00.000-04:00

AirTran recently became the second airline to outfit its entire fleet with Wi-Fi (after Virgin America). "But with your newfound freedom to surf the internet, comes a little responsibility," says the airline in the introduction to "Internetiquette," a brochure that will be found in every AirTran seatback pocket. The 'manual' says that it will "[allow] you to enjoy the internet to the fullest, while at the same time, not offending the people around you."

"Internetiquette" features such helpful tips as #48 ("Flight attendants are not tech support"), tip #10 (helping you figure out which online photos are suitable for flights [SFF] or not suitable for flights [NSFF]), or #134, which advises against taking your laptop into the lavatory to take care of some business.

But perhaps even better are the series of short videos hosted by none other than "Airplane!" star Peter Graves, who speaks about some of the dos and don'ts of in-flight internet use. He even manages to throw in a few jokes from "Airplane!" every now and then in the videos, which can be seen here.

United deals with song fallout

2009-07-14T11:36:00.000-04:00

Last week, a music video was posted to YouTube that was every airline PR executive's nightmare: a catchy country-music song, professionally edited with a humorous music video, that was quickly spreading across the internet. Normally this wouldn't be a problem, but the song was called "United Breaks Guitars," by Canadian singer Dave Carroll and his band, Sons of Maxwell, and describes his fight with the airline to receive compensation after United baggage handlers in Chicago damaged his $3,500 Taylor guitar.

In the last week or so, the song/video (which only cost $150 to make) has reached almost three million views on YouTube, gained prime-time exposure on CNN's Situation Room, and was the most popular song at the band's concert last Friday. “Everybody was calling for that song the minute we hit the stage,” Carroll said to Rolling Stone. “It was unbelievable, 1,500 people raising their hands in the air to the ‘United breaks guitars’ tag line in the chorus."

That's got to be causing some serious pain over at United headquarters in Chicago. It's bad enough when a YouTube video critical of your airline (no matter how light-heartedly) garners millions of views; it's even worse when you see that the song has had such success that over a thousand people put their hands in the air to the words of "United breaks guitars." How many of them are going to have that chorus line stuck in their heads at the first mention of United? And how many discussions of the song ("Did you see that video on YouTube?") are going to evolve into discussions about a lack of customer service on United ("You know, I flew with them last April...") ? And it's not over, yet - there are still two more songs on the way.

Obviously, it's hard to blame United for not seeing this particular incident arising. I don't think a case where someone, slighted by an airline, has turned around and released a wildly popular country song about their experiences. But it does highlight some serious customer service policy deficiencies, ones that United is seeking to rectify. As the pictured "tweets" show, United Airlines' PR department has been working hard to respond to comments on Twitter regarding the song, and has said that the video will be used for training, and that they've "apologized for, have fixed, and most importantly, learned from" the mistake, too. Airlines are starting to understand the power of social media - a $150 music video can be more effective than a multi-million dollar Madison Avenue ad campaign.

Perhaps airline reps everywhere now will be thinking in the back of their minds, "Could this turn into a smash YouTube hit?" After all, it worked for Carroll - national attention and a priceless amount of free publicity. Rolling Stone has said that Bob Taylor, of Taylor Guitars, personally phoned and offered Carroll two free guitars of his choice for the second video, while other airlines have reportedly offered him free tickets.

Pilots agree to cuts, but trouble still ahead for BA

2009-07-13T13:46:00.000-04:00

It seems as though British Airline Pilots Association (BALPA) members are actually buying British Airways CEO Willie Walsh's statements that the airline is facing its largest-ever crisis, since 94% of them voted today in favor of a 2.6% cut in salary, a move that should save the airline £26 million. "We have pressure tested the company's trading position and cost base, and are satisfied that this step is necessary to help BA recover its position as one of the world's most successful airlines," said Jim McAuslan, general secretary of BALPA.

BALPA's agreement to pay cuts is a relief for Walsh, who is going to have a much harder time convincing cabin crew and ground handling staff to take a salary cut. Four weeks of negotiation have failed, and the threat of a strike looms large for the airline. “There is every sign that a conflict is looming if this last throw of the dice does not succeed," said Mick Rix, who heads up the GMB union. The Unite union evidently doesn't buy Walsh's message as BALPA did, saying that "BA’s management are opportunistically using the recession to force through changes which are more far-reaching and damaging to BA’s future.

The pilots have seemed to recognize that the airline's future is at stake during these critical next months. While painting gloom-and-doom pictures has always been a management strategy used to extract concessions from unions, I think that British Airways is genuinely in a "fight for survival," as Walsh put it. Naturally, it was under Walsh's nose that the airline went from making record profits one year to posting record losses the next, and once the dust settles after the current crisis, Walsh might find that he needs to move on. But to be fair, BA is saddled with outdated, expensive labor contracts - ones that need to change, and change in a hurry.

"The problem is that there’s no flexibility with the cabin staff," said Howard Weeldon, a senior strategist at London's BGC Partners LP. "It’s been entrenched for 20 or 30 years... There has to be some form of compromise, because you can’t have an airline without cabin crew and the cabin crew need the jobs. A strike would be very, very foolish and it would only make things much worse.” But unless the cabin and ground staff agree to a reduction in wages, a strike might be just the thing that Walsh finds himself facing later this summer. He's also going to have a difficult day tomorrow, when he addresses BA's shareholders at their annual meeting - and they can't be happy about the fact that the airline has stopped issuing a dividend. The airline has even talked with key shareholders about an emergency rights issue for £500 million, although that would probably be a last-resort option.

photo by michal818 from Flickr, licensed under the Creative Commons

Continental allowed to join Star Alliance immunity pact

2009-07-10T12:40:00.001-04:00

The Department of Transportation ignored a recommendation from the Department of Justice that Continental Airlines not be allowed to join nine other Star Alliance carriers in recieving antitrust immunity on international routes, and instead granted it permission earlier today. (Thanks for the heads up from Airline Route.)

The airlines (Air Canada, Austrian, bmi, LOT, Lufthansa, Scandinavian, Swiss, TAP, United and now Continental) can benefit from "limited and carefully considered" antitrust immunity on international routes, saying that "the transaction will not substantially reduce or eliminate competition."

In its ruling, the DOT also stated that the Continental's joining "does not materially alter the competitive landscape or increase overall market share to any significant degree," noting that Continental's move to Star allows for "a more competitive alliance in markets where oneworld or SkyTeam have a strong presence."

The DOT also noted that Continental currently overlaps with other Star carriers in fourteen city-pair markets, but stated that creating "carve outs" (routes that are not covered by the antitrust immunity) would "detract from the efficiencies that the alliance would otherwise create." Existing "carve outs," such as Chicago-Frankfurt, Washington-Frankfurt, San Francisco-Toronto and Chicago-Toronto, are still in effect. As for domestic competition (especially with United), the DOT concluded that "the benefits of the alliance outweigh the comparatively small risk of harm that could occur in domestic markets."

Of course, the whole argument of alliances being good for the consumer only stands if "metal neutrality" is practiced. "Metal neutrality" is when airlines that jointly market services aren't picky about who actually operates the flight (and thus keep more of the revenue). For example, if I wanted to fly from Boston to Frankfurt as seamlessly as possible, I could take a direct Lufthansa flight, or instead fly United through Washington Dulles. If I book my ticket with United Airlines, under "metal neutrality" they'd put me on the Lufthansa flight, even though they'd make much less money than if they put me on their flight through Washington. If things are kept metal-neutral, the DOT argues, then carriers won't spend time worrying about making sure that a passenger flies on their airline; instead, they can work on syncing their flight schedules and sharing financial benefits and losses, which give them incentive to make things as convenient as possible to the passenger.

photo by James Willamor on Flickr, licensed under the Creative Commons

WestJet announces largest-ever expansion

2009-07-08T13:28:00.001-04:00

If there's a Canadian airline on the rise, it's definitely WestJet. Originally started in Calgary in 1996, it was originally only going to fly to destinations in western Canada (hence the name). But the airline quickly grew in subsequent years, and is now the second largest airline in Canada (behind Air Canada) and the largest Canadian low-cost carrier. WestJet has, more recently, announced plans to introduce a frequent flier program and has announced a codeshare agreement with Southwest Airlines (another one is in the works with Air France/KLM).

And earlier today, the airline announced what it billed as its "largest-ever seasonal non-stop flight schedule" in the company's history, adding 11 destinations for the winter schedule. Pretty much all of them are warm-weather getaways (Miami, Mexico, Cuba, St. Maarten, etc.) although I was rather surprised to see Atlantic City on the list. Year-round service to Yellowknife from Edmonton and San Diego from Calgary was also added. The airline's transborder and international capacity will increase 45% year over year, compared with just 5% domestically.

"This schedule represents significant expansion on both the transborder (U.S.) and international fronts," said Chris Avery, WestJet's VP, Revenue and Planning. "Both are strategic decisions as we continue to aggressively pursue and earn profitable market share in these critical areas. WestJet is well on its way to becoming the market leader in many of the most popular sun destinations in the U.S., Mexico and the Caribbean."

WestJet also has to be taking advantage of the rather precarious situation that its chief rival, Air Canada, finds itself in. Air Canada has been dealing with less-than-stellar relations with some of its unions, and is trying to avert a possible strike during the 2010 Vancouver Olympics. Any significant labor disruption at Air Canada could be enough to push the airline into bankruptcy for the second time in the past ten years - something that WestJet, which is not a unionized carrier, would be sure to exploit.

"United Breaks Guitars" and inspires country song

2009-07-07T15:09:00.001-04:00

I recently came across a country singer's airline-related story of woe on United Airlines (thanks to Alex for the heads up). Dave Carroll was flying from Halifax to Omaha on United Airlines, with a stopover in Chicago, when his guitar was damaged (full story here):

In the spring of 2008, Sons of Maxwell were traveling to Nebraska for a one-week tour and my Taylor guitar was witnessed being thrown by United Airlines baggage handlers in Chicago. I discovered later that the $3500 guitar was severely damaged. They didn’t deny the experience occurred but for nine months the various people I communicated with put the responsibility for dealing with the damage on everyone other than themselves and finally said they would do nothing to compensate me for my loss. So I promised the last person to finally say “no” to compensation (Ms. Irlweg) that I would write and produce three songs about my experience with United Airlines and make videos for each to be viewed online by anyone in the world.

Frustrated with United customer service, Carroll found a creative way to try to get even with the airline: write a song. Called "United Breaks Guitars," the catchy, country-sounding song details his experience. Of course, I'd like to point out that his troubles could have been prevented had he carried his precious guitar with him on board the aircraft - I'm pretty sure that this is possible, having seen passengers carrying guitars on board planes in the past. Nevertheless, it makes for enjoyable watching (and listening).

Ryanair plans 'standing seats'

2009-07-06T11:00:00.001-04:00

Ryanair boss Michael O'Leary

When the story broke last week about China's Spring Airlines looking into 'standing-only' flights, I figured that it was only a matter of time before European budget carrier Ryanair would announce plans for a similar concept. And sure enough, Ryanair, not to be outdone, finally announced today that it was in discussions with Boeing and the Irish Aviation Authority to look at "vertical seating" in its 737s - the last four rows of regular seats would be removed in order to make room for the new seats. Passengers wouldn't actually be standing, but "they would have something like a stool to lean on or to sit on," said Ryanair spokesman Stephen McNamara; CEO Michael O'Leary has described them as "barstools," according to The Sun, which also reports that O'Leary got the idea from the Chinese carrier.

The passengers who use the "vertical seating" would fly for less than those with a regular seat, and would apparently be used only on flights under 90 minutes. "We might take out the last five or six rows and say to passengers, 'Do you want to stand up? If you do, you can travel for free'," said O'Leary, to Sky News. "Why is this any different to what happens on trains, where you see thousands of people who cannot get a seat standing in the aisles, and it happens regularly on the Underground?"

Spirit Airlines reportedly buys Air Jamaica

2009-07-06T09:01:00.001-04:00

Some interesting rumors are circulating around the tropics - acccording to the Jamaica Gleaner, US ultra-low-cost-carrier and Ryanair-wannabe Spirit Airlines will purchase perennially unprofitable state-owned flag carrier Air Jamaica, which could be renamed "Spirit of Jamaica." The news comes only days after Radio Jamaica reported that the Jamaican government's Privitisation Committee, set up to find the best buyer for the airline, recommended that either Trinidad-based Caribbean Airlines or British charter airline Thomas Cook should be the one to make the purchase. Spirit Airlines spokesperson Misty Pinson refused to confirm or deny the story, only saying to The Airline Blog, "We don't comment on market rumors."

In preparation for the sale, the government installed Bruce Nobles, the same person who oversaw restructuring at Hawaiian Airlines, as president and CEO. Nobles realized, pretty quickly, that Air Jamaica's fleet utilization was poor and vowed "to fly the airplanes as much as you can to generate revenue." He also dropped routes to Atlanta and Miami, and instead used the aircraft on routes where they made money. Nobles also noted that one of Air Jamaica's main problems was that it lacked capital; "Air Jamaica spends too much money because it does not have any," he said, and has since secured more cash for the carrier.

Evidently, he's done a pretty good job of fixing up the airline; those who thought that there would be a mid-summer snowstorm in Montego Bay before a profitable Air Jamaica might be surprised. Nobles says that the airline, which has never made a profit, could break even as soon as December and may actually become profitable in 2010. Especially given the current economic environment, that's quite an accomplishment. The fact that Spirit's owners, Indigo Partners and Oaktree Capital, are interested in buying Air Jamaica has to be a testimonial to the airline's improved financial condition.

