Monthly Archive for June, 2009Page 2 of 6

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

Published
by
Dan Webb
on June 25, 2009
in Industrywide and Southwest
. 0 Comments

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)’

Sigh…

Published
by
Dan Webb
on June 24, 2009
in Humor
. 2 Comments

Sometimes, airline reporting is just hilarious. Take this line from a BBC report:

Dozens of holidaymakers returning to Newcastle refused to fly after they were asked to act as human ballast.

Scary! More details!

A jammed hold door meant luggage could only be loaded into the front of the Thomas Cook plane at Mallorca airport.

Passengers were asked to move seats to distribute the weight, but 71 left the plane, fearing for their safety.

Thomas Cook said it was standard procedure for airlines to ensure cargo and passengers were evenly distributed, and there was no safety risk.

 I know I’m not the most frequent passenger, but isn’t moving passengers around for weight and balance a pretty common practice, especially on regional flights?

Oh well…

AAAE: Gary Kelly’s Speech

Published
by
Dan Webb
on June 24, 2009
in Industrywide and Southwest
. 1 Comment

As I mentioned in an earlier post, Southwest CEO Gary Kelly was one of the keynote speakers at the AAAE conference, and here’s my summary of his speech.

Gary started off with a great joke by saying he gave up smoking when Herb retired, and that it was all secondhand. But, it wasn’t all fun, as Gary turned right to the recession and said that Southwest really isn’t seeing much improvement in the economic environment, and that it is a difficult time for the industry as a whole. He mentioned that the industry is facing a “one-two-three punch” of low last-minute ticket sales, low demand, and rising fuel prices.

On the bright side, he did say that he thought Southwest was in good shape, as it has a strong cash position and access to new capital if it needs it. But then he mentioned that May RASM was weak and June isn’t looking much better. He also announced that this is first time that Southwest is reducing ASM capacity.

Gary then focused on new revenue initiatives like pets on board, and said that “we’re hard at work on several other near-term as well as longer-term revenue initiatives.” But, he quickly mentioned that he believes Southwest has a “very strong competitive advantage” by not charging for the first two bags and “isn’t leaving any money on the table” because of it, as Southwest is still outperforming other carriers in terms of revenue. He also claimed that the low fare brand helps Southwest in a recession, but that Southwest has had to discount fares, bringing about lower yields. Continue reading ‘AAAE: Gary Kelly’s Speech’

Republic to Purchase Midwest

Published
by
Dan Webb
on June 23, 2009
in Frontier, Midwest and Republic
. 1 Comment

Well, Republic’s been busy this week.

Yesterday, the carrier announced that it would be purchasing Frontier to bring the carrier out of bankruptcy protection. The Frontier brand will continue. PlaneBuzz brings up an interesting point – at this point in time, Republic does regional flying for United. Assuming the deal goes through, Republic-owned Frontier will now be competing with United, specifically in the Denver market, where both carriers have hubs.

Today, Republic announced its intent to purchase Midwest from TPG Group, which, in all honesty isn’t too shocking considering that Republic has loaned money to Midwest, it currently flies E170s for them, and recently it was announced that a Republic-owned company would be replacing the flying done by SkyWest. Another not-surprising part of the announcement was that Midwest’s remaining 717s will be going away and be replaced by E190s.

Alaska To Launch San Jose-Austin; Files 8-K

Published
by
Dan Webb
on June 23, 2009
in Alaska
. 1 Comment

Just after it was announced last week that American would be cutting its San Jose-Austin nonstop, Alaska announced yesterday that it would be filling the void with service starting September 2. Even with Alaska’s new service, though, the route is still seeing a cut in capacity. While it looks like American is currently flying two MD-80s, Alaska’s flight will only be one daily 737-800. One reason I found this interesting is that Alaska announced Austin-Seattle service in February. This route was also one that American dropped.

Brett Snyder makes a very good point in his post about this new route:

Alaska certainly has a smaller customer base in Austin than American does, but remember, you can earn American miles on Alaska flights, and those miles are elite qualifying miles as well. So the loyalists should support this flight.

Meanwhile, the carrier filed an 8-K with the SEC this morning, and I found a few highlights.

First, for the second quarter to date, Alaska is reporting 7.4% decrease in PRASM for May, and a 4.7% decrease for the second quarter to date. Compared to what other airlines have been reporting, that’s not too shabby, I think.

Second, Alaska is estimating to earn $30 million in revenue this year from the first bag fee, and after that it hopes to make $70 million annually from the fee.

Third, and finally, advanced load factors look good. June and July are actually positive – up one and two percent respectively, while August is down 3%. The filing reports that “June and July advanced bookings have significantly improved as the date of travel approaches.” These statisitics don’t provide many clues when it comes to revenue. While fuller planes is a good thing, it depends on who is filling the seats. For example, are the higher load factors coming from passengers looking for last minute deals? Still, it’s something positive.

