Monthly Archive for July, 2008

Hawaiian Adds a First Bag Fee

Published
by
Dan Webb
on July 31, 2008
in Hawaiian
. 0 Comments

Hawaiian’s now charging $15 for the first checked bag. Hey, where’d they get that idea from?

I can definitely understand why other airlines have enjoyed the extra fees. They produce a bit of extra revenue, but they have also significantly reduced the number of bags on the plane (less weight, quicker turning time, and less lost bags). Continental was very excited about this on their conference call, according to Mark Ashley’s recent post that has a good discussion on luggage fees.

I don’t think an airline like Hawaiian is a good one to add baggage fees, though (they already charge $25 for the second). A large number of its passengers (especially on the longer flights) are tourists who will probably be staying a few days. For them, sure, it’s possible to cut down to one checked bag, but charging for the first one? Really? Maybe the checked bag fees can encourage some passengers on other airline to go carry-on only, but not Hawaiian, and the airlines are still split on the issue. Continental and Delta, for example, still allows one free checked bag (though it is cheaper to pay $15 and $25 for two bags on Northwest, for example, than pay $50 for the second bag on Delta).

Anyways, I’m not a fan.

(Image Source)

United Sues Its Own Pilots?

Published
by
Dan Webb
on July 31, 2008
in United
. 0 Comments

Well, I guess a strain on management-labor relations as a result of the massive capacity cuts was bound to happen. United is suing the Air Line Pilots Association (hat tip to my dad for pointing out the story), and four specific pilots for organizing an abuse of sick days, causing many flights to be cancelled.

My opinion goes both ways on this one. On one hand, United is making those massive fleet cuts (is it any shock that the majority of the calls are coming from 737 pilots, as PlaneBuzz reports?), and roughly 950 pilots will be losing their jobs. But is not just the pilots that are losing out here - there are plenty of flight attendant and management jobs that are being cut as well.

Also, the pilots are kind of shooting themselves in the foot here (in my opinion) as canceled flights hurt the United brand as a whole. Obviously I know the outgoing pilots don’t care too much about that, but still. When a passenger has his/her flight cancelled, is he/she going not going to be annoying because they feel for the pilots? No, he/she will probably poorly judge United and maybe consider a different airline for the next trip.

(Image Source)

Jet Fuel in the Car?

Published
by
Dan Webb
on July 30, 2008
in Random
. 0 Comments

Today in the Sky reports that a man was arrested for attempting to fill up his car’s gas tank with aircraft fuel.

Any Family Guy fans out there find this familiar?

More Luggage Fees!

Published
by
Dan Webb
on July 30, 2008
in Delta and Northwest
. 2 Comments

Last week Northwest announced it would be adding a $15 fee for the first checked piece of luggage. I wasn’t too shocked when I read it as a few airlines have the same fee now.

But then this morning I read that Delta is increasing its fee for the second piece of checked luggage from $25 to $50. They still don’t charge for the first piece, but still.

Meanwhile, Southwest’s no fees ad campaign just got more ammunition.

On a side note, if/when fuel goes down, how many of you think that the fees will go away?

Yeah, I’m doubtful too.

Can Alaska’s Strategy Work Industrywide?

Published
by
Dan Webb
on July 30, 2008
in Alaska
. 0 Comments

I mentioned in my posts from Monday and Tuesday how Alaska’s earnings report was the odd man out in both cases. It’s CASM (cost per available seat mile) with fuel went down, but its CASM excluding fuel went up. Compared to the second quarter of 2007, it’s revenues went up more than its expenses. It’s fuel bill went down 21.8 percent, even though it had one more aircraft, and ASMs increased a modest 1.6 percent.

I was trying to wrap my head around this, and I mentioned it two a friend. He quickly replied: “Two letters, two numbers: MD-80.”

Alaska has been removing many of the fuel-hungry aircraft from its fleet. All of the 737-200Cs were gone last year and were replaced by the 737-400C. Alaska decided to retire the entire MD-80 fleet back in 2006 to transition to a fleet made up completely of 737s as those newer aircraft have better performance. The final MD-80s will be retired in a couple of weeks. Jame Wallace reports that on average, a 737-800 burns about 200 pounds of fuel per hour less than the MD-80 while holding more passengers.

Alaska developed a good fleet strategy back in 2006 to deal with an increase in fuel prices while maintaining capacity. Hopefully some other airline’s can learn from Alaska’s example.

Revenue and Cost Growth (And a Talk about Baggage Fees)

Published
by
Dan Webb
on July 29, 2008
in Industrywide
. 0 Comments

Welcome to day two of “Dan loves making graphs way too much.” Today we’re going to look at revenue.