Of course, if the sale turns out to be true, it does raise a few unanswered questions. Would Air Jamaica turn into an ultra-low-cost-carrier, along the lines of Spirit? Many in Jamaica would probably cringe at the thought of their national airline becoming another Spirit, which is known for its Ryanair-like disregard for passenger service (according to the Department of Transportation, Spirit had the most complaints in 2008, with 14.3 per 100,000 passengers; US Airways, with 2.0, came in second). Perhaps Spirit might run the carrier separately, keeping its existing (and newly-profitable) business philosophy and using it to feed Caribbean traffic into Spirit's US operations (and vice versa). But here, the 'feed' strategy might not be successful - for a start, the two airlines serve different airports in New York (Air Jamaica at JFK, Spirit at LaGuardia). And the discrepancy in the current levels of service offered by the airlines might be off-putting to some travelers, too.

photo by Matt Coleman - BNA-Photo on Flickr

Delta starts flights on crowded Sydney-LAX route

2009-07-03T11:13:00.001-04:00

photo: Delta flight 16, a Boeing 777-200LR, gets ready to leave Sydney. Photo by AFP

Delta Air Lines started Los Angeles - Sydney service on July 1, becoming (as Fish pointed out) the first US airline to fly to all six 'inhabited' continents since Pan Am. If anything, it further sends home the message that Delta is now a major international player, and that it's putting some of the route authorities it acquired with Northwest to good use. Even though the US, unlike so many other countries, has never had an official 'flag carrier,' Pan Am was the closest to it until it went bust in 1991. So perhaps now Delta has assumed that mantle - not bad for an airline that, 80 years ago last month, started out as a crop-dusting operation in Louisiana.

But Delta had better not be expecting an easy ride on the US-Australia route, which is known for being a major cash cow for the airlines that fly it. Up until recently, those airlines were Qantas and United, and they both made a lot of money (Qantas apparently makes 20 to 30% of its money on the route, and I recall that United also also attributes a pretty hefty amount of its earnings to the route as well). United and Qantas had a lock on the market, and if you didn't like one of those airlines, your options were, well, rather limited (unless you wanted to fly via Asia, which adds several hours). Qantas flew about 70% of the traffic, leaving United with the remaining 30%.

But Virgin offshoot V Australia started flying between Sydney and Los Angeles this past February, and suddenly things got complicated - the formerly lucrative route has turned into a money-losing one. Fares went down, as they usually do when a carrier enters a new market; over the past year, prices have gone down by more than half. Qantas' market share on the route is expected to fall to just over 50%, and just as badly, their international yields were down 25% in May versus the same month last year. Capacity will be going up by as much as a third, now that there are new airlines flying the route and Qantas is using the A380, and that can also lead to lower yields.

Still, nobody's giving up, at least not yet. "[The route] is such a jewel that we intend to keep it," said Alison Espley, United's general manager for Australia and New Zealand. "Someone may not last the distance, but we will." She said that United has been flying the route for 24 years and isn't going anywhere, and that other airlines are going to "have to look very seriously" at exiting the route. Virgin chief Richard Branson similarly predicts an airline exiting, but of course, not his own: "I would put money on either Delta or United not flying across the Pacific in two to three years." By year's end, predicts Flightglobal, the market share on the route will be Qantas 60%, United 17%, V Australia 15%, and Delta 8%.

What used to be a comfortable money maker is no longer, and chances are that at least one of the four airlines might have to consider stopping flying Sydney-Los Angeles pretty soon.

JetAmerica delays launch, blames Newark

2009-07-02T17:04:00.003-04:00

The story started last night, when Jaunted reported that startup airline JetAmerica would not let you book tickets in July on their website, even though their reported launch date is July 13. "There is a problem with our server," said a JetAmerica employee when Jaunted phoned the reservations number. "[The website] is only booking flights for August and September... IT says all should be fixed by end of day tomorrow." Cranky Flier, meanwhile, has warned potential passengers to stay away from JetAmerica, at least until they're in the air.

But just a little while ago, the airline released a press release that stated that it was "self-imposing a thirty one day delay of the launch of its first flights," which are now scheduled for August 14. JetAmerica said that "unforseen complications with landing and take-off time slots at Newark Liberty International Airport" were to blame for the delay.

"In February 2009, the Federal Aviation Administration advised us, through an intermediatiary, that our operations at Newark could be accommodated," said Brian Burling, JetAmerica's VP of Operations, in a press release. "However, at about the same time JetAmerica started making national news with its $9 non-stop fares; when JetAmerica announced 60,000 website visitors and sales in excess of 20,000, the FAA re-clarified its policy, telling JetAmerica we would need to obtain slots." He added, "The delay is not as unusal as it sounds... Historically, many of the world's most successful airlines and charter services have had to delay their launches."

“We feel terrible for the folks who booked with us for travel during the July 13 - August 13 timeframe, but the FAA's change in the slot policy for indirect air carriers is beyond our control," said CEO John Weikle. "We are working hard to obtain all the slots we need as soon as possible.”

According to the press release, the airline will also be e-mailing 6,486 passengers to alert them that their credit card accounts will be fully refunded, and that the refunds should appear "on e-statements within 7 to 14 days." The airline will also offer those inconvenienced passengers "special incentives to rebook on future flights," including waiving the $10 reservations 'convenience fee' and the seat assignment and first-checked piece of baggage fee. (Those who are affected can call 727-451-3970 for more information.)

Burling says that the airline has "no immediate plans to change our flight schedules," saying that "initially, JetAmerica planned to fly 34 weekly flight segments starting on July 13, 2009. On August 14, 2009 the number of flights is still slated to expand to 40 per week." And, as if to try to head off any ensuing negative press coverage, he said: "People should not be quick to jump to negative conclusions about JetAmerica. I am particularly referring to internet bloggers and naysayers who are predicting the worst."

Well, I'm not predicting the worst, but this means that JetAmerica's start is shaky at best. I'm no expert in airport slots, so I'm not sure if their excuse is plausible (I assume it is), or if JetAmerica is experiencing other problems, but blaming everything on 'server problems' and then switching to another explanation looks anything but professional. Weikle and Co. are going to have to put their damage control response into overtime to have to deal with this - and even if they do get in the air next month, it remains to be seen if passengers will continue to have confidence in the carrier.

Edit: In a statement to The Airline Blog, Toledo-Lucas County Port Authority CEO Michael J. Stolarczyk, had this to say about the delay: "We are disappointed to hear about this situation, and our first priority is with our customers here in Toledo. We need to embrace and support JetAmerica and we sincerely appreciate the support of our community. The Toledo-Lucas County Port Authority is also trying to mitigate their inconvenience as much as possible. We will see JetAmerica fly in August and beyond."

Auf wiedersehen to Lufthansa's A300s

2009-07-01T08:44:00.000-04:00

The last Lufthansa Airbus A300 flight flew earlier today, as the culmination of the airline's plans to phase out the 26-strong fleet. Lufthansa flight 3853, operated by aircraft D-AIAM, left Rome and arrived in Frankfurt shortly past 9:00am local time. The A300s have been a key part of Lufthansa's 'continental' fleet since 1987, and the airline used them extensively on inter-European routes. But the A300s got the axe as part of a cost-cutting plan that Lufthansa has implemented, which is expected to save €300 million ($420 million).

American Airlines, another big A300 operator, is also expected to retire the last of its A300s this year on August 24th. Those of you who have yet to fly on an A300 (myself included) might want to look at booking tickets before it's too late...

photo by eigjb on Flickr

jetBlue smokes competition in J.D. Power survey

2009-06-30T08:07:00.001-04:00

The 2009 J.D. Power and Associates 2009 North American Airline Satisfaction Study was released earlier today, and jetBlue came out top, not just in the low-cost carrier group but overall, as well - for the fourth year in a row. For the 'traditional network carrier' category, Alaska topped the list for the second consecutive year. (Just to be clear, JD Power defines low-cost carriers as airlines that "operate single-cabin aircraft with typically lower fares," while 'traditional network carriers' "operate multicabin aircraft and use multiple airport hubs." It also considers AirTran to be an LCC, although it does operate multicabin aircraft.)

I spoke with Paula Sonkin, VP Travel and Real Estate at J.D. Power, who said that cost was the biggest influence for most passengers, and they've not been favorably impressed by the various sources of ancillary revenue (read: fees and charges) that the airlines have added recently. This, along with with declines in in-flight service, has led to overall customer satisfaction with airlines this year on the decline for the third straight year, reaching a four-year low (ouch). The only airline that improved its position versus last year was Southwest.

That's not to say that everything is gloom and doom, however. Sonkin pointed out that the airlines that did well - for example, Alaska, which was 4th place in 2007 and rose to 1st last year - did so because they focused on improving the things that were in their control. Fuel prices, a weak economy - those things can't be changed, and the things that occur as a result (such as increased fees and lowered employee morale, which can lead to poorer service) can be expected, if not necessarily liked. But Alaska really made strides because it improved its pre-flight process - that is, its website, the ticket booking process, and especially the check-in process, which the airline made faster and friendlier. Also on the plus side, passenger-reported flight delays and check-in times were reduced, and the general on-time arrival rate went up by more than 5% versus last year. “Despite the economic stresses that airlines are under, they are recognizing the value of passengers’ time and trying to make air travel more expedient and efficient,” said Dale Haines, senior director of the travel practice at J.D. Power. “Unfortunately, any improvements in customer satisfaction are being offset by passenger displeasure with cutbacks on in-flight services, increases in fees and issues with the helpfulness and courtesy of flight crews.”

jetBlue did very well, especially in the aircraft category (of course, flying a bunch of relatively new planes with in-flight TV might help), although Southwest really managed to place a strong second place (tied with WestJet), and the trend is that the airline is closing the gap with jetBlue. All of the airlines were scored on a 1000 point scale, and interestingly, even the lowest-ranked low-cost carrier (AirTran) still managed to beat the top-ranked traditional network carrier (see charts below). Delta and Continental performed adequately for the network carriers, with US Airways (haven't they branded themselves an LCC?) coming in dead last - maybe it was that whole experiment with charging $2 for drinks that really did them in. For the full results, head over to J.D. Power.

photo by MHJohnston from Flickr, licensed under the Creative Commons

Standing only flights on Spring Airlines?

2009-06-29T13:35:00.001-04:00

That's right - CCTV is reporting that Chinese carrier Spring Airlines is looking at standing-room only flights on some of its Airbus A320s. The airline, billed as the first low-cost carrier in China, will try to get regulatory approval for the idea by the end of the year. Apparently, the new passenger layout means that the A320s can fit up to 40% more passengers (that's quite a bit) as well as cut costs by 20%. "It's just like bar stools," the airline said. "The safety belt is the the most important thing. It will still be fastened around the waist."

Spring Airlines wants the standing-only flights as a way to cope with capacity issues - it can't get a hold of new planes quickly enough to keep up with passenger demand. According to Spring Airlines President Wang Zhengua, the idea for the flights was proposed by Chinese vice premier Zhang Dejiang: "He suggested that, for a lower price, passengers should be able to get on a plane like catching a bus, with no seat, no luggage consignment, no food, no water, but very convenient." Wang also says that airline has been told by Airbus that the idea was safe, so "once the government approves it formally, we'll try it."

Apparently the tickets that require you to stand in the aisle would be 20% cheaper. I'm not sure whether the entire aircraft would be standing-only, or if it's just additional standing in the aisle. But this might be a novel, if somewhat uncomfortable, way of dealing with the problem of undercapacity - that is, if it gets regulatory approval, as the Chinese aviation authorities still require that passengers are seated for takeoff and landing. Maybe Vice Premier Zhang can do something about it, but in the meantime, let's not give Ryanair's Michael O'Leary any ideas...

Problems ahead for global airline alliance immunity

2009-06-29T09:35:00.002-04:00

The Department of Justice recently expressed objections to the antitrust immunity agreement that nine Star Alliance carriers (plus Continental, which will be a Star member later this year) are seeking. The airlines, which include United, Lufthansa, Air Canada, SAS and Swiss (but notably, not US Airways), have been looking to obtain global immunity from antitrust laws for some time now. In April, the Department of Transportation gave the carriers a tentative green light, but last Friday, the DOJ instead called on the DOT to "deny the broad requested immunity and instead grant a more limited immunity" - probably just a more limited transatlantic cooperation.

Right now, Continental technically competes with Star Alliance members on its routes, but under the proposed immunity agreement, that competition would be eliminated. The DOJ went further in its explanation, saying that Asian and Latin American routes flown by United and Continental would probably see price increases, as the airlines would no longer be competing. And the DOJ also took fault at some transatlantic routes; Continental has a pretty extensive list of European destinations, and the DOJ said that competition on some routes between the US and some of those cities would decrease substantially.

So, what implications does this have? First, it shows that the federal government is getting more serious about enforcing anti-trust policies, especially under the new presidential administration (as had been expected). Secondly, it could have serious effects for a similar agreement that rival alliance oneworld is trying to put together, and could be in the shape of things to come for such global agreements. And the DOJ statement also goes after cooperation between United and Continental on domestic US routes; "a sweeping grant of immunity raises significant concerns about harm to domestic competition," it said - something that might indicate obstacles to a potential United-Continental merger.

photo by caribb

ANZ presents 'bare essentials of safety'

2009-06-27T11:21:00.001-04:00

Last month's Air New Zealand TV ad was enormously popular, having generated almost two million views on YouTube (and also a lot of free publicity). Seeking to build upon that, the airline has released a new safety video for its Boeing 737-300 aircraft, featuring crew members wearing nothing but body paint. Maybe this will cause people to finally start paying attention to those safety videos...

"The Blue Skyway" flies again on Continental

2009-06-25T18:39:00.000-04:00

One more airline adds a 'retrojet' to its fleet. Continental has recently taken delivery of a brand-new Boeing 737-900ER that's painted in 'The Blue Skyway' livery, in preparation for the airline's 75th anniversary on July 15. The paintjob was first used on Continental planes back in 1947. Here you can see it on a DC-7 back in the day, and much more recently on a shiny 737 (photo by Drewski2112).

Maybe Air India is "too big to fail"?

