This week Southwest announced a rather significant milestone related to their integration with subsidiary AirTran. All flights on both carriers can now be booked as a single itinerary. There are a few limitations – most notably that international routes cannot be booked on the Southwest site – but overall the change means great news for AirTran passengers who don’t like bag fees.
Despite the merger there are a few policies where Southwest is rather more customer friendly which have not migrated to the AirTran side of the operations. Things like bag fees, for example, still exist on AirTran and they were recently raised. Similarly, change fees and re-fare policies on AirTran aren’t nearly as generous to the customer as they are on the Southwest side of things. Up until this past Monday you had to book on the AirTran site to get access to many AirTran routes and destinations. And that meant you had to accept the less customer-friendly policies. Today, however, other than the 8 international destinations served by AirTran, that is no longer the case.
As an example, take a trip from New York to Pensacola. Service into Pensacola is only offered on AirTran flights but they can now be booked using the Southwest site and the prices are identical.
Mixed carrier itineraries look similar on the systems:
Booking these itineraries on the AirTran site means you’re stuck with the AirTran policies. The press release states that any booking which includes a Southwest-operated segment should be exempt from bag fees but the other restrictive rules will still apply:
…[A]ny itinerary with a Southwest segment or that is purchased through a Southwest point-of-sale channel will not have bag fees for the first or second checked bag (weight and size restrictions apply.)
Also worth noting that points earning is dictated by the booking channel. If you book through AirTran you earn A+ rewards, regardless of who operates the segments. There are scenarios where that might be beneficial to the passenger to switch the booking channel depending on whether you want A+ credits or RapidRewards points.
Customers will continue to earn and redeem currency through the frequent flyer loyalty programs of their Marketing Carrier, regardless of the Operating Carrier they travel on. Customers should be enrolled in both Southwest Airlines Rapid Rewards and AirTran Airways A+ Rewards programs in order to earn currency from whichever airline they purchase a ticket.
Lots of decisions to make depending on which earns you the best points and has the best policies.
More cuts are coming to Delta‘s service at Memphis, a hub for Northwest Airlines prior to the merger of the two companies in 2008. Twenty-one flights will be cut as of January 2013, bringing the total number of daily operations below 100. Prior to the merger the two carriers operated a combined 238 average daily flights. The most recent cuts will include terminating service to Jacksonville, Florida and Birmingham, Alabama. Service to Amsterdam, the last long-haul service Delta currently operates from the hub, will also be ending per an announcement last month.
The status of Memphis as a hub for the Atlanta-based carrier is in doubt more now than ever. Delta’s PR staff is still noting the value of the operation to the overall operation, noting that there are still 47 destinations which will be served from Memphis. Still, as the service frequencies are cut and the focus shifts from connecting passengers to local traffic it seems likely that further cuts will happen; there isn’t sufficient local demand to support many of the routes.
The Memphis airport on the whole is seeing reduced service, down to fewer than 200 daily frequencies. The airport authority is working to attract Southwest to the airport, hoping that they will increase their service from the levels currently available via their AirTran subsidiary.
Slowly but surely Southwest is moving to phase out the AirTran brand following the merger of the two companies. And, slowly has definitely been the key to the integration. The company has previously tried to move some flights from the AirTran brand to the Southwest side of operations only to be forced back on certain routes due to technology limitations. But now, with their pilot and flight attendant unions on board, the company is ready to grow the route map for the Southwest brand. And that growth is headed to Puerto Rico.
As of April 14, 2013 the company will operate four daily flights to San Juan under the Southwest brand. Three will be from Orlando and the other from Tampa. These flights will replace service currently operated by AirTran. The AirTran brand will continue to serve San Juan from Baltimore, Ft. Lauderdale and Atlanta. Eventually all the operations will migrate to the Southwest brand but that appears to still be a ways off, pending significant technology upgrades, among other things.
Still, this is a significant milestone for the merged company.
Southwest is taking over some Key West routes from AirTran this week, also from Tampa and Orlando. Those are easier to change than the over-water routes.
