Monthly Archive for June, 2009

A Little Piece of Airline History

Those who have been long-time readers of the blog know that I enjoy collecting inflight magazines (I finally crossed the 200 mark this year). My friend Martin Rottler was able to make a significant contribution to my collection as he was uber-generous and let me have one of his copies of the final issue (March 2009) of Northwest’s World Traveler magazine. Thanks for being so kind, Martin! This is definitely one of the highlights of my collection. :D

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Airplane Geeks Episode 54

This week, Max, Rob, and I are joined by fellow BoardingArea blogger Ben from One Mile at a Time. We have a load of news stories, talk about Ben’s mileage running activities, and more!

Take a listen here.

Is Republic Becoming the Next Independence Air?

My friend curbcrusher from FlyerTalk sent me this article from the Indiana Business Journal this past weekend, and while the article has a few errors (i.e. saying that Republic is still flying for Frontier), it brings up an interesting, point, especially:

Republic’s foray into owning major carriers reminds Sorensen [an ex-Midwest executive, now consultant quoted often in the original article] of the unsuccessful attempt by regional carrier Atlantic Coast Airlines to enter the mainline business.

For those of you who don’t remember, ACA flew CRJs for United. ACA didn’t like the deal that United offered them, so they decided to go out on their own and re-brand themselves as Independence Air, with a hub out of Dulles. The airline ended up shutting down in 2006. Is Republic’s situation all that similar? I’m going to say “no.”

Most importantly, ACA was only flying for United, while Republic flies for many carriers, so they will continue to earn revenue from their regional flights. Right now, it appears that Frontier and Midwest will continue operating as separate brands, at least in the short term. (Who knows what Republic’s long-term plan is?) But, assuming Republic uses these purchases to go its own way, it’s still different than Indepdence, and two major differences come to mind.

First, the article seems to suggest that one factor in Independence’s failure is that it was new to the mainline business, but this isn’t the case with Republic’s acquisitions with Frontier and Midwest (assuming that everything goes swimmingly with those purchases, specifically in bankruptcy court in Frontier’s case), Republic is acquiring mainline carriers with experience, not going out on their own with no prior knowledge to work with.

Second, another issue with ACA/Independence was its fleet mix. Initially, the airline was stuck with CRJ-200s, which aren’t exactly the most economical aircraft. Pair that with a fare war with United out of Dulles and you get a pretty bad mix. Meanwhile, Republic just acquired a bunch of Airbus aircraft from Frontier. Independence started using A319s, and from what I remember, those routes were doing pretty well, but it was too late to save the airline once they got going.

So, that’s why I think Republic’s situation is very different.

Alaska’s Aviation Geek Night

Alaska Airlines is still a relative newcomer to the social media scene, but it’s been using it effectively basically from the get-go in my opinion, which is a lot better compared to other carriers. I think one very good example is the airline’s utilization of Twitter to get the word out about service disruptions due the eruption of Mt. Redoubt

Last week, Alaska held an Aviation Geek Night for fifteen lucky tweeps, which I think is just great since I always enjoy things that show what’s “under the hood,” so to speak. Attendees were able to have fun in the 737 trainer, have fire extinguisher training, and even spend some time in the simulator!

I think this is just awesome. First, kudos to Alaska for putting this on for free. Second, while I love social media, I still think word-of-mouth is one of the most effective forms of marketing. Gee, do you think the attendees might tell their friends and family about this experience?

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The group, along with Elliott Pesut (far right), Campaign Management Specialist at Alaska and the man behind the airline’s Twitter account (@AlaskaAir).

More pictures (all of them from Alaska’s Facebook page) after the jump. Continue reading ‘Alaska’s Aviation Geek Night’

Come On, Delta, Pick a Team!