2009-06-25T11:17:00.000-04:00

Looks like the Indian government is getting set to perform a bailout of ailing flag carrier Air India, which has lost almost $1 billion in the last fiscal year. Indian Civil Aviation minister Praful Patel sounded an awful lot like Barack Obama talking about GM when he said that "it doesn't mean there is a checkbook open to Air India... It will be difficult for the government to keep continuing our support unconditionally."

In order for Air India to get the money (over $800 in the form of equity and loans), though, the government is forcing the airline to cut costs and become leaner and meaner (sound familiar?). Air India has to submit a cost-cutting plan to the government within one month, including a plan to cut personnel costs and dump unprofitable routes. Not that long ago, the airline attracted quite a bit of attention after deferring the salaries of its employees for two weeks; more recently, Air India's senior mangagement have been asked to work without pay next month.

Maybe keeping Air India afloat is a point of national pride; after all, the airline has always been the state-run flag carrier. But is the Indian government really going to be able to force a bloated, government-owned entity to slim down? Air India's main rival, the privately-owned Jet Airways, also posted a loss for the last fiscal year - but it was just under $200 million, which is a heck of a lot less than Air India's.

photo by hartlandmartin from Flickr, licensed under the Creative Commons

It'll cost you $2 to watch this safety video

2009-06-24T19:43:00.000-04:00

Here's a clip from MADtv showing a fictional airline safety video... although it's two years old, it seems to be ahead of its time when it comes to predicting excessive airline fees ("Seatbelts can be purchased for $5"). While airlines won't be charging for seat belts, they can (and often do) charge for just about everything else. Good old Ryanair might come to a lot of people's minds, let's remember than on Ryanair, they wouldn't even give you that single peanut for free. (Thanks to FlyersView for the heads up.)

Republic buys Frontier and Midwest

2009-06-23T16:36:00.000-04:00

I can't think of a time when an airline company has purchased two airlines in as many days, but that's what has happened, now that Republic Airways Holdings has agreed to not only purchase Denver-based Frontier Airlines, but also long-struggling Midwest Airlines. If it wants to pull off the hat trick, then all it needs to do is purchase one more airline.

You might not have heard of Republic before - and that's not surprising, since the airline doesn't fly under that name but under three brands: Chautauqua Airlines, Shuttle America, and Republic Airlines. Still haven't heard of any of those? That's because they're the ones who do some of the flying for the regional airline brands, like United Express, Delta Connection, US Airways Express, AmericanConnection, and Continental Express. Republic Airways has been pretty successful, because of the increase in regional airline flying and the fact that their labor costs are relatively low (flight crews aren't as senior, meaning they aren't paid as much).

Under the terms of the first deal, Frontier, which has been stuck in Chapter 11 bankruptcy for more than a year, would walk out of bankruptcy court as a fully-owned subsidiary of Republic, but keep flying under its own name. Of course, the deal's not final yet - if another company places a higher bid for Frontier next month at a bankruptcy auction, or if the bankruptcy court turns the deal down, then the takeover wouldn't be completed.

Why did Republic go after Frontier? One scenario claims that Republic, which does some flying under the United Express banner, could turn around and sell Frontier's assets to United Airlines, which competes head-on with Frontier at Denver.

As for Midwest - well, let's just say that the writing's been on the wall for quite some time now. The airline is a sad shell of its former self - remember when they had all of those DC-9s and MD-80s and the nice seats and good food? Last year, Republic loaned Midwest $25 million - a lifeline that helped it stay out of bankruptcy, but one that by no means helped the overall financial situation. The airline fought off a takeover attempt by AirTran last year, but times have since gotten a lot more tough.

The airline was recently sued after falling behind on aircraft payments, and it would have had to have faced the prospect of going up against not only AirTran but now Southwest at its Milwaukee hub, so it's got to be pretty good for Midwest that Republic stepped in. The current plan is to have Midwest continue under its own brand name, just like Frontier, but the 717s will be ditched in favor of Embraer 190s.

photo by E-Mans from Flickr, licensed under the Creative Commons

An interview with Mark Malkoff

2009-06-22T21:19:00.001-04:00

Mark Malkoff is a New York comedian with a fear of flying, and has taken a pretty novel approach to confronting his fear: he's been spending the entire month of June living on a plane. Well, not just one, of course; he's been eating and sleeping on quite a few AirTran planes since the month began. He stays in touch with the rest of the world through Twitter and his website, MarkonAirTran.com, where he posts some pretty amusing videos he's taken on board. Last week, The Airline Blog had the opportunity to ask him a few questions:

So first of all, why did you agree to do this? Did you approach AirTran or did they approach you?
I got the idea a year and a half ago to stay on a plane for an entire month to get over my fear of flying. AirTran had liked my previous work. I wanted to do the project. We sat down and it immediately became clear it was a good fit.

How much progress have you made in getting over your fear of flying?
My fear has gotten tons better. If I started at a ten, I'm now at a 3. Talking to the AirTran pilots has really helped. Also, just flying 13 to 14 hours every day has gotten me used to it.

What do you like best about living on the plane? And the worst?
The best are the AirTran flight attendants, and the wifi when I'm up in the sky. I don't think I'd survive without the wifi. It allows me to keep in contact with friends, family, and people on Twitter. The worst is washing my hair in the airplane bathroom. Sleeping alone on the plane isn't fun, either.

What do you mostly eat? Where do you get your food from?
Nice people bring me food from the airport. I try to stick to fruit and vegetables. I take a lot of vitamins every morning.

So far, what's the strangest experience you've had while living on an airplane?
People taking my picture while I'm sleeping was strange. Also, a few times I was sleeping alone on the plane at night [when] it started moving, being pulled to another gate. The first time it happened, I wasn't told ahead of time. I was just happy it didn't take off.

How difficult is it to keep track of where you're flying, and where you've already been?
I never know where I am, where I'm going, and how many times I've been to a particular city. For instance, I thought I was in Milwaukee for the third time and it was the eighth.

What are some of the little things that you do to try to keep some semblance of a 'normal' daily routine?
I wake up, get clean, dress, brush my teeth, eat fruit, check my email, and then see what cities I'm flying to that day. I don't usually know until the day before, but all the cities kind of blend together.

I saw the video of you getting showered down by the fire trucks at Flint airport. When you don't have the opportunity to do that, how do you keep clean?
I use baby wipes and wash my hair in the airplane bathroom. It's not fun, trust me. Getting hosed down on the tarmac in Flint was the cleanest I've been in weeks.

Is AirTran giving you frequent-flier miles? Do you get to keep them?
I hope so! My wife flies with me on the weekends. AirTran threw us an anniversary dinner on the wing of a plane. It was kind of incredible. The videos are a lot of fun. Passengers love being a part of it. We put up new content every day at markonairtran.com. My favorites are bingo with passengers, a flight attendant washing my hair mid-flight, and [playing] Twister.

OpenSkies to become ClosedSkies?

2009-06-22T08:02:00.002-04:00

If you're not familiar with OpenSkies, it's the premium transatlantic brand that British Airways launched a year ago with some BA 757s, which fly in an all-business class configuration. It merged with French competitor L'Avion last July, and the process was completed in April. The subsidiary took advantage of the identically-named Open Skies treaty, which allows European Union airlines to fly from any EU country to the US.

But The Guardian is now reporting that BA, faced with deepening financial troubles, is looking at shutting down or selling off OpenSkies. BA, which itself developed much of its product around catering to business travelers, has been adversely affected by the drop-off in business travel over the last year, and it's not unreasonable to think that OpenSkies, an all-business class airline, must be affected in the same way. "Every part of our business is under review in these difficult and challenging times," said a British Airways spokesperson. "Closing [OpenSkies] would have no material effect on our financial performance," said CEO Willie Walsh. "But the team there knows that it will close if it does not deliver on its business plan."

The report conflicts with recent statements by Dale Moss, OpenSkies' managing director. "We are not on the business plan that we set out, but we are not far off - we are probably nine months off where we wanted to be at this particular time," he said. Moss stressed that despite the downturn in business travel, the airline will continue flying. More importantly, Moss said that OpenSkies will try to use its lower cost base to compete more effectively against its transatlantic competitors. But BA's operating in crisis mode, and if the operation isn't making money, then its future looks bleak. The fact that Walsh is publicly talking about giving OpenSkies the axe can't be a good sign.

BA's 'value calculator' goes after Ryanair, easyJet

2009-06-20T16:56:00.000-04:00

If nothing else, British Airways certainly deserves credit for their latest attempt to fight back against its two main low-fare rivals, Ryanair and easyJet. The airline has launched a "value calculator" on its website, which illustrates the various "hidden" fees that have made the low-fare airlines famous. BA shows what Ryanair and easyJet charge for checking baggage and food and drink, among other costs, and then contrasts those with BA's "no extra charge" column. You can check off as many boxes as you wish, and the total at the bottom of the columns update "With British Airways," the website says, "the price you see is the price you pay."

BA has a point. Alison Hunt recently wrote an article where she researched a long weekend trip in Venice from London on BA and Ryanair. She notes that if "you were to fly with Ryanair (£157.06), check into the hold just one piece of luggage (£20 in fees, both ways) weighing 23kg (another £120 due to the expensive restrictions Ryanair places on heavy luggage), pay by non-VISA Electron debit card (£20) and spend £8 each on sandwiches and drinks on each flight (£32) you could be looking at a grand total of £349.06 - £64 more than BA. Eek!" £350 is a far cry from the base £9.99 fare that Ryanair advertises. In other words, if you were to take advantage on Ryanair of the little 'extras' that you didn't pay any additional money for on BA, your ticket would end up being more expensive.

But the popularity of Ryanair is due to its 'a-la-carte' pricing - if you don't want it, you don't have to pay for it. Assuming that you didn't check any bags or purchase any food or drink onboard, you'd still have to pay Ryanair's ridiculous online check-in fee of £5 and debit card charge of £10. But even with the £15 in fees, your new price of £172.06 would still be less than BA's £285. And Hunt assumes that you'll forget your boarding pass, which Ryanair charges £40 for doing. If you keep track of things, your cost will be even less.

The moral of the story - be careful when booking on low-fare carriers, because sometimes you might end up being charged for a lot of 'extras' that you didn't know about. But if you're smart about it, you can still end up saving a good deal of cash flying on Ryanair or easyJet versus on British Airways.

Good news about United? I can't remember any

2009-06-20T00:15:00.001-04:00

I really can't remember the last time that I heard some good news regarding United Airlines, at least in terms of financial performance. Let's see here... good news, good news, good news... can't think of any. If you can, please do let me know.

In his blog post What a Difference a Decade Makes on the Wall Street Journal's website, Scott McCartney rounded up a few interesting statistics that looked at United and Southwest - both today, and ten years ago. United has dropped from the largest airline in the US to the third-largest; its North American passenger traffic for the first five months of 2009 is down 26% from the first five months of 1999. Between 2000 and 2008, the airline's fleet as been cut by a third; its passenger numbers have dropped 38% and its workforce has been cut in half. In the last ten years, the airline has also had to deal with one of the largest Chapter 11 bankruptcy filings in American corporate history.

So the news about United has been pretty bad for the last ten years, and there's no sign of that changing. Even though it tried to strike an upbeat tone with the recent news that it was shopping around for new planes, the recent financial numbers that it has posted are pretty ugly - if you've got shares in United Airlines, the numbers are likely to make your teeth start itching. Traffic fell a whopping 12.3% in May, and the airline expects the amount of money that it makes for every mile that a seat flies (also known as 'unit revenue') to drop 18 to 19 percent this quarter, compared to a year ago.

And Fitch downgraded United's debt ratings, saying that its "credit profile is likely to weaken further, as extreme pressure in the revenue environment continues to undermine the positive cash flow impact of lower jet fuel prices in 2009." United's "heavy exposure to premium business markets" means that it's been hit particularly hard by the cutback on corporate travel spending.

But perhaps the most visible sign of United's financial distress came when TV host Jim Cramer blasted CEO Glenn Tilton on his show, Mad Money, saying that Tilton belongs on the CEO 'Wall of Shame' because United's abysmal stock performance is awful, even for an airline. The airline's shares have lost 88% since it left bankruptcy back in 2006, and are down 63% just this year.

Nobody's really predicting the imminent death of United, nor are they saying that the airline is likely to file for Chapter 11 a second time. And when the entire industry is facing its worst crisis since, well, the last major crisis a few years ago, it's unfair to think that United is going to start posting a profit or something. But the results that UAL has been posting have been significantly worse than the industry averages. United's got some strong assets - a sturdy, if somewhat tarnished, brand name; membership in the Star Alliance; some good international routes. But there's always been gloom-and-doom talk about how a big US carrier needs to fold in order for the rest of the industry to return to profitability, and if United doesn't want to be 'that one,' it had better come up with a better plan for financial viability, and soon.

photo by superciliousness from Flickr, licensed under the Creative Commons

An interview with JetAmerica

2009-06-17T10:29:00.002-04:00

New start-up airline JetAmerica has attracted a lot of attention recently, and not all of it has been positive. Sure, the flying public (and Jay Leno) have been talking about the airline's much-promoted $9 fares, but some have been doubtful of JetAmerica's business strategy. I figured that it would be a good thing to let someone with ties to JetAmerica to have an opportunity to elaborate on the airline's plan for the future.

As head of World Satellite Television News and Media Relations, JetAmerica's official media relations firm of record, Bryan Glazer is JetAmerica's spokesperson. He has many years of experience with the airline industry, having previously worked with clients such as Virgin Atlantic and jetBlue. He also reported on airline-related news stories for various television news outlets. I recently had the opportunity to talk with Glazer about JetAmerica; a transcript of our conversation (edited for brevity and clarity) is below.

Let’s start with the current business climate. With a weak economy and rising oil prices, now is definitely a challenging time to be starting an airline. How will JetAmerica succeed where others haven’t been all too successful?
The climate is really good for a startup air carrier. The reason that I say that is, you have all the major carriers that are cutting back on services; cutting back on flights, [and] in some cases increasing fares and continuing to increase additional expenses for baggage, etc. We’re going into markets where there is no competition on these routes.

