Posted by Seth on January 27, 2012 under News | 
Spanish regional airline Spanair is apparently ceasing operations effective immediately, shutting down their network of flights with virtually zero notice. The move comes as Qatar Airways has cut off talks with the carrier about becoming an investor and infusing cash to help keep the airline afloat. Additionally, the Catalan government has decided to cease providing additional loan funds to the carrier. Most reports from Spain suggest that the company will not be flying any more at all, though there are also a few updates trickling out which suggest there might be additional flights tomorrow. Most of the reports are in Spanish and I’m depending on Google Translate to get the gist of the situation but I’m guessing I’m not getting everything completely correct.
This move also cuts out a chunk of service for Spanair’s partners in Star Alliance. The carrier often had good inventory for awards and also generally a good regional network for connecting passengers on the Iberian peninsula. Then again, this is the same company which repeatedly sold codeshare inventory on US Airways metal at ridiculous discounts (or errors) to the point that US Airways cut off their codeshare agreement not too long ago.
Sad to see an airline fail and so many folks newly unemployed (estimates suggest ~4,000). Good luck with accommodation if you’ve got Spanair flights booked.
Posted by Seth on January 18, 2012 under Flying, frequent flyer, News |
I’ll be the first to admit that I was definitely betting against Philadelphia scoring service from Virgin America in their announcement yesterday. There were a couple other destinations on their "short list" which seemed more likely to me. Alas, I was wrong, and the carrier will be launching five daily frequencies starting in April.
As part of the launch release Virgin America pulled no punches, describing their competition in less than flattering terms. Said company CEO David Cush:
Travelers deserve more options than just the typical legacy airline cattle car, and we hope our unique brand of low fares and inventive service will be a breath of fresh air for Philadelphians.
I didn’t expect Philadelphia to be the new market based mostly on the fact that transcons are expensive and it generally takes a lot of capacity to compete in those markets; once daily service, especially between larger cities, is often frowned upon by customers. Virgin America is coming in big, however, adding three flights to Los Angeles which will increase the daily frequencies from 7 to 10, a reasonably significant capacity upgrade. Similarly, the frequencies on the San Francisco route will increase from 8 to 10 with the two new Virgin flights.
But are there enough passengers – profitable ones at that – to make the service work? Virgin seems to think so, suggesting that roughly half of the passengers on each of those routes takes a connecting flight rather than a nonstop option. So maybe there are enough people looking for nonstop options; the question is whether they’re profitable. Time will tell.
With all the hating that goes on against US Airways, this route might seem like a perfect assault. But attacking them at Philadelphia with only a couple non-stop destinations seems unlikely to be the way to go. Even Southwest, which attacked many more routes, is pulling back in their assault there, suggesting that US Airways is reasonably stable and willing to fight their competitors.
One thing it might do, however, is convince US Airways to compete on pricing for the routes. A one-way fare is currently $850 on US from Phillly to LA; the new numbers with Virgin in the market look to be a bit lower:
Interestingly, while US hasn’t been matching Delta fares on the route (or United Airlines on flights to San Francisco) they appear to be taking the Virgin entry into the market a bit more seriously. They aren’t completely matching the fare, but they are much closer, at least for San Francisco. Apparently they’re banking on their frequent flyers or the more frequent schedules demanding a $20ish premium for the route.
For Los Angeles, however, the price disparity remains, at least as of this morning.
It is also worth noting that elites in the US Airways Dividend Miles program can confirm that $850 fare into the first class cabin at the time of ticketing. Virgin is selling their first class cabin – admittedly MUCH nicer than that of the US Airways A321s – for about $1,000, a premium for elites, though still $200 less than the non-elite upgrade fare from US. Both are significantly higher than Delta’s first class fare on the route.
What does it all mean? I have no idea. But there are enough interesting bits at play here that it is worth watching. Oh, and prices on some of the inaugural flights are still pretty reasonable, so I might be headed to Philly for some fun in early April.
