Posted by Seth on October 4, 2011 under News | 
October 1, 2011 saw 129 pilots retire from American Airlines, an increase over the already high 111 retirees from the prior month. The number of recent retirees is now significant enough that it has the potential to impact the operations of the airline, preventing them from flying their schedule.
The retirees are apparently are still concerned about the long-term financial viability of the company and chose to get out while they could still maintain the 60-day back-dating option on share price for their retirement package. Given the news yesterday of impending bankruptcy for the company the move by the pilots doesn’t seem all that far-reaching.
The efforts to mitigate the impact bring a whole new collection of issues to the forefront related to the negotiations between the union and the airline. The airline has reduced some long-haul flying and altered the schedule to require fewer pilots. They have also proposed a "relief plan" to the union, though it is not clear that the pilots are interested in accepting that offer.
It should also be noted that the number of retirees is not, at the absolute level, a disaster for the company. There are many others available and many on furlough who can be brought back to help cover the issue. But there is a notable time requirement for the training to get them back on board which will prevent things from running seamlessly.
Lots of fun to be had down in Fort Worth these days.
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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.
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Posted by Seth on August 4, 2010 under News |
After filing for bankruptcy protection yesterday in both Mexico and the United States, Mexicana, the oldest airline in North America, has ceased ticket sales in most markets. This cessation occurred at 7pm EDT today, August 4, 2010. The company insists that it will continue to operate flights for passengers who have already booked seats but that seems increasingly unlikely as the ability to generate further revenue to fund operations has been terminated.
The bankruptcy filing yesterday was half of a double-whammy of pain that the airline recently incurred, The US government also downgraded the ratings of the entire aviation operation in Mexico, effectively terminating all code-share flights for Mexican airlines. This move drastically reduced the number of passengers and the revenue flow on trans-border flights.
The airline is seeking to rewrite pilot and cabin crew contracts, slashing them by huge amounts in an effort to compete with lower cost carriers at home and abroad. The unions were not particularly amenable to such cuts so the airline is now looking to rewrite the contracts while in bankruptcy.
The move could not come at a worse time for Mexicana’s global alliance partners in oneworld. The major players in the alliance, American Airlines and British Airways just received approval of their anti-trust immunity application, a move that was expected to significantly increase revenues for the two in the transatlantic market. Losing a major partner for Latin America will definitely hurt their alliance and revenues. Considering that American was one of the only carriers in the USA to post a loss last quarter, suffering a blow like this does not engender much confidence in the near-term financial outlook.
Posted by Seth on March 12, 2010 under News |
Sun Country Airlines, a small carrier based in Minneapolis that focuses mostly on leisure routes, has announced their intentions to start transatlantic service this summer, connecting New York City to London’s Stansted airport once weekly. The service will depart from New YorkMinneapolis on Friday evenings with return flights scheduled on Sunday mornings. The aircraft will remain at Stansted overnight on Saturday.
The Stansted airport is only marginally truly a London airport. It is about 45 minutes and £18 away from Liverpool Station by express train. Still, it opens a fourth airport offering service to New York City back up to London residents and it offers some convenience for residents in the northern suburbs.
The Stansted – New York route was served previously by Eos airline, an all-business class carrier, and American Airlines. American fought Eos aggressively on price, and the upstart carrier eventually was forced into bankruptcy and a cessation of operations. Shortly thereafter American suspended service on the route noting that it was not profitable. The Dallas-based carrier has not yet indicated whether they intend to restart operations on the route given the new competition but it seems unlikely.
The service is expected to be operated on the carrier’s 737-800 aircraft making Sun Country the only operator of coach or mixed configuration 737s crossing the Atlantic at this time. The necessary ETOPS certification was accomplished in late 2009 so there are no limitations to offering the service at this point. Pricing and final schedule details have not been released and initial inquiries to the Sun Country press office have not yet been returned.
UPDATE (17 MAR 10): The service will be from Minneapolis with a technical stop in Gander on the Canadian coast, not via New York City. So very disappointing for me.
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Posted by Seth on January 5, 2010 under News |
Airline bankruptcies are never a good thing and it is certainly a terrible way to start the new year. But such a filing was made by Mesa Air Group this morning with the carrier seeking Chapter 11 bankruptcy protection.
