Joe Sharkey At Large

The preparations for the Airline Spring Prom (this year’s theme: “Off We Go Into the Wild Blue Yonder!”) are turning really really mean.

First Continental told United it would not be seen dead in its company, thank you very much. That was mean. Now the pilots at United Airlines are saying they think US Airways is a big looooser.

Here’s what the United Airlines council of the Air Line Pilots Association said today. Really, they are making no effort whatsoever to be nice.

Just yesterday, the entire Air Line Pilots Association, representing 56,000 pilots at 41 airlines in the U.S. and Canada, put out a separate mean statement quoting the United union leader saying the United boss, Glenn Tilton, is a big loooooser making a “shameful grab” for his “obscene compensation” ($10.3 million) while producing “abysmal numbers and operational deficiencies” at United.

Kids, kids! Can’t we just “slip the surly bonds of earth” and just keep raising fares and GET ALONG, gosh darn it?!

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Delta and United slapped in still another price hike yesterday in the form of fuel surcharges.

Can the rest of the unindicted co-conspirators major airlines be far behind?

Here’s last night’s report, and running update on the fare increases (including fare increases and fuel-charge increases) this year, by Rick Seaney of FareCompare.com:

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By Rick Seaney:

“Tonight at 8:00pm EDT, United Airlines matched the Delta Air Lines initiated airfare hike early in the day on the bulk of its route system – the hike – in the form of a fuel surcharge – is either an additional $10 or $40 roundtrip depending on the type of airfare and city pair.

“This leaves four remaining legacy airlines yet to match , including American, Continental, Northwest and US Airways.

“I have been asked to update our airfare increase timeline, noting whether the hike was base airfare or fuel surcharge related which I have done below. Effectively to an end-consumer there is not difference a hike of the base airfare or fuel surcharge as the two are combined and sales tax applied (not broken out separately on domestic airline tickets). That said there is a not so subtle difference for corporations that have negotiated airfare discounts – these discounts are only applied to the base airfare and not the fuel surcharge which reduces the overall effectiveness of these contracts.

“Our updated 2008 Increase Timeline follows:

1. January 3^rd, initiated by United, $10 roundtrip, base airfare hike, successful (sticky)

2. January 11^th, initiated by United, $30 roundtrip, fuel surcharge hike, unsuccessful

3. January 17^th, initiated by American, $20 roundtrip, fuel surcharge hike, unsuccessful

4. January 24^th, initiated by Continental, $20 roundtrip, fuel surcharge hike, successful (sticky)

5. February 22^nd, initiated by United, $10 roundtrip, base airfare hike, successful (sticky)

6. February 28^th, initiated by Delta, $10 roundtrip, base airfare hike, successful (sticky)

7. March 7^th, initiated by United, $10 roundtrip, fuel surcharge hike, successful (sticky)

8. March 14^th, initiated by United, $4-$50 roundtrip, base airfare hike, successful (sticky)

9. March 19^th, initiated by Delta, $10 roundtrip, fuel surcharge hike, unsuccessful

10. March 27^th, initiated by Delta, $10 roundtrip, fuel surcharge hike, unsuccessful

11. April 9^th, initiated by United, $4-$30 roundtrip, base airfare hike, successful (sticky)

12. April 15^th, initiated by United, $10-$20 roundtrip, fuel surcharge hike, successful (sticky)

13. April 24^th, initiated by United, $4-$70 roundtrip, base airfare hike, successful (sticky)

14. April 28^th, initiated by Delta, $10 and $40 roundtrip, fuel surcharge hike, pending

“Note that I have closed out the 13^th hike of last week with a notation that it was widely successful.”

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Yikes, another week, another fare hike is in place! This time, the unindicted co-conspirators six network airlines didn’t even bother to build in a few days before they all fell into lockstep.

Not that the airlines are colluding or anything as they fix match fares. That would be wrong.

Tom Parsons of BestFares.com has the latest information on the 10th airline price -heist hike this year:

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From Tom Parsons:

“On Thursday, April 24, United Airlines raised domestic airfares by 3 to 5 percent, primarily on markets where they do not compete with low-cost carriers. The majority of routes saw a 5 percent increase.

“On Friday, American Airlines, Continental Airlines and Delta Air Lines quickly matched the United airfare hike. Saturday, Northwest and US Airways, the final two holdouts among the major legacy airlines, matched the airfare increase.

