Posted by Seth on August 28, 2010 under News | 
In a move that was only surprising for how quickly it happened, the Department of Justice has stated that they are satisfied with the terms of the proposed merger between Continental and United Airlines. The new carrier will be the largest and there was some concern that various regulatory agencies would place undue barriers in the place of the merger. Given the conditions that the DoJ assigned, however, that seems to have been false fear.
The only significant condition that the DoJ applied was that a number of slots – amounting to 18 daily round trip flights – be ceded to another carrier in the Newark market. That number roughly represents the number of flights that United operates from Newark today. Given the relative domination of the Newark market by Continental today (64% of enplanements are on Continental or Continental Express), this requirement does not seem unreasonable. While Cleveland and Houston both have a higher percentage of service operated by Continental, the New York City market is apparently in greater need of competition. Plus there is the fact that Newark is slot-restricted while the other airports are not.
Those slots will be granted to a new entrant in the Newark market: Southwest Airlines. The carrier will be leasing the slots from the combined United/Continental and is expected to begin operations in March 2011. The full complement of slots will be transferred by June 2011. They have not yet announced destinations for the 18 daily flights.
Unlike the recently proposed Delta/US Airways slot swap, the Continental/Southwest deal was welcomed by the DoJ. It seems to reason that having a significant number of slots go to a single stakeholder, particularly a new entrant, is a better competitive solution than spreading a limited number of slots across a broad collection of carriers, effectively limiting any one of them from providing significant service and competition.
With this approval the number of potential road blocks for the proposed merger diminishes quite significantly. There are still potential union issues and the Department of Transportation will eventually need to rule on a combined operating certificate. And there is the pesky little issue of the stockholders needing to approve the merger, but that seems quite likely given the large number of institutional shareholders. At this point things appear to be progressing rapidly towards this deal being done somewhere around Halloween, if not sooner.
Speaking of the union issues, it is no real surprise that the pilots’ unions have brought up the scope clause in their initial negotiations with the companies. What is somewhat surprising is just how aggressive they are being with their stance. Currently the United and Continental pilots have differing scope clauses for their operations. With United the limit for regional operations permits the operation of 70 seat aircraft by regional partners, Continental has a more restrictive 59 seat limit in the agreement with its pilots. The initial stance of the combined union is that there should be zero flights operated by regional carriers. Yeah, a bit extreme. They’ve made it clear from the initial announcement that they’re looking to be as restrictive as possible on this and the initial position is not too surprising as a jumping off point for the negotiations. Still, it is a bit unreasonable to expect that will actually be the ultimate agreement.
Related Posts:
Posted by Seth on August 28, 2010 under News |
Mexicana, formerly Mexico’s largest international carrier, has announced that they will cease all operations as of today. The airline filed for bankruptcy protection just over three weeks ago and shortly thereafter ceased ticket sales in most markets. Given the lack of new revenue it was only a matter of time before the airline would be forced to shutter its operations. Earlier in the week the airline’s parent company was purchased by a group of investors for an undisclosed amount of money. At that time the Tenedora K group suggested that they planned to recapitalize the company and bring them out of bankruptcy. It is not clear how the cessation of operations will affect those plans.
The cessation will affect not just the Mexicana mainline and international operations but also those of the domestic services from MexicanaClick and MexicanaLink. Those carriers were not part of the previous bankruptcy filing. Still, the new owners have made it rather clear that they are not going to operate as before and that drastic measures will need to be taken for the carrier to recover. As noted in their announcement of the flight suspensions:
Among the factors that have contributed to this announcement are:
- Grupo Mexicana’s fragile financial situation, which has deteriorated further over the last four weeks due to the previous management’s decision to suspend ticket sales, forcing the company to continue operating in the interests of passengers without receiving any revenue.
- No substantial agreements were reached to give companies in the Group long-term viability.
- Lack of effectiveness in the insolvency (Concurso Mercantil) process intended to protect additional financial resources available to the company so it could to continue operating.
