Posted by Seth Miller on February 22, 2013 under Flying, Mileage Run, News | 
With the grounding of the Boeing 787 Dreamliner now in its 6th week and looking to stretch into several months the long-term impact on flight schedules is starting to build up. With no certainty of the planes reentering service anytime soon airlines are extending route cancelations or aircraft swaps, depending on the circumstances. For United Airlines the groundings are affecting a number of routes, even those not scheduled to operate on the 787.
United has officially removed the 787 from their schedule through June 5, 2013 (or they will be with this weekend’s schedule updates). The only flight on the 787 expected earlier than that is Denver-Tokyo, a route which was supposed to launch on March 31; the new launch date for that route is May 12th, a delay of 6 weeks. And that date is soft, depending on the 787s getting back into service. Because United has other routes scheduled to be operated by the 787 which are now being operated with other planes the ability to continue expansion efforts are also impeded.
United’s flights from Los Angeles to Tokyo and Shanghai, as well as Houston to Lagos, Nigeria, will continue to operate, but with the 777 rather than 787s. Flights between San Francisco and both Paris and Taipei, both scheduled to start in the coming weeks, are pushed back. Paris service is now slated to begin April 26th and Taipei is expected to start June 6th; these dates are several weeks after the originally announced route launch dates.
For me, the delay on the DEN-NRT flight creates a personal problem for me: I was supposed to fly on the inaugural. United is being quite flexible on rebooking and reroutes, including positioning flights to Denver, and so I now have to decide what to do. I’m still inclined to get the new line and I’d still love to be on the inaugural. Plus, I think I can make the timing work with another event near Denver that weekend. So that’s probably what I’ll do. But I’m tempted to get creative on the way home, extending my mileage run. Maybe a routing via Honolulu? Or something else. Hong Kong or Singapore might be a bit too much, I think. I’d love to get the Island Hopper in there, especially since I’m on a B fare so upgrades would be easier, but I want to do that flight on the daytime, westbound version so that doesn’t work out for me. Any other suggestions??
Tags: 787, Boeing, Denver, Dreamliner, Flying, houston, Los Angeles, Mileage Run, Paris, San Francisco, Shanghai, Tokyo, United, United Airlines
Posted by Seth Miller on November 26, 2012 under Flying, frequent flyer, News, PaxEx |
It is not clear that the future of SAS is a particularly strong one. The carrier is fighting against LCCs including Norwegian which is adding long-haul service as they take delivery of 787s in 2013. Plus they are saddled with high labor costs and relatively high debt loads and multiple hubs in a very tight geographic proximity. Oh, and they’ve recently been put on notice by their creditors that failure to cut some costs would see funding dry up. Perhaps not the most optimistic situation to be in.
And yet the carrier is looking to expand. They reached a compromise with the labor unions which should be sufficient for now. And, with that behind them for the near term, the route map is growing. SAS is going to try to survive through growth, not by shrinking. Here are the additional routes.
From Sweden:
- Stockholm to Innsbruck, Pula, Palermo, Cagliari, Thessaloniki, Tel Aviv, Pristina and Alanya
- Gothenburg to Nice, Pristina and Östersund
- Oslo to Salzburg, Berlin, Budapest, Santorini, Cagliari, Palermo, Pristina, Valencia, Malta, Lisbon, Athens, Tenerife and Pula
- Bergen to Dubrovnik and Antalya
- Trondheim to Split
- Stavanger to Antalya
- Copenhagen to San Francisco, Budapest, Prague, Newcastle, Cagliari, Palermo, Alanya, Thessaloniki, Pula and Biarritz
From Finland:
- Helsinki to Paris, Rome, Prague, Geneva and Östersund
- Kittilä to Turku and Tampere
This is an interesting collection of destinations. The mix between business and leisure is very much there. And some great new options for award seats should come from this, too.
Will it be enough to save the carrier? I suppose we’ll see soon enough.