“‘This is the tenth airfare hike we have seen from the major airlines since December 20, 2007, and the ninth increase since January 7, 2008′ - says Tom Parsons, CEO and founder of Bestfares.com, an internet travel website that tracks airfare changes and travel industry trends.

“Today, the average fuel surcharge, which has been raised four times since December 20, is $70 roundtrip. This fuel surcharge applies to both short haul and long haul flights. The major airlines have also raised leisure airfares six times since January 7, 2008.

“Of the recent airfare hikes, the first five were by flat dollar amounts, such as $10 or $20 roundtrip. On March 14, United raised airfares as little as $10 roundtrip on short haul flights of 500 miles or less one way to as much as $50 roundtrip for long haul flights that exceeded 1,500 miles one way.

“The new airfare hike that took place this past weekend added a new twist by raising some airfares by 3 percent, but the majority of increases were by 5 percent on the base airfare. The ten airfare hikes that have taken place since December 20, 2007, have primarily affected routes not served by a low-cost airline.

“‘In just four short months, leisure travelers purchasing roundtrip tickets, especially on flights over 1,500 air miles one way, could be paying as much as $220 roundtrip more than they did between the same two destinations back in December’ - states Parsons. One example is Newark to Fresno (CA), a cross-country route not served by a low-cost carrier. On December 18, 2007, the lowest published leisure airfare on this route on Continental was $760 roundtrip. Today, Continental charges $973 roundtrip for this route, an increase of $213 roundtrip.

“Another example is Savannah (GA) to Portland (OR). On December 18, 2007, the lowest published airfare was $650 roundtrip on Delta. Today, the lowest published airfare on this route is $878 roundtrip, an increase of $228 roundtrip.

“One of the highest airfares in America on a non-competitive route based on cost-per-mile is from San Francisco to Sacramento, which is a distance of 86 air miles each way or 172 air miles roundtrip. The lowest leisure airfare on both United and US Airways for this route is a whopping $686 roundtrip. That’s $3.98 per mile. The walk-up fare (Y class) on this route is $1,510 roundtrip, or a cost of $8.77 per mile flown.

“One of the lowest airfares in America on a cost-per-mile basis is also from San Francisco. San Francisco to Las Vegas, where United and US Airways must compete with low-cost carriers Virgin America and Southwest Airlines, is a distance of 830 air miles roundtrip. On this route, all four airlines offer a roundtrip leisure airfare of $88 roundtrip, or a cost of 10.6 cents per mile. Southwest’s walk-up fare (Y class) is $153 one-way or $306 roundtrip, or 36.9 cents per mile.

“‘As major airlines continue to lose billions of dollars and as the cost of fuel continues to climb, leisure and business travelers should expect to see even more airfare hikes in the very near future, especially on non-competitive routes’ - adds Parsons.

“Since December 20, 2007, the major airlines have now attempted to raise airfares and fuel surcharges 14 different times. Ten have stuck so far.”

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Whoa, did Continental Airlines totally diss United Airlines yesterday or what? I mean, it was one thing to tell United to get lost. But, as you can see from their joint statement linked here yesterday, Continental CEO Larry Kellner and president Jeff Smisek said that the need to protect Continental’s “significant cultural, operational and financial strengths” finally won out in the decision not to merge with United.

Was the well-run Continental basically telling the not-so-well run United that they stink?

Anyway, United has sucked it up and is looking for somebody else to take to the prom, specifically US Air, according to this report from Reuters — which, by the way, has become this country’s most reliable and heads-up wire service in my opinion.

Meanwhile, United CEO Glenn Tilton issued this statement: “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.”

So there.

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Continental Airlines said today that it chooses “to not merge with another airline at this time.”

Continental also said it is “considering alternatives to SkyTeam” and evaluating other global airline alliances.

Here’s the statement Continental sent to its workers and released publicly.

Continental is now weighing some kind of a new alliance with British Airways and/or American Airlines, under the kind of anti-trust immunity on certain markets that the government has handed out freely to Delta-Air France KLM and Northwest-Air France KLM. These arrangements are a kind of quasi-merger on certain select (read: intrernational and international-feed) markets.