If you take a look at the routes from South Bend, Lansing, Toledo, and Melbourne, Florida, into the New York metropolitan area, into Newark Airport, the people in these communities have, for years… been forced to fly on cramped turboprop planes and regional jets. They’ll have to endure very long layovers and arrive at their destinations anywhere from 7 to 10 hours later on a flight that should take under 2 hours in most cases. So we’re really not faced with competition. These routes are being served by major carriers, but they’re not getting any big jet service... [With the major carriers] they’re looking at round trips that, in many cases, start at $500.

In other words, you’re not looking at going head-to-head up against the big guys?
No, we’re not, because they are not running on these routes at all. They are, but they’re [flying] small turboprop planes and regional jets...

Some people have been scratching their heads over JetAmerica’s decision to have Toledo as a hub… there just doesn’t seem to be that big of a market there, at least in terms of O&D traffic.
Well, actually, if you take a look, statistically, people who live within a 75-mile radius of an airport will drive that far to get to an airport. We’re looking at a population base of approximately five million people in a radius of 75 miles from Toledo. The enplanement numbers specifically show that approximately a million customers a year... within that 75-mile radius fly from either Toledo Express [Airport] or Detroit Metro [Airport] to the New York metropolitan area. When I say they’re flying out of Detroit Metro, it’s because they choose to drive that far, or they’re taking the puddlejumpers and doing the connections through Detroit with Northwest or O’Hare with American.

The population base and the enplanement numbers do exist to substantiate why we can fly from Toledo to Newark… It’s more about, are you willing to get on a puddlejumper, pay $500 for round-trip airfare with 21 day advance notice or as high as $1100 at the last minute as opposed to paying anywhere from $9 to $199 on JetAmerica… You really need to look at the big picture, which is, take a compass, twist it around 360 degrees, and look at what’s there, and in each case [referring to South Bend, Lansing, and Melbourne], you’re looking at 5 million people.

It’s been said that you’re using the Ryanair model as a basis for JetAmerica. To what extent do you plan on applying that model?
In many ways, we’re mimicking the business model of Ryanair. Ryanair is the most successful airline in the world. The reason that is is because they’re using Boeing 737 jets; they’re not using 747s, for example. These jets have long range and short range capabilities. And the airports that Ryanair primarily serves, although it’s branched into larger ones, are secondary airports that have huge population bases that, again, would normally have to connect to larger airports... Ryanair is an a-la-carte airline, where you pay for everything; same on JetAmerica.

The only difference is that we will never have pay toilets on our planes; Ryanair is seriously talking about that. JetAmerica is not looking at a pay toilet situation… We’re an a-la-carte air carrier, but we’re going to draw the line on what is acceptable and unacceptable. Pay toilets are unacceptable. We do look at what you’re getting for your $9; you have to pay service fees, the September 11 fee, the taxes, the “convenience” fee to book online or to call reservation agents. When all is said and done, the reality is, $9… ends up being $25. It’s still quite a bargain.

JetAmerica’s flights will be operated by Miami Air. Are there any plans to have JetAmerica operate its own aircraft with its own crew?
There are no immediate plans… that say that we’re going to purchase aircraft. We have a very conservative business model, which is, why buy an airplane when the market is flooded with relatively new, clean, mechanically problem-free aircraft? Why buy it?... Why have the problems of owning an aircraft that cost $50 million and getting the financing, when you can simply outsource, or subcontract, an aircraft from a very reputable outfit like Miami Air... Miami Air services some of the best-known NFL, NHL, MLB teams. They’re not going to be putting their multi-million dollar players on DC-3s that don’t operate. Miami Air has an excellent reputation; they’ve been in business for 16 years… and the owner of the company makes sure that the oil is changed and the sparkplugs are changed on those airplanes every night. Those airplanes are probably better maintained than other aircraft out there today.

I point to somebody like Allegiant that’s running MD-80s… some of these aircraft are twenty years old. Granted, Allegiant is the most profitable airline in the US right now, but who wants to ride on those planes? Maybe the leisure traveler who’s willing to get from point A to point B on a Greyhound bus. We’re not a Greyhound bus, we’re an a-la-carte carrier, and so subcontracting is a really good idea.

You mentioned Allegiant Air… They’re an airline that has taken up point-to-point flying, somewhat similar, I think, to what JetAmerica is looking at.
Right, they’ve applied the Ryanair model, same concept.

And so, do you think that JetAmerica can become similar to Allegiant Air?
I wouldn’t even make that distinction. I mean, Allegiant Air is a completely separate animal. But there are some similarities in the business model... [But] in terms of analogies, you’re comparing apples to oranges. We’re running 737s and they’re running MD80s. Totally different animal.

Allegiant Air’s success has, in part, to do with the fact that it serves leisure markets, like Las Vegas and Florida. Taking a glance at JetAmerica’s initial route map, there don’t seem to be as many cities that leisure travelers might want to visit on vacation...
I agree with you, but let’s take a look at the points where they’re going. First, they’re going to New York, so we’re going to New York… we’re [also] servicing central Florida and the I-95 corridor, as far north as Daytona and as far south as West Palm Beach [via Melbourne]. We’re not currently flying to Las Vegas, which is a very appealing destination for many people, and the Las Vegas economy’s not doing that well these days too… We’re going to be bringing onboard more aircraft every quarter with the concept of having at least twenty jets by the year 2010. If you look at where are our future focus cities are, if they should come to fruition, these are all underserved markets.

One of the great things about these underserved markets is that they have small community air service grants. You can actually go ask an airport, like Melbourne, Lansing, South Bend, and Toledo, to help you fund your start-up air carrier. And in this particular case, the small community air service grants are given by the Department of Transportation to these airports to entice big jet air travel for their communities.

Speaking of the subsidies…
Not subsidies, grants. Big difference; these aren’t tax dollars, they’re grants.

So the grants, then, that JetAmerica is getting, in the form of lowered airport fees and assistance in advertising and marketing… How essential are those to the JetAmerica business plan? In other words, how reliant is JetAmerica on those grants?
We’re reliant on the airports to help us with marketing, and waiving their landing and takeoff fees. That’s pretty substantial; at some of these airports, that’s above a quarter of a million dollars. Startups can go to the airports and say, help us with our advertising and public relations and marketing campaigns. Right now we’ve got spots out there that have been produced, and the airports are placing them in their local markets. They’ll probably be more inclined to spend more of their small community air service grants once we have an airplane and we’re up in the air, which will happen on July 13th.

...Toledo has had its [grant] money sitting since 2006 and it’s decided not to use it until [JetAmerica] came aboard. Michael J. Stolarczyk, who is the president and CEO of the Toledo Port Authority, and he’s the one… who went looking for an air carrier to service his market. He went on LinkedIn and found different airline executives and approached them, and that’s how he found John Weikle… He knew that people in his community wanted non-stop air service to New York and Florida… You can’t run an air carrier on small community air service grants… you can get some seed money, and some waivers, but they aren’t going to last forever.

One last question: I’m sure that you have encountered your own fair share of doubters and naysayers who are pessimistic about JetAmerica’s long-term survival. What do you have to say to them?
I have seen consultants make forecasts that say that we have a good shot because we’re a start-up and we’re coming in at a time when there are a lot of cutbacks. I’ve seen naysayers that say that we wouldn’t have a chance. We’re going to take a roll of the dice here; we have a calculated crap shoot, meaning that the odds are with us, not against us. The ‘house’ is the ‘big boys,’ and they’re not going to win. They’ll do everything to prevent us from winning. United Airlines was quoted as saying, Chicago is our home, and we’re going to do everything to protect that. Continental Airlines is going to do everything to protect Newark Airport.

We’re not as heavily financed as jetBlue, but we have a niche market, and that’s all we’re looking for. I’m sure people said that about Allegiant; they certainly said it about Southwest, when it came about; they said it about just about every start-up. Some have come and gone. The odds are on our side. This is a calculated crap shoot; this is not a spin of the wheel. The odds are with us.

Buying airplanes, the Ryanair way

2009-06-16T10:55:00.002-04:00

As airplane manufacturers gear up to pitch their products at the annual Paris Air Show, they're uncomfortably aware that the market for new airplanes is at its lowest in years. The realities of the tough market conditions aren't lost on Ryanair chief Michael O'Leary, either. But while Airbus and Boeing are struggling with a significant drop in orders, O'Leary is figuring that now's the time to open up the wallet, much as United is planning on doing; he knows that he's likely to get a better deal out of them when they're desperate for customers.

So the recent report that Ryanair is looking at ordering 300 new airplanes from either Airbus or Boeing should come as no surprise. That's a lot of aircraft - without a doubt, Boeing CEO Jim McNerney is salivating at the prospect of what he's labeled "the deal of the year." Ryanair is one of Boeing's best customers, operating a fleet of almost 200 Boeing 737-800s. CEO O'Leary, notoriously brash with his public statements, has told a group of Boeing employees that he would help them "kick the shit out of Airbus," and later told them that they "make the best goddamn aircraft in the world." "We love Boeing," he said. "Fuck the French."

So then why did Ryanair mention that it is considering an Airbus product? It has made fleet standardization one of the key points to its success, and there's no chance that it would operate both the 737 alongside the A319 or A320. And Airbus itself has said that it's not in talks with Ryanair; sales chief John Leahy told Dow Jones that "we're not negotiating," saying that Ryanair had set price expectations that were "unrealistically low."

The answer comes down to the fact that Michael O'Leary has always driven a hard bargain. He waited to order the initial batch of 737s until 2002, when Boeing was struggling after 9/11. But the order for Boeing was never a foregone conclusion; instead, he brilliantly played Airbus and Boeing off of each other, reportedly faxing the latest offer he received from Airbus over to Boeing and vice versa, in an attempt to get a lower price. Airbus offered to sell him A320s at half price, and O'Leary had apparently even shaken hands with the Airbus CEO before switching at the last minute to order from Boeing at even lower prices. O'Leary didn't mince words when recounting how he managed to get a spectacular deal from Boeing, saying: "We raped the fuckers."

But O'Leary can't fall back on competition between Boeing and Airbus to get a good deal anymore. Boeing knows that at the end of the day, barring some unforeseen tectonic shift, O'Leary will continue to be a devoted Boeing customer. And so it will be interesting to see how Ryanair will try to continue to get low, low prices on its new airplanes.

photo by Drewski2112 from Flickr, licensed under the Creative Commons

Passenger survey ranks best, worst airlines

2009-06-15T14:12:00.001-04:00

Seatguru.com has released the results of its 2009 survey of over 1600 fliers. Airlines were ranked based on the quality of their in-flight service (food, seating, and flight attendants). Unsurprisingly, Singapore Airlines came out the clear winner, having the highest rating for flight attendant politeness, best food, and most comfortable business-class seats. British Airways also scored well in the flight attendants and food categories.

American, United, and US Airways could definitely use an overhaul of their in-flight service; the three airlines were ranked as serving the worst food, having the worst economy-class seats (jetBlue had the best) and the rudest flight attendants (with United coming in dead last here). Nobody's saying that they have to become like Singapore Airlines, but surely a few improvements here and there might be a sound investment? After all, how many people choose to fly on one of the US legacy carriers because of service? With the possible exception of Continental, I'm betting that very few actually do. Most people buy a ticket on United or American or Northwest because of their route network, or maybe a good price that they managed to get. If one of those airlines improved its in-flight product above its competitors - nothing drastic, necessarily, but maybe politer flight attendants, cleaner planes, and more comfortable seats, for a start - then maybe people would go out of their way to fly that airline. Just a thought.

A few other interesting tidbits from the survey: fliers perceived international airlines to be safer than US domestic airlines, and more people felt safer in the front of the aircraft than anywhere else. 13% of fliers said that they had "knowingly transported banned items through security," although no examples of what these 'banned items' could be were provided. And "for those who didn't mind celebrity seatmates, preference went to the President & First Lady."

photo of a United 737-300 cabin by caribb from Flickr, licensed under the Creative Commons

US Airways CEO: Consolidation needed

2009-06-11T13:02:00.000-04:00

It seems like a few years can't go by without US Airways CEO Doug Parker talking about a merger. Parker came over from America West Airlines when it merged with US Airways in 2005, and by the end of 2006 had made a hostile bid for Delta. That fell through pretty quickly, but didn't put an end to speculation that Parker would be interested in shopping his airline around or looking to combine it with another. Back in April 2008 Parker mentioned in a letter to employees that the airline would merge if the time was right, and yesterday, addressing the company's annual meeting in New York, he said that further consolidation was much needed in the airline industry.

"The industry continues to be far too fragmented... The result is far too many hubs across the nation and far too many seats competing for those same passengers," Parker said. He also stated that the Delta-Northwest merger was a good thing, since it went pretty far in helping to simplify the industry, but that it wasn't enough: the industry needs to get smaller if it wants to become profitable.

Who could US Airways potentially merge with? The first option that people seem to mention is United. The airlines tried to merge back in 2000, but this was rejected on antitrust grounds; United and US Airways talked last year about a merger once again, but this time United walked away. Nothing has been ruled out between the two airlines in the future, though. American could be a good fit for the airline, too. And even if US Airways doesn't end up merging, the fact remains that capacity needs to be further cut for airlines to stay afloat during these tough economic times.

photo by matt.hintsa from Flickr, licensed under the Creative Commons

America's top 'greenest' airlines

2009-06-10T11:49:00.000-04:00

"Ever since jet engines have been roaring and guzzling Jet-A, kerosene-based refined petroleum, carbon emissions have been accumulating. Jet-Age progress has a price and with some estimates showing jet aircraft accounting for 11% of greenhouse emissions, it doesn't take a John Muir to discern that flying the friendly skies exacts a price on the environment," says a press release by the online 'guide to green living,' Greenopia, which has released a list of the top ten 'greenest' airlines in the US. Virgin America, thanks to its young fleet and other environmental efforts, came in first place. The airlines were scored in seven categories:

Fuel conservation (do airlines have electric-powered ground vehicles? do they frequently wash their engines, which improve their efficiency? do they have winglets on their fleet?)
Alternative fuel types (such as biofuels)
In-flight recycling (after all, all of those cans have to go somewhere)
'Green' food options in flight (listed by Greentopia as 'organic, local, natural, or fair trade')
'Green' buildings and terminals
Carbon offsets available for purchase
Fleet age (not necessarily a perfect indicator of how 'green' an airline is, but generally speaking, the younger the airplane, the more fuel-efficient it is)

And the results:

Virgin America
Continental
Horizon
jetBlue
Southwest
Northwest
Delta
American
United
US Airways

For the full analysis of why each airline ranked where it did, head over to Greenopia's website.

