Monthly Archive for October, 2008Page 3 of 4

Saturday Links #14

Happy long weekend, everyone!

  1. Reuters has a nice chart that has the traffic data for most of the airlines.
  2. One report says that Southwest’s decision to not add lots of extra fees is helping them in terms of booking.
  3. Though the FlyerTalkers do have some good points about how accurate it could be.
  4. Despite the GAO’s objections, the Bush administration and Transportation Secretary Mary Peters are going ahead with their New York plan.
  5. Tickets are now on sale for the new partnership between United and Aer Lingus.
  6. Speaking of Aer Lingus, that airline is cutting jobs.
  7. Air France will no longer fly between Heathrow and Los Angeles, but will launch LHR-JFK service.
  8. Sun Contry filed for bankruptcy.

A Look at Hawaiian’s September Traffic

Hawaiian just released their September traffic report, and at first it looks a bit confusing. The number of passengers carried increased 2.7%, but load factor went down 7.9 points, on a 10.4% decrease in RPMs and only a 1.4% decrease in ASMs. Hawaiian did include a nice explantion, though:

The increase in passenger numbers year-over-year is mainly the result of Hawaiian’s expansion of interisland operations while the lower Revenue Passenger Miles (RPMs) and average load factor reflect adjustment of capacity between markets and a lower transpacific load factor as Hawaiian has raised fares in an effort to offset the increased price of fuel.

The expansion of interisland flights is probably still due to Hawaiian filling the gap after Aloha ended passenger service. The decrease in RPMs makes sense if the flights accross the Pacific are being affected since they’re simply longer. That change affects load factor, which compares RPMs and ASMs.

Anyway, I am interested in seeing how Hawaiian’s traffic shifts in the future. If the economy is really as bad as some say, leisure travel will decrease, and I think Hawaiian is more sensitive to changes in leisure travel compared to other carriers.

Also, Brett pointed out yesterday on his BNET blog that the interisland market can change again soon, as Republic is considereing entereing that market.

Elevate Making Headway

For the longest time, Virgin America had a frequent flyer program, Elevate, but flyers couldn’t do much with it other than say they were a member and earn points for…er…nothing. Well, now those points can be used!

First, Elevate is a bit different than most frequent flyer programs around here in the US.  Usually either miles flown or number of segments flown are used as a way to earn points and redeem them for awards. Instead, Elevate is linked to how much money is spent – five points for every dollar. While I’m sure this aspect may not please the mileage runners out there, I think it makes sense to reward the highest-paying customers.

Perhaps the best feature of the program that I have found is that there are no blackout dates! If there’s an unsold seat, an Elevate member can get it. The press release does say, however, that the “price in points varies based on class of service and seat availability.”

There are a couple other things I like. The end of the press release mentions:

Coming in 2009: Members also will be able to combine points and dollars to redeem on-line. Members will be able to tailor the in-flight experience by loading a favorite play-list or videogame avatar.

I like the idea of combining points and money is a good one, and Northwest already does something similar called PerkChoice, where on leg is paid for in points and the other in dollars. I’m not sure how Virgin will do it – if they will split it like Northwest or find some other way to combine them. This is a benefit that is great for the flyers that don’t fly too often and often don’t have enough points for a roundtrip.

The idea of loading a playlist and avatar sounds really interesting and I’m hoping Virgin can release some more details about it soon.

There are, though, a few things I don’t like so much. Points are on an “18 month rolling expiration.” That timeframe seems a little short to me, but those who know more about the other programs out there can judge better. Points earned through September of this won’t expire until 2010 (no date is specified, maybe the end of the year?), which is nice for those who have already been earning points.

It doesn’t seem like there is a way to do upgrades like on other programs – it looks like if you want to fly first class, you will have to use a full reward to get it, not an upgrade.

Finally, there is no premium level. My idea was that elites could get automatic upgrades to Main Cabin Select if there is space available on the flight.

An Elevate credit card has also been announced. One point is earned for every dollar spent, and triple points are earned with Virgin America purchases. 300 bonus points can be earned for every $5,000 spent (up to 1,200 bonus points can be earned this way). There’s no annual fee, and one can earn a free flight if he or she applies by a certain date, uses the card by a certain date, and flies by a certain date. I’m not credit card expert, but it does seem like it is worth a look.

