Posted by Seth on February 2, 2011 under News, Trip Reports | 
I’m not sure who pissed god off this winter but we’ve certainly been dealing with some incredible weather the past couple months. In the past six weeks the airports up here have been closed more than I can remember happening in the 12 years I’ve lived here. We’ve had a ton of snow and, last night, a solid half inch of ice.
The good news for me is that I don’t really have to commute for work and I have – quite fortunately – missed all the flight cancellations thanks to not having much booked or just being lucky.
As penance for my good fortune I’ve helped out at our building with clearing the snow and ice off the steps and sidewalk. Better workout than going to the gym and less of a chance of falling down on the way, though I did fall once the other day.
Even if you’re stuck amongst the thousands of cancelled flights in these storms, it is hard to fight with the beauty that they present. Just try not to slip and fall out there.
Posted by Seth on December 24, 2010 under Trip Reports |
Sure, it was blustery and cold outside, but that doesn’t make a winter afternoon in upstate New York any less beautiful. Indeed, the cold added to the beauty in many ways. The gorges that run through Cornell University’s campus truly are beautiful and when not trudging through them just to get to class it offers the opportunity to go slow and actually enjoy the view.
In addition to the natural beauty of Ithaca it also still has some rather interesting and entertaining small-town business experiences to behold. Walking through the Farmer’s Market I was somewhat surprised to overhear a conversation between a vendor and customer detailing a purchase and return from two years prior. The original hat didn’t fit but the shop offered only a credit, not a refund. No paperwork or receipt, just a promise that they’d honor the exchange if the customer stopped back by and reminded them of it.
So the customer did. Two years later, a quick “Hi, I’m Mr. xxxxx” was greeted with a happy “Welcome back; go ahead and pick the hat you want.” Certainly not the type of business arrangement I’m used to experiencing but I suppose it works.
Gotta love a small town.
Posted by Seth on September 27, 2010 under frequent flyer, Internet, News |
Apparently the airline industry is bored when there isn’t enough merger activity going on. Southwest and AirTran have ramped that pace back up again, with the Dallas-based carrier announcing a planned $1.4 billion buyout of AirTran this morning. The carriers expect the deal to close in the first half of 2011 with operations merging in 2012.
So those are the facts, at least as much as are available now in the early stages of the news discovery. What are the big open questions out there regarding the merger?
WHY?
OK, so this is both a very easy and very complicated question. Southwest has struggled of late to enter new markets, in part because it is harder to find underserved destinations and in part because there are significant barriers to entry in major markets like Atlanta, New York City and Washington, DC. With this purchase the carrier picks up – at a relatively bargain price – significant slot portfolios in all three of those cities. The slots at Washington’s National and New York’s LaGuardia airports are particularly valuable to Southwest.
Somewhat strangely, the Associated Press is reporting the move as an effort by Southwest as seeking “entry into a number of smaller markets.” That makes very little sense. Not only does Southwest already serve many small markets, including most that AirTran serves, but the value is in the larger markets. Southwest fought strongly to defeat the proposed US Airways – Delta slot swap at LGA/DCA in an effort to gain access to slots at those airports. When that failed they simply bought the slots they wanted.
The Atlanta market is nothing to sneeze at, either. While Delta has successfully fought off small entries on a few occasions (e.g. JetBlue’s efforts a few years back), AirTran has established themselves quite solidly in the market there. This move opens up that entire market to Southwest in one quick move.
International?
Southwest has historically only flown domestic routes. They’ve talked about code-sharing to gain international service but those deals have been delayed or canceled recently. This move gives them established service in Mexico and the Caribbean. CEO Gary Kelly stated in the analyst call that the carrier is committed to going international as part of this move. The destinations that AirTran serves should meld nicely with the Southwest operations so that decision isn’t such a surprise.
Fleet commonality?
Southwest is been a Boeing 737 customer and solely operated that type for a long, long time. AirTran operates a fleet of 737s and 717s. There was previously some discussion on retiring the 717s as they start to age – some are 10ish now – and it would seem that the new carrier could simply retire the type completely and keep most of their operations intact based on sharing in the Southwest 737 fleet base. The official statement today says that they will be keeping the 717s in the fleet but it would not be too surprising to see that stance change in the coming years.
In-flight products?
AirTran offers a first class product. They also offer in-flight entertainment. They offer food for purchase. Southwest offers none of those things. Both carriers offer in-flight internet connectivity, with AirTran having deployed the gogo product from Aircell fleet-wide. Southwest is in the early stages of rolling out Row44’s satellite-based system fleet-wide.