- Given the uncertainty of the situation, certain suppliers have begun demanding advanced payment of services that are essential to the airlines’ operations.
While the new consortium does still intend to resume operations at some point it is not at all clear what form those operations will take. At least the writing was on the wall long enough that hopefully there aren’t too many folks stranded by this move.
Related Posts:
Posted by Seth on August 27, 2010 under News |
As airlines continue to search out new avenues of ancillary revenues they are becoming ever more creative. Passengers generally hate the idea of “nickel & dime fees” for things like checked bags but many of those same passengers love the idea of paying a bit extra on a flight to earn double or triple miles. Of course, the price point at which those miles are sold is often rather high (here’s an example from American Airlines; a similar story from the WSJ is here) but apparently there are enough folks out there obsessed with the idea of earning points that the airlines are ale to generate the extra revenue and not annoy their customers. Seems like a win for just about everyone.
Continental is joining the party in the next couple weeks; they’ve released the initial functionality of their product – OnePass Maximizer – onto their preview website that is open to a limited set of test users. Look for the new features to be live for everyone on continental.com on the 11th of September.
The regular award miles (“RDMs”) are priced at about 3 cents each, comparable to the the relatively overpriced rate that AA is selling their miles at. Continental is also introducing the ability to simply buy miles outright, up to 60,000 at a time. These miles are priced at 3.5 cents each so there is a premium to get there, but you also don’t have to buy a plane ticket first, so the value proposition is roughly comparable.
Unlike the other players in this space, however, Continental is selling more than just award miles. Customers who are so motivated can also purchase “Elite Maximizer” which includes elite qualifying miles (“EQMs”), getting passengers closer to elite status without requiring actually flying more.
The elite miles pricing is in addition to the RDMs so those miles are quite pricey. Assuming $239 for 5,291 miles in the example above, the price is only about 4.5 cents per EQM which isn’t horrible, especially considering how much higher airfares are this year than last. The problem is that you cannot buy only the EQMs. The total combined cost is much closer to 8 cents for both one RDM and one EQM. Valuing the RDMs at two cents each – which is actually probably a bit high on the buy side of the equation – means that the cost of the EQMs is five to six cents each. That’s not a very good deal at all. In limited situation where it is towards the end of the year and time becomes more valuable, maybe. But even then it is somewhat questionable if the points and status are really worth it if there wasn’t enough “natural” travel to get the status anyways.
There are some scenarios where Continental’s prices come down a bit – near 4 cents per EQM and 2.7 cents per RDM – but those are still not great price points.
In the end, the airlines are not offering these programs because they’re feeling generous. In certain circumstances, such as when US Airways runs a 100% bonus for purchased miles, the value proposition is somewhat reasonable. But for the most part these offers result in a less valuable approach than just buying the tickets outright. Buying 25,000 miles at 3.5 cents each is $875. In the vast majority of cases that one would be redeeming 25,000 miles for a ticket the actual cash cost would be well less than that, and that’s before things like the time-value of money are even considered.
Nice to see that they’re offering paths to incremental revenue that folks do not have to pay. Too bad they are such a bad deal for the customer. The fact that the airlines are realizing millions of dollars per month on these transactions speaks to just how obsessed with points the American public has become. Points are skewing buying habits even when they are not worth it.
Related Posts:
Posted by Seth on August 27, 2010 under News |
One of the conditions handed down by the European and US authorities for the approval of the American Airlines – British Airways anti-trust immunity application was the ceding of slots for service between London and certain US airports. Delta has decided to take advantage of this opportunity. They have applied to the appropriate authorities to serve both Boston and Miami from London’s Heathrow airport. Based on the limited number of slots at Heathrow currently held by the SkyTeam alliance, it appears likely that the application will be approved. If awarded the new service Delta would operate 10 daily frequencies from Heathrow to 6 different US gateways:
- New York JFK: 3x daily
- Boston: 2x daily
- Miami: 1x daily
- Minneapolis: 1x daily
- Atlanta: 11x weekly
- Detroit: 10x weekly
In addition to the new London service, Delta is also looking to beef up its presence in the Raleigh Durham market. Noting a significant increase in traffic from RDU this year, the carrier is adding 14 daily frequencies, increasing service by more than 25%. Included in these additions is service to three cities not currently served by Delta from RDU of which two have never seen Delta service from RDU. Additionally, Delta has recently opened a SkyClub lounge in RDU, demonstrating their commitment to the market.