BA, AA hopeful for transatlantic alliance

2009-06-08T11:17:00.000-04:00

American CEO Arpey. photo by AP

If British Airways CEO Willie Walsh had his way, he might want you to overlook all of the recent media attention his airline has garnered, almost all of which paints a gloomy picture for BA's future. First BA posted a record loss, and now there's threat of a possibly crippling strike this summer during a period that Walsh has said British Airways faces "our greatest-ever challenge." The Sydney newspaper The Daily Telegraph has said that BA is 'close to collapse,' and while that might be stretching things a bit, it certainly does a good job of illustrating the dire straits that Walsh now finds his company in. More recently, at the IATA summit in Kuala Lampur (which forecasted that the worldwide airline industry would lose $9 billion in 2009) Walsh believed that "this is probably the most difficult period in the history or our industry and I think that's shown in the IATA figures." If Walsh is to be believed (and I don't think he's making this stuff up), British Airways is currently fighting for survival.

But amidst all of the negative news, Walsh is trying to sound upbeat about one at least one thing: the proposed transatlantic alliance with American Airlines, saying that their case is "stronger than ever": "This is about leveling the competitive playing field and we are confident our case has significant merit... We expect to get approval in the current calendar year, which will allow us then to proceed with the joint business by 2010." American CEO Gerard Arpey also said that "we are confident of a positive outcome on both sides of the Atlantic." Addressing the two previous times that AA and BA applied for transatlantic immunity but were rejected, Arpey said that "it is open playing field across the Atlantic now," in reference to last year's Open Skies agreement between the US and the EU. And both airlines have made the case that since their chief rivals already have a similar deal (Delta and Air France-KLM, United and Lufthansa), it's only fair that the same privileges be extended to American and BA, too.

As BA hurts, Iberia looks to Air France, Lufthansa

2009-06-05T12:15:00.001-04:00

photo by jmiguel.rodriguez

The relationship between British Airways and Spanish carrier Iberia runs long and deep. BA owns 13.5% of Iberia and has two seats on its board, and the two airlines are members of the oneworld alliance. The airlines have been pursuing a merger for a while now, and back in February, Iberia chairman Fernando Conte said that a 'preliminary decision' on a merger would be arrived at in March. But only a few weeks ago, Spanish airline Iberia said that it indefinitely postponed the timeline for finishing up merger talks with British Airways; chairman Fernando Conte said that Iberia should instead "concentrate on the reestablishment of its financial solidity." Yet it's interesting how the announcement came right around the time that British Airways announced a record loss and reports emerged about how the carrier is struggling with a pension plan deficit of at least £1.2 billion ($2 billion). BA CEO Willie Walsh has even said that the airline "is in a fight for survival."

Hmm... coincidence?

Probably not. Although talks between BA and Iberia are still continuing, it's clear that Iberia is starting to question the financial viability of its British partner, and so reports that it's looking for a future partner with stronger financial performance aren't surprising. Iberia's finance director, Enrique Dupuy, said Wednesday that Iberia can't hold its own against what he called airline "megagroups", namely, Air France-KLM and Lufthansa. "A merger with BA is a good fit for Iberia, but a merger with Lufthansa or Air France would be quite a good fit as well," Dupuy said. "We have spent a lot of time examining these alternatives, and of course they are not ruled out, perhaps the most attractive aim is British Airways but we also have very attractive alternatives."

In a statement to The Airline Blog, Iberia's international press manager Santiago de Juan made clear that as of now, the only deal being negotiated is between Iberia and BA: "Mr. Dupuy said something Iberia has been saying for some time now, which is that Iberia wants to play an important role in the consolidation process the airline industry is going through. That means that Iberia has analysed the different possibilities for this consolidation process, Air France and Lufthansa included, but at this moment Iberia is in merger talks with British Airways and it is NOT in merger talks with [Lufthansa or Air France]." de Juan would not comment on whether Iberia's recent look at 'different possibilities' had anything to do with BA's financial trouble.

United Airlines finally goes shopping

2009-06-04T10:23:00.002-04:00

photo by Telstar Logistics

United Airlines is eying a large new order for up to 150 airplanes, worth $10 billion, according to an article in the Wall Street Journal. United is apparently choosing between Boeing and Airbus, and according to the article, it's an all-or-nothing deal, meaning that purchases won't be split between the two manufactures; this way, United might be able to get a better deal. And the deal shows that United has been thinking ahead, by waiting to order until bad times for the industry. This way, the planes could be delivered starting as early as 2010, when the industry is expected to look up.

The order also comes at a time when the airplane manufacturers are desperate for orders. Boeing, for example, has signed up 60 new orders so far this year, but has also lost 60. United is probably hoping that they can turn the manufacturers' desperation into their gain, in the form of lowered prices and permission to revise the order at a later date. I'm not exactly sure how United's expecting to pay for the order, especially given big losses and a pretty bad credit rating at the airline, but the article suggests that United might be seeking financing from the aircraft manufacturer, among other places. At the time of posting, United had not yet returned calls from The Airline Blog seeking comment.

So what planes are going to be replaced, and with what? The airline's A319 and A320 fleets are, on average, ten years old, and they're probably not going to go anywhere anytime soon. The 737-300 and -500 fleets are much older (20 and 17 years, respectively) and are already on their way out. United's new order is probably seeking to replace the larger 757-200, 767-300, and 747-400 aircraft, and maybe some of the 777-200s too. The airline has an average fleet age of 13 years - younger than most of its rivals - but much of that is due to the relatively young age of the Airbuses. The 757s are getting pretty long in the tooth, and it wouldn't be too surprising if they were replaced with the A321 or the Boeing 737-900ER. Neither of them could completely replace the 757, though; they'd probably just be used to replace the oldest ones or to simply supplement them. The 777s aren't old, either, since the 777 itself is a pretty new aircraft model. But United, being the launch customer for the type, has some of the oldest 777s flying, and some of those are the non-extended range variety. The different versions of the 787 might be a successful replacement for both the 767 and some of the 777s; maybe the A350 would work here too. And the 747-8 (which so far only Lufthansa has signed up for) might replace some of the 747-400s.

A Virgin interlining agreement

2009-06-03T14:36:00.000-04:00

photo courtesy flightglobal

'Virgin' airlines Virgin America and V Australia (part of Australian carrier Virgin Blue) announced that they're going to start a US-Australian 'interline' agreement that allows travelers to book travel on both airlines between the US and Australia. For example, if you lived in Boston, you could fly from Boston to Los Angeles on Virgin America and then from Los Angeles to Sydney on V Australia, all on a single ticket.

Despite the press releases heaping praise on "a seamless "Virgin" experience," an interlining agreement really doesn't make the relationship between the rather disparate Virgin brands any closer. Most airlines have various interlining agreements; for example, United and American have an interlining agreement with each other, and V Australia and Delta announced one back in March. For the traveler, this usually means that you don't have to retrieve your luggage in the stop-over airport and check it in again for the next flight, as you would have to do if you were traveling on two airlines that didn't have an interlining agreement.

An interline agreement shouldn't be confused with a code-share agreement. That's when an airline can issue a flight number for a given flight, even if its code-share partner is actually the one operating it. (This is a common practice among airline alliance members. For example, US Airways flight 5947 between Spokane, WA and Denver is really operated by United Airlines flight 812.) Both airlines can then sell tickets on the same flight.

As of yet, there's been no announcement of any code-sharing between Virgin America and V Australia. But fellow 'Virgin' companies Virgin Atlantic and Virgin Blue already codeshare.

O'Leary: Ryanair interested in takeover of Lufthansa

2009-06-02T10:28:00.001-04:00

photo by lorentey

European budget airline Ryanair head Michael O'Leary might have a history of making rather outlandish statements, and the announcement that he made this morning that Ryanair is "seriously interested" in taking over Lufthansa is no exception. According to an orf.at article, Ryanair "could almost buy [Lufthansa] in cash," according to O'Leary. This statement has been backed up over at the Financial Times, which also reports that O'Leary plans on expanding Ryanair's fleet by 15% and that the airline has 90% of the year's fuel hedged at $62 a barrel. According to financial results released on Ryanair's website today, Ryanair now is the largest airline in Europe by both traffic and market capitalization (€5.3 billion vs. €4.5 billion for second-place Lufthansa).

Lufthansa declined to comment on O'Leary's comments, although shares of the airline were trading higher on the Frankfurt stock exchange. And while I suppose that a takeover of Lufthansa could never be ruled out totally, I'm inclined to believe that O'Leary, being the king of free media attention, is just up to his usual tactics of getting some press coverage (or maybe even distract the media a bit from its announcement this morning of a lowered profit this year). A Ryanair takeover of Lufthansa just isn't realistic.

Delta president: bankruptcy was a good thing

2009-06-01T09:54:00.001-04:00

photo by Drewski2112

At a recent gathering of the Detroit Regional Chamber's Mackinac Policy Conference, Delta Air Lines president Ed Bastian said that Chapter 11 bankruptcy was a good thing for the newly merged Delta and Northwest, according to a Detroit Free Press article. "Bankruptcy worked for our companies... Now we stand as the strongest airline in the United States and the largest in the world," he said.

Yes, in terms of financial performance, bankruptcy did indeed 'work' for Delta. Just a few years ago Delta was struggling with high labor costs (some pilots at the airline were paid as much as $300,000), high fuel prices, and Song, a low-cost offshoot set up in 2003 to compete with jetBlue that ultimately failed three years later. It filed for bankruptcy in September 2005 and emerged in April 2007 a much stronger carrier, having cut labor costs and restructuring its route network, expanding its list of international destinations. And the merger with Northwest was well-timed and well-executed, with the airlines' route networks containing little overlap.

So even though Delta might be in a relatively strong position, I'm willing to bet that many of its employees have less-than-fond memories of the Chapter 11 process - recent grumblings over executive compensation being proof.

easyJet's in-flight weddings won't be taking off

2009-05-31T18:03:00.000-04:00

photo courtesy easyJet

Those of you looking forward to getting married mid-air will have to wait; easyJet's request earlier this month to have its pilots be authorized to wed couples in flight was turned down. The Luton, UK-based low-cost airline, one of Europe's largest, claimed that it received many requests from couples seeking to tie the knot on board, and was aiming to be the first airline to offer in-flight weddings. But the Luton Borough Council axed the proposal, saying that "current law does not permit a civil marriage or civil partnership taking place on board an aircraft... But we would be happy to consider licensing easyJet's ground facilities at London Luton Airport.”

easyJet's Andrew McConnell was less than pleased with the outcome. "We are of course very disappointed by this news. It would appear that faceless bureaucrats in windowless offices have scuppered the dreams of many who wished to get married in the air."

Virgin Atlantic posts profit, but can it last?

2009-05-29T09:37:00.000-04:00

photo courtesy Virgin Atlantic

Only a few days after arch rival British Airways posted a record loss, Virgin Atlantic Airlines announced some surprising news this week: it made a profit for the 2009 fiscal year. Even more surprisingly, pre-tax profits doubled from £34.8 million to £68.4 million ($109.3 million). And to rub it in even more to British Airways, Virgin claims that the increase in profits came from an increase in premium passengers, a demographic that BA is particularly reliant upon. Because price-cutting, Virgin was able to keep load factors in its first and business class seats solid. "We are winning market share from our competitors during the toughest trading environment ever," said CEO Steve Ridgway. "Our load factors remain resilient as travelers take advantage of these bargain fares, proving the value of vigorous competition."

But Virgin's reported recent financial success isn't as simple as just an increase in passengers. Virgin Atlantic locked in its fuel prices two years ago, meaning that the airline didn't have to deal with the steep rise in prices that occurred last year. And Virgin Atlantic, unlike most of its competitors, isn't publicly listed, meaning that it doesn't have to disclose detailed financial information. The Times' Ian King notes that Virgin released the numbers two months earlier than they did last year, which "raises the suspicion that their release has been timed not only to embarrass the old enemy but also to emphasize the airline’s strength to the trade at a time when the battle for corporate clients is more ferocious than ever."

While Virgin might be in a comparatively good spot right now, especially when viewed in light of British Airways' abysmal financial performance, they might not be able to keep it up for much longer. The transatlantic price war that Virgin is taking part in has started to take a toll on profits, and the state of the industry as a whole isn't solid (as Virgin's CEO has admitted). Check back in a couple of months - I'm sure that we'll see a much more subdued financial announcement from Virgin Atlantic then.

Long-haul a loser for SAS

2009-05-28T09:16:00.000-04:00

photo courtesy SAS

Intercontinental (or 'long-haul') routes account for 12.7% of sales at Scandinavian Airlines, but account for almost a whopping 50% of their losses, according to a boarding.no article. The recent economic downturn, which has seen a slump in business travelers, has only made a bad situation worse for SAS. "Half of our most recent quarterly deficit of one billion Swedish kronor [comes] from our inter-continental business," said CEO Mats Jansson in a takeoff.dk article.

