Monthly Archive for May, 2009Page 2 of 5

My Vacation = Great Guest Posts

Well, tomorrow I’ll be flying down to Florida, and on Saturday I will be boarding Royal Caribbean’s Liberty of the Seas  for a week-long cruise. Out of pure chance, fellow BoardingArea blogger Marshall Jackson will be onboard as well. This is actually the same ship I took last year, and it will be visiting the same ports, but in a different order. Unlike last year, though, I will be putting up a full trip report.

But the blog won’t be taking a break while I’m gone. Friends of mine have been very kind to write up some guest posts that will post automatically, and personally, I think they’re great.

While I’m gone, I probably won’t be doing any posting, but there’s a good chance that I’ll be tweeting along the way, especially if I get a coupon for free internet time (otherwise, it’s really expensive).

Southwest Announces…Milwaukee?

Not that I think it’s a bad idea, but I was just surprised. Based on Southwest’s recent actions I was expecting another major city (I was thinking the next city would be Atlanta). But, alas, Gary Kelly announced the service during yesterday’s shareholder’s meeting, and you can see a blog entry here.

What’s annoying is that Southwest didn’t release any details about where the airline would fly out of MKE. As Cranky noted when the carrier announced Boston, this seems to be Southwest’s habit lately. In my opinion, it’s just plain annoying. If an airline is going to tack on a new city to its route map, it should tell its customers where it’s going to fly right away. Period. Anyway…

At first glance, this move can make it seem like Southwest has AirTran and Midwest in its crosshairs. Frankly, it’s hard to tell until Southwest announces its service, but I think it could be possible, as the official press release says the carrier will “offer multiple destinations from the airport of choice for business and leisure travelers.” That’s pretty darn ambiguous. But, I would expect service to a couple of focus cities (BWI, DEN, PHX, and LAS come to mind as possibilities.) For leisure routes, some of the Florida markets could work.

But, we’ll get a better idea once Southwest tells us where they’ll be flying from MKE. If it’s a few flights just focus cities, then Southwest is just “plugging in” MKE to the rest of the system. If we see a good number of routes, then I think it’s safe to say that Southwest is looking to steal a good number of passengers from other carriers. Nevertheless, I have to think that Southwest is a bit limited in terms of growth because Southwest has been adding these new cities without growing the fleet.

Nevertheless, this could get interesting depending on what Southwest does here. AirTran has built up its presence after not buying Midwest, which has cut a great deal of service but has built up a partnership with Delta/Northwest. This could just shake up things further.

Speaking or AirTran, the carrier issued a press release yesterday entitled “AirTran Airways Continues Rapid Expansion at General Mitchell International Airport.” Gee, I wonder if that had anything to do with the Southwest announcement!

Dear United Pilots: Be Consistent!

Yesterday, United’s pilots threw out a press release saying that the goverment should hold off on giving anti-trust immunity to United and Continental.

Ah, I love discussions saying how opening up markets can be bad.

Now, I think ALPA is just using this as leverage in negotiations, but let’s look in more detail.

Of course, ALPA plays the safety card pretty quick:

“United pilots pioneered many of the safety innovations such as onboard weather radar, anti-skid brakes, enhanced weather forecasting, and improved navigation instruments that allow safe flight operations,” added Captain Wallach. “Our training center and our pilots are among the best in the world. Does the current Administration really want to also outsource that experience when granting antitrust immunity without considering what the travelling public may get in exchange?”

Safety makes for a great PR move. Hinting that United is gambling with its passengers safety puts the airline in a bad light instantly. But, one would have to ask why United would do such a thing. In a competitive marketplace, passengers are surely willing to fly a safer carrier instead of an unsafe one.

I loved the first line line of the press release:

The antitrust immunity being sought by United Airlines and Continental Airlines not only has the potential to outsource tens of thousands of American jobs, it also could take experienced pilots off international routes, say the pilots of United Airlines.

This complaint was also great:

Continental would join United and US Airways as the only United States members of the Star Alliance. The Star Alliance is expected to grow to 50 airlines, mostly non-U.S. carriers.

The first sentence doesn’t make sense. Why is it bad that there are only three US carriers? Wouldn’t United pilots like passengers to flock to the superior service of United and the Star Alliance, providing growth to United? But that’s beside the point. The second sentence doesn’t make sense either. If there was less protectionism around the world, Star wouldn’t need as many foreign carriers.

I believe that ALPA should be advocating for the increased opening of markets. If that were the case, the need for alliances begins to go away. Let’s say, for example, the EU allows US carriers to begin domestic flying in Europe. In this situation, United could go, “Screw Star! Screw Lufthansa! Let’s launch our own European hub!” And if United provided a superior product and/or lower fares to its new customers, the company would grow and hire more pilots, flight attendants, etc. In fact, the higher demand for these jobs could bring about higher wages as well.

But, clearly, ALPA (like many other labor unions) is stuck in the rut of protectionism. So, if outsourcing is so bad, I call on ALPA to be consistent in this area. They should demand that United cut routes like Tokyo-Bangkok and Tokyo-Seoul. After all, United is a foreign carrier flying these routes, and clearly this is negatively affecting the well-being of pilots in those countries, whose jobs are being taken away by Americans.