There are a lot of things that will need to be reconciled on that front. I expect that the gogo-equipped planes will convert to Row44 eventually. Once the 717s are retired there are not all that many 737s to add on to the Row44 deployment and Southwest holds quite a bit of pricing power on that front since they are the sole commercial customer for the product today.
On the seating front I expect that the first class sections will be removed from AirTran’s planes. Perhaps they will pursue a hybrid option comparable to JetBlue’s Even More Legroom product but that seems unlikely, particularly as Southwest seems quite satisfied with their open seating policy and their “fewer fees” marketing mantra, even if that isn’t completely true in terms of actual operations. Still, there doesn’t seem to be a sufficient demand in the business model to keep the first class seats around so those will disappear.
Loyalty Programs?
The loyalty programs of the two carriers are rather different and Southwest is long rumored to be working on a revised Rapid Rewards program expected to launch eventually. It seems highly unlikely that AirTran’s A+ Rewards will trump the Rapid Rewards program as part of this merger. Even with the uncertainty surrounding the timeframe for the revised Rapid Rewards, the program is bigger and more established than A+ Rewards.
Fares?
The quotes from Southwest are touting the “Southwest effect” and their intentions to bring lower fares to more customers. Unfortunately, that plan does not seem to mesh with the reality of the merger. AirTran already generally offers downward pricing pressure in markets which suggests that there is not necessarily a lot of room for fares to move with Southwest taking over. Connecting the two networks will offer a bit of expansion in potential for low fares but it does not seem conclusive that fares will be cut for consumers.
Moreover, it ignores the effect on airports where Southwest becomes the dominant carrier and sees little competition. In such cities, including Oakland and Albany, fares actually have increased faster than the average across the country.
Finally, any loss of competition almost certainly will lead to increased fares for passengers. Supply & demand doesn’t work perfectly in the airline industry but it is pretty close at the macro scale in situations like this.
Conclusions?
Unlike the United Airlines – Continental merger which was billed as a combination of equals, this move is most definitely a buy-out of the smaller AirTran by Southwest. The main attractions – NYC, Washington and Atlanta markets as well as the international routes – are likely worth more to Southwest than the purchase price paid. The fact that they also pick up a few extra airplanes, too, probably doesn’t hurt the situation, but not really critical to the deal. Southwest is dictating terms and nearly everything associated with the combined carrier will be based on the Southwest side of the operation.
There are plenty of other little things that will play out in the coming months. But the near-term view suggests that Southwest is going to be growing and spreading their wings just a bit further.
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Tags: AirTran, Atlanta, Boeing, Continental, Delta, fees, frequent flyer, IFE, internet, JetBlue, merger, Mexico, New York, New York City, points, Southwest Airline, United, US Air, Washington DC
Posted by Seth on September 20, 2010 under All You Can Jet, AYCJ, Trip Reports |
For the second time during my travels on the All You Can Jet pass from JetBlue I had trouble with my crazy itineraries that involved an extra connection in Boston. Last week it was my desire to fly Sarasota – New York – Boston – Las Vegas rather than just New York – Las Vegas. This week it was an even more irrational desire. I really wanted to fly to San Jose, California.
Why the obsession with San Jose? It is one of only two domestic stations that JetBlue flies to that I haven’t yet visited. I really wanted to get there during this AYCJ period. Even if it meant missing my return flight. Yeah, like I said, bad idea.
Shortly after I made it to Boston I noticed that my connecting flight was orange on the monitor – delayed. About two hours. I originally had built the trip with a 2:25 connection so the two hour delay was not critical initially but it was definitely going to be tight. Still, I made the decision to press on with the trip. I really wanted to get that visit to San Jose. It was only after we were fully boarded and the door was closed and we took an extra 10 minute ground hold after pushing back from the gate that I knew I was screwed. Alas, there was nothing to do at that point but enjoy the flight.
About half way through the flight I was chatting with Rodan and Ashton, two of the awesome flight attendants working the trip. Joe, a flight attendant deadheading out to SJC to work the return flight. I was asking Rodan to help me out by asking the captain to call ahead and let the gate know that there was a connecting passenger on board in hopes that they wouldn’t close the flight out 10 minutes early like they have a habit of doing. It was then that Joe piped in, noting that JetBlue only has one gate at San Jose.
Based on when we were going to arrive the New York flight was going to be just getting ready to push back. It was quite likely that they’d push that flight and then let us pull in to the gate. In other words I’d be watching my flight leave without me from my seat. My hopes were further thwarted when Rodan reported back that he’d spoken with the pilot and we were actually even later than expected getting in to San Jose.