Related Posts:
Tags: award, awards, bankruptcy, Copenhagen, Denmark, Finland, Flying, frequent flier, frequent flyer, Geneva, Norway, Oslo, Paris, PaxEx, Prague, reward, Rome, San Francisco, SAS, Star Alliance, Stockholm, Sweden
Posted by Seth Miller on November 26, 2012 under News |
I often enjoy reading economic analysis of the aviation industry. I usually feel like I’m learning something new and the nuance is generally interesting. I was quite surprised when reading an OpEd piece in the New York Times last week to uncover what would appear to be a rather ridiculous suggestion: Small and mid-size markets in the USA would benefit from foreign carriers being given permission to operate on wholly domestic routes. The basic claim is that there is insufficient competition in the market today, allowing fares to creep higher and planes to be more full. And service to small and mid-size markets is enduring the brunt of the pain; most of the "heartland hubs" (CLE, CVG, PIT, MEM, STL) have seen major capacity cuts in recent years, with their status as a hub in question. And the solution, according to Mr. Winston, is opening the skies over the USA to anyone who wants to operate here.
That is, unless policy makers do what they should have done a long time ago and allow foreign airlines, including discount carriers like Ryanair and global players like Qantas and British Airways, to serve domestic routes in the United States. Why, after all, should an industry that has ingeniously used free-market principles to squeeze the most revenue out of each middle seat be protected from competing in a real free market?
Well, we can start with the part about how that isn’t actually a "real free market" based on a lack of reciprocity in the other countries. And even if that were made available it still is an unlikely solution. Or at least not likely a good one. After all, what’s the value proposition being suggested? Apparently the key to improving the UA aviation market is to flood it with more capacity, driving down fares. But that increased supply will somehow also drive demand. Last I checked that’s not how the basic supply/demand curve works, though I will admit I dropped my Econ class after the first exam because I didn’t really like it.
There is a certain amount of discretionary travel demand which increases as fares drop below a certain threshold. I believe that number is roughly $100 each way these days. But just flooding the market with inventory to drive the fares down that low doesn’t mean that enough people will necessarily buy the seats in a volume which pays for the service. In fact, it is rare that flights operated at that discretionary demand point are profitable to the airlines at all.
Mr. Winston notes that passengers have likely saved $5bn annually thanks to Open Skies agreements between the US and Europe. Not surprisingly the airlines are trying to claw some of that revenue back, cutting service and striking joint ventures which allow them to cut costs and pool revenue and collude on prices. Are these agreements good or bad for passengers? If only measured by average fare paid then they are probably bad. But that’s not really the only metric. Look at the carriers who have gone bankrupt in the interim. For those customers – and those employees and creditors – the $5bn in annual savings means a lot of losses, not gains.
Mr. Winston also suggests that one upside of the competition is that it will help reduce unemployment:
Competition from foreign airlines would put downward pressure on wages, something that union workers may object to. But by reducing fares and expanding service, it would also increase the demand for air travel and related services — thus, presumably, creating additional jobs during a time of persistently high unemployment.
Can someone explain to me how cutting the salaries of US-based employees and creating an environment where the domestic airlines will struggle more to maintain their margins is actually going to increase the employment rates?
So if the fares are driven sufficiently low, to the point that they cannot cover the costs of operating the flights, then other airlines will want to jump in to the market, right? Certainly then Singapore Airlines will show up to operate on Sarasota – Cincinnati, making the service better and the price lower, right? That’s what is being claimed in the piece.
The reality is that opening up the US skies to foreign carriers would see those carriers do the same thing that pretty much every other start-up airline has done in recent years: cherry pick. JetBlue started by cherry picking routes between JFK and upstate New York or Florida. Virgin America has picked heavy business routes and seems to be losing a ton of capital doing so. Oh, and that’s with the fares higher now; things would be much, much worse for them were the fares depressed further.
So where can these foreign carriers make money operating in the USA? Certainly the grandmother trying to get from Sarasota to Cincinnati (his example, not mine) worried about fewer flights and higher fares won’t benefit from Qantas getting local traffic rights on their LAX-JFK flight. And even if Singapore Air could operate to Sarasota, why would they? The market demand there isn’t very high. So instead of the smaller markets getting more service the carriers who serve them today suffer from lower yields on their more profitable routes. That means they scale back the less profitable routes. So grandma gets even fewer options, not more.
