Joe Sharkey At Large

…Or a Tale of Two Cities, pick your allusion.

British Airways today reported that its passenger load factor fell 5.1 points in April, to 71.6 percent, compared with April of last year.

The Easter holiday falling in March of this year had some effect overall, but in general, BA said the basic problem is a decline in long-haul coach traffic, even as business-class and first-class traffic continues growing.

Coach traffic fell 8.8 percent in April, while premium traffic rose 3.4 percent, British Airways said.

Looking at airline performance in general for April, it’s increasingly clear that the class-divide in the air-travel market is becoming more pronounced, as is the divide between domestic and international service. That is going to become extremely apparent this summer, as the network carriers continue shrinking domestic routes and concentrating on lucrative international routes (and those domestic routes that feed international traffic).

In a general assessment of what’s ahead, I thought Delta’s president, Edward H. Bastian, was pretty clear at the JPMorgan aviation and transportation conference in March (which occurred before the Delta-Northwest merger announcement).

Here are some excerpts from his comments that describe what is going on with some clarity through Delta’s prism:

–”International growth is the core, the foundation and cornerstone” of Delta’s future. “Internationally, we are go to be growing at roughly 15 percent pace in 2008 over 2007.”

–”The good thing for us about the international growth is that a considerable amount of it is being funded out of the domestic system.”

–”Forty-one percent of our capacity this summer will be flying internationally.”

–Some of this domestic capacity reduction will be accomplished by pro-active “day-of-the-week cancellations, as well as holidays.”

–This summer, Delta’s schedule for international flying will be “up over 77 percent [while] domestic is down greater than 22 percent.”

–”We’re going to be continuing to rationalize, on the domestic side, point-to-point flying.” [My note: That describes many routes that do not feed into hub connections that yield international passengers, and portends further reductions in service at many smaller airports.] “The domestic reductions I mentioned earlier are largely going to be come out of point-to-point flying domestically. We’re going to be continuing the strength of our hubs [but] our point-to-point network domestically is subject to rationalization. “

–”Domestic capacity is increasingly being pointed toward feeding international destinations.”

–This pronounced trend can be described metaphorically, Bastian said, as “the tale of two cities.”

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[Above, the cabin configuration for Singapore Airlines' new all-business-class service on A340-500s]

I’ve been hearing from people who say they loved Eos Airlines and can’t understand why it failed, given its terrific in-cabin performance as an all-business-class airline whose product surpassed some airlines’ first-class service.

Furthermore, it has been noted, other airlines seem to be optimistic about all-business-class service.

In fact, Singapore Airlines is making one of the biggest moves ever into all-business-class flying by a major airline. In mid-May, Singapore will start all-business-class flights nonstop between Newark and Singapore a couple of times a week, and ramp them up to daily by summer. In September, Singapore is expanding the all-business-class service to Los Angeles-Singapore nonstop, again with a plan to ramp up quickly to daily flights.

And Lufthansa is also expanding its boutique all-business-class service, operated by PrivatAir, with flights between Germany and Dubai and India.

So what happened to Eos?

Brutally simple. Eos, flying used 757s, had a cost structure that required its planes (with 48 seats) to fly about 70 percent full, with average fares of about $3,500, to be profitable.

Though it had expansion plans, Eos flew a limited route, New York-London Stansted. On that route (especially with Stansted in the equation), it was heavily dependent on the banking and investment business — not just in New York but, perhaps more importantly, in London. Remember, the plane flies both ways, and transatlantic traffic originating in London had become increasingly important, especially with the weak dollar.

Lawrence Hunt, the affable and indefatigable founder of Silverjet, has been frantically raising cash since the airline launched early last year. The most recent score was from Middle East investors, who bought a 28 percent stake in Silverjet last week. Hunt says that will help finance a planned aggressive expansion in the Middle East and Africa.

Meanwhile, though, Silverjet is struggling on its Newark-London route, and the challenge is made tougher the fact that Silverjet’s London base is the not-so-convenient London Luton Airport.

[Silverjet reported today that it had a 67 percent load factor in April and said it expects that the load factor and yields will "show further improvement in May.]

Skeptics are perched on the trees waiting, but Hunt thinks Silverjet can ride it out, assuming additional financing, because he has hammered the break-even point down enough so that the current average fare of about $2,100 roundtrip will do the trick, assuming loads over 70 percent.

The major U.S. airlines in the New York-London market helped kill off Eos by cutting negotiated business-class fares — the ones they offer their top corporate customers — down to the Eos level. American Airlines even threw a new flight from New York into Stansted last October (and announced a second one to come) and was said to be discounting some business-class fares down to the $3,000 roundtrip range.

Meanwhile, British Airways introduced a murderously cheap advance-purchase (62 days) business-class fare of about $2,500 round-trip between Kennedy and Heathrow, and later extended into mid-May — pretty well covering the business-travel season to the summer lull.

Eos just couldn’t compete as the majors kept slashing business-class fares (which had been going for about $9,000 roundtrip, walk-up)

At the end, “Eos’s pricing was very similar to Continental, British Airways, American and Virgin Atlantic,” said Silverjet’s Hunt.

And “with only 48 seats on a 757, the economics were similar to Silverjet’s 767s in terms of operating costs,” he said. Silverjet runs its 767s with 100 seats.