I had missed my flight. Not good.
Read more of this article »
Posted by Seth on September 16, 2010 under All You Can Jet, AYCJ, Trip Reports |
I really need to rethink my travel plans for this All You Can Jet pass. I’m on day 10 – only 8 of which I’ve been traveling – and I’ve already watched sunrise on half those days. Today was yet another morning that I got to see the beauty that is sunrise. Sure, I was bleary-eyed having just flown in on a redeye with only a couple hours of sleep, but fortunately for me the camera does most of the work once I point it in the right direction.
Posted by Seth on September 13, 2010 under All You Can Jet, AYCJ, Trip Reports |
I was originally intending to spend today out and about in the area surrounding Las Vegas. Maybe a trip to Hoover Dam or out into the red rock formations that are in the area. It was finally an opportunity to do the “other stuff” that generally seems to get skipped over between shows, gambling and drinking when I’m in Vegas with friends. Alas, it was not meant to be on this trip either.
Just a day after I booked my non-refundable hotel room for Sunday and Monday nights a colleague informed me that we had meetings in Los Angeles on Monday during the day. Well, at least flying to get to the meeting would be free since I had the All You Can Jet pass.
Studying the flight schedule I also figured out that I could fly in to Long Beach in the morning and fly back to Las Vegas from Burbank. The latter flight is a new line on my map so I’m particularly excited about that, especially since I missed out getting the new Boston – Las Vegas line yesterday due to weather in New York City.
And my meetings were in an office building that overlooks the south runways at LAX. Waiting for my colleagues to arrive I sat in the park by In-N-Out and watched the planes come in, including a pair of Japanese 777s back-to-back. Very cool.
Each of the three airports has its advantages. Both Long Beach and Burbank are relatively tiny, meaning easy to get in and out and deal with rental cars if necessary. That’s always a plus, especially when you do something absent-minded like I did and forgot to book the car. Whoopsie.
Long Beach also offers a great restaurant upstairs in the terminal building. There is a patio outside with phenomenal views of the field (though the glass could use a cleaning) and the free wifi reaches up there. I was able to get a couple hours of work in before the meetings while enjoying a cool Southern California morning.
Both Long Beach and Burbank have ramps to board the planes rather than jetways. Burbank has one distinct advantage, however, in that boarding happens from both the front and rear doors. This means passengers get to walk out under the wing to get to the back door. I love that.
Just another great day of jetting, even if it did include work most of the day.
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Posted by Seth on September 12, 2010 under All You Can Jet, AYCJ, Trip Reports |
Today is a day of a couple firsts for my flying on my JetBlue All You Can Jet pass. I get a new airport – Sarasota/Bradenton (SRQ) – and a couple new lines on my route map. SRQ-JFK is the “easy” new one I am getting. I’m also going to be flying from Boston to Las Vegas later on this evening which will also be a new line for me. It also almost created quite a problem for me with my carry-on bag.
Due to a rather interesting boarding process in Sarasota I ended up basically one of the last folks to get on the plane. No room for my bag in the overhead. Were it just a normal routing I wouldn’t care but I’m flying every day for the next five and I’d like to have clean underwear eventually during that time. Plus the chances of my bag ever catching up to me should it get delayed are pretty low. Needless to say, I started to freak out a bit.
The flight attendant, Michael, was trying his best to help out but when I started to try to explain my itinerary I realized that it wasn’t going to do any good. I just waited for the gate agent to come down the jetway with the bag tags. The conversation went roughly like this:
GA: What’s your final destination?
Me: Las Vegas.
GA: What flight number?
FA: He’s connecting via Boston.
Me: Yeah, Do you want to route it direct to LAS or have it connect with me in Boston, too?
GA: Forget it. I’ll just tag it for a gate claim in JFK. Pick it up in the jetway when you arrive.
Me: THANK YOU! That’s way easier for me, too!
The best news is that I made it complicated enough that the agent agreed to tag it like a stroller so it should be brought back up to the jetway in New York City when I arrive. I’ve tried that before and have never been successful. Hopefully it actually works this time. If not I can go out and get it at the carousel but I’d rather not deal with the TSA again if I don’t have to.
I managed to get myself a free EML seat in row 1 for SRQ-JFK.There was no one in 1A/B/C so I just took 1A and settled in. Much better than a full row in the back. It also meant that I got to chat with the flight attendants some more, this time without freaking out over my bag. It was then that I finally got to explain why I was flying to Las Vegas via Boston: because I wanted the new line for my map. The response I got was the title of this post, “Oh, I just thought you were crazy.” I’m pretty sure that I am and that my flight patterns prove it, but if they’re willing to give me the benefit of the doubt I suppose I should take it.