Of course, it is entirely possible that part of the traffic increase is based on the fact that Delta has been running a rather significant promotion for flights from RDU and that when the promo ends the volume will decrease as well. Then again, maybe the fact that the region is pretty stable is really what is driving the expansion. Delta will be competing against Southwest on three of the routes. A number of the new frequencies are on the somewhat miserable CRJ-100 aircraft so that might not be so great either, but who knows.
Related Posts:
Posted by Seth on August 26, 2010 under News |
Airline irregular operations (IRROPS) are the bane of every traveler’s existence. There may be nothing quite so frustrating as getting to the airport and settling in for a trip, only to find that the gods have conspired against you. Maybe it is weather. Maybe it is mechanical troubles. Maybe it is just that you forgot to offer the right sacrifice to the appropriate deity that week. No matter the cause, IRROPS suck.
I’ve had my share of issues, from cancelations to delays to whatever else. I’ve even thought that some of them were actually bad situations. And then I got to talk to a guy who worked for an airline and listened to some of his stories. I laughed. I cried. And I realized that the silly little problems that I’ve had are nothing in the grand scheme of things. I’ve never been grounded in the middle of the Sahara, wondering if I can scrounge up a crate of oranges and an loaf of bread. I’ve never had to negotiate my way through immigration because I accidentally bypassed immigration while entering Germany. And I’ve never had a conversation like this with the counter guy at a McDonalds:
Thankfully there is no line at McDonalds. I order a dozen Big Macs, a dozen McChickens, a dozen fries and two hundred chicken nuggets.
"Please wait, I call my supervisor."
"Is there a problem?"
"My English not so good. I misunderstand you say want twelve Big Mac, twelve McChiken, twelve French Fry and two hundred nugget."
"Ja, zwei hunderd nugget. Das ist Mahlzeit fur die komplette Crew"
"Oh! Bitte schoen."
If you’re at all interested in what happens behind the scenes with airline operations, it is a great read. Highly worth an hour of your life. Check it out here.
Posted by Seth on August 25, 2010 under All You Can Jet, AYCJ, Trip Reports |
Unlimited flight access can be a dangerous thing. Even with (or perhaps because of) the somewhat quirky schedules and routing options JetBlue offers, it looks like I’ll be able to do a reasonable amount of damage (likely mostly to myself) during my month of flying. I managed to put the finishing touches on a doozie of a travel week last night. And the best part is that I’m actually going to be stopping in a few of the places in addition to simply flying a ton.
Starting on a Sunday afternoon, I’ll be flying to San Jose, California, mostly because I’ve never been to that airport, via Boston. I get back to New York on Monday morning and will immediately fly out to Dulles and then on to Long Beach and then up to Portland, Oregon. I actually overnight in Portland – 14 hours should be plenty of time for dinner and a good night’s sleep – before catching a ride on Amtrak’s Cascades train on Tuesday morning. Tuesday night is Seattle – Long Beach – Ft. Lauderdale arriving in Florida in the wee hours of Wednesday morning.
The second half of the week will include my island adventure for the AYCJ month. I’ll head first to Santo Domingo in the Dominican Republic for 36 hours from Ft. Lauderdale. I actually am taking a better timed, more direct route rather than flying to get some completely awesome lines on the map. I’d like to think of it as maturity but I’m pretty sure that cannot really be there. So I overnight in the DR and then from Santo Domingo I head 432 miles east to St. Maarten. Of course, I’m flying via JFK for a total distance traveled of 3230 miles. I’ll even potentially get a couple hours at home and to sleep in my own bed before heading back out to JFK for the 10:20am flight to the plane-spotting mecca. I’ll sit on the beach all day and watch the planes come and go before hopefully heading over to the French side for some decent food and nightlife (assuming I’m at all coherent at that point) and then back to the beach and the airport in the morning before heading back up to JFK.