The statement obviously means that Continental’s hot-and-heavy negotiations with United Airlines have collapsed — and is evidence that Continental did the collapsing, once they had a good look at what a mess United is in.

Now United needs to find someone else to take to the dance.

Yoo-hoo! US Airways? Anyone??

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[Above: The Eos cabin]
Oil prices and the credit crunch take out another one: Eos Airlines is abruptly shutting down today. Here’s the announcement.

Eos operated at the top end of the all-business-class niche, using 757s configured with just 48 lie-flat seats and flying between Kennedy airport in New York and London Stansted Airport.

It’s the second of the all-business-class startups to go out of business. MaxJet ceased operations last December.

On Dec. 24, when MaxJet folded, Eos issued a statement saying it was doing very well. “Industry failures, rising oil prices, a weakened economy and planned reductions in corporate travel have neither diminished travelers’ enthusiasm for Eos … nor hindered the company’s march toward becoming an unqualified business success,” that statement said.

Eos had 44 weekly flights between Kennedy and Stansted and was planning an ambitious expansion.

As part of that expansion, Eos had announced an additional daily route between Newark and Stansted that was scheduled to start May 5. Eos had also announced a new route between London and Dubai starting July 6.

Here’s the bankruptcy court filing Eos made yesterday:

eos-bankruptcy-filing.pdf

Note that the Chapter 11 bankruptcy filing shows $70.2 million in assets and $34.8 million in debts. That’s hardly a balance sheet for desperation — unless you’re looking down the road and seeing very bad news lurking right around the corner.

The bankruptcy filing also notes that there are between 1,000 and 5,000 (unsecured) creditors.

But at the very end of the filing, after all those “whereas’s” and “resolved’s,” the top 20 unsecured creditors are listed. The biggest unsecured claim in the top 20 is $744,000 and the smallest is $127,594 — for a total of about $5.7 million. So there’s a long way to go to get to the $34.8 million in debts claimed. My guess is that somehow, some people who bought tickets and hadn’t flown yet are being counted as unsecured creditors — though that still couldn’t add up to anywhere near $34.8 billion. And it would seem that the ticket dough in hand could also be regarded as an asset.

It’s a curiosity, having twice the claimed assets as debts and filing for bankruptcy — while at the same time maintaining, as Eos does, that it has no intention of continuing operations. (Or at least, commercial airline operations).

As usual, there is a need to look hard at airline numbers.
Here’s the Wikipedia background on Eos.

Meanwhile, Silverjet, the all-business-class startup that flies between Newark and London Luton airport, is offering to accommodate some Eos passengers.

Silverjet’s own status is uncertain, although the airline insists its passenger loads are satisfactory.

Silverjet founder and CEO Lawrence Hunt tells me today that a “fundamental problem” Eos had was that it wasn’t able to offer a “price advantage,” once major-airline competitors like Delta, American and Continental brought transatlantic business class discounts down to Eos’s level in the $3,500 to $4,000 round-trip range. Silverjet’s roundtrip fares average around $2,000, he said.

The famously aggressively competitive American Airlines also hit Eos hard when it started a New York flight to and from Stansted last October, and added a second one last month, at negotiated fares that were undercutting Eos prices.

Hunt said that Silverjet has been in talks with several buyout “investment companies,” none of whom are airlines.

“We get approaches all the time. A couple of them are quite serious in the last couple of months, but there’s nothing to announce yet,” he said. “Since the markets turned last year we’ve been looking for a long-term strategic investor who would continue to finance our expansion.”

He added, “The fuel price obviously is hurting everybody, including us, and the general economic climate is not great” on the hotly competitive transatlantic routes. The Dubai route, he said, continues to do well.

Among Silverjet’s current investors are the Reuben brothers, the billionaire London entrepreneurs, who have lent the airline over $20 million.

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Everything you need to know about the profoundly embarrassing spectacle that is the annual White House Correspondents Dinner — and the related Tragic Decline of Our Republic — is embodied in this red-carpet photo of arrivals to the dinner in Washington last night.

In the above photo, that’s General James Conway, the Commandant of the United States Marine Corps, looking like he’s dashing off to drum & bugle corps competition, accompanied by what appear to be an amazingly spry Jayne Mansfield, along with Gidget’s mom.

And yes, I did say Commandant of the United States Marine Corps.