Maybe easyJet or RyanAir could set up shop in the USA and make it work. But SkyBus certainly couldn’t. Maybe the others would actually serve the airports in the cities they advertise, but they often don’t in Europe. RyanAir’s idea of service Paris is an airport 60+ miles away. That’s like flying in to Trenton for service to New York City.
Competition is good. Monopolized markets are not very consumer friendly. But neither are unstable markets. A few people might win, playing in the margins, but the big picture effects of pursuing open skies on all domestic markets would be a disaster for the US economy. And for the passengers such a change supposes to help.
Posted by Seth Miller on September 30, 2012 under News, Trip Reports |
You, American Airlines, should no longer be flying across the Atlantic. You do not have the know-how. You do not have the equipment. And your employees have clearly lost interest in the endeavor. Like the country whose name graces the hulls of your flying ships, you are exhausted and shorn of purpose. You need to stop.
That’s how author Gary Shteyngart starts his trip report from a recent Paris – New York voyage on American Airlines. Well written and certainly gripping, though I’m not really sure it deserved to be published in the New York Times. But apparently this is pick on AA month and the NYT is getting in the game.
The short version of the story is a mechanical diversion led to an overnight in London, some trouble getting through immigration (because, as we all know, AA controls immigration queues at Heathrow), and then a second cancelation. Certainly not a great day for AA and not a great trip for the passengers, but also rather short of kafkaesque, the term used in the headline.
I have no idea why the Times thought this was worth publishing, other than that the first paragraph is pretty well written. And it was in the opinions section so I suppose he’s entitled to his. I’m just not sure why they thought the rest of us care about it so much. Or why the anti-America (the country, not American the airline) aspect is so tightly wound with his travel experience. Quite bizarre, indeed.
Posted by Seth Miller on July 8, 2012 under Flying, News |
Believe it or not, this is the spin that United Airlines is trying to put on their decision to start cutting routes out of Houston in the face of Southwest‘s plans to start international flights from Hobby in 2015. United suggested that the City approving the plan would lead to direct and immediate route cuts and they’re holding to that plan, with several route cuts announced in recent weeks. Comments offered on one of the most recent announcements – the cessation of service on Houston – Paris in October – leads to some interesting conclusions.
Speaking with the Houston Chronicle about the most recently announced cuts, United spokeswoman Mary Clark indicated that the routes being cut are generally money-losing operations. By choosing to cut them now, in the face of potential competition in three years’ time, United plans to stem their losses.
Clark said United had continued to offer service to the unprofitable locations, hoping they would turn around as Bush Intercontinental grows, but was prompted to nix them after the Houston City Council’s approval of Southwest’s Hobby proposal.
As part of that deal, Southwest agreed to pay for a customs facility and five-gate expansion at Hobby so it could begin flying in 2015 to the Caribbean and Latin America.
Clark said the Paris route hadn’t been profitable for more than two years.
"With Hobby operating internationally, we don’t feel we have the same growth prospects at IAH we had in the past," she said. "So we don’t expect these flights to become profitable.
"Our most prudent path is to eliminate the unprofitable flying now rather than continue to lose money."
Apparently, had Hobby remained closed to international flights, the most prudent path would have been to continue operating the money-losing routes for two years just to see if things shifted in the market. At least that’s how I’m reading this quote. Never mind that the airline will still offer at least four daily flights to Paris on their own aircraft and that from North America they can also offer connectivity via partners Air Canada, Swiss and Lufthansa as part of the A++ anti-trust immune joint venture which allows for collusion on pricing and revenue/cost sharing on the route.
The massive route network which United now has, one of the factors it routinely cites as a key value differentiator for its customers, is impressive. It also means that it is possible for man customers to be better routed through other hubs than only via Houston. It might suck for the folks living in Houston or Paris and trying to get to the other city, but there are a lot more passengers than just the O/D crowd.The number of folks who are losing a single connect routing to Paris is surprisingly low. And the company has to consider all its customers.