All in, that’s 17,851 miles flown in a seven day span. Somewhat miraculously, I’m going to do it while only spending two of the seven nights on red-eye flights. I’ll get to spend time in the Pacific Northwest (and maybe even get a business meeting in there) and two Caribbean destinations. I’ll even be home in time for a (rather late) dinner in NYC on Saturday.
Not a bad travel week at all.
Related Posts:
Posted by Seth on August 24, 2010 under Trip Reports |
Spend enough time driving in Ghana and you’ll be singing this Bob Seger ditty, too. In my case it only took about an hour for the tune to percolate to the top of my head. Why? Because we’d endured two or three traffic “checkpoints” by then and, well, they mostly seemed to be shake downs.
I’m sure that there are plenty of typical traffic laws in Ghana. Things like no speeding, stay on your side of the road and mostly stay in a straight line. And we were mostly doing those things.There are taxes and registrations that need to be paid as well, and my driver had all of those covered and current. The stickers were right on the windshield. Still, we kept getting stopped and kept having to talk our way out of “fines.”
No seatbelts for part of the trip (I’m actually a bit surprised they worked at all) and apparently that’s an offense. Still, we actually had them on for most of the trip and the attempted fines kept coming. They also insisted on checking the trunk several times. I have no idea what they were looking for or what the rules are about carrying cargo, but apparently they take them somewhat seriously.
At one point an officer showed us a speed on a radar gun. I would guess that it was pretty accurate, but I honestly cannot say that I had seen a speed limit sign for at least 20 or 30 minutes at that point, so I’m not sure we were actually speeding. Still, my driver had the wonderful opportunity to get out of the car and chat with the officers. The speeding ‘violation” conversation ultimately was explained back to me in rather simple terms:
I told them that 85 [km/h] isn’t really speeding. Going 100 or 120 would be speeding but 85 is just normal driving. Once they realized I wasn’t going to pay they waved me on.
Of course, the whole conversation happened out of earshot and likely in a language I have no comprehension of, but my driver didn’t seem all that upset about the outcome so if it was anything else he did a pretty good job of hiding it.
At one of the stops the officer notices a couple small bills in my driver’s shirt pocket, maybe a total of CH¢5 (~USD$3.50). Some comments were exchanged and eventually one of the GH¢2 notes disappeared. The driver simply shook his head, chuckled a bit and we continued our drive. That was actually the only time there was actually a payment, but not for a lack of effort on the part of the cops.
Ultimately, the opportunity to get out of town and to see the countryside and get photos like these was worth a few extra Cedis and probably worth the hassle, too. Especially because the officers were so willing to talk to the white guy and see what I was willing to say.
Oh, and I got to sing this a bit…
Posted by Seth on August 22, 2010 under All You Can Jet, AYCJ, News |
One of the drawbacks of the JetBlue All You Can Jet (AYCJ) pass is that one still has to pay all the international taxes. I know that they’re almost all government-assessed fees, but it still sucks. And figuring out just how much they’ll add to the price of your booking can be a pain.
Well, the booking site went live a little early tonight (woohoo…I’ve got 5 bookings already!) so I spent a few minutes cataloging some of the taxes. Here’s what I’ve got:
| JFK-AUA |
$81.70 |
| JFK-BQN |
$32.20 |
| JFK-BDA |
$87.50 |
| JFK-BOG |
$93.70 |
| JFK-CUN |
$89.89 |
| JFK-KIN |
$97.54 |
| JFK-MBJ |
$92.82 |
| JFK-NAS |
$91.20 |
| JFK-POP |
$126.80 |
| JFK-PSE |
$32.20 |
| JFK-SJO |
$71.55 |
| JFK-SJU |
$32.20 |
| JFK-STI |
$126.80 |
| JFK-SDQ |
$126.80 |
| JFK-SXM |
$81.55 |
All taxes are calculated based on a round-trip itinerary leaving 14 September and returning 16 September except for SXM because that route doesn’t operate those days. In some cases the flights route via FLL or MCO but, where possible, I confirmed that the taxes are the same with and without the connection.