Oil Prices and Currencies

Published
by
Dan Webb
on June 23, 2009
in Finance
. 0 Comments

We’ve been hearing about how the rise in oil prices can potentially be due to the devaluation of the dollar. And I think it’s a convincing case, at least for some of the increase.

Oil is priced in terms of dollars. So let’s say the dollar depreciates against other currencies – to compensate for that, the price of oil goes up. The dollar did strengthen against other currencies at the end of last year, mainly due to the horrific events in the financial markets. One reason for this is that people fled to some form of financial safety in the United States. That increases the demand for dollars, which increases their price in the form of the exchange rate. This urge to find safe investments is the same reason why we briefly saw negative treasury yields.

But, while currencies like the euro are nowhere near their highs, they have been gaining some ground. The Euro, for example, hit a low period in late February and early March, but is now essentially flat for 2009.

So, basically, if the devaluation argument holds, then any increase in oil prices should be less in currencies like the Euro that it is in the dollar. I decided to graph these prices from February 12, since this was the lowest spot price I found for oil in the EIA data I obtained.

jun22

And, if my calculations are right – in dollars, oil has increased 107.08% from February 12 to June 16, while it has increased 91.32% in euros. That’s still a big increase, but it’s a difference of 15.72 percentage points, which is pretty significant, I think.

Meanwhile, I saw a graph like this on a Financial Times blog, and decided to make my own graphing the price of oil and the value of the euro in dollars.

jun22_2

It’s actually a pretty decent fit. For the statisticians out there, I got an r-squared value of 0.83, which isn’t too shabby.

This suggests to me that indeed the devaluation of the dollar has an effect on the price of oil, whether it be current moves in currency markets or future inflation expected by traders.

And while we’re on the topic of the dollar and inflation, I once again present the scary graph of the monetary base. But this only tells half the story. The other half is the velocity of money, and you can see a graph of that here. Basically, once that picks up, well, it cold get messy, depending on what the Fed does

Anyway, more on oil later.

Interviewing Southwest CEO Gary Kelly

Published
by
Dan Webb
on June 22, 2009
in Southwest
. 7 Comments

The highlight of the AAAE convention last week was being able to interview Southwest CEO Gary Kelly, who was one of the keynote speakers. When I asked Southwest about doing this a few months ago, I figured that it was a long shot and wasn’t too likely. But, it all came together! Many thanks to Paula Berg and Chris Mainz over at Southwest for helping to arrange the interview, and of course Gary for allowing me to sit down with him. I was really impressed that I was able to do this. I’m just an eighteen-year-old blogger after all!

Fortunately, I got to the hotel in plenty of time, and soon Chris met me in the lobby. Once Gary came down, I was pretty nervous – it’s not like I’ve been able to meet one-on-one with a Fortune 500 CEO before. I was excited as well, of course. I’ll be honest, it was pretty cool to shake his hand. I was impressed as well that he told me he would object if I didn’t call him by his first name.

I think that the interview went pretty well. The only snag was that I completely blanked out at the end of the interview and forgot to ask for a picture with Gary. Luckily, I was able to arrange meeting with him again in the lobby after his speech, and I was able to get it. Thanks, Gary for being so accommodating!

phl1

But enough of my rambling. You can click here to listen to the interview. (If you’re having trouble playing it in your browser, it might be a good idea to right click on the link and select “Save Target As” or “Save Link As” and download the MP3 to listen to it.)

Neat Little Windows XP PowerToy

Published
by
Dan Webb
on June 21, 2009
in Random
. 1 Comment

I love Microsoft PowerToys, as they add nice little features for free, and I just stumbled upon one that I think is very useful for airplane and travel geeks. I’ve encountered loads of pictures of aircraft, airports, and beautiful destinations that make for excellent desktop backgrounds. To be honest, it’s kind of hard to pick one!

Luckily, I found the Wallpaper Changer PowerToy yesterday, and it’s very easy to use. Fill up a folder with pictures you want to use as backgrounds, set how often you want it to change, and you’re all set. Right now I have 11 backgrounds set up, and the wallpaper will change every 15 minutes.

You can find it here.

Sunday Video #28

Published
by
Dan Webb
on June 21, 2009
in Sunday Video
. 1 Comment

Maybe it’s just me, but I’ve always loved Frontier’s commercials with the talking animals on the tails. So here’s one of my favorites. :D

YouTube Preview Image

Saturday Links #48

Published
by
Dan Webb
on June 20, 2009
in Saturday Links
. 0 Comments
  1. Continental’s going to have a retro livery? Sweet. (Hat tip to my friend Chris.)
  2. The Paris Air Show was this week. Instead of linking to individual stories, just check out FlightBlogger and Runway Girl, who did a fantastic job covering the show.
  3. Now the DOJ wants to take a look at Continental’s attempt to get anti-trust immunity as it joins Star. Please, really, can we get this over with?
  4. Continental released results of its biofuel test flight earlier this year.
  5. Air France is considering cutting more jobs.
  6. Southwest and WestJet still don’t have their passenger codeshare set up, but the two carriers now have a cargo agreement.