This is really serious - if the long-haul routes only account for less than 13% of sales but half of the losses, then something needs to be done. A couple of factors are at work here. One is that the planes that they're flying - the A330 and A340 - aren't flying full. SAS might consider upgrading its inflight service product (it really isn't anything special). Right now SAS offers a "low-cost" service for high prices; it should try to do the opposite. In other words, "we need to look at costs," as CEO Jansson said. That's difficult when Denmark, Norway and Sweden have some of the highest average wage rates in the world. Not to mention, SAS has a fleet that could be euphemistically labeled "diverse"; it needs to simplify. After all, how much sense does it make to fly the A321 next to the 737-800? (It should be pointed out that the MD-80 fleet will be gone by 2010.)

Another problem that Scandinavian faces is that there really isn't much originating and departing traffic at its main international hub in Copenhagen, which is similar to other European cities such as Madrid, Dublin, and Lisbon in that they're large enough to support non-stop service to a few international destinations, but not large enough to become a big international hub. London and Paris, on the other hand, have sufficient O&D traffic to ensure that they're successful international hubs. That said, SAS has the potential to transform Copenhagen into a relatively successful international hub. It might not be able to be anything on the scale of Lufthansa's Frankfurt or even KLM's Amsterdam, but it could promote Copenhagen as a less-congested way to connect from, say, North America to Asia. But a handful more of destinations from Copenhagen might be a good idea (right now Chicago, New York, Washington, Tokyo, Beijing, and Bangkok are the only long-haul routes flown from Copenhagen; Seattle is currently flown as well but will be dropped later this year).

And SAS should also consider flying a handful of international routes from Oslo, which it has neglected in terms of long-haul flights, and increase service from Stockholm (at present, only Chicago and Newark are served). They should probably be able to get enough traffic for some of these to justify point-to-point service.

After Skybus, there's JetAmerica

2009-05-27T13:05:00.000-04:00

photo courtesy JetAmerica

No, this isn't the original JetAmerica Airlines, which operated a bunch of MD-80s out of Long Beach in the 1980s until it was bought by Alaska Airlines. This is a brand-new start up public charter carrier flying one wet-leased Boeing 737-800 from Miami Air International between cities like Lansing, Michigan and South Bend, Indiana from its base in Toledo, Ohio.

Sound familiar? Well, Toledo is just halfway across the state from Columbus, the home of the infamous Skybus, which went bust less than a year after it started flying. And Skybus' famous limited $10 fares are awfully similar to JetAmerica's $9 fares, although only a certain number of seats (9 to 19) on a flight will be at that price.

So, will JetAmerica (sometimes spelled Jet America) survive? The concept of the ultra-low-fare carrier (where pretty much everything carries its own fee) hasn't really taken off in the US. Sure, carriers like Spirit and Allegiant have managed to make the model work, but these airlines fly mostly vacation travelers to and from Florida and Las Vegas. JetAmerica might suffer because Toledo certainly doesn't have a lot of originating and departing traffic - something that helped contribute to Skybus' demise.

Yet JetAmerica is also being heavily subsidized by some of the airports that it flies to; Melbourne, Florida, Toledo, Lansing and South Bend airports are all giving JetAmerica $1.4 million in grants for a year, not to mention $1.1 million in marketing help and $867,000 in waived fees. These subsidies can help the airline weather any spikes in oil prices, but at the moment, oil prices are relatively low (sky-high oil prices helped to take down Skybus). And CEO John Weikle claims that JetAmerica's goal is to make money along the same lines as Allegiant, by "stay[ing] away from the competition."

S7 Airlines to join oneworld alliance

2009-05-26T11:11:00.000-04:00

photo courtesy S7

Russian carrier S7 (formerly known as Siberian Airlines) has announced today that it will officially join the oneworld alliance next year. British Airways has 'sponsored' the airline, which is Russia's largest domestic airline and a large player on international routes, too. S7 recently switched to an all-Western built fleet (no more smoky Russian jets) and is quickly expanding. Willie Walsh, CEO of British Airways, released a boilerplate statement with the usual "S7 is a perfect fit for oneworld," etc., etc., but also said that "oneworld's priority is the quality rather than quantity of member airlines." That's probably a subtle dig at oneworld rival Star Alliance, which is at least twice as large in terms of number of airlines. But perhaps when it comes to Russia, Walsh needn't be worried. The S7 announcement leaves Star as the only alliance without a significant presence in Russia (Aeroflot is a member of SkyTeam).

And speaking of Star, Greek carrier Aegean Airlines will become a full member of the alliance next year.

Delta CEO: Goal of no layoffs

2009-05-23T12:59:00.000-04:00

photo by sainz

Here's an interesting paragraph from an article in yesterday's Atlanta Business Chronicle:

Anderson credited employee for hard work despite an adverse economy, and said the carrier retains the goal of having no frontline layoffs. Delta and Northwest have offered buyout and early retirement packages to thousands over the past year, and officials have said 2,500 employees will leave the combined carrier after the busy summer travel season. “We just have to do our very best and work very hard,” Anderson said.

That's right! No 'frontline' layoffs at Delta, according to the CEO - except that that doesn't include Delta's wholly-owned regional subsidiary Comair, which has cut jobs through 'attrition' this past February. So, no layoffs? Well, maybe if you work for Delta mainline, but if you don't...

British Airways posts record loss

2009-05-22T12:46:00.000-04:00

photo by lrargerich

British Airways today posted the largest loss since it was privatized in 1987, and CEO Willie Walsh warned that he sees "no signs of recovery anywhere." "I'm 30 years in this business and I've never seen anything like this. This is by far the biggest crisis the industry has ever faced," he told CNN. The airline halted its dividend and Walsh announced that he would work without pay in July: "This is no stunt. I want to make a contribution in recognition of the extremely challenging position we face."

BA's posted a net loss of £375 million ($594.6 million) for the 12 months that ended on March 31, only a year after posting a record £712 million profit a year before. Its operating loss of £220 million was compared to year-ago results of £878 million in profit. BA's full year fuel costs are near £3 billion - something that Walsh pinned the loss on, along with "reduced passenger and cargo demand."

While the news of the huge loss is certainly surprising, especially in light of the fact that the airline posted record profits only last year, it wasn't altogether unexpected. BA has long been dominant in flying 'premium' passengers; some have argued that it was the airline that really made business class popular. The number of premium passengers that it flew dropped 13%, and while this number isn't far from the industry average, BA has more exposure to the premium market than other airlines; as such, it is adversely affected by the double-digit drop even more.

This has meant that, over the past year, the airline has had to put volume over yields. In other words, instead of focusing on 'profit per seat' figures that are boosted by premium-paying passengers ('yield'), it's focusing on filling seats, even if those passengers filling seats are paying less. "We're now saying it's getting that balance between yield and volume so it's more a focus on volume than it has been," said Walsh, who believes that going after increased market share "is sustainable in the long term and will be profitable."

BA also announced that it is still ordering the Boeing 777-300ER for delivery between 2010-12, the same time that its remaining Boeing 757-200s will leave the fleet and be replaced by aircraft in the Airbus A320 family. But BA will slash capacity by 4% next winter to reflect the lowered demand for travel as it parks 16 aircraft.

Air France and Delta finalize joint venture

2009-05-21T08:50:00.001-04:00

A Boeing 777 in Air France's new livery. Photo courtesy Air France

Air France/KLM and Delta yesterday put the finishing touches on a $12 billion-a-year joint venture deal that would allow them to operate as a single carrier on North Atlantic routes. The pact extends a previous joint venture that KLM and Northwest have had since 1997. Air France merged with KLM in 2004, and Delta recently took over Northwest, allowing for a four-way alliance (all are already members of the SkyTeam alliance).

The deal is a revenue- and profit-sharing venture, and will have antitrust immunity (something that American and British Airways are seeking right now). It affects more than 200 daily transatlantic flights to over 400 destinations in Europe and North America, or around 27% of total trans-Atlantic capacity. It also allows them to more effectively combine operations. For example, if both Delta and Air France have a flight from New York to Paris, but both flights are only 1/3 full, they can be combined and flown on one aircraft. Marketing, pricing, and ticketing will also be shared, and these result in very impressive cost savings (about $150 million per airline).

As previously mentioned, American, Iberia and British Airways in the oneworld alliance and United, Lufthansa (and soon Continental) in the Star Alliance are working on similar deals. This means that airlines without an alliance affiliation - like Virgin Atlantic - might suffer as a result. And while this means that Air France and Delta are cooperating even more closely, they can't actually merge - under US law, a foreign company can't own more than 25% of a US airline, although this rule might end in the future.

Some slides from the Air France/Delta news conference in Paris on Wednesday:

Southwest to begin Milwaukee service

2009-05-20T12:31:00.000-04:00

photo by YoLoPey

This morning, Southwest Airlines announced that it Milwaukee, Wisconsin would be the fourth addition to its route network this year, following Minneapolis/St. Paul, New York LaGuardia, and Boston. Apparently, Southwest has been adding these new destinations without adding any new aircraft to its fleet; instead, it's been trimming unpopular services and shuffling around resources. "As we have previously announced, we essentially slowed our 2009 and 2010 fleet growth to zero," said Southwest President and CEO Gary Kelly. "All of these new market opportunities are made possible without the addition of a single airplane by our continuous flight schedule optimization process."

Southwest starts flying to Milwaukee on November 1, and it will put the airline (which already has a formidable presence at Chicago's Midway airport) up against Milwaukee-based Midwest Airlines (formerly known as Midwest Express), which is partly owned by Northwest Airlines. While Northwest has been known to aggressively defend its turf against low-cost airlines, Southwest doesn't seem scared, having first started flying out of Minneapolis/St.Paul (a key Northwest hub) and now Milwaukee. AirTran also has a good number of flights out of Milwaukee and will have to compete as well.

But I think that Midwest is the airline that should really be concerned with this news. The airline has already retired a significant portion of its fleet and only has nine Boeing 717s left (the rest of its flying is outsourced to Republic and SkyWest as "Midwest Connect"), and if Southwest provides significant competition - which I expect it will - on routes out of Milwaukee, Midwest might not make it.

Finnair - 40 years ago

2009-05-20T09:06:00.000-04:00

On May 15, 1969, Finnair inaugurated service to New York with the DC-8, and in honor of the 40th anniversary, here are a few interesting pictures from the time period (courtesy the Finnair AV Department - click to enlarge).

Finnair uniforms, newly designed in 1969.

Finnair pilots in front of a DC-8.

The Finnair 'space suit'.

The interior of Finnair's Manhattan office.

More uniforms.

Flight attendants in yet another uniform design, at the door of a DC-8

AA/BA alliance a "monster monopoly"?

2009-05-19T09:47:00.002-04:00

photo by Jun Seita

Virgin Atlantic president Richard Branson has called upon the US Department of Transportation to reject a proposed alliance between American Airlines, British Airways and three other airlines, claiming that it would form a "monster monopoly" that would pose a serious threat to the survival of rival airlines and would mark the end of "red-hot competition."

In an address to the National Press Club in Washington last week, Branson warned that a tie-up would be "disastrous" for consumers, and highlighted the fact that American and British Airways, combined with their oneworld alliance partners, would control almost half of the takeoff and landing slots at London Heathrow. "It doesn’t make sense to encourage even less competition by allowing dominant carriers to increase their stranglehold by setting prices together and agreeing schedules," he said. "...Our arguments are as strong today as they were on the previous two occasions when BA and AA tried to merge. Their dominance has grown even further between then and now."

Under the proposed alliance, American, British Airways, Finnair, Iberia, and Royal Jordanian Airlines would receive antitrust immunity on transatlantic flights - something that has already been granted by the DOT to carriers in the rival SkyTeam and Star alliances. "This permission or antitrust immunity has already been granted to 10 airlines in Star and six in SkyTeam - including the recently merged and now world's largest airline Delta," said an American spokesperson, in an email to AFP, adding that the proposed alliance was "simply seeking to level the playing field."

But Branson predictably did not agree with this logic, stating: "I understand that it is tempting for regulators to say, 'We’ve given dispensation to one alliance, we should do likewise for others' as they’ve done previously. But they must resist temptation. Each anti-trust application must be considered on its merits and it’s clear that the application for a merger between BA and AA must be rejected."

Branson has lobbied against proposed two AA/BA tie-ups in the past (1997 and 2001), both of which failed due to regulatory concerns. American's argument that 'it's only fair that we get this too' certainly has credit to it, but the sticking point is likely to be Heathrow - the AA/BA presence there is already enormous. The DOT has six months to issue a ruling, so we'll just have to wait and see if Branson is successful in putting down a proposed AA/BA alliance for a third time.

Last month, former American CEO Robert Crandall said that "any objective observer would have to look very hard to find a way in which alliances have benefited consumers." He also believes that "airline alliances have been far more beneficial for international airlines than for US carriers, and for that reason alone, I think they should be disallowed." Interestingly, he also noted that if Star Alliance and SkyTeam are allowed their own antitrust agreements, "AA-BA should be permitted as well."

Virgin America's top 10 requested cities

2009-05-18T08:16:00.000-04:00

photo by Johnny Vulkan

Virgin America recently released a list of the ten cities that are most requested for new VA service. The survey is still up, so if you don't see your preferred route listed below, you can still vote.

SFO- Chicago
SFO- Honolulu
SFO- Miami
LAX- Miami
SFO- Portland
LAX- Chicago
SFO- Phoenix
JFK- Miami
SFO- Denver
LAX- Portland

Many of these routes are currently flown only by a few legacy carriers. The San Francisco - Chicago and Los Angeles - Chicago routes, for example, are currently flown only by United and American. JFK - Miami is flown only by American and Delta, and American has a monopoly on the San Francisco - Miami and Los Angeles - Miami routes. Even though Virgin America would certainly be taking a risk by flying into the fortress hubs of legacy carriers (United in Chicago, American in Miami, etc.), their relatively premium product would probably attract quite a few unsatisfied AA and UA customers. Those are the routes (LAX-MIA, SFO-ORD) that would be best for Virgin America to fly, especially as they would avoid head-to-head competition with other low cost carriers (i.e. Frontier on SFO-DEN).