Honestly, it is a shame that they’re using the Hobby decision as an excuse here. The cuts were almost certainly going to happen anyways. But now they’ve got someone to blame for the actions they were likely going to make either way.
Related Posts:
Posted by Seth Miller on June 27, 2012 under Flying |
Apparently premium cabin bookings into London aren’t so strong right now; British Airways has launched another business class sale for travel into London and Manchester from most USA gateways at $2012, inclusive of taxes and fees. The deal books into I inventory and allows for travel on American Airlines or British Airways metal. It is valid for travel between July 16 and September 2, 2012, with a Saturday night stay required. It is the same price from the west coast, too, so if you’re in it for the miles keep that in mind. Oh, and if you’re in Hawaii it is just an extra $130 for the connection to the mainland, making this quite a reasonable run.
Even more impressive is that there are a number of packages available including 3 nights of hotel at very reasonable rates. No idea how the hotels will price out during the Olympics (and the flight options are tighter during the games, too), but if you’re still considering going and trying to pick up some tickets on the street I’d definitely take a look at this deal.
Oh, and just because they can, Air France actually has heaper fares from some gateways, assuming you don’t mind the connection in Paris.
More details available on the BA sale site here.
Posted by Seth Miller on May 27, 2012 under Flying, frequent flyer, News |
British Airways and JAL, partners in the oneworld alliance, have received approval from the Japanese government to formally launch cooperative marketing and revenue sharing efforts for service between Japan and destinations in the EU. JAL currently operates four daily flights from Tokyo to Europe (Paris 2x, London and Frankfurt) and BA operates 12 weekly flights between London and Tokyo.
The two carriers expect to begin their joint operations in March 2013. They have suggested that the approval will "benefit customers by providing better links between the EU and Japan, more choice, enhanced frequent flyer benefits and the potential to launch new routes." Most other ATI agreements have resulted in less competition which generally is bad on the airfare front, but the other benefits are generally quite good for consumers. It seems unlikely that this one will be much different on either front.
Related Posts:
Posted by Seth Miller on March 22, 2012 under News |
It wasn’t too long ago that the concept of the fuel surcharge in the context of airline tickets simply didn’t exist. The full price of the transaction was simply the ticket cost and the mandated airport and government taxes or fees and that was that. A few years ago airlines realized that they could manipulate the pricing systems a bit, charging a fuel surcharge rather than just raising fares and an ugly trend began. In theory the fuel surcharges would be relative to the actual costs of fuel and would decrease when those costs decrease, but that sort of behavior has not been particularly common.
Perhaps the most adversely affected group from these fees are those traveling on corporate contracts. Those deals allow for discounts on the fare paid but the taxes and fees are not subject to discount. By shifting the cost to the fuel surcharge the airlines have effectively killed a chunk of those discounts. The US government has finally caught on, however, and they don’t seem too impressed.
In a notice published in the Federal Register two weeks ago the Department of Transportation put the airlines on notice that they consider the current practice to be a violation of the unfair or deceptive trade clauses which they have the power to enforce. To that end, they are proposing that the airlines must change their behavior in two significant ways.
First, all fuel surcharges and any other fees which the airlines keep for themselves must be identified separately from fees which are paid to the government or airport authorities.
We have found, in reviewing airline Web sites, that many Web sites which detailed additional fees labeled all additional charges, government and carrier-imposed, as taxes when in fact carrier-imposed fees were often the major portion of these fees. Such displays were deceptive and in violation of section 41712.
This should help clear up the fact that a $100 base fare plus $650 in "taxes & fees" for a NYC-London flight is actually $550ish to the airline and $200 in real taxes (still obscene, but way better than the old way it was shown). Interestingly, they do indicate that it would be acceptable to have a single entry called "Taxes and carrier-imposed fees" rather than just "Taxes and fees"
Second, the airlines will be required to align the fuel surcharge component with the actual cost of fuel to provide the service, or at least a near approximation.
When a cost component is described as a fuel surcharge, for example, that amount must actually reflect a reasonable estimate of the per-passenger fuel costs incurred by the carrier above some baseline calculated based on such factors as the length of the trip, varying costs of fuel, and number of flight segments involved.