Tags: Delta, elite status, Flying, frequent flier, frequent flyer, Los Angeles, Philadelphia, San Francisco, Southwest Airline, United, United Airlines, upgrade, US Air, Virgin America
Posted by Seth on January 10, 2012 under Flying, frequent flyer, News |
As part of their bankruptcy reorganization efforts American Airlines has announced that they are cutting the longest route in their network, the flights between Chicago and Delhi, India. The flights are being terminated as of March 1, 2012. Live from a Lounge (a local on the India side) and One Mile at a Time (a quite vocal AAficionado) have both weighed in on the topic, mostly with disbelief. To me the surprise is really that it took the bAAnkruptcy to do the route in.
At least one analyst out there says the route was losing $40MM annually. And naturally you’re going to cut anything that isn’t profitable in a reorganization, right? The problem with that approach is that, at this point, nearly everything American touches is not profitable; they’ve got the inverse of the Midas touch. The real question should be whether a route can be profitable, not whether it is right now. And in the case of the Delhi flight, the answer is still no.
It is the longest route in their system, roughly 7500 miles in the air each way. That’s a whole lot of fuel that needs to be carried so the plane can make it to the destination, and that fuel has increased significantly in cost since the route was launched in 2005. It seems that even if the company could get the labor costs down, their stated goal in the bankruptcy process, the other fixed costs of the route are still too great.
The same analyst who asserts the $40MM annual losses also suggests that there are a few other routes which are hemorrhaging cash and which seem primed to be cut: New York-London, New York-California, Chicago to Delhi, Beijing and Shanghai and Miami to Buenos Aires. Seems unlikely to me that all those are going to be touched. The London routes gets the advantage now of ATI, something that was far too late in being granted by the authorities on both sides of the Atlantic. That should help significantly for margins on that service. The transcon market is an interesting one and I could see some changes come, but I doubt they’ll fully retreat. And the South America service seems to have way more potential than the Asia routes, putting it squarely in the "potentially could be successful" category.
Could the Beijing and Shanghai routes be on the out? Loads to China are down and the yields are likely following. At the same time, however, getting back into that market is incredibly challenging. Plus, there aren’t particularly great onward connections if you look to partners. It seems much more likely that the China routes could be profitable and that they’d stick around a least a bit longer.
The other consideration for American, more than individual routes, is the combined effect of cutting too much on the route map. Their international network was already somewhat anemic outside of Latin America and further cuts won’t help that. Even with partners and the ATI agreement, it is hard to market and sell flights to corporate contracts when you don’t actually have service to the destinations they need to serve. And a merger with US Airways, JetBlue or Alaska Airlines isn’t going to solve any of those problems.
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Posted by Seth on January 10, 2012 under frequent flyer, News |
A few months ago US Airways announced their intentions to retrofit their larger regional jets with first class cabins. It appears that work has now been completed, making upgrades available now for passengers on an additional 640 flights daily.
There are a lot of reasons that this sort of fleet conversion makes sense, both for customers and for the companies; I wrote about it a bit when this change was first announced back in April but it seems worth revisiting now that the conversion is complete. Customers – particularly the folks with elite status, arguably the folks contributing the most to the margins – are happy because they have access to first class capacity. Whether through upgrades or through purchasing directly, the first class cabin is great for those customers.
At the same time, airlines are working hard to maintain capacity discipline. And the regional fleets offer some of the highest costs per seat and generally operates in more marginal markets where capacity controls are more needed. By cutting ~7.5% of the seats on the fleet they’ve removed a whole lot of available seat miles (ASMs) from the market. Plus, they made the cuts without needed to kill frequencies, the other means that is normally employed to reduce ASMs.
Wins all around indeed.
Here’s the breakdown on the new cabin configurations:
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Posted by Seth on January 3, 2012 under News |
US Airways has announced their intentions for new service at Washington, DC‘s National Airport thanks to the 42 slot pairs they received from Delta Airlines in exchange for the slots at LaGuardia. The carrier will be adding service to 11 cities, 8 of which do not currently have flights to DCA. These are the first of two sets of routes which will be added by the carrier.
The routes in green – Little Rock, Birmingham, Pensacola, Fort Walton Beach, Tallahassee, Fayetteville, Jacksonville and Islip are all cities with no service to DCA currently. The cities in blue are additional frequencies from US and the red are new to US but with other competition on the route.