Lufthansa's bmi takeover drama continues

2009-05-17T10:26:00.000-04:00

photo by Ingy The Wingy

Although the takeover of British carrier bmi (formerly known as British Midland Airways) by German airline Lufthansa was approved on Thursday by European Union antitrust authorities, the German newspaper Suddeutsche Zeitung yesterday reported that Lufthansa is backing out of the deal, apparently after taking a closer look at bmi's rather precarious financial situation and deciding that the price would be too high.

bmi, which lost $151m in 2008, was 30% (minus one share) owned by Lufthansa, 20% by Scandinavian Airlines, and 50% (plus one share) by former British Midland chairman Sir Michael Bishop. Last October, Lufthansa announced that it would be acquiring Bishop's stake in bmi, meaning that the German carrier would be effectively controlling bmi.

bmi is one of the latest of Lufthansa's potential acquisitions; it already wholly owns Italian carrier Air Dolomiti, German low-cost carrier Germanwings, Swiss International Air Lines, Lufthansa Italia, and regional carriers Eurowings and Lufthansa CityLine, among others (it will wholly control Austrian Airlines pending approval by the EU later this year). It also owns significant stakes in bmi, Luxembourg's national airline Luxair, Belgian carrier Brussels Airlines, and jetBlue.

UPS retiring DC-8

2009-05-16T09:52:00.000-04:00

photo by So Cal Metro

Another aircraft retirement took place recently as UPS operated its final DC-8 flight into Louisville, KY Tuesday morning, receiving a 'water cannon salute' from fire trucks. Last month, UPS decided to accelerate the retirement of its 44-strong DC-8 fleet as a cost-cutting measure; originally, the planes were due to be phased out by 2013. Most of the airline's DC-8s were around 40 years old, and it will certainly sad to see the type go. DC-8s have been absent from scheduled passenger aviation in the US for almost twenty years now; generally speaking, many older types of planes (DC-10s, 727s) often find new lives hauling packages after they're through hauling passengers.

Whatever happened to flying the friendly skies?

2009-05-15T07:47:00.000-04:00

Editor's note: This is the first in a series of articles contributed by readers of The Airline Blog. If you have an airline-related article that you've written and would like to see it on The Airline Blog, please email it and it might be published! Please note that the opinions expressed in this article are of the author, and not necessarily those of The Airline Blog.

Whatever Happened to Flying the Friendly Skies?
by Sedef Onder

I have a confession: I’m a frequent traveler. By choice. Even in these days of predictable flight delays, less predictable baggage handling snafus, elimination of in-flight meals and snacks, and endless waits in long lines on the tarmac while flights takeoff or disembark passengers.

I make regular trips to the nation’s capital at least nine times a year. That’s a round trip air ticket, plus rental car for each visit (oh, and I’ve travelled to Washington, DC twice within the past three weeks). I’m a pretty regular customer for anyone whose paying attention.
Hertz is. Every time I bid on Priceline for a rental car at the airport in Washington Dulles, I get a nearly instantaneous reply from Hertz accepting my offer, virtually regardless of the amount bid. It’s turned me from an Enterprise-by-choice to a Hertz-by-choice customer. Not bad, considering how often I rent cars, including during holidays when they charge a premium.
I noted recently that Hertz’s Connect service offers hourly rentals in NY with rates as low as $8.50/hour, ala Zipcar and other competitors. Smart move, considering more and more consumers are reducing their carbon footprint through less reliance on cars, among other promising energy trends. For this, I applaud Hertz. Some brands get it. When the marketplace changes, and it always does, it’s critical to remain relevant and customer-focused. Innovation is essential, particularly these days.

Which is what makes me particularly baffled by the recent experience I had with Delta. Besides DC, I book at least another 5-6 trips annually; double that if you count travel by car. Recently, I bought round-trip air tickets on the Delta.com Website for the upcoming July 4th weekend. Only three days later, the fare was reduced by $100 total. On Orbitz and countless travel sites, for some time now, they guarantee your purchase at the lowest rate. They want to ensure you’re a satisfied customer; and they definitely want to provide a compelling reason to return and use their site the next time you’re booking travel. It’s a pretty simple formula for creating brand loyalty. What part of it does Delta not understand?

One might expect, as a customer, that you’d receive better treatment and select benefits by booking directly via a company’s Website over an aggregator site intended to sort and compare competing travel offers and rates by emphasizing lowest fees. It’s a market opportunity for airline brands to differentiate themselves and offer consumers advantages for choosing their brand over other options. Jet Blue gets it. They actually charge a $15 fee for booking on a site other than theirs. They also charge nothing to have an existing ticket re-issued at a lower available fare.

And like Hertz, Jet Blue is an innovator. Their Jet Blue Promise Program is a policy that refunds flights or vacation packages in full to anyone whose been laid off recently since making travel plans. How’s that for counteracting the “uncertain” for those unfortunate enough to experience difficulty during these uncertain times. You can call it recession marketing, as some have. Or, I prefer to attribute it to Jet Blue’s exceptional customer focus, which has always been core to its brand experience.

Despite the economic downturn, I’m planning to keep up my aggressive travel and flight schedule. I figure I’m a catch, and a keeper, by anyone’s standards for customers these days. I think I’ll pass on Delta from now on. Jet Blue...or anyone else, are you listening?

Air New Zealand staff bare all for TV ad

2009-05-14T07:04:00.003-04:00

A recent Air New Zealand advertisement has ANZ employees - including CEO Rob Fyfe - wearing body painted uniforms. It's part of the airline's campaign to differentiate itself against 'budget' airlines with 'miscellaneous' fees (i.e. drinks and checked bags) - ANZ claims that when it comes to fees, it has "nothing to hide."

Edit: Sorry for the oversized video screen - I can't seem to figure out how to make it regular size. To view it without the text in front, just click on the "full screen" icon.

Airbus slows A380 output

2009-05-06T12:56:00.002-04:00

photo by NguyenDai

Airbus unsurprisingly announced that it would lower the amount of A380 aircraft it produced this year to 14, down from 18. Originally, the company had planned to increase production this year compared with last (and still is expected to deliver 20 next year), but the weakened economy and recent scare over swine flu has had an impact on travel demand, causing airlines to defer/delay some aircraft deliveries. IATA has estimated that air traffic, which started declining back in September, fell by 11% in March. (The figures for April will be released soon.)

It's only the latest bump in the A380 program, which has not only seen cost overruns (development spending is now at $18 billion, up from the originally planned figure of $12 billion) but also substantial delays. Singapore Airlines, Qantas and Air France are expected to be among the airlines that take delivery of A380s this year. And Airbus is also scaling back production of other models, too - a move that competitors Boeing and Embraer have also followed.

AirTran's CEO says airline can remain profitable

2009-05-05T13:09:00.000-04:00

photo by James Willamor

Robert Fornaro, AirTran's CEO, was recently interviewed by the Associated Press. He mentioned how the airline had faced a troubling time last year when oil prices shot up. But in the first quarter of 2009, despite a weak economy and lowered travel demand, AirTran managed to post a profit. I'll post a clip from the interview at the end of this post, and more can be read in the original article, but here are some interesting points:

He doesn't see further consolidation, at least for a while: " Clearly we've seen Northwest and Delta come together, but I'm not sure we're going to see another merger over the next two or three years. The financial condition of the carriers now is weak, and there's probably some real big issues that need to be resolved with the labor contracts."
Even though AirTran attempted a hostile takeover of Midwest Airlines a few years ago, Fornaro (who has been in the top job for a year) is moving away from acquisitions: "We now feel that we can be much more successful going in on our own. Over the next two years, thinking about acquisitions will be very very low on our priority list."
How did AirTran responded to the economic crisis? "We stepped back, we reassessed our operation, we adjusted our capacity and obviously managed our costs and have very quickly rebounded."

Canadian airlines create passenger bill of rights

2009-05-04T14:45:00.000-04:00

photo by caribb

Canadian carriers Air Canada, Air Canada Jazz, Air Transat, and WestJet have come up with new legally binding operating rules, or "airline tariffs," that give passengers more options if their flight is delayed or canceled. As part of the new set of rules, the four airlines must:

Distribute meal vouchers for delays of four hours or longer
Let passengers off the aircraft if the plane is delayed on the ground for more than 90 minutes
Pay for hotel rooms for passengers affected by overnight delays or cancelations

Not bad - if I was a delayed or stranded passenger, I'd say that those rules are a pretty good improvement. But the four airlines, which have formed a lobby group known as the National Airlines Council of Canada, aren't exactly doing this unprovoked, however. A Canadian MP proposed a bill that would fine airlines $1200 per traveler who was bumped off of a flight longer than 3500km (about 2175 miles). Airlines would also have to start giving $500 an hour to passengers stuck on a plane on the ground for more than 60 minutes after the doors close.

Naturally, the airlines are keen to avoid having to pay such exorbitant fines, and are thus rolling out their own "bill of rights" in advance. And it's doubtful whether the proposed bill would actually pass; as the lobby group's president stated: "The compensation requirements are grossly punitive and do not recognize the cost/revenue environment that air carriers face today. In the current economic downturn, airlines are already struggling to provide service to their customers." The fines outlined in the proposed bill do seem rather "grossly punitive"; but at the same time, passengers who are stuck for hours on a plane on the tarmac should be compensated fairly. The National Airlines Council of Canada is proof that even if it takes the threat of a harsh bill to do it, airlines still have the capability to ensure that their customers are compensated in a fair manner.

Ryanair considers "fat tax"

2009-04-23T00:53:00.005-04:00

photo by wicho

European budget airline Ryanair has apparently been mulling over the possibility of a "fat tax" following the results of an online poll in which the airline asked passengers to come up with a winning "cost reduction" idea. Ryanair has been known in the past to use things like this as free publicity. For those who are interested, the results are as follows:

29% - Excess fees for very overweight passengers
25% - €1 for toilet paper – with O’Leary’s face on it
24% - €3 to smoke in a converted toilet cubicle
14% - Annual subscription to access Ryanair.com
8% - €2 “corkage” fee for passengers who bring their own food onboard

Another way to spoil your pet: Pet Airways

2009-04-19T12:44:00.003-04:00

Even though you'd think that now would be a lousy time to start an airline, it's no secret that pet owners are spending more and more on their pets these days. So a couple of pet-loving entrepreneurs have come up with "Pet Airways", "a pet-only airline dedicated to pet-friendly travel" where "your pet will be safe and comfortable flying in the main cabin - not in cargo!" According to their website, you drop your pet off at the airport and they board the plane, where they're looked after by "Pet Attendants" who check up on all the pets every 15 minutes. Then you pick up your pampered dog or cat at the destination airport, "knowing he or she has traveled comfortably and safely in the main cabin of our plane."

Pet Airways will initially be serving New York, Washington, Chicago, Denver, and Los Angeles (although none of the big airports at these cities are used; they'll be using smaller, "executive" airports around the cities instead). But those pet owners who have visions of dogs sitting on seats in a Boeing 737 will be disappointed; pets will be flown on the distinctly less-glamorous looking Beech 1900 with the seats stripped out and replaced by "private pet carriers". The flights will be operated by Suburban Air Freight (Pet Airways certainly does sound better, doesn't it?).

American takes delivery of new 737s

2009-04-14T12:26:00.002-04:00

photo by caribb

American Airlines has taken delivery of its first new planes since 2006 - seventy-six additional Boeing 737-800s. AA plans to use them to phase out out about a quarter of their MD-80 fleet, which are older, less efficient, and more prone to maintenance issues than the 737s. The new 737s will also carry more passengers (160) than the airline's previous 737s (sometimes as low as 134); this will be accomplished by a thinner divider between first class and coach and using thinner seats, which AA claims are more comfortable than the old ones. The galleys in coach class are also gone, since meals aren't served anymore in coach.

American is also going to base some of the new 737s out of its Chicago hub. Previously, it had kept almost all of its 737-800s flying out of its Dallas and Miami hubs, and kept the MD-80s at Chicago. But when the MD-80 faced serious mechanical issues last year, the airline was forced to scrub hundreds of flights at O'Hare. The introduction of 737s there should lower their reliance on a single aircraft type for the bulk of their domestic flying.

Continental gets approval to join Star Alliance

2009-04-08T17:48:00.003-04:00

photo by bribriTO

Continental Airlines yesterday received a tentative OK to join Star Alliance, although the US Department of Transportation will require Continental, United, Air Canada and Lufthansa to release an 'annual report' on the alliance. Star Alliance is already by far the largest airline alliance, and the addition of Continental just makes it even bigger. As such, the US government has expressed concern about the impact on competition - and so has Delta, Continental's current partner in the SkyTeam alliance, which has complained that the impact on US domestic routes would be too large, given that United and US Airways are already members.

Southwest's rapping flight attendant

2009-03-17T11:46:00.002-04:00

A few recent news stories have highlighted David Holmes, the Southwest Airlines flight attendant who makes the pre-flight safety announcement a bit more entertaining by rapping it.

"You will not get that on United Airlines, I guarantee."

About me

2009-01-01T00:00:00.003-05:00

My name is Tom, and I've been interested in the airline industry for as long as I can remember. I love the airplanes themselves, of course, but also the concept of flight; I'm still amazed that you can, relatively cheaply, fly across the continent and back in the same day. Furthermore, the airline industry is seemingly almost always in some sort of turmoil, so there's never a dull moment.

Back before my sophomore year of high school, I created this blog as way to stay informed about the airlines and as a way of expressing my opinions about them. Since then, I've tried to keep it pretty active, although at times 'real life' kind of gets in the way. But I enjoy writing about the airlines, have been doing so for 4 years now (time flies), and hope to be doing it for some time to come.

Right now, I'm a sophomore at Hobart and William Smith Colleges in Geneva, NY, and planning on a double major in international relations and Russian area studies.