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Posted by Seth on September 3, 2010 under Trip Reports |
It is a nearly universal fact of life: Flight delays suck. And yet, as I sat in the Delta SkyClub last night waiting for my flight to depart, I could not have been happier about the delay of DL 164 from New York City’s JFK airport to Dublin. Originally scheduled to depart at 10:40pm, the flight left nearly two hours late, at 12:34am the next morning. Why should I care? After all, I arrived this morning in Georgetown, Guyana, not Dublin, Ireland. Actually, that’s exactly why I care.
It turns out that Delta doesn’t really think that the couple very late night departures they have out of JFK – namely Bogata and Georgetown – really need lounge access. The Dublin flight is actually the last flight out every night that rates lounge access. On most days the lounge would be closing up right as I got to the airport, three hours prior to my flight. Instead, I got to enjoy the rather nicely renovated facility for a couple hours beyond its normal operating hours, complete with a couple free drinks and all the Biscoffs I could handle.
So, yeah, I was cheering on that flight delay. Didn’t make me too many friends in the lounge as the Dublin passengers came and went three different times when they thought their flight would be boarding, but I made out just fine.
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.
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Posted by Seth on July 21, 2010 under News |
Following on the approval granted by the EU last week, the US Department of Transportation has approved the request from American Airlines, British Airways, and Iberia to have anti-trust immunity on their service in the highly competitive and lucrative transatlantic market. The approval was granted 12 years after AA and BA initially requested such permission and after being denied repeatedly for most of that interim period. The approval is not without conditions, but generally they are minimal compared to the benefits that the airlines will receive from this approval.
The airlines will be required to give up 4 daily slot-pairs at London’s Heathrow airport, two of which will be ear-marked for service between London and Boston. This divestiture requirement is less strict than that required by the EU and significantly less than some competitors, namely Virgin Atlantic, would have liked to see. The DoT dismissed Virgin Atlantic’s concerns rather abruptly,
Furthermore, Virgin Atlantic’s analysis of the constraints at Heathrow airport does not prove that the agreements are anti-competitive and should, therefore, be disapproved. We directly addressed the issue of Heathrow access in the Show-Cause Order. Even though the immunized oneworld members will collectively hold almost half of Heathrow slots, there are still a number of other competitors at Heathrow. There are also some important mitigating factors that Virgin Atlantic does not adequately consider. First, since the provisional application of the U.S.-EU open-skies agreement, at least three major airlines have begun serving the United States from Heathrow, and the overall U.S.-Heathrow market has enjoyed an expansion and diversification of services.27 The new entrants have enhanced competition and will continue to exert competitive discipline in the market when the joint venture is implemented.
The DoT is correct that there have been a number of new entrants into the Heathrow market but those companies have paid a sizable sum for those slots. Moreover, fares have increased significantly in the US-London market. It is not clear that competitive discipline has truly remained even with the competition, and this approval will reduce competition in the market.
Also interesting in the filings is the support that the oneworld partners received from parties who are exposed to potential harm from the move in terms of reduced competition. The Dallas-Ft. Worth airport authority supported the application even though BA and AA are the only carriers offering non-stop service to Heathrow from the airport. The fact that is is a major hub for AA certainly doesn’t hurt the claim, but ultimately both the airport and the DoT are supporting the idea that connecting traffic is sufficient to preclude anti-competition concerns.
As DFW pointed out in its reply, the connecting services available in the nonstop overlap markets discipline the fares charged for nonstop service. For example, in the case of the Dallas/Ft. Worth-London route, which concerned Virgin Atlantic because it will effectively have one competitor in the nonstop market following the transaction, we determined that approximately one-quarter of the passengers already use connecting services in the overall city-pair.
The approval of this request was not at all unexpected, though the very light divestiture requirements are somewhat so. The DoT has previously approved similar deals for SkyTeam and Star Alliance; continuing to deny similar benefits to oneworld would amount to a regulatory competitive disadvantage being applied to the carriers. Fares will be higher in many cases, not lower. It is rare that reducing competition results in anything else; that the DoT can suggest otherwise is disheartening. It is even more confusing when considering the restrictions that the DoT applied to the proposed Delta/US Airways slot swaps which would have similar impact on competition.
The DoT release can be found here and the full report here.
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Tags: American Airlines, Boston, British Airways, frequent flyer, Iberia, London, New York, New York City, OneWorld, points, SkyTeam, Spain, Star Alliance