Dan over at Things in the Sky has a pretty good review of the filing and potential impact it may have. Most notable is that the regional carrier seems to think that this will help them receive legal relief (or at least resolution) more quickly in cases they have pending against Delta and United Airlines regarding the larger carriers terminating regional services. But even if Mesa wins those lawsuits I’m not sure the cash is enough to help them deal with the large number of regional jets they’ve got lying around now with no customers.
The Mesa operation in Hawaii, go! Airlines, is excepted from the filing so that operation is running as normal right now. That seems strange but I’m sure there is a legal reason to do it that way.
Posted by Seth on September 25, 2009 under Uncategorized |
US Helicopter, the service that provides connections from Newark and JFK airports to two heliports in Manhattan, has suspended all service, both scheduled and charter. According to the release on their website it is a “standown” of service and they will be reorganizing their operations with an eye on restarting service in November.
We are temporarily halting all service as we regroup to add aircraft to our fleet and introduce new routes. This ‘standown’ of service applies to our scheduled flights as well as our charter service. We plan to return to the skies of New York – a bigger and better airline – by late November. For information on refunds for tickets you hold for future travel, please contact your credit card company for a credit or refund. We apologize for any inconvenience this may cause and we look forward to serving you again very soon with our 8 Minute Airport Shuttle.
While this certainly is unfortunate, it is also not all that surprising. The two times I used the service I was the only person on the helicopter. They recently offered a huge sale – $59 each way – in an effort to drum up some cash but it doesn’t look like it was enough. I hope they are flying again in December and that they have the deal on offer; I’ve got a trip planned and it would be fun to do it again if it is cheap. But at $159 each way the value just doesn’t seem to be there for me. And apparently not for enough other people either.
Posted by Seth on September 16, 2009 under Uncategorized |
Several weeks ago there was a big kerfuffle in the frequent flier world when some reporters started talking about airlines going bankrupt and the mileage programs disappearing. The carriers cited – big ones in the USA – were arguably at risk of going bankrupt, but there was essentially zero risk to the points. Why? Because another carrier would buy the program as one of the few valuable assets the bankrupt carrier had and they’d honor the accrued points in those programs. At least that’s the way it would happen most of the time.
Then there are the other, smaller carriers that go under, and the points simply vanish. Such is the case with Greece’s Olympic Airlines and their Icarus loyalty scheme. They’ve announced their liquidation, effective at the end of the month. And they’ve also made it clear that the Icarus program expires at that time, including all points.
Dear Members,
As you maybe aware, Olympic Airlines will enter into liquidation and a new privately owned Airline Olympic Air will be established.
Consequently, we would like to inform you that the accumulated miles of Icarus Program of Olympic Airlines must be redeemed for domestic and international flights until the September 30th of 2009*.
*All flights must have been completed until the 30th of September 2009
The ICARUS FREQUENT FLYER PROGRAM will be terminated on 30th of September 2009.
Taking the opportunity we would like to express our appreciation for your continuous support during all those years.
Sincerely,
Olympic Airlines
The good news? If you’ve got some Icarus points sitting around you have two weeks to fly on them. But come the end of September, the points – and any tickets redeemed via the points – are gone.
Ouch.
Posted by Seth on August 18, 2009 under Uncategorized |
For the past couple years now, as airlines have teetered on the brink of bankruptcy with more than a couple tipping over, the common refrain heard across the industry is that the US commercial aviation industry needs to lose one more big player to bankruptcy. There is simply too much capacity and that is artificially keeping fares low, preventing the airlines from making money. Over the past 16 months or so we’ve been hearing over and over again how airlines are going to be cutting 10% here and another 10% there. And they have been cutting to some extent. So where are the profits? And were are the cuts?
The first quarter on 2008 saw approximately 261 billion Available Seat Miles (ASMs) flown. In 2009 the first quarter saw only 237 billion ASMs flown in the United States. In that same window US Airways only flew 17 billion ASMs. Continental flew 26.3 billion in that time frame and Southwest flew 24.2 billion ASMs. So we’ve seen a drop in capacity the equivalent of losing a major carrier. And it still isn’t helping.
Load factors are up. Way up. Carriers are reporting loads as high as 90% lately where 75% used to be considered pretty full. So with all those seats full and fewer planes flying around – precisely the recipe that was called for with the shuttering of a carrier – why aren’t the airlines seeing profits? Why aren’t yields going up?