Hopefully this helps folks with their budgeting for AYCJ taxes.
UPDATE: JetBlue had a few destinations missing during my initial research. They’re available now:
| JFK-UVF |
$79.40 |
| JFK-BGI |
$75.70 |
| JFK-PUJ |
$126.80 |
Related Posts:
Posted by Seth on August 19, 2010 under Trip Reports |
After crossing the border between Aflao, Ghana and Lomé, Togo twice last week I have come to the conclusion that granola bars are incredibly valuable currency. The chocolates were good, too, but maybe too much as I think I overstepped my bounds with that gift. Oh, and the value of the Ghanaian Cedi is still the same. These are the lessons I took away from my little jaunt to Africa.
I understand the concept of a little gift, just to grease the skids. It is a way of life in many places and, indeed, in many places that don’t want to admit it. So I wasn’t all that surprised when I approached the immigration official at the border in Aflao, Ghana and she asked me what I had brought her as a gift. Okay, I was I little surprised. She caught me off guard and all I could think of that I had other than cash – and there was NO WAY that was going to happen – was a couple granola bars that I always have in my bag. They’re light, cheap (especially when pilfered from the Continental Presidents Club) and can generally be trusted to hold me over if I’m on the road and don’t have time to stop for a meal. And in this case they also made “F”, the immigration officer, very happy. We joked a bit, talked about where I was from and I thought nothing more of the incident.
Fast forward about 20 hours as I’m passing from Lomé back to Aflao. “F” is sitting at the same desk when I walk in to the building.
Hellooo, New York. Do you have any more granola bars for me??
Read more of this article »
Posted by Seth on August 19, 2010 under News |
Aircraft delivery flights are often quite the party. The airlines have a new toy to play with and they are a great opportunity to show partners, vendors, employees and customers the happier side of flying. Gaining access to those flights, however, is hardly trivial. It is doubly difficult if you’re not actually in the industry.
Continental has made it a bit easier for 40 folks to gain access to this experience through their OnePass Auctions website. The airline currently has 20 packages available for a delivery flight of a Boeing 737-800 on September 25, 2010. Winners will receive two tickets to Seattle, two nights hotel accommodations, dinner & drinks at Boeing and again for the launch party, ground transportation in Seattle and two tickets from Houston back home. And, of course, the aircraft delivery flight.
While normally spending frequent flyer points on something other than travel isn’t a great value, this auction is currently very inexpensive (25K points wins right now, though it will likely go up a bit) and the experience is truly a once-in-a-lifetime thing. Sadly it is limited to OnePass-branded Chase MasterCard holders which excludes a lot of folks, but it is still a tremendous opportunity if you have the card. Alas, I’ll be enjoying my AYCJ pass and will have to skip this one. I’ll definitely be bidding should the Dreamliner delivery show up on the site.
Bid here: http://auction.continental.com/cgi-bin/ncommerce3/ProductDisplay?prmenbr=73052744&aunbr=130595802&MoreSubs=.
Posted by Seth on August 18, 2010 under All You Can Jet, AYCJ, News |
You mean there’s more than one?
Indeed, there is. Not only does JetBlue have their All You Can Jet pass available again (in two different flavors) for 2010 but Sun Country has a similar pass available. So which one, if any, is right for you? Here are a couple deciding points:
How often are you going to fly?
Seems like a simple question, but this is really the crux of the decision tree. If you’ve got more than two round-trip itineraries in mind then you can start to consider the pass. Anything less than that and the deal is almost certainly not going to work out in your favor. Sure, you might make it work on the random already high-priced trip that you want to take next month, but those payoffs are going to be less common.