…
Therefore, the “fuel surcharge” of $476 in the above example, which is associated with a transatlantic trip originating in New York City, must be an accurate reflection of the fuel cost over some reasonable baseline for an individual passenger for that trip and the carrier should be prepared to detail the services and costs per passenger associated with its “Passenger service charge international.”
In other words, the numbers have to actually line up with something that vaguely resembles the cost of the service being offered. Take, for example, the fuel surcharges levied by United Airlines for non-stop flights from Newark to four nearby destinations in Europe (all rates are one-way for travel in late March 2012):
- Dublin – $101
- London – $219
- Paris – $248
- Amsterdam – $248
With a spread of less than 500 miles from the shortest to the longest, it is clear that the numbers do not reflect the actual costs of the fuel. According to the company’s 2011 10-K filing the cost for fuel averaged 4.77 cents per ASM. That puts the actual fuel cost per seat for the above flights somewhere around $150. And that assumes that there is a direct correlation from the fuel costs to the miles flown, something that doesn’t actually work out quite so directly. Plus, the DoT seems to think that the "surcharge" should actually reflect the difference over some acceptable baseline, not the entire fuel cost.
This might mean that base fares go up while fuel surcharges go down, leaving the final fare the same for most folks. Not a huge deal in the end if the number is the same, but at least the fares will more properly reflect the reality of what is being offered.
Posted by Seth Miller on November 22, 2011 under Flying, News |
Faced with "poorly performing" routes and an uncertain economic future, Delta has announced that they are trimming six international destinations from their Atlanta hub in 2012. One of the destinations, Shanghai, has been an on-again, off-again operation with limited service (currently only 2x weekly). The other destinations being cut – Athens, Copenhagen, Moscow, Prague and Tel Aviv – were all seasonal destinations which are not being reinstated as originally expected in the Summer ’12 season. Oh, and the timing of these cuts is a bit of a smack at the ATL airport authority. The airport’s new international facility is scheduled to open in 2012 right as demand is apparently drying up.
A few seasonal destinations from New York City are also being cut by Delta, including Manchester, U.K.; Budapest, Hungary; and Berlin.
But it isn’t all cuts for Delta. They are picking up the slack for SkyTeam and anti-trust alliance partner Air France, operating the Seattle – Paris route starting in March the day after Air France leaves the market. On that route it is most likely a fleet utilization issue as the two carriers share profits and expenses on many transatlantic routes thanks to the ATI arrangement. Delta will also be adding service between Detroit and Paris, likely for similar reasons.
There’s a lot more red on that map than green.
Tags: Air France, Athens, Atlanta, Berlin, Budapest, Copenhagen, Delta, Detroit, Moscow, New York City, Paris, Prague, Seattle, Shanghai, Tel Aviv
Posted by Seth Miller on November 18, 2011 under frequent flyer, News, points |
When British Airways and Iberia announced a couple months back that they were integrating their loyalty programs under the Avios moniker there were a whole bunch of folks (mostly based in the USA) who were pretty upset at the potential issues it could raise. At that time I took a somewhat measured approach, suggesting that there are a few areas in which folks might see benefits, mostly for those in the UK or Europe. Now that the details are out and we can look at the numbers I’m still not certain, but the program mostly seems to be a debacle unless you live in the UK or Spain and only fly on simple trips.
You didn’t want to connect, did you?
The single-partner award chart isn’t nearly as bad as previously expected, with a catch. Awards on a single partner now do not permit connections. If you require a connection for your itinerary then you redeem an award for each flight. That means JFK-EZE on AA would be one price (25K one way in coach) but connecting via Miami would add 7,500 to that total; connecting via Dallas is 10,000 more. So if you can position yourself to get to a hub gateway (or if you are lucky enough to actually live in one) then the numbers can be quite reasonable still. I queried ~150 city pairs on routes operated by wide-body aircraft by Cathay Pacific, Qantas and LAN and found a few routes where the numbers aren’t completely awful. But that assumes you’re at the gateway and want to go to the hub. A pretty significant catch to be sure.