I’ve gotta say, comparing this map and the one Delta put together for their LaGuardia service, that this looks pretty pathetic. Maybe I’m completely ignorant in the world of route yields and these are all markets with huge amounts of pent up demand for service which will result in great revenue premiums on the routes. I’m betting more that they’ll be cool lines to fly once for the aerophile in me.
Oh, and US Airways has also indicated that they’re increasing from 175 current daily flights to 230+ as part of this swap, though the swap only included 42 slot pairs. It is not clear where the 20 missing slots are coming from.
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Posted by Seth on December 16, 2011 under News |
I had a bit of a preview of the announcement for new Delta service from LaGuardia last night. The official release is out and it looks like the preview was accurate, but there are a bunch more routes also on offer coming up. The changes will happen in two waves, one in March and one in July.
Map from the awesome gcmap.com. Red is phase 1, blue is phase 2.
Here’s how the schedules line up (numbers are new service only, not including existing frequencies):
Effective March 25, 2012:
- LGA-ALB; 1x daily
- LGA-BTV: 3x daily
- LGA-BUF: 6x daily
- LGA-DAY: 2x daily
- LGA-DFW: 6x daily
- LGA-GSO: 4x daily
- LGA-MHT: 2x daily
- LGA-MIA: 4x daily
- LGA-NAS: 1x daily
- LGA-ORF: 5x daily
- LGA-RIC: 5x daily
- LGA-ROC: 4x daily
- LGA-RSW: 1x daily
- LGA-SDF: 2x daily
- LGA-SYR: 5x daily
Effective July 11, 2012:
- LGA-BGR: 1x daily
- LGA-BNA: 1x daily
- LGA-CAE: 1x daily
- LGA-CHO: 1x daily
- LGA-CLE: 5x daily
- LGA-CLT: 5x daily
- LGA-DEN: 2x daily
- LGA-GSP: 1x daily
- LGA-IAD: 4x daily
- LGA-IAH: 4x daily
- LGA-ILM: 2x daily
- LGA-IND: 1x daily
- LGA-JAX: 1x daily
- LGA-MCI: 1x daily
- LGA-MKE: 3x daily
- LGA-MSP: 1x daily
- LGA-PHL: 4x daily
- LGA-PIT: 6x daily
- LGA-PWM: 1x daily
- LGA-RDU: 1x daily
- LGA-ROA: 1x daily
- LGA-STL: 1x daily
- LGA-YHZ: 2x daily
- LGA-YOW: 3x daily
- LGA-YUL: 5x daily
Not a whole lot of surprises there. I had forgotten about the Denver exemption to the perimeter rule so that means those aren’t such a big deal to add. As for Delta "attacking" other carriers, there are two ways to look at the situation. One is that they are going after the hubs of their competitors. Flights to DFW, MIA, CLT, PHL, CLE, DEN, IAH and IAD are all going after a hub from American Airlines, US Airways or United Airlines. And BUF, ROC, SYR & BTV are all strong JetBlue markets from JFK. But that doesn’t necessarily mean Delta is really attacking those airlines, especially with the frequencies they’re offering.
The other view is simply that they’re taking the LaGuardia slots and connecting the largest business markets they can to New York City. From that perspective the moves are completely rational and not so much attacks as a logical growth to the market. So there will be some competition on a number of the routes, but that is likely good for customers. Particularly in the IAH, CLE, MIA and DFW markets where competition has been more or less non-existent recently this competition will likely bring some fare discounting.
There will be losers, of course, with the changes as well. With many of the slots shifting to major business markets there will be fewer slots devoted to smaller markets. These are markets currently served by US Airways ex-LaGuardia that Delta does not have on the schedule:
- LGA-ACK
- LGA-AVL
- LGA-BDL
- LGA-BWI
- LGA-CHS
- LGA-CMH
- LGA-ITH
- LGA-LEX
- LGA-MDT
- LGA-MVY
- LGA-PVD
US Airways may keep some of these but odds are the connections for these customers are going to be worse.
Conspicuously they’re skipping service to Toronto. Maybe because WestJet is adding that one or maybe because they don’t see much business there (unlikely). But the 10 daily frequencies to Canada otherwise is a reasonably strong statement there.
