Yesterday, V Australia announced that it would be codesharing with Emirates on routes between Australia and New Zealand. While I was originally scratching my head on this one, it makes a lot of sense.
Virgin Blue chief Brett Godfrey with Richard Jewsbury, an Emirates SVP.
(Source: Virgin Blue)
This deal is a win-win for both airlines. Emirates will get some extra passengers on its flights to Sydney from Christchurch and Auckland, and V Australia can hopefully get some New Zealand passengers on its longhaul flights to the States, annoying Air New Zealand.
V Australia has had an agreement with fellow Virgin Blue carrier Pacific Blue to get New Zealand passengers, but the Emirates adds some new things to the mix. Virgin Blue tells me Emirates has better timing (though V Australia did play with its flight times a bit) and Emirates offers business class. I think the latter is the biggest factor. Pacific Blue has a premium economy cabin similar to business class found on domestic European flights, but obviously that pales in comparison to Emirates’ superior international long-haul product.
Virgin tells me, however, that the partnership with Pacific Blue will continue.
Anyway, this is a smart move, I think.
United released its latest third-quarter guidance yesterday, and it appears to be telling the same story as a lot of recent data: it’s still rough out there, but things might be improving a bit.
On the revenue side, things look a bit better. Mainline PRASM is expected to decrease 17.8-18.8%, and consolidated PRASM is forecasted to decline 15.8-16.8% year-over-year. These declines compare favorably to declines of of 19.5% and 17.2% in the second quarter, respectively.
The cost side looks pretty good as well. Earlier this year, United was predicting CASM ex-fuel and profit sharing would either be flat, or up a maximum of 1%. The airline is now predicting a decrease of 0.5-1%.
What continues to impress me with United is how the regionals have picked up so much flying. Year-over-year mainline capacity in terms of ASM will be down about 8.4% in the third quarter, but regional ASMs will be up 15.2%. But, I guess that’s what happens when you eliminate a big chunk of the narrowbody fleet.
In terms of cash, United expects to have $2.6 billion at the end of the quarter, and the company says that it “has other liquidity initiatives underway that it expects to complete in the fourth quarter.”
More light should be shed on the revenue situation when the ATA releases yield data next week. Improvements in PRASM look good, but that statistic isn’t just a measure of revenue, it also shows how well the airlines are measuring capacity.
Photo credit:
http://www.flickr.com/photos/lrargerich/ / CC BY 2.0
From a press release today:
Delta Air Lines today announced that it is planning a private offering of $500 million in aggregate principal amount of senior secured notes due 2014. Delta intends to use the net proceeds of this offering, together with initial borrowings under its proposed new senior secured credit facilities, to repay all outstanding borrowings under Northwest’s senior corporate credit facility and to use any remaining net proceeds for general corporate purposes.
In a new report yesterday, IATA reported that through August, airlines have raised $15 billion in cash this year, $12 billion of which was through debt offerings.
Last week, Virgin Atlantic updated its baggage policy, and will be adding a second bag fee for economy passengers starting November 25th. This move is in-line with moves that American carriers have made on their transatlantic flights.
Virgin Atlantic has offered two free checked bags for those in economy, but that allowance will be cut to one. If the fee for the second bag is paid online, fliers are charged $48, but passengers who check their bags at their airport will have to pay $60.
Premium Economy passengers will still have two free bags, three for Upper Class, and Flying Club Gold members will receive one bag additional to their allowance. Virgin still allows for one free bag of sports equipment.
There are a few exceptions – those in economy traveling from Heathrow to either Nairobi or Lagos can have an extra bag, as can economy passengers flying from the United States to India.
While I’m never a fan of new fees, this move does simplify things a bit. Virgin’s current system has a system by piece on some routes, and by weight on others. Now, everything will be done by piece.
Details can be found here.
Photo Credit:
http://www.flickr.com/photos/eisenbahner/ / CC BY 2.0
Delta mainline is coming back to PVD! Technically we got it when Delta merged with Northwest, but that doesn’t count in my book. Delta has been relatively nice lately – the usual three CRJ-700s became CRJ-900s, and now the midday flight has turned into an MD-80.
Sorry…I’m just really excited about this. 