Also on the connection front, it appears that folks based in Europe are going to feel the pinch of award prices rising. A trip from Istanbul to Paris sees a 4,500 point surcharge over a trip from Istanbul to London. Not all that surprising considering the rate on London-Paris is 4,500. In other words, even if you stay on BA metal for the journey you get hit with a connection penalty. This applies to flights originating in the USA as well, and the up-charge might be even more than you’d expect (ORD-LHR is 20,000; ORD-CDG is 25,000 while MIA-LHR and MIA-CDG are both 25,000). In other words, the award charts are very inconsistent and nearly impossible to decipher with any reasonable sense of reason.
Multi-partner Awards
The multi-partner award chart is unchanged and is shown below. With this scheme you are permitted up to 8 segments on an award, including an open jaw stopovers so long as the stopover is on the direct point of travel. That basically means only at hubs, which is also not particularly great, but also not atypical.
| Avios costs for multi-carrier reward flights |
| Miles in your journey |
Avios needed for an economy flight |
| 0-1,500 |
30,000 |
| 1,501-4-000 |
35,000 |
| 4,001-9,000 |
60,000 |
| 9,000-10,000 |
70,000 |
| 10,001-14,000 |
90,000 |
| 14,001-20,000 |
100,000 |
| 20,001-25,000 |
120,000 |
| 25,001-35,000 |
140,000 |
| 35,001-50,000 |
160,000 |
|
Business class reward flights: x2
First class reward flights: x3
|
Some "gems"
So, what are these "gems" I referenced in the thread title? There are a couple to talk about.
If you’re looking for flights operated by international configured aircraft and hoping for a bargain there are a few routes that come up as quite reasonably priced. Some have gone down from the prior charts, though, again, no connections are permitted any more so there’s that problem. Still, take a look at some of these routes with the decent redemption pricing (o/w, economy):
| AMM |
DTW |
30000 |
| AMM |
JFK |
30000 |
| AMM |
ORD |
30000 |
| AMM |
YUL |
30000 |
| AMS |
HKG |
30000 |
| BOG |
MIA |
10000 |
| CCS |
MIA |
10000 |
| CDG |
HKG |
30000 |
| CUN |
MIA |
4500 |
| CUN |
SCL |
20000 |
| FCO |
HKG |
30000 |
| FRA |
HKG |
30000 |
| HEL |
SIN |
30000 |
| HKG |
PVG |
7500 |
| HKG |
HND |
10000 |
| HKG |
ICN |
10000 |
| HKG |
KIX |
10000 |
| HKG |
NGO |
10000 |
| HKG |
LHR |
30000 |
| HKG |
MXP |
30000 |
| HKG |
YVR |
30000 |
| HKG |
JFK |
35000 |
| ICN |
TPE |
7500 |
| JFK |
LIM |
20000 |
| KIX |
TPE |
7500 |
| LIM |
SCL |
10000 |
| MAD |
SCL |
30000 |
| MIA |
PUJ |
7500 |
| PUJ |
SCL |
20000 |
Comparing those numbers to other carriers I’ve compiled data on suggests that the program isn’t a complete fiasco, so long as you can avoid that pesky connection problem.
Also, it is possible to redeem 10% of the regular Avios award price for an infant in lap which is a nice feature and most certainly not one that most programs offer. But that’s a pretty small consolation.
Upgrade or downgrade?
In the end, I believe that the overall changes to the program are quite negative for most customers. Yes, there are a few bright spots where award costs have gone down and those should be celebrated, but for most customers the connection penalty will be a rather steep price to pay to make the Avios retain value. That said, if you live in a hub or in a spoke with good frequencies there is the slight chance that the program can be made to work for you.
I’m quite happy that I’m not sitting on a pile of Avios right now, even being in NYC where I have the advantage of many non-stop options. If it comes to that I’ll just move some Membership Rewards points over and leverage the program that way.
Check out some other views on the changes from these noted loyalty bloggers:
- Lucky’s posts
- TPG’s thoughts:
Related Posts:
Tags: British Airways, Cathay, Chicago, frequent flyer, Iberia, Istanbul, LAN, London, Membership Rewards, New York City, Paris, points, Qantas, Spain