Ah, I get it now – outsourcing is good, as long as its ALPA members who are taking the jobs from others. Unfortunately, other countries involved in international trade don’t always like that kind of arrangement.

Summer Reading: Southwest Passage

I love taking the bus to my summer job. It saves on both time and stress, but it also gives me plenty of time to read. So, I’m hoping to read a few things over the summer and post some reviews here.

If I asked you to name some of the people influential in the founding of Southwest Airlines, some names that would probably pop up are Rolling King, Herb Kelleher, and Colleen Barrett. And all of those answers are correct. King got the idea of the carrier started, Kelleher won some very important legal battles for the airline and became one of the best leaders in the industry (in my opinion), and Barrett, I think, deserves much of the credit for developing Southwest’s culture.

One name that is consistently left out of Southwest lore, it seems, is the late Lamar Muse. Yes, he is mentioned in the company’s official timeline on its webpage, but, it seems that unlike other Southwest leaders, there is not a 737 bearing his name. A few years ago, he published a book entitled Southwest Passage: The Inside Story of Southwest Airlines’ Formative Years, which is now out of print. Fortunately, curbcrusher from FlyerTalk lent me a copy.

Muse makes it clear in the book that he thinks his story is what people should be paying attention to. In fact, he even criticizes other books on the company:

And rest assured, any similarity between this real story and and the convoluted tales told in Hard Landing: the Epic Contest for Power and Profits That Plunged the Airlines Into Chaos(1995) by Thomas Petzinger Jr. and Nuts! Southwest Airlines’ Crazy Recipe for Business and Personal Success (1996) by Kevin and Jackie Freiberg is purely coincidental. (Page 91)

The first nine chapters, which take up less than 70 pages, can be skipped. I’m not saying they’re not worth reading, but they focus on Muse’s childhood and early airline career. I enjoyed these chapters since I did learn a lot of airline history, but a reader wishing to rush could skip them to get to the stories about Southwest.

In 1971, Muse was hired by then Air Southwest as CEO and president, and he quickly made some big changes:

The first thing I did after taking over the chair  was to suggest a name change for our new airline. Since Air Southwest sounded to me like some Mickey Mouse, third-level carrier, I convinced the board to change the name to “Southwest Airlines Co.” (Page 68)

Muse also tells the story about how the 737 was chosen and how he helped the airline get a good deal on its first aircraft (at first, it does seem that he is beating his own drum a bit much). He also goes into great detail when explaining the efforts made to receive initial financing, and since he is an accountant by training, Muse goes into great financial detail in other parts of the book as well. This might be a turn off to some readers.

But, Muse’s recollections of the early days are very well-done, and he describes important events, like the decision to use the 10-minute turn, and what new markets the carrier would serve, very well. Memos sent to the board of directors are constantly quoted, and are quite helpful. Muse’s descriptions really do make the reader feel like he or she is right there calling the shots with him.

The book did reveal some nuggets of Southwest history I didn’t know. I had no idea that the company was in the process of setting up a subsidiary company to operate flights out of Midway back in the late ’70s. (Ironically, one of the routes being considered was MDW-MSP!)

Over time, tension started to build between Rollin King and Muse, and it’s clear that Muse has an ax to grind, as he makes numerous jabs at King. Some examples:

The board members kept asking me the same old question: “What would happen to Southwest if you got run over by a truck?” Well, in the first place, I was not going to get run over by a truck, unless it might be one driven by Rollin King. (Page 166)

…I had the opportunity to…renew my acquaintance with Rollin’s ex-wife, Marsha. At lunch…we all agreed that Marsha and I had something in common. We both had been screwed by Rollin King. (Page 197)

Eventually, Muse left Southwest in 1978 after resigning in a sort of unceremonious fashion. Eventually, his son started another carrier called Muse Air, in which Muse became heavily involved over time. It was eventually sold off to Southwest.

Toward the end of the book, Muse does make some suggestions that, in my opinion, are a bit far-fetched. For example, on pages 213-214 he suggests Southwest get some gates at DFW and use that as a way to eliminate all crew bases other than Dallas. Later, on page 218, he lays out some suggestions to Herb for a post-9/11 environment:

Second, I would install as permanent equipment in the cockpit two .38 revolvers loaded with bullets that would not penetrate the fuselage….I would advertise the hell out of it, and just dare terrorists to try something. I guarantee you, passengers will swarm to your flights.

Muse does have a very bitter tone at times, that I think can be unnecessary and detracts from his main book. For example, he calls Colleen Barrett”s presidency as “an honorary position,” which I think is pretty insulting. (Interestingly, he recommends Gary Kelly to be COO and president, and he is now CEO, president, and chairman.)

But, he does have great advice in other parts, I think:

It is time to get back to basics, get costs under control, be the low-fare carrier in fact rather than fiction, and stay the course. (Page 216)

I also found it interesting that he heavily criticizes yield management at one point, and believes that having many fare classes isn’t the right way to go.