Delta has released its latest guidance for the third quarter, and it looks good.
First and foremost, it is predicting an increase in operating margin by 3-4%. Back in July, Delta predicted a 1-2% increase. For the full year, the airline is forecasting a breakeven operating margin.
Mainline CASM ex-fuel is expected to rise 1-2%.
For traffic, Delta’s forecasts for the third quarter seem in line with predictions from July.
In terms of yield, Delta said:
System yields for September – December 2009 are expected to be 11-14% lower than the same period last year. Yield pressure is being driven by the prior year period’s fare/surcharge peak related to fuel, the effect of which should lessen throughout the December 2009 quarter.
Yield was down 19% in the second quarter.
Overall, this looks pretty good. Hopefully other legacy carriers will have similar results. We only have a couple of weeks left in the third quarter, and we should see results in about a month’s time, and we will probably see some guidances from other airlines before that.
Yesterday, Porter Airlines launched service to Boston’s Logan Airport, with three daily flights to Toronto’s City Centre Airport.
(Original photo – licensed by Creative Commons)
The airline faces competition on the route – Air Canada operates flights to its Toronto hub, mainly with mainline E-Jets, while American has a few ERJs a day. Despite the other service, I think Porter will do well as long as it keeps fares competitive. City Centre offers convenience, and the airline has a very nice inflight product. (I mean, heck, they have free booze. ) If Porter starts doing well, I wouldn’t be too shocked if American decided to drop the route altogether.
My next question, though, and this is still years away – but what’s next for them? Porter has clearly found a niche, but there’s only a finite number of decently-sized markets within a short range. The Q400 does have a decent range, but it best competes with jets (at least in terms of speed) on shorter routes. In addition, Porter’s future fleet choices are probably limited by the airport – City Centre’s longest runway is almost 4,000 feet.
Right now, Porter operates 13 Q400s, with 7 more on order.
Who cares about losing Frontier?
Last week, Southwest announced one new flight to Spokane from Denver, which will compete with United and Frontier, and Reno, where the airline will only compete with United.
Two nonstops to Boston were also announced. Southwest has been expanding Boston pretty fast – St. Louis was recently added and now Denver has been added to the mix, where Southwest will compete with JetBlue and United, though, to be honest, I don’t think Southwest won’t have any big issues filling those planes with only two flights a day. Southwest just needs a bit of O&D, and Denver should open up a good number of connecting opportunities to the West Coast.
All of the new flights will begin on January 10.
In other Denver news, last week Frontier announced that it will begin service to Ft. Myers on November 21.
I noticed that at some point during my time at NBTA, I received one of these cards in a goodie bag, I think:
It just seemed that this was an interesting thing to hand out – was the airport hoping some airline executive would notice and contact them?
Last week it was rumored that Delta was interested in taking a stake in Japan Airlines. Well, it’s now been reported that Air France and American are interested as well.
I’d love to see when each airline started talking to JAL. For example, did American start talking with them after Delta and/or Air France-KLM? A purchase by either would probably mean JAL leaving Oneworld for SkyTeam, which would certainly be a blow to the alliance.
In the SkyTeam arena, who is a better fit for JAL – Air France or Delta? Air France and JAL do have a codeshare agreement in place on some routes. Either way, the JAL addition would enhance the alliance’s Asian position. Korean Air and China Southern are already members.
But there are a few other things going on in the background. For one, the United States and Japan are working on an open skies agreement that they wish to complete by the end of this year. Second, All Nippon Airways (ANA) is looking for antitrust immunity that would allow it to enhance its partnership with its Star Alliance partners.
Yet another factor here is Tokyo’s airports two airports – Haneda and Narita. The setup there is similar to what Washington, DC has with National and Dulles – Haneda is closer to the city and has mainly domestic flights, while Narita has the long-haul flying. Haneda, however, is getting a fourth runway and a new international terminal, and the airport will be opened up to more overseas flying (there are only a few international flights currently). A stake in JAL might help to give these airlines access to that airport.
Another thing I was thinking about – in its recent deal with US Airways, Delta gave the airline some rights to Tokyo for a future flight from Phoenix. Was Delta in discussions with JAL at that time?
Anyway, this is certainly very interesting!
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