Overall it is definitely a big shakeup in the market. The next year should be a lot of fun in the New York City aviation market.
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Posted by Seth on December 15, 2011 under News |
Delta has scheduled a big event to announce their plans for the new slots at LaGuardia now that the deal with US Airways is finalized. They’re expected to announce, among other things, many of the details for the routes they plan to serve with the new slots. Funny thing is, the information is already loaded in the timetable. So if you don’t want to wait for the press release, here are some of the new frequencies to look forward to:
- LGA-DFW: 6x daily
- LGA-MIA: 4x daily
- LGA-BTV: 3x daily
- LGA-GSO: 3x daily
- LGA-ORF: 4x daily
- LGA-RIC: 5x daily
- LGA-BUF: 6x daily
- LGA-ROC: 4x daily
- LGA-SYR: 5x daily
- LGA-MHT: 2x daily
- LGA-SDF: 1x daily
- LGA-DAY: 2x daily
The first two are going after American Airlines hubs and it will be interesting to see how that plays out. The Miami service will be on MD88s (useful for keeping the AA folks comfy, I suppose) while the DFW service will be on E70/E75s which is probably right for the market size but it may be hard to shed the "regional" stigma, even if it isn’t really so bad with a first class cabin and in-flight internet on those planes (both works in progress, but both happening). In related news, perhaps my theory that jetBlue should use all their LGA and DCA slots to attack American at DFW is looking like even less of a good idea.
There are a few other destinations also coming, including Wilmington, DENC (Damn, that was an awkward mistake), which adds that state back on to the Delta route map. Of interest on the ILM route is that they seem to think the LaGuardia flights are useful for international connections. Apparently they don’t hate the Van Wyck nearly as much as I do.
These numbers represent only about half of the frequencies that Delta acquired so there will certainly be more to come as things shake out.
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Posted by Seth on December 15, 2011 under frequent flyer, News, points |
As part of the revamp of their Divided Miles program scheduled to take effect in 2012 US Airways has announced new fees – in addition to the miles required – for upgrades on flights. The upgrade fees will apply to all flights, not just their Envoy long-haul product and the rates are based on the length of the flight.
The good news here is that they are also cutting the miles required in many cases, making the overall upgrade proposition slightly better on the shorter flights. But for anything over 1500 miles or outside of the Continental US and Canada the numbers are not attractive at all.
The fees are waived for all Dividend Miles Preferred members or passengers on Y/B fares.
In addition to the new fees US Airways also announced a couple cuts to their Silver Preferred status level. Those passengers will only be able to check one bag for free going forward, matching a policy change first made by United Airlines a few weeks back and also recently matched by Delta. And the company changed their "quick ticketing fee" cutoff for award reservations from 14 days to 21 days, with a charge of $75 for that service. Silver Preferred members will not be exempt from that fee, though Gold and higher will be.
All in all, a whole lot of downgrades for the Dividend Miles program, though it still isn’t the worst out there by a long ways.
Posted by Seth on December 9, 2011 under Flying, frequent flyer, points |
Honestly, these changes have been a long time coming. Turkish Air changed their fare classes a while ago, adding in their "Comfort Class" premium economy product and pulling out their first class cabin. Many of their partners were quick to update the earning charts; Continental and United Airlines weren’t. That has finally been resolved as of today.
The new earning rates are mostly downgrades on the Continental side of things. Y and B fares no longer earn 150% EQMs and G fares – one of the most discounted economy class tickets – now earn nothing at all. There are a few other changes, with F, W and Z fares also no longer earning but I believe those fares are also no longer published so less of an issue.
The Comfort Class fares will only earn at 100% (US Airways and Air Canada both have an earning premium assigned to those fares) which is unfortunate. That said, the change does at least add all three of the Comfort Class fares to the list; previously one was absent.
On the United side of the coin the earning rules are similar, with one additional downgrade. Elite members will no longer earn the 500 mile minimum credit on flights operated by Turkish. Not a huge deal, as most TK-operated flights are longer than that, but still a minor downgrade.