Here’s a graph comparing revenues from the second quarter of 2007 to the second quarter of 2008.

Increases are always good…but let’s look at the percent change in revenues versus the percent change in expenses. Continue reading ‘Revenue and Cost Growth (And a Talk about Baggage Fees)’

Comparing Airline Costs

Published
by
Dan Webb
on July 28, 2008
in Industrywide
. 2 Comments

Well the majors have announced their earnings for the second quarter, and I’m going to spend the next couple of days analyzing them a little bit. Today we’ll look at costs, tomorrow will be revenues, and Wednesday will be a discussion on jet fuel prices.

First let’s compare the CASM numbers (cost per available seat mile) including fuel (but excluding special charges) from the second quarter of 2007 and 2008. (Click on any of the graphs to enlarge them) Continue reading ‘Comparing Airline Costs’

Saturday Links #3

Published
by
Dan Webb
on July 26, 2008
in Saturday Links
. 0 Comments

Let us commemorate my transition into adulthood today with some links…

  1. Frontier got some financing it desperately needed. PlaneBuzz has some good points about it. The airline added some fees, too.
  2. In case you didn’t hear yesterday, a Qantas 747-400 en route to Melbourne from London experienced a sudden loss in cabin pressure due to a hole in the fuselage that formed during the flight after a stop in Hong Kong. The Middle Seat Blog already has some speculation about the cause.
  3. Chris Elliott points out that when inflation is considered in fare data, the recent airfare increases don’t seem all that bad.
  4. The first 767-300ER with blended winglets has made a successful first flight.
  5. Mark Ashley reports that Spirit’s web convenience fee is no more.
  6. Alaska made money, but made it harder to redeem frequent flier miles and could be cutting jobs.

Enjoy the weekend…

JetBlue Wishes to Expand in Cancun

Published
by
Dan Webb
on July 25, 2008
in JetBlue
. 1 Comment

On the 16th, JetBlue applied to the DOT for approval for two more routes out of Cancun.

First is Saturday-only service out of Washington Dulles using an A320. I guess that fits as the airline is adding more “touristy” destinations out of that airport in December (Ft. Myers, San Juan, and West Palm Beach). The second route is a daily flight from Tampa using the E190.

JetBlue already flies to Cancun from Boston, New York (JFK), and Orlando.

Southwest’s Earnings and Partner Speculation Part Deux

Published
by
Dan Webb
on July 25, 2008
in Southwest and Uncategorized
. 0 Comments

A profit! Southwest made $278 million during the second quarter, and excluding special items made $112 million, or $0.16 a share, better than estimated!

Of course the hedging program really helped here. According the the media call, the airline would have lost about $134 million during the second quarter. Gary Kelly was on CNBC and Bloomberg Thursday morning, and I believe he said the hedging program saved $511 million during the second quarter, and the airline expects to see $2 billion in savings for the year.

Like the other airlines, revenue was up a good amount. Southwest set a record with $2.9 billion, 11% higher than last year. Southwest is different, though, because that extra revenue isn’t coming from extra fees. It was very refreshing to hear Gary Kelly say that Southwest would rather be transparent and raise fares rather than adding extra fees that the customer may not expect. He especially stressed the lack of a change fee during one of the television interviews. This feature is very popular with business travelers.

Anyways, I’d to like to go back quickly to some of the speculation I made a couple of days ago on codesharing. First Gary Kelly said this on the conference call, laying out the future codeshare plans:

We are working very hard on a Hawaiian solution as well as a Mexican and the Caribbean solution which with a little luck we’ll get all of those executed by the end of next year.

Then Dan McKenzie of Credit Suisse asked:

I wonder if you can talk about the pros and cons of say a code-share with another domestic low-cost carrier to gain access to markets that Southwest hasn’t yet cracked in particular maybe Atlanta or Reagan National or LaGuardia?

Which I saw as a question about a potential AirTran partnership, an idea I had not considered before. Kelly replied:

Well, we had a great amount of business to LaGuardia [with ATA] in particular, but also to Reagan so those are on our wish list…What we told you all is that we’ll be working on Mexico and the Caribbean but it could somehow it could emerge that we have somebody who could codeshare for us to New York or Washington. But right now, Dan, those are lower priorities for us.

That answer instantly made me think of AirTran as less likely, as they don’t have much to offer in terms of Mexico and the Caribbean. But it is still interesting to consider a codeshare with a carrier in the domestic market.

Anyways, based on what was said about future codeshares, we can all look forward to some exciting announcements from Southwest in the coming months.