When American Airlines suggested that soda spilling might be responsible for the failing of seat mounts on some of their planes recently it was laughable to many, self included. The news today of a soda causing damage to a plane is rather more believable, if not equally wacky. A catering truck crashed in to an AirTran 717 parked at the gate in Milwaukee late last week. The truck hit the plane at a fuselage joint point causing notable damage to the aircraft. As for how it happened, the driver reported that a beverage can became lodged under the brake pedal, preventing the truck from stopping before hitting the plane.
The Flight Attendants from Southwest agreed last week to changes in their contract which will allow them to work flights to international destinations or routes which require flying over water. The agreement, known as Side Letter 10, was approved by a narrow 53%-47% margin with ~57% of eligible employees voting. This vote was the second taken on the topic; the first failed with fewer members voting. The deal only covers “near international” destinations, basically the Americas north of Ecuador/Venezuela/Colombia/Peru. Should the company choose to expand to destinations further afield (e.g. Europe) there would need to be further negotiations on the contract. With this approval the company can move forward with planning their integration with the AirTran international service as well as expansion of that service.
The agreement is significant for Southwest and their flight attendants as it opens up several long-standing policies at the carrier to be changed. Redeye flights can now be added to the schedule, for example. There’s the potential for meal service, too; more than just a pack of peanuts. And certain flights will require FAs to be proficient in a foreign language. Big changes, indeed.
Flight attendants working redeye flights will receive a bump in their hourly rate. FAs who are language-proficient and working on a flight which requires such will be paid the foreign language speaker kicker even if there are more speakers on the flight than the minimum required. And all international flights will have a $0.50 bump in hourly per diem which will apply to the entire pairing, not just the flights which are international.
Also, flight attendants will now be required to carry passports at all times. The company will reimburse the expenses for acquisition but the FAs are on their own if they lose the passport.
Don’t expect huge expansion of international service in the immediate future, despite the contract approval. The company still also must upgrade their reservations systems to handle international travel. That is expected to occur at some point in 2013. Until then the AirTran service will remain separate from Southwest’s.
If you want to read more details on the arrangement the Transit Workers Union local 556 which represents the flight attendants produced a couple documents which are an interesting read: Tentative Agreement; FAQ.
When Southwest bought out AirTran they were quite up front about their desire to get rid of the 717s in their newly acquired fleet. Thanks to a new agreement between Delta and their pilot union, it seems like there is a deal on the table which will allow them to do precisely that. Assuming the pilots ratify the new contract Delta will lease 88 of the 717s from Southwest, putting them in to operation while also retiring the DC9-50s and some CRJs as well. The replacements will be in a capacity-neutral manner, which suggests more aircraft will be retired than will be brought in based on the seating densities.
The good news in this move is that fewer tiny regional jets generally should lead to a better in-flight experience for passengers. The bad news is that it may also lead to decreased frequencies as there will be fewer planes flying. Plus, the AirTran 717s are not known to be the most comfortable aircraft in the skies. That said, they are equipped with gogo’s in-flight internet service and Delta is also a customer of gogo so that should see the connectivity remaining in service.
As part of the deal with the pilots to bring the 717s into the fleet Delta will also be allowed to increase the number of 76-seat jets they have operated by regional carriers. These are not mainline pilot jobs, but the total number of regional pilot positions will likely remain steady as the smaller regional jets are retired and these are brought in to the fleet.
The overall position with the pilots at Delta seems to be quite positive these days. More flying will be mainline which means more pilots working for the parent company rather than a regional affiliate. It also seems relatively good for customers, with fewer of the small CRJs and the new planes all offering wifi and first class cabins. Seems to be mostly smiles all around.
As the integration between Southwest and AirTran progresses the company is working to integrate their loyalty programs. Today’s milestone in that effort was the announcement that points and credits in the two programs are now fungible between the two systems via an online interface.
At first blush this is a good thing. Making it possible for members to combine their points and take advantage of the redemption opportunities available via the partner is a good thing. It also provides an idea of how the company will value the points as the programs are combined in the future as the AirTran brand is retired. All good news, to be sure. That said, there are some bits about the conversion that are, well, interesting.