Also of note is that with both programs the V fare class will be deprecated as an earning bucket come January 1, 2012. This is another discount economy fare bucket and losing it will be unfortunate.
Finally, there has been an addition to the earnings tables. Flights marketed by Turkish but operated by AnadoluJet (a regional/express carrier) will be eligible for earning in both programs. The cheapest economy fares (L, Q, T, V) do not earn while non-discount fares (Y, B, M, K, H, S, E) earn at the 100% rate, again with no 500 mile minimums.
All of these earning rate changes have been loaded into the mileage earning calculators on the Wandering Aramean Travel Tools site.
Posted by Seth on December 8, 2011 under Flying |
Chatting with some folks today about JetBlue‘s new DFW-BOS service got me to thinking. And that’s never a good thing. JetBlue paid a king’s ransom by some accounts for the eight slot pairs each at LGA and DCA. They’re going to need to realize some serious profits on that investment. So they’re going to want to go to markets where there are high yields and limited competition. Both airports are limited by perimeter rules in terms of flight distances that can operate so it is basically Texas or east (and not even all of Texas works) for the routes. So what would I do if I were sitting at the white board working on routes?
A somewhat disturbing and almost certainly untenable option came to mind: Attack DFW.
Assuming you could get another gate or two at DFW, why not attack the American Airlines hub? JetBlue has already shown that they’re willing to attack a little bit, putting 3x daily on DFW-BOS starting next year. Why not go all-in? Sure, they don’t really own any market share at DFW. Or LGA. Or DCA. But they could try, right?
It wouldn’t be a half-assed effort like Spirit Air‘s gambit. We’re talking about a total of 19 daily frequencies, all to major business cities and all where the competition is VERY limited. US Airways flies E-Jets 3x daily on the DCA-DFW route. US, Spirit and Frontier all list DFW-LGA but they all fly it as a one-stop direct flight. Seems like there could be a lot of fun to be had with some new blood bringing competition on these routes.
Then again, it would require the additional gate at DFW. And the stage length is a bit high for fleet utilization and yield management. Still, showing up at DFW with that much lift would be an incredibly entertaining challenge to the incumbent.
Another great option would be service from Austin, connecting folks from the west coast, too, but that’s just outside the perimeter at both LGA and DCA. Sad.
Besides, what else are they going to do? Fake shuttle service?
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Posted by Seth on November 10, 2011 under News |
United Airlines CEO Jeff Smisek has been doing a pretty good job of keeping his name in the news lately, with many interviews running over the past few months. Most of them are basically fluff pieces where he talks about how challenging merging the airlines is and how great all his co-workers are (both true facts but hardly "news"). This week’s version is not much different but there are three particular bits in the published Q&A that caught my attention.
Pricing
Q: Is there anything that will make airfare pricing less complicated?
A: No. I think what you’re going to see is more choice. And choice can become complex.
That’s not really a good thing, though it also is not particularly surprising. The company is on record as looking for more different ways to incrementally increase revenue and this sort of comment suggests it isn’t going to stop any time soon. This also plays in to the recent battles between the airlines and the GDS companies versus their "direct" sales models where different customers can see different pricing depending on a variety of factors. Pretending that’s "choice" for the customer is a disingenuous move but one that all the airlines are parroting.
Consolidation
Q: Is consolidation good for consumers?
A: Ultimately, yes. It’s bad for consumers to have airlines that are always on the brink of insolvency, that are subject to potential strikes by labor, who cannot be depended on to be there the next day.
Indeed, companies that cannot function on a day to day basis is bad for consumers. But history suggests that mergers are a crap shoot in terms of labor relations (just look at US Airways today or the current challenges Continental and United are facing in getting their seniority lists and union contracts aligned). And consolidation means less competition so generally higher prices. Stable companies are a good thing for consumers, but at what cost?
Customer Service
Q: What’s the last thing you do before heading home?
A: I try to make it through my e-mails. … I get interesting e-mails, like a customer that was just outraged that she was in 23B and she wanted to be in 23C and it was marked "Urgent — Fix This Tonight!"
Sorry about that, Jeff.
So, just another puff piece of sorts, but it also gives a lot of insight into the thought processes at work behind the guy running the largest airline. Always fun to read.
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