But, despite Muse’s clear bias in some sections, this is a great book, and I think anyone interested in a great airline case study should pick it up. This book is highly informative, and should be read by anyone looking to go into the airline business. Unfortunately, it is now out of print, but I would recommend trying to get it from a library.

And, if there’s one thing I learned, it’s that Lamar Muse deserves a 737 with his name on it, in my very humble opinion.

The Legacies Start Using Social Media Effectively

When one is asked about airlines that have been using social media effectively, long-time favorites like Southwest and JetBlue come to mind. But, much to my surprise, some other carries have caught up, like American and United.

First, let’s look at American’s promotion, after the airline reached the 10,000 fan mark on Facebook:

may18

may18_4

Nice! What I found interesting is that, while the airline did ask for help in reaching the milestone, I can’t seem to find a mention of the discount beforehand. I think a nice unexpected promotion is a great move to help build up loyalty. American also deserves credit for effectively using both Twitter and Facebook at the same time.

United has taken a similar move (though, they are making it known that a promotion is coming):

may18_3

You can register for it here. It will be interesting to see how effective it is for United. Heck, it was enough for me to sign up for Mileage Plus.

It’s great to see more airlines using social media!

AirTran Ups the Ante on BOS-BWI

Ah, the Boston-Baltimore route has become such as hub of activity lately. Southwest announced service, then JetBlue decided to hop on, and now Delta is bailing. Now, AirTran has made a move to help keep O&D passengers by offering double rewards credits:

The double A+ Rewards credits promotion applies to flights taken between May 12 and December 31, 2009. To be eligible for the extra A+ credits, travelers must be a member of A+ Rewards and register for the promotion online at http://www.airtran.com before traveling. A+ Rewards signup and promotion registration are free. Double A+ credits are earned by passengers traveling on nonstop flights between Baltimore/Washington and Boston.

Click here for the press release.

I would expect something similar to come out of Southwest. They often offer bonus credits when a new destination is launched, and I don’t see why BOS and LGA would be any different. I wouldn’t be shocked if JetBlue came out with something as well.

Sunday Video #25

I’ve been seeing this video a lot lately – thanks to Craig for passing it along to me. I think it’s a fantastic advertisement!

YouTube Preview Image

Saturday Links #45

  1. Patrick Smith, writer of the “Ask the Pilot” column on Salon.com, had a nice piece in Reader’s Digest. (via One Mile at a Time)
  2. United is following the lead of fellow Star Alliance carrier US Airways and tacking on a $5 fee for checking a bag at the airport. (Might Continental eventually join in to provide consistency among Star carriers?)
  3. AirTran will have its entire fleet of aircraft equipped with Wi-Fi service by the end of July.
  4. As usual, Evan Sparks has a great post about government in aviation, and this time its about how disorganized it can be. Your tax dollars at work!
  5. There were hearings on Colgan Air flight 3407 this week, and they had some interesting results. (More on this next week here, maybe.)
  6. In other Colgan news, the wheel of one Q400 came off upon landing in Buffalo.
  7. The former America West pilots won their lawsuit against US Airways “East” pilots this week.

Oil’s Back

Sorry to seem like a Debbie Downer, but take a look of this graph of EIA data that goes from March to a few days ago. Oil has had a nice little run, especially in the past couple of weeks.

may14

Now, of course this could be a bad thing since it can equal higher costs for the airlines. But, if you’re in the camp that believes that the commodities market is a leading indicator of a recovery (myself included), then this could be a  positive news. It certainly doesn’t mean we’re out of this recession, but it could mean the worst is over.

Of course, there’s also the argument that the declining dollar could be a factor, which makes sense.  Generally speaking, a declining dollar will lead to higher oil, which is priced in terms of dollars. And I think there is some validity to this argument. While the dollar gained on some major currencies during the past few months , that trend has been reversing a bit. Take a look at this graph of the euro vs. dollar, for example.

Either way, while the focus sifted from oil prices to low demand in recent history, I think oil is slowly becoming an important issue again, and I’m sure hedging will probably be coming up more often during second quarter earnings calls.

Iberia Feels the Pinch

Iberia posted a net loss of 92.6 million euros in the first quarter, and in a press release the Spanish carrier detailed some of the adjustments it would be making.

There will be some capacity cuts. While the airline won’t be dropping any cities from its route map, there will be some reduced service. As a result, five A320s will be taken out of service.

The airline is working on some measures that is says will reduce losses by 110-125 million euros. These include temporary layoffs, a hiring freeze, cutting back on rental space, etc. The airline also announced a decrease in investment spending on projects like such as renovation projects by about 80-90 million euros. But, the airline does say that:

However, all investments aimed at improving services to customers will continue, such as the spending of 7 million euros to improve VIP lounges at the Madrid hub and elsewhere. The renovation of tourist class on long-haul aircraft will also go ahead.

I do hope Iberia knows what it’s doing with that one. While I’m all for trying to improve the customer experience, I wonder if these improvements will have any effect on revenues. (Such as if the refurbished VIP lounges will help attract more premium passengers.)