As a Mets fan, I am disappointed that Delta is also the official airline of that “other team.” (Especially after that horrid subway series!) :D

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Sunday Video #29

I can’t say this was the smartest idea, but it is pretty funny…

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Annoying Airline Reporting #1

Yes, another cheesy post series. You’re welcome. :D

When I read stories about airlines from the mainstream media, there are sometimes some obvious errors. I’m not expecting every reporter to be a total expert on the industry, and nor am I trying to say that I’m perfect. But, there are some things that are just plain wrong, and even annoying to read.

For example, we have this article from CNBC:

Low-cost carrier Ryanair this week revealed plans to scrap luggage check-in desks, saying passengers will have to take their own bags through security, departure lounges and across the runway to their plane, according to various media reports.

Across the runway? :D

Saturday Links #49

  1. Looking for a European market that had airline traffic growth in May? How about Latvia? Anna.aero has some very interesting traffic statistics.
  2. The climate bill passed the House by a pretty close margin yesterday, the ATA had a couple of interesting press releases about it. (Here and here.)
  3. Qantas canceled 15 787 orders and deferred 15 more. Not surprisingly, Jon Ostrower has all the details.
  4. The first flight of the 787 was pushed back again this week. Jon has all the details on that one, too.
  5. Oh, look, O’Leary has a new idea: passengers will carry bags to the aircraft. O’Leary also said that “this is so much fun. I love recessions. You get the chance to kick the —- out of everybody.”
  6. WestJet has some plans to utilize Twitter. (Finally – for awhile there it seemed they were only updating sporadically.)

United Turns to the Bond Market

The industry has been approaching the capital markets recently, with the latest to be US Airways and JetBlue. Now United is joining the mix to get some cash. The company will be offering bonds worth $175 million at maturity, but they will be “will be offered at a discount from their principal amount at maturity.” (Probably because United’s offering a low-ish interest rate, but I’m no bond expert.) The bonds will pay quarterly interest and mature in July 2012.

According to the SEC filing:

The Notes will be secured initially by a lien on all spare parts owned by United which are located in the United States (subject to certain exceptions) that are appropriate for installation on or use in Airbus model A319 and A320 aircraft and Boeing model 737, 747, 757, 767 and 777 aircraft or on any engine utilized on any such aircraft and may also later be secured by certain other collateral owned by United.

The ratings, B2 from Moody’s and B+ from S&P, put the bonds below and investment-grade and technically makes them “junk bonds.” But hey, it could be worse – they could be Cs! :D

Anyway, will be interesting to see how this all plays out. It definitely would be nice if United can get some extra cash, but of course they have to pay it all back eventually.

Should Airlines Fear High-Speed Rail? (Part 2)

Back in April, I wrote a post entitled “Should Airlines Fear High Speed Rail?” and I discovered that a blog called “Trains for America” picked it up about a month ago and brought up some interesting points in response to my post. Unfortunately, due to my vacation and other things, I really haven’t had the opportunity to respond until now. So, let’s get to it! :D

First, the author writes:

It’s certainly well-written and interesting, but, naturally, holds views rather divergent from TFA. And geez, take a look at some of the other posts. How come no one talks about rabid “plane-fans”?

Well, thank you for the compliment, but what does that last question mean?

Anyway…

Let’s just ignore for now the many times that airlines have received large bailouts from the federal government.

This statement is probably a response to my point that airlines operate on a profit-and-loss basis, while government-supported rail might not have to.

But many bailouts? The last large bailout I can think of was the one in response to the September 11th attacks, and the only constant federal aid provided to airline routes that I can think of right now is the (non) Essential Air Service program. Nevertheless, the author seems to assume that I support government aid to the airline industry, and in most cases, I don’t. If an airline came up to the government today and asked for financial assistance due to the weak economy, I wouldn’t support it.

Next:

And yes, high-speed rail and trains in general should be supported by government; the service rail provides to communities large and small is more equitable, clean, and efficient than air and car travel.

I think a good discussion could be had about the “clean” and “efficient” aspects, but “equitable”? That’s just one of those vague words that can work in some political arguments (Mr. Webb, how dare you not support a transportation system that isn’t equitable?), but doesn’t really say much, because it can mean different things to different people.