First up, it appears that Southwest will not permit AirTran credits to be converted to RapidRewards points; they can only be converted to RapidRewards credits. Given the move towards points rather than credits with the new RapidRewards program this doesn’t make a ton of sense given that they have an established ratio, but I suppose it is what it is.
Next, converting points doesn’t extend the expiry of them. They certainly didn’t have to do that but it would have been customer-friendly and useful. Not necessarily surprising, but a bit disappointing.
There is also the conversion factors in place. Under the plan 1200 points will convert to 1 A+ credit. That can be converted back to a RapidRewards only as 1 credit, not as points, but the rough math there seems to be a losing proposition. To get to 8 credits, enough for a one-way trip, would require 9,600 points. That same number of points is worth $160 at the Wanna Get Away fare levels if redeeming as points. Then again, for last minute tickets where the fare is high redeeming 19,200 points to get to 16 credits for a one-way unrestricted award seems to be a better value than getting only $160 worth of Business Select fare value for the same number of points.
Finally, I don’t understand why they chose to display graphics showing one set of numbers and descriptions showing a different set, albeit at the same ratio:
Definitely a bit strange, even if accurate.
Overall, nothing incredibly surprising or revealing in the system set up to handle these transactions. Good for customers in general as it opens up more options.
Southwest Airlines is pushing the City of Houston to add international service at Hobby Airport, their base of operations in the city. Unsurprisingly, United Airlines is objecting to the idea given their position across town with the bulk of the traffic out of Intercontinental airport. And in the middle sit the City and the airport authority, trying to figure out what the right thing to do is.
Since the acquisition of AirTran the formerly domestic-only Southwest is suddenly interested in keeping some of the international routes that the buy-out included and even growing their international footprint. No real surprise there, as the routes apparently make money. So they want to grow their international service options, opening up Hobby and potentially other airports as bases for such flights. Hobby doesn’t currently have the facilities to handle immigration and customs for commercial flights, so the city has to decide if they’re going to spend the money to build that out or not. Complicating factors include the limited runway length at Hobby and the limited growth opportunities for operations there given the current gate/airline situation.
The Houston Airport System issued its opinion on Monday, suggesting that the addition of gates and a FIS facility at Hobby was a good idea. They intend to add nearly 200K square feet of finished space and more than 17K square yards of apron space (no idea why they use different units of measure there) to accommodate the FIS facilities and also the aircraft which can access them. He project is estimated to cost $91MM and apparently Southwest is willing to pay a decent chunk of that through increasing the PFC at the airport by $1.50 per passenger. Only 60MM passengers to pay it back at that rate.
But there are some quirks to the plans. For one thing, the gates will only be sized to handle 737s or A320s. The runways at Hobby don’t support aircraft that are too much larger than that, but it still seems somewhat short-sighted to not account for at least 757-200s in the gate space. They aren’t even that much larger than the 737-900s that will be accounted for. Also, the gates are an interesting configuration: three of them will be arrivals only. I honestly have no idea what an arrivals-only gate is these days, but apparently they’re going to build some new ones for some reason. It was also rather disappointing to open up the HAS papers on their opinion to find completely illegible drawings of what is actually being proposed:
More interesting, however, were the financial impact numbers that the recommendation was accompanied by. Among them, there is the suggestion that 1.5MM new passengers will be handled through the airport annually because of the new facility. That’s more than 4000 daily through a facility which will initially only handle 400 passengers an hour, In other words, those passengers will be completely miserable as they pass through or the number of passengers predicted is completely bogus.
Also, the economic study suggests that the flights will contribute 10,000 jobs and $1.6Bn in value to the community. Of course, there is no explanation offered for how each passenger taking such a flight will generate $1000+ in value to the local economy of Houston, and considering many will only be in transit the numbers are even harder to believe.