Overall, Elevate looks very promising to me and I think travelers will enjoy it – especially the lack of blackout dates. Right now, I think its only limitation is Virgin America’s relatively small route map.

TAM fills Varig’s Gap in Star

Remember Varig’s financial troubles a couple of years ago? Well, those resulted in Star Alliance suspending the ariline’s membership in late 2006, and Varig formally left the alliance in early 2007. That was a problem – it left a huge gap in Star’s network by leaving it with no South American carrier. Now, it was announced yesterday that TAM will be joining the alliance, remedying that issue. To quote the press release:

“Thanks to TAM, Latin America will no longer be a white spot but rather a hot spot on our world map,” said Jaan Albrecht, CEO of the organization, during the official announcement today.

For those of you keeping score, SkyTeam doesn’t have a South American carrier, but does have AeroMexico and Copa (though I think Copa might move to Star with Continental…anyone know?). Meanwhile, Oneworld has LAN as one of its members.

Hmmm…maybe TAM’s move to Star will give Ben some good oppurtunities to redeem rewards? :D

Update on Virgin America’s Refundable Fares

I contacted Abby Lunardini at Virgin America yesterday about the new refundable fares asking why they aren’t on the website, and she got back to me quite quickly. She said that it is due to a “technical limitation” of their website. She also said that they wanted to get out these new fares to business traffic, and most of that comes through phone bookings and travel managers/agencies.

So I’m guessing at some point in the (hopefully near) future we will see them on the Virgin America website.

Another Thing On Mishandled Luggage…

Grant’s comment on my post yesterday made me think of something…he mentioned if there is less luggage going through the system, then you probbaly will have less mishandled bag reports.

In August 2007, there were 57,499,972 enplanements, and there were 53,979,160 – a 6.1% decrease.

In August 2007, there were 435,766 mishandled baggage reports, and only 268,590 in August 2008 – a 38.4% decrease.

I don’t know if/where the reports on the total number of pieces of luggage are handled are published, but I am willing to guess that there is less baggage going through the system, especially due to many airlines introducing baggage fees.

This is an effect that I believe was predicted during Continental’s conference call with analysts during the summer, and it seems to be coming true.

Virgin America Makes It Harder to Book Higher Fares…Why?

Virgin America issued a press release yesterday and then sent out a correction as well. The first part of the release was that the airline is rolling out its Main Cabin Select product, which was previously delayed in getting rolled out. If you want to learn more, Cranky has two great posts on it – click either here or here.

The other announcement was the introduction of fully refundable fares, and the release lists the benefits:

Fully refundable up to time of departure;
Transferable with name changes up to time of departure;
Changes or cancellations are permitted without a fee until the time of departure, with the difference in fares either collected or refunded;
No blackout dates;
No minimum or maximum stay requirements (as with all Virgin America fares);
No advanced purchase required;
“No shows,” or reservations not changed or cancelled prior to departure,will be turned into a credit valid for travel on Virgin America for one year from the date of issuance.

OK, looks good, except in the correction, this was added:

Fully refundable fares are only available via the Virgin America call center at 1.877.FLY.VIRGIN (1.877.359.8474) or through travel managers and agencies. The previous release noted that fully refundable fares were available through the Virgin America Web site (http://www.virginamerica.com), which is incorrect.

The only question I can ask is…why? Fully refundable fares are generally more expensive than all the others, so isn’t it advantageous for Virgin to make it as easy as possible for customers to purchase the highest fare? Plus, Virgin charges a $10 fee for booking over the phone – annoying!

Anyway  I think I will ask Virgin about this one and let you know if they get back to me.

EDIT – They got back to me.

Delays, Bags, and Complaints, Oh My!

First, many apologies for posting so late today!

The ltaest issue of the Air Travel Consumer Report was released a few days ago, and I always think it is worthwhile to take a look.

In terms of delays, there was a decent improvement in August 2008 compared to August 2007. The perecentage of on time operations for all reportable airports went up 6.7 points to 78.4%, up from 71.7%. The top five in this area were Hawaiian, Pinnacle, Skywest, Northwest, and Southwest. JetBlue was the worst with only a 64.7% ontime rating.

