Monthly Archive for March, 2010

JetBlue and American To Establish Partnership

Published
by
Dan Webb
on March 31, 2010
in American and JetBlue
. 1 Comment

I have established a new rule of thumb – whenever I don’t have time to write, an exciting airline announcement comes out. For example, I’ve been busy studying for a marketing exam, and today JetBlue and American announced a partnership, which I think is huge!

What’s motivating this partnership? I think JFK is the biggest part here – Delta has said on many occasions that they want to “win” New York, with efforts both at LaGuardia and Kennedy. JetBlue and American are the other two big players at JFK, so by partnering up and creating an interline agreement the two players can join forces and increase competition with Delta.

The interline agreement is only for routes where the two airlines aren’t competing with one another – so American customers will be able to book JetBlue nonstops out of JFK . On the JetBlue side, this means that those travelers will be able to tap into American’s network, especially the airline’s international network out of JFK. More on that in the a minute. There will be interlining taking place in Boston, as well. For American fliers this opens up eighteen new destinations.

At JFK JetBlue will also be giving up twelve slot pairs at JFK to American. Of course, American has to make a good deal to get that number of slots, so they will be sending eight DCA slots over to JetBlue, who plans to start service there in November. Some readers might remember that as part of the new proposed Delta/US Airways slot swap deal US would give JetBlue five slots there. If JetBlue ends up getting all thirteen slots (the US/DL deal would have to be approved for that to happen), it could certainly start running plenty of frequencies to DCA from Boston or New York. Does JetBlue want to compete with the US Airways or Delta Shuttles? Or will they do something else with it? Hm. That one will be fun to watch, and I think JetBlue’s final strategy is contingent on the US Airways/Delta deal being approved. American will also give JetBlue a single slot at White Plains.

But back to the agreement over at JFK. My big question here is what Lufthansa thinks of this deal. The carrier holds a 17.2% stake in JetBlue and has two seats on the company’s board, and the airlines began codeshare operations a few months ago. Of course, there are some markets where American makes total sense for international connections, like this in South America. But there is some overlap on the European routes, for sure.

Anyway, on the domestic side, I think this makes total sense for American and JetBlue to beef up competition with Delta, and having JetBlue becoming a player at Reagan National is certainly exciting. But my big questions is what this means on the international side of things. Those are my initial thoughts for now – though I’m sure there will be more to discuss once everyone gets to process this.

What’s Porter’s Limit?

Published
by
Dan Webb
on March 30, 2010
in Porter
. 7 Comments

Last week, Porter Airlines announced new service from its base at Billy Bishop Toronto City Airport (YTZ) to Moncton (YQM). The fact that the flight makes a stop in Ottawa, just like the airline’s Halifax service, got me thinking about Porter’s future, especially in terms of their future destinations.

Porter operates a fleet of Q400s, which is a very capable airplane. I’ve yet to fly in one but from what I’ve heard, it’s pretty comfortable inside and also is very good economics-wise compared to similar jets. It also has decent range. According to to Bombardier’s maps on its website, Air Canada would be able to fly a Jazz Q400 from Toronto to Miami if they wanted. But, unfortunately, Porter most likely wouldn’t be able to because of its base at YTZ.

That’s because airport’s runways aren’t very long – 8/26, the longest, measures only 3,988 feet. For context purposes, Bombardier says a Q400 with 70 passengers going on a 500nm haul (about 575 miles or or 926 kilometers), 3,726 feet of runway is required. That number is based on a “standard day” of 59 degrees, so that requirement goes up during the summer.

So, how limited is Porter out of its home base? Well, the best way to guess is to look at the longest routes on the airline’s route map. Right now, that’s the seasonal Myrtle Beach service that operates twice a week, which goes away this summer. That route comes in at 687 miles. During the summer, the longest route flown by Porter is Toronto-Thunder Bay, which is 579 miles long. So, using the always-handy Great Circle Mapper, we can take a look at those ranges out of the airport, and we can see that Moncton and Halifax are both out of reach, which makes it appear why stops in Ottawa are needed.

Of course, these are just my best guesses as to what Porter can do with from YTZ without some kind of weight restrictions. And there are plenty of more cities the airline can serve easily from its home base. But eventually, there’s a limit. So what can Porter do? One option is to pursue more point-to-point routes that aren’t from Toronto.

Or another way for the airline to expand its reach is through a codeshare agreement with another carrier. The problem is figuring out who that would be. My guess is that it would make sense for Porter to link up its route network to the hub of an American carrier that can send traffic to destinations that Porter just can’t reach with its current fleet – like the West Coast. Actually, it pretty much has to be an American carrier who will be Porter’s partner. It’s not like a European carrier can fly to YTZ! :D

I’d count out any Star Alliance carriers thanks to Porter’s rivalry with Air Canada. Skyteam (Delta) could work, but apparently they’re interested in WestJet right now. Since WestJet might partner with Delta first, one might assume that a Porter-Southwest partnership could work out considering Porter’s existing MDW service. If WestJet continues to buddy up with Skyteam carriers, oneworld will be completely shut out of Canada so Porter might be the best option for them and American. One would assume Chicago service would be needed to move to O’Hare. JetBlue works as well, considering Porter’s existing Boston operation, though New York service would need to be