And cut out that damn giggling. Don’t you know there’s a war on?

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That’s an all-purpose headline I’ll save for regular use as the “it’s snowing” excuse gives way to the “it’s raining” excuse for massive delays and cancellations at Chicago O’Hare. Or fill in the blank with your favorite major airport.

Last night, the always-nimble Associated Press reports, “more than 30″ flights were canceled at O’Hare because of thunderstorms.

Wait. Let me put on my reading specs for a minute. Hmmmm. It says here at FlightStats.com that there were 421 flights canceled yesterday during the afternoon and evening at O’Hare. As usual, the AP has got the scoop, because 421 canceled flights is definitely “more than 30.”

By dinnertime yesterday, O’Hare flights were running at an on-time rate of less than 10 percent. And O’Hare is still messed up today, though it’s merely partly cloudy in Chicago.

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Sealing the deal on the latest round of fare increases, Northwest Airlines matched the across the board increases of 3 to 5 percent initiated by United Airlines and followed by Delta, American, Continental and US Airways.

And showing that some airlines simply cannot issue a statement without obfuscation, Northwest said: “The fare increase comes on the heels of this weeks’ [sic] 1Q earnings report, showing Northwest Airlines lost $4.1 billion.”

In fact, Northwest “lost” $191 million in the first quarter, if by “lost” you mean “no longer actually has this specific sum of money in its wallet.”

The rest of the alleged dough, adding up to that $4.1 billion, comes from an airy accounting adjustment that reflects what Northwest says is a decline in its perceived value. The $191 million is real money on anybody’s block. But the rest of the $3.9 billion-and-change is basically Monopoly money, a red-ink herring to make the plight of the airline — certainly bad enough — look even worse.

Delta Air Lines, Northwest’s soon-to-be acquirer, used the same tactic — and in fact the identical language about a “non-cash goodwill-impairment” charge — in its first-quarter earnings report this week, claiming a “loss” of $6.4 billion on an actual operating loss of $274 million.

I’m happy to see the serious media have not let this accounting ploy settle into the record, and are using the operating losses as the appropriate figure.

As I keep saying, we all need to look hard at the real numbers as the airline industry wails and moans and falls to its knees begging and pleading for relief in Washington. Yes, they are having a very rough time of it. But let’s keep the math in perspective as the industry consolidates, as it is rapidly doing.

Meanwhile, I see in the Times today that Continental — which in my opinion is the best of the lot among the major airlines — is using its Web site to prepare its customers for a merger announcement with United that is expected within a week. I like the fact that Continental isn’t being coy. I don’t like the fact that my meager but valued and long-held elite-status toehold in OnePass is about to be subsumed into a mega-airline. This cannot be good, I think.

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—Encouraged, no doubt, by incessant media stories that accept at face value the proposition floated by airline executives that substantial fare hikes are necessary for survival, the unindicted co-conspirators major airlines are falling into lockstep as usual on the latest round of fare increases.

Not that they’re colluding of course. That would be illegal, and we all know how sternly the current Justice Department looks upon shady corporate behavior.

Anyway, Rick Seaney of FareCompare.com, sends an update this morning on the new round of fare hikes initiated yesterday by United Airlines. Last night, both American and Delta matched it, raising fares by 2 to 5 percent “across the bulk” of their routes, Rick says.

The new fare-hike will be the ninth successive fare increase (not counting increases in fuel surcharges) this year — once all of the competitors match it, as they probably will later today.

[UPDATE 3 P.M.] From Rick Seaney: “Continental Airlines matched the United initiated increase of 2% to 5% ($6 to $80 roundtrip) across the bulk of its route system. Additionally US Airways has matched across approximately 35% of its route system from 2% to 4%.

(Meanwhile), “American continued to firm up, matching in markets it left out last night … Frontier partially matched on some of their routes … Northwest has some minor increase-matching (less than 10% of their routes). … This leaves Northwest, who has typically been one of the last to match in past increases attempts — along with a major portion of the US Airways route system – yet to match.”

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—The latest mass hysteria: Food Hoarding by People Who Have No Conceivable Reason to Stockpile Food, Encouraged by the Media. And I was planning to go to Costco today. No way now. I’ll gnaw on that old celery rather than have agita facing that marauding horde.

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