Where do you live?
If you live in Minneapolis then the Sun Country Fall Free for All pass is worth considering. If you do not, it is probably not. Their route network simply isn’t broad enough to cover enough other locations. Unless you happen to live in one of their other cities and are flying to Minneapolis a lot in September, then maybe.
If you live in New York City, Boston, Los Angeles (such that Long Beach is convenient for you), Ft. Lauderdale, Orlando or near Washington Dulles then the JetBlue AYCJ pass is worth considering. Hardly a surprise as those are the main hubs of the carrier. And, similar to the Sun Country pass, if you happen to be flying to those cities a bit during the month then it is potentially a good deal.
How far do you want to go?
Flying locally (say NYC – Rochester)? Probably not a great deal unless you’re going to do it every day. Those flights are still generally inexpensive so the pass isn’t particularly compelling. Even some of the NYC/Boston – Florida routes are still reasonably priced and not really compelling. For folks flying lots of longer flights – mid-con/transcon and Caribbean or Latin America routes – the pass is quite compelling. The international routes still require paying taxes so the costs will climb a bit, but the airfares will still be cheaper.
How tight is your schedule?
Got a real job and no vacation time? You’re certainly not going to use the passes effectively for long weekends or crazy holidays. But if you’re commuting for meetings or site visits then the passes save some serious coin. If you’re going to try to squeeze trips in on the weekends then the Friday/Sunday travel requirement is probably going to bite you to the tune of an extra $200. Still not so bad considering that those flights are generally more expensive anyways.
Oh, and the Sun Country pass lasts a full week past the JetBlue AYCJ pass so that helps amortize the costs a bit as well.
How do you feel about taxes?
Death and taxes – facts of life, right? Well, in the case of taxes on these passes, only sortof. The JetBlue AYCJ pass includes all domestic taxes, passenger facility fees, random governmental surcharges and other stuff. In other words, so long as you stay in the USA (excluding Puerto Rico) you’ll fly for free once you’ve paid for the pass. Sun Country is charging all those little fees for each trip booked with their pass. The costs should be relatively low – less than $10 on most tickets – but it can add up.
On the international (and Puerto Rico) travel front, there are also a number of governmental taxes charged. You’re going to be paying those either way, up to $100 on some routes. You’re going to be paying that whether you buy the pass or not, though, so I call that a wash.
How set is your schedule?
The JetBlue AYCJ pass is much more flexible than the Sun Country pass for change fees. Once a flight is booked on the Sun Country pass all changes will cost up with fees ranging between $50-75. On the JetBlue side, any changes more than 3 days out are free. That means you can make and change reservations as much as you want, so long as you’re a few days out from travel. Unless your schedule is very fixed, the Sun Country pass could actually become very expensive.
How obsessed are you with earning points?
If the answer is anything above “barely” then these plans are probably not compelling. Neither plan will permit unlimited frequent flyer point accumulation; both are fixed. For JetBlue it does not appear that the flights will earn GoBig or GoLong bonus thresholds, either. If you’re in it for the points you’re not going to benefit from these passes.
| |
AYCJ $699 |
AYCJ $499 |
Sun Country $499 |
| Date limits |
Any day between 7 September and 6 October, inclusive |
No Friday or Sunday departures |
Any day between 7 September and 13 October, inclusive |
| Route Network |
60 destinations; codeshare/interline flights excluded |
29 destinations |
| Extra costs |
None for domestic (non-PR) flights; government taxes for international/PR flights |
PFCs/segment fees on all flights; government taxes on international, too. |
| Change/Cancellation Fees |
None for 3+ days out; $50 inside 3 days. |
$50-75 for all changes. |
So, which pass is right for you? Maybe none of the above. I know that the $699 AYCJ pass is right for me, but I also plan to be flying most of the 30 days.
Related Posts