The number of mishandled bags decreased as well. In August 2007 there were 7.58 reports of mishandled bags per 1,000 passengers, but only 4.98 in August 2008. The top five in this category were Hawaiian, Northwest, AirTran, Frontier, and US Airways. Southwest was very close behind US Airways in this category.

Finally, my favorite – consumer complaints! Complaints went down slightly compared to August 2007 – 1.84 complaints per 100,000 enplanements to 1.22. Southwest was number one in this category with 0.22. The remaining airlines in the top five were Alaska, ExpressJet, Skywest, and Pinnacle. US Airways was the worst with 2.45 thought that is still a major improvement compared to its August 2007 number of 4.42.

The one airline that surprised me in terms of complaints was JetBlue. Last month its complaints were 0.59 per 100,000 enplanements but they were up to 2.19. I wonder what has caused such a jump.

Anyway, I’m more looking forward to next month’s report as we will see what the capacity cuts do to ontime percentage and these other statistics.

Saturday Links #13

  1. JetBlue’s Ebay experiment was successful, according to ATW. On average the tickets sold for a 40% discount.
  2. AirTran is launching service to Cancun from Baltimore (weekends) and Atlanta (daily).
  3. United has successfully moved to obtain some more cash by the end of the year.
  4. Both US Airways and United posted investor updates that are very interesting. If any of the airlines posted one, please pass along the link!
  5. Lufthansa seems to be becoming the preferred potential investor in Alitalia because the Italians like their plan better. Honestly, the airline was almost liquidated. Why are the unions still being picky?
  6. In other Alitalia news Ryanair has filed a complaint with the European Commission about the deal.
  7. TACA is making some changes to its brand, with the most visible change being a new logo and livery.
  8. Interesting: the GAO (Government Accountability Office) has found that auctioning slots at New York airports is not legal.

Anyway, have a great weekend! Unfortunatlely, I have a big exam to study for! :(

Looking at Some September Traffic Results

I had been looking forward to the September traffic results to see the results of the capacity cuts, so today I’m going to look at Continental, AirTran, and Southwest. Why them? Well, I used the highly-scientific method of choosing the messages that I opened in my inbox first.

First let’s look at Continental. For the whole system, RPMs (revenue passenger miles) decreased by 10.9% and ASMs (available seat miles) decreased 8.1% compared to September 2007. These shifts resulted in 2.5 point decrease in load factor, from 79% to 76.5%. The decerease in domestic RPMs was impressive (in my opinon at least) – a 16.2% decrease! ASMs decreasted by 13%. Load factor went down from 81.1% to 78.5%. I was a bit surpised here – I thought that overall the capacity cuts would be enough to keep load factors steady or even make them increase a bit for Continental, but I guess we’ll have to see how things play out.

An increase in load factor did occur for AirTran though. In fact, September’s load factor of 74.4% was a record, and also a 5.9 point increase from September 2007′s load factor 68.5%. RPMs were down by 2%, but AirTran’s cuts in capacity decreased ASMs by 9.7%.

Southwest’s results are quite different, because ASMs for September were up 0.8% compared to the same month last year. But the airline experienced a decrease in RPMs – 5.9%. As a result, load factor decreased 4.5 points to 63.4%.

As many expected, travel for the generally-slow month of September was down. The efforts of some airlines to cut capacity seem to be working in the sense that load factors will either decrease less, stay steady, or in AirTran’s case, increase.

Load factor isn’t everything, though. It’s just a measure of how many seats are filled. An airline can fill up a plane completely but still lose money if the fares are too low. Likewise, an airline can have dismal load factor but if most of the passengers are paying a fare premium, it could turn a profit. Only Continental released anything financial in nature by providing an estimate of RASM (revenue per avaible seat mile):

For September 2008, consolidated passenger revenue per available seat mile (RASM) is estimated to have increased between 8.0 and 9.0 percent compared to September 2007, while mainline passenger RASM is estimated to have increased between 9.0 and 10.0 percen compared to September 2007.

Regardless, the financial picture will become much clearer when the airlines start releasing their third quarter results which will be begin relatively soon.