United pilots: remove CEO

2008-08-15T16:59:00.002-04:00

The Air Line Pilots Association (ALPA) and the United Airlines MEC (Master Executive Council) have created a website, GlennTilton.com, which calls for the removal of Glenn Tilton as United's CEO. The website said, "As professional pilots, we believe in accountability. Glenn Tilton, Chairman, CEO, and President of United Airlines, has failed all of us… costing shareholders, employees, and the travelling public billions of dollars."

Is Glenn Tilton to blame for United's troubles? The website says he is. "To Glenn and his staff, responsibility for United’s predicament belongs to everyone and everything other than themselves... Their excuses include high fuel prices, increasing costs of security, more competition, and stronger regulation, and they see themselves as victims of these uncontrollable factors. It just isn’t right, and it just isn’t true. These same factors influence every airline, and all the others are handling challenging conditions much better than United."

Or are the pilots just upset with management? Leave your opinion; please comment!

American's new deal with BA, Iberia

2008-08-14T16:30:00.004-04:00

American Airlines, Iberia, and British Airways announced earlier today that they were forming a three-way alliance that would allow them to cooperate on flights between Europe and North America. Although the three airlines are already part of the oneworld alliance, the deal allows them to work more closely together and to cut costs. Not surprising, Virgin Atlantic's Richard Branson took a dim view of the deal, which he said would create a "monster monopoly".

The announcement comes at a time when other airlines are also seeking to link up: United, Continental, Air Canada and Lufthansa are working on a transatlantic alliance, similar to the AA/Iberia/BA one announced today.

Farnborough Airshow Review, Day 3

2008-07-17T00:28:00.000-04:00

A quick summary of orders at the Farnborough Airshow on July 16:

Boeing

Malaysia Airlines ordered 35 737-800s.
Aviation Capital Group ordered 15 more 737-700s.

Airbus

Netherlands-based lessor AerCap launched the A320/A321 freighter, with an order for 30.
Asiana Airlines ordered 30 A350 XWBs, with 10 options.

American to retire A300

2008-07-16T21:42:00.000-04:00

photo by Vidiot

American Airlines CEO Gerard Arpey said earlier today that the airline's fleet of Airbus A300s, which were due to be retired by the end of 2012, will instead be phased out by the end of 2009. Right now, the type is based at either JFK or Miami (there still is a significant AA A300 presence in San Juan, but this has declined as AA has started to downsize operations there slightly) and flies mainly on routes to and from the Caribbean. The A300 is also a pretty versatile aircraft - it's used on AA's Miami - Orlando route three times a day.

It's unclear as to what American will replace the A300 with, but they might not choose to replace it at all. Instead of going for higher capacity, AA might just choose to have higher fares for fewer seats.

Farnborough Airshow Review, Days 1 and 2

2008-07-16T07:05:00.000-04:00

The Farnborough 2008 Airshow, which runs from July 14 to 20, is the first major airshow to be held since the Paris Air Show last June. Boeing VP Randy Tinseth pointed out on his journal a few ways that the aviation world has changed since the Paris show:

There have been 2,678 commercial airplane orders (Boeing and Airbus)
Oil has gone from $67/bbl to $134/bbl
Jet fuel has gone from $2.12/gal to $3.92/gal
The U.S. dollar has gone from 0.75 euros/dollar to 0.64 euros/dollar, and from 123 yen/dollar to 107 yen/dollar
The market has continued to liberalize with “open skies” between the EU and the U.S.
And worldwide aviation traffic continues to grow

The economic situation that the airline industry's in has only gone downhill since last year, so some expect that, as a result, there will be fewer orders announced at this year's airshow. So here's a quick summary of the orders placed from days 1 and 2 (July 14 and 15). It should also be noted that Airbus tends to "save up" announcing orders until airshows, while Boeing tends to announce them on a more regular basis.

Boeing

Dubai-based low-cost startup FlyDubai ordered 50 737-800s, worth $3.74 billion at list prices.
Ethiad Airways ordered 35 787-9s and 10 777-300ERS, worth $9.4 billion.
Nigerian airline Arik Air announced an order for seven more 737s.

Airbus

Aeroflot ordered five A321s.
Dubai-based Aircraft lessor DAE Capital ordered 30 A350-900s and 70 A320s.
Aviation Capital Group ordered 23 A320 family aircraft.
Tunisair ordered three A350-800s, three A330-200s and ten A320s.
Qatar Airways ordered four A321s.
Ethiad Airways ordered 20 A320s, 25 A350 XWBs and 10 A380s.
Saudi Arabian Airlines ordered eight A330s.

Northwest to cut 2500 jobs, add fees

2008-07-10T08:14:00.001-04:00

photo by caribb

Northwest Airlines announced yesterday that it would be laying off 2,500 employees in all groups of positions (pilots, mechanics, flight attendants, and other employees), but that it would first be looking for volunteers to leave the company. A variety of "voluntary programs including early-out programs, voluntary leaves, work rule modifications and attrition" will be offered, with the airline moving to furloughs as a last resort.

“Our fuel costs have more than doubled in the past year,” said Doug Steenland, President and CEO. “In order to manage through this unprecedented fuel challenge, we have to take action to both control costs and increase our revenue... These reductions are the direct result of our extraordinary fuel costs and the necessary actions we must take to right-size our airline and eliminate unprofitable flying." Last month, Northwest said that it would reduce its system capacity by 8.5%.

In additions, the airline is introducing a set of new fees: for travel in the US and Canada, it will charge $15 for the first checked bag, $25 for the second and $100 for three or more checked bags. Northwest also rolled out new fees for using frequent flier miles as well as ticket changes. Steenland said, “We expect these three incremental revenue enhancing measures to generate $250 million to $300 million a year, which will help ease the burden of these record high oil prices.”

Vladivostok Avia starts US service

2008-07-09T08:00:00.000-04:00

For those of you in the US who have been wanting to fly on a Russian-built aircraft, here's a new opportunity: Vladivostok Avia has started seasonal twice-weekly service from Anchorage to Vladivostok, via Petropavlosk-Kamchatsky. The first flight, which arrived in Anchorage on Monday morning, was flown by a Tupolev TU-154, although the airline has said that the route will be flown with newer Tupolev TU-204 airplanes. The flights will be carried out until September 15, and if this summer's flights are a success, the airline might continue them next summer.

BA's OpenSkies to merge with L'Avion

2008-07-02T13:07:00.000-04:00

British Airways has announced that it will purchase Paris-based premium carrier L'Avion to add to its OpenSkies premium transatlantic subsidiary. The deal, which only set back BA $52 million in cash, will be completed this month, and OpenSkies will formally combine with L'Avion shortly thereafter.

In a statement, British Airways head Willie Walsh noted that "L'Avion is a successful airline that has built up a premium business in a relatively short period. It has many synergies with OpenSkies and buying it provides a larger schedule and an established customer base."

L'Avion flies Boeing 757-200 aircraft from Paris Orly to Newark, and is the last of the independent premium transatlantic airlines surviving - MAXjet, Silverjet, and EOS have all become victims of higher oil prices.

Continental to join Star, link with United

2008-06-20T18:11:00.000-04:00

photo by sea turtle

Even after merger talks between United and Continental fell through a few months ago, the two airlines are still interested in cooperating - yesterday, they announced plans to start codesharing and for Continental to join Star Alliance, of which United is a member. According to an email sent out to Mileage Plus members, United expects the deal to start sometime in 2009.

It remains to be seen what this means for US Airways, which has been a Star member for a few years now. It's possible that it could remain in Star, but having three US airlines in the same alliance could lead to some overlap.

Continental rejects United as merger partner

2008-04-28T07:05:00.003-04:00

photo by Drewski2112

Well, it was a bit of a surprise. After the linkup between Delta and Northwest a few weeks ago, many (myself included) expected to see continued industry consolidation. And a merger between United and Continental was seen as a likely one; rumors floating around pointed to an announcement as soon as this week. The merger would have created an airline that might rival Delta/Northwest in size, as well as international coverage (United's strong Asia presence would fit nicely with Continental's extensive European route network).

But last week, a little something occurred that made Continental think twice: United posted a $542 million loss for the first quarter of 2008. Even in the airline industry, a half billion dollar loss is pretty big, and it's a sign of an ailing airline. United's huge loss scared away Continental, which announced on Sunday night that it was abandoning merger talks with United.

The airline made the announcement in a letter to employees from CEO Larry Kellner and President Jeff Smisek. "We want you to know that our Board of Directors met today and has unanimously supported management’s recommendation that, in the current industry environment, the best course for Continental is to not merge with another airline at this time," it read... The Board very carefully considered all the risks and benefits of a merger with another airline, and determined that the risks of a merger at this time outweigh the potential rewards, as compared to Continental’s prospects on a standalone basis." The letter - which never identified United Airlines by name - went on to say that the airline will "continue to review potential alliances and our membership in SkyTeam. We are considering alternatives to SkyTeam as we carefully evaluate which major global alliance will be best for Continental over the long term."

Continental's decision is certainly a setback for United, which has been looking to merger for some time now. I don't think that the decision to not merge was arrived at easily, since there could have been some benefits from linking with United. But the folks over at Continental are betting that a merger with United, which is racking up heavy losses, could also drag them down as well. Even though Continental definitely wants a better Asian route network - and they could have obtained it through a merger with United - it might be able to get it another way. If United files for bankruptcy again, Continental might be able to grab the Asian routes by themselves, without having to deal with United's poor financial shape.

Continental has also reportedly been in talks about forming a three-way alliance with American Airlines and British Airways, although, from an anti-trust standpoint, this might be a bit difficult.

And as for United - well, this is certainly bad news. CEO Glenn Tilton tried to remain upbeat in a statement released Sunday night: "Our strategy is consistent. Consolidation is underway - ensuring you have the right partner is everything. We will pursue all options to ensure a strong, sustainable future for our airline and will not shy away from the tough choices necessary to create value for our shareholders and benefit our employees and customers." A United-US Airways merger might happen, but I don't know if it will do much good. Both airlines are still dealing with their respective trips to bankruptcy court, and I don't think that a merger between them will solve anything.

Eos Airlines shuts down

2008-04-27T18:28:00.000-04:00

New York-based premium transatlantic carrier Eos Airlines filed for Chapter 11 bankruptcy protection yesterday and operated its last flights earlier today. The airline flew Boeing 757-200s between New York-JFK and London's Stansted Airport, but had plans to expand to other destinations.

Eos' shutdown was not necessarily expected, but given the current state that the industry's in, it wasn't too surprising, either. MAXjet, another premium transatlantic carrier, stopped flying in December.

US Airways CEO mentions mergers

2008-04-17T07:08:00.000-04:00

photo by caribb

In a letter sent to employees yesterday, US Airways CEO Doug Parker said that "airlines are going to have to make dramatic changes" if they want to survive. Although he said that he couldn't "comment on any specific discussions or transaction," he said that the media have suggested that US Airways is in merger talks with United and that American would make a good match as well. "Rest assured," said Parker, "if US Airways chooses to participate in any industry consolidation, we will do so because we believe it is the best interests of our employees and our airline."

Would US Airways be a good match for United, which has been seeking out merger partners? They already code-share (a benefit that the Delta/Northwest combination has), and US Airways has a strong presence in the Northeast and Southeast (two areas where United's route structure is weaker). But I don't see US Airways' route network as being as much of a plus for an airline like United, which needs more international routes. Of the six largest legacy carriers, US Airways has the smallest international route network. United might prefer a rumored merger with Continental to one with US Airways.

US Airways still has problems of its own, too, from its last merger (between US Airways and America West). And let's not forget that the last time United and US Airways tried to merge, it was rejected by the Justice Department on anti-trust grounds.

By the way, here's the original message sent out by Parker (posted on the US Aviation boards):

From: Corporate Communications
Sent: Wednesday, April 16, 2008 8:36 AM
To: Corporate Communications
Subject: USNews Now: An Important Message from CEO Doug Parker
Importance: High

An Important Message from CEO Doug Parker

April 16, 2008

Dear Fellow Employees,

With the recent news of a potential Delta/Northwest merger, analysts and media are speculating about the next potential combination. While we had hoped to remain on the sidelines of this speculation, today’s Wall Street Journal suggests we may be in merger talks with United and another article in the Dallas Morning News suggests we might make a good merger partner for American.

While I can’t comment on any specific discussions or transaction I certainly didn’t want you to hear this speculation without hearing directly from me about what this might mean for US Airways.

Most of you know my views on consolidation and those have not changed. Our industry is far too fragmented and consolidation, if done properly, could result in a much healthier industry which would be good for our employees, our customers and the communities we serve. Rest assured if US Airways chooses to participate in any industry consolidation, we will do so because we believe it is the best interests of our employees and our airline.

Despite all of the challenges of merging two airlines, we are a much stronger company today as a result of the merger of US Airways and America West. We posted the highest pre-tax margin of the big six airlines in 2006 and even with our operational challenges we posted the second highest pre-tax margin in 2007.

And we have an improving airline. We’ve made great strides with our operational improvement plan, including top three performances in on-time arrivals for three consecutive months. As we continue through 2008, we feel extremely good about our ability to continue to improve our operational performance relative to the industry.

But we can't ignore what's happening in the world around us. Oil has risen to over $113 per barrel and Wall Street is anticipating a recession that, if it happens, will lower all airline revenues. And the DL/NW combination potentially creates a formidable competitor. In that world, all airlines are going to have to make dramatic changes to their existing business models in order to be viable.

I know airline merger speculation can be distracting so for now, I encourage all of us to remain focused on running a great airline. Our work on the reliability, convenience and appearance initiatives continues and we are running an extremely reliable airline as a result. Whatever we do, we will always take great care to ensure the path we choose returns value to our shareholders and customers, and also provides long-term stability for our employees.

Thanks for all you do for our customers and keep up the great work.