Apparently there is actually more needed than simply cutting capacity out of the industry. Or there was WAY too much capacity to begin with. Do we still need to lose another carrier? I suppose that might be the solution. That would bring the US air travel industry back to levels last seen in early 2002. And those were particularly dire days.
But I’m also starting to wonder if there isn’t something else going on. Are the pressures on fares from the younger carriers too great for the legacy carriers to endure? Would losing any one of the legacies to bankruptcy actually change that fact? Certainly a carrier won’t just disappear. Even if they go Chapter 7 and cease operations the (profitable) remnants will be picked up in a hurry and put back to work, so the total capacity loss isn’t going to happen.
I’d love for the airlines to come up with some way to be profitable, but it seems that the common wisdom thus far actually isn’t playing out the way they all said it would. Methinks it is time for a different solution to come to the front. Anyone have any bright ideas?
Stats above from http://www.bts.gov/xml/air_traffic/src/datadisp.xml and airline 10-Q filings.
Posted by Seth on June 23, 2009 under TSA |
Verified Identity Pass, the company behind the “CLEAR” security lanes program at many airports across the United States, has ceased operations effective as of 11pm Pacific time June 22. That was last night. Their security lanes – which used to be available at a few dozen airports – are closed effective immediately. Here’s the notification that they sent to their customers:
Dear xxxxx
At 11:00 p.m. PST today, Clear will cease operations. Clear’s parent company, Verified Identity Pass, Inc. has been unable to negotiate an agreement with its senior creditor to continue operations.
After today, Clear lanes will be unavailable.
Sincerely,
Clear Customer Support
Verified Identity Pass
600 Third Avenue
10th Floor
New York, NY 10016
Short and sweet as far as notifications go, though they only gave about 3 hours notice to their customers which pretty much sucks.
The company and the associated program had a rocky life. The TSA used to perform background checks on the folks applying for the cards, making it seem somewhat reasonable that they’d move to the front of the security lines. Then that went away and the customers still went to the front of the lines. At the same time, however, those customers were still subject to ridiculous TSA policies, like still needing to show a photo ID after using their CLEAR pass and its integrated biometric features to verify that they were the person who signed up for the program.
In the end, the program only really was helpful at a handful of airports and it cost way too much – over $100/year – to really make much sense for most people. Considering that elite customers with the airline frequent flyer programs often received similar benefits at many airports the target market wasn’t really there for them. And it got even smaller when the economy tanked and the number of folks traveling by air dropped significantly.
I’d like to pretend that I’m sad to see another small business fail but in this case I’m actually really quite ambivalent. Sure, it sucks that a bunch of people are out of work, but the program was silly. They provided very few real benefits and created a tiered system of access to public services. I’m not really a fan of that, particularly when the actual benefits were so minimal. Had it meant a reduced screening or other real benefit maybe there would have been value, but that just didn’t happen based on the idiocy of the TSA.
Posted by Seth on November 19, 2008 under Uncategorized |
Southwest seems to be the only domestic carrier having any fun these days. Between their new code-share agreements, expansion into Minneapolis and general profitability (though not so much last quarter), they appear to be avoiding the difficulties that other carriers have been experiencing of late. Yes, they are cutting capacity overall, but they seem to be doing so with much more surgical precision than other carriers who are leaving markets completely and otherwise flailing about.
And now, Southwest has gone and made a bid to serve NYC’s LaGuardia airport. They’re bidding on the 7 slot pairs that ATA still owns in their bankrupt state. They are pretty much the only asset ATA still has and they are a huge asset. Southwest wants them, and they have the resources to bid on them, so things look pretty positive for their chances. It is not a done deal yet – the bids still need to be reviewed and a decision made by the bankruptcy judge – but things look pretty good on that front.
Where will Southwest fly with their 7 flights/day? It is hard to know for certain, though Chicago-Midway seems likely as one destination. And there will certainly be struggles for Southwest to operate in the LaGuardia structure, with the frequent delays, troubles in bad weather and slot details all affecting their operations. But 7 flights is certainly enough to have a significant impact on the other carriers in NYC, and that is a good thing for passengers. It also means that I might have the opportunity to consider Southwest now for some flights, which would be a big change for me.