The author goes on:

The mistake that air carriers in the past, including, as the blog mentions, Southwest, have made is that they view high-speed rail as competition rather than an opportunity. Let conventional/high-speed rail take over these short/medium haul routes and make sure that there are connections to the airports. This way, passengers can be funneled into the more profitable long-haul routes and the carriers don’t have to subsidize the connecting flights.

Just let them “take over”? How is this supposed to work out? Are the rail lines supposed to make the flying unprofitable by using the good ol’ government ATM as funding? (Clearly, the airlines should apply for bailout money at this point, in order to project American jobs. :D )

The blog then goes on to use the example of Air France-KLM considering getting more involved in high speed rail, which is absolutely fine. They’re a free business, if they think it’s a smart investment, go ahead!

But on to the comments, which were very interesting (especially one from Allan), but I’d like to focus on the points made by the commenter Alex, who writes:

Like the “roads pay for themselves” argument, I am tired of the airlines pay for themselves argument. Weren’t the airports built by government?

Alex seems to have screwed up “airlines” and “airports,” as I am talking about the latter. While local governments do help pay for airports, they don’t start up airlines to use the airport, unlike government-subsidized rail service. And I’m all for attracting more private investment into airports, which is why I’m following what happens at Branson’s new airport. But anyway, if rail was to follow the system I was talking about, governments would help build stations and rails, but wouldn’t start up service, too.

Alex also writes:

Do airline landing fees really cover the full cost of maintenance, upgrades and renovations? I don’t think so, because flying from any Asian, European, or even a Canadian airport like Vancouver, and landing at most American airports is like time traveling back 20 or 30 years.

Clearly, Alex hasn’t been looking at terminal renovation projects here in the States (JetBlue’s new JFK terminal comes to mind). But Alex’s points make the argument moot, anyway, as he suggests that airports can’t cover their costs. But if high speed rail needs government help, then it can’t cover it’s costs either. Hmm.

And he continues:

What happens when oil goes back up to $100 or $120 a barrel. Sure, airlines will always be around for long distance travel, but for shorter hauls? Will they be around? Shouldn’t we be planning for the future? Why is this country incapable of looking ahead more than 2 or 3 years!?

I would simply say that this industry always has to look ahead more than two to three years, especially the aircraft manufacturers, since designing and building a new airliner is no quick task. And clearly the firms are planning to have airlines stick around in the short-haul market, just look at the Bombardier CSeries (yes, it actually has some decent range, but Swiss is going to use it to replace Avros). And obviously the aircraft manufacturers are also concerned about fuel efficiency to save costs. Why else would Bombardier be sticking a shiny new geared turbofan that is supposed to save on fuel on that aircraft?

Before I close, I’d like to note that I’m not an anti-high speed rail person (I do think it can work in some markets), and that I’m not writing against it just because I love airlines. If there’s a great high-speed rail line out there that provides good service to consumers, then that’s fantastic. I’m just weary of governmennt-funded high speed rail projects turning into things that unfairly affect other forms of transport.

AAAE: Gary Kelly’s Speech (Question and Answer Session)

Yesterday, I wrote about Gary Kelly’s speech at the AAAE convention, and today I would like to share the highlights of the question and answer session, and some parts of it were very interesting.

The first question was about business travel, and to be honest Gary’s response wasn’t too shocking – customer feedback has been positive, and the company is trying to move away from a “one size fits all” model to one that provides more customer choice.

Next up was about international service, and Gary said that Southwest’s systems still aren’t capable of generating international reservations, but that will be coming. Gary then said that since Southwest has flies only the 737, markets like Mexico, Canada, and the Caribbean make sense for consideration and that “we’ll be evaluating those [international markets] in future years, but it is not a priority.” Continue reading ‘AAAE: Gary Kelly’s Speech (Question and Answer Session)’