And then there is the "Southwest effect" suggesting that any market the carrier enters suddenly sees lower fares. It conveniently ignores the impacts of Southwest driving competitors out of markets and then jacking fares up. In this case that seems somewhat unlikely given the competition across town, but it also remains to be seen whether the competitive effect will even exist in this case. After all, United has a history of ignoring cross-town airports as competitive markets when it comes to pricing (e.g. EWR v. LGA/JFK).
Finally, there are the niggling issues facing Southwest in their merger progress. Little things, like their computer systems still cannot handle interlining passengers between the Southwest and AirTran brands or that they actually cannot support international flights in the current Southwest systems. The former of these actually resulted in a number of flights to and from Atlanta reverting to the AirTran codes recently so as to be able to accommodate through passengers. And the company has indicated that it will be more than a year before they can address the systems issues.
It is quite likely that the new facility will happen at Hobby. Everyone seems keen to add a bit of competition in the Houston market, even if the new competition on offer is somewhat biased in its focus. Given the population of Houston and the distribution of passengers around the metro area it will even probably work out OK as far as numbers go. That said, the revenue and economic impact numbers seem highly skeptical, so who knows. And with the passengers – even the ones not using the new facility – footing the bill, it isn’t necessarily clear that this is a good thing for the market.
JetBlue and WestJet were the winners of the auctions for landing slots at New York City‘s LaGuardia airport and Washington, DC‘s National airport according to reports. JetBlue had made it clear that they intended to bid on the slots and their win there is not particularly surprising. WestJet is a slightly bigger surprise (and only won at LaGuardia); the carrier appears ready to attack the "golden triangle" commuter traffic from Ottawa, Toronto and Montreal to New York.
On the JetBlue side there isn’t any particular indication yet of what the routes will be used for (or even an official confirmation that they won). With an equal number in both DC and LaGuardia it would be possible to take on the US Airways and Delta Shuttle operations, though that also seems unlikely; the market doesn’t need a third player in that space. There are enough other routes that could be operated from the two airports which makes Shuttle service seem unlikely. And with $72MM invested in acquiring the slots it seems to make sense that they’re going to want to maximize revenue, not just attack other established markets.
Most surprisingly to some observers is that Southwest apparently declined to bit at both airports. Southwest was the main instigator of troubles with the previous efforts to distribute the slots so their absence from the auction is somewhat surprising. That said, with their purchase of AirTran the need to acquire slots through the auction process was rather diminished.
The deal for US Airways and Delta to trade large chunks of their operations at New York City‘s LaGuardia and Washington, DC‘s National airports has received approval from the Federal Aviation Administration. The swap, which has been in limbo since it was initially proposed about two years ago, will see Delta increase its market share significantly in the New York area, bringing it on par with United Airlines which has held a significant lead thanks to the hub operations at Newark by its Continental subsidiary.
The final agreement calls for Delta to gain 132 slot pairs at LaGuardia in exchange for 42 slot pairs that US Airways will gain in Washington. An additional 24 slot pairs – 16 in NYC and 8 in Washington – will be divested by the carriers to competitors. The divestment plan, which pretty much matches the original proposal from years ago, will have the slots auctioned in a cash-only, blind bid offering managed by the FAA. With the Southwest buyout of AirTran and acquisition of those slot portfolios the Texas-based carrier is no longer in as strong a position to oppose the swap or the blind distribution of the slot divestiture.
In addition to the FAA review of the slot swap there is a Department of Justice Anti-Trust investigation ongoing for the transaction. The DoJ announced that they are no longer concerned with the anti-trust implications in the New York City market but they are still looking into the US Airways monopoly issues at National. If that is too significant an issue it could still result in the deal being scuttled but at this point it does seem like the deal is quite likely to go through.
This represents a significant shake-up in both markets. Delta has not been shy recently about wanting to attack the New York City market and taking a sizeable chunk of that market share from competitors. They will still be running a split hub environment with major operations at both LaGuardia and JFK airports but they’ll have significantly more traffic going forward. For the Washington, DC market the domination at National by US Airways will be much more significant (hence the continued DoJ efforts).
Still plenty of excitement and new developments to come on this front but things are finally back in motion after being stalled for so long.