Given that, plus the transatlantic fare war, Hunt said. “It was very hard for them to offer a price advantage. Eighty percent of their business came from banks and financial services, and those guys started getting deals with Continental and American and Delta in the $3,500-$4,000 range.”

Optimistically, Hunt said, “It’s going to be a very tough 2-3 years. It was very important for us to get our price point to the $2,000 level where the majors can’t compete with us.”

As to investors, Hunt said it’s been exceedingly difficult to raise money.

“The British institutional investors have got their own problems. For example, one of our largest shareholders was the second-largest shareholder in a bank called Northern Rock that got bought by the government because it nearly went bust. So they had to sell everything — and we have lots of shareholders in that situation. We’ve got a big property fund that’s invested in us that’s 80 percent leveraged. They’re not sure whether they can make it or not, and they’re selling everything they can to raise cash. So we need to find a different type of investor going forward,” he said.

Here’s the rest of what he told me in a recent interview:

“Also, we have a pretty tough regulatory environment, from a capital and liquidity point of view, so you never know what the regulators are going to do.

“We’re almost at a cash break-even now. Our planes are going to be nearly 60 to 70 percent full this summer. We’re doing okay, but I’m not pretending we’re out of the woods yet.

“How many people said I’d never get this off the ground? How many said we’d never raise the money? How many said we wouldn’t fill the planes because people wouldn’t fly to Luton? If I’d listened to all those people I wouldn’t be here now.”

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The predictable romantic press twaddle and television rhapsodizing accompanied the running of the Kentucky Derby today.

But as the squadrons of private jets take off from Louisville to disperse the well-heeled fans back home, again the ugly truth about three-year-old thoroughbred racing is glossed over, because it doesn’t comport with the media narrative and the commercial interests intertwined with it.

The horse that finished second, a filly named Eight Belles, broke down after the finish line — compound fractures in two ankles — and had to be killed (let’s avoid the word “euthanized”) on the track.

Presumably, the 157,000 party-goers in attendance collectively averted their eyes.

Without doubt, the craven NBC TV sports announcers at Churchill Downs did so. Even after the winning horse spooked at the collapsed Eight Belles and threw his jockey on the track, the NBC announcers prattled on merrily, ignoring the obvious until they were forced to acknowledge it briefly before moving back onto narrative and the winner’s circle palaver.

Anyone who knows horses knows that that filly probably ran at least a few furlongs of that race on at least one fractured leg. It was in her nature not to quit.

These horses are far too delicately bred to start with — and most of them are babies, not chronologically three years old, when they’re forced into intensely competitive racing. Their bones and muscles are still not fully developed.

All they know is to run like hell. Which they do, with magnificence.

These horses are still too young, in early May of their second year, to race in a dense pack in the kind of intense conditions demanded at Churchill Downs. The Kentucky Derby might be a great party and spectacle, but it’s an animal-welfare ethical disgrace, as is the entire Triple Crown and thoroughbred-breeding apparatus.

There’s nothing wrong with racing fully grown horses, assuming the horse knows what the deal is and goes along. Horses love to run. They even love to run with someone on their backs. But two-and-a-half years — which is how old these horses actually are — is too early to run them at that level, under those conditions. They need another year or more to develop, and even then they’re still young and overbred.

Sports writers spend an awful lot of time flapping around about things like steroid use in baseball. It’s time they started questioning assumptions about the races of the Triple Crown and the systemic animal abuse — much of which occurs long before the dewey-eyed fans warble the atrocious “My Old Kentucky Home” at Churchill Downs — that’s behind all that excitement.

Most sports writers, of course, are known for this: Writing the same crap over and over, till the last syllable of recorded time, while stuffing themselves with free shrimp in the press lounge.

In Sunday’s New York Daily News, then, we have this unconscionable passage quoting the dead horse’s trainer, Larry Jones:

“Trainer Larry Jones said, ‘She went out in a blaze of glory,’ as he tried to hold back tears from his reddening eyes.

Sorry to hear of the trainer’s reddening eyes. But she did not go out in a “blaze of glory.” She is a horse. She went out in hideous pain, unable to understand why her legs gave out when all she was doing was running like hell. She went out in the back of a truck.

Are they going to bring out any more shrimp, do you think?

It is time to say enough.

“How many times do we have to see this?” said my wife Nancy, who knows horses. She said this: Racing raw, so-called three-year-olds in an arena massed with bellowing people and startling visual impressions, within a pack of horses that don’t know each other — the field is not a natural herd; it’s a hastily assembled mob — is simply “preying on their instincts to flee.”

In the Washington Post, Sally Jenkins has it just right.

In the Times, William C. Rhoden’s Sunday column also gets it. “The sport is at least as inhumane as greyhound racing and only a couple of steps removed from animal fighting,” Rhoden says. “This is bullfighting.”

But these are lonely voices against the media trumpet-chorale of glorious tragedy: The brave filly who wouldn’t quit, who ran on through shattering pain and managed to place in parimutuel paradise.

Can’t you hear the stirring theme music?

Meanwhile, Chelokee, the colt who was badly injured just yesterday in the Alysheba Stakes at the Kentucky Oaks races at Churchill Downs, was battling for survival.

Chelokee was trained by Michael Matz, who also trained Barbaro, the 2006 Kentucky Derby winner. Barbaro, you’ll recall, shattered his leg two weeks later in the second 2006 Triple Crown race, the Preakness, and eventually had to be put down.

And these, remember, are just the famous horses that make the news.

Except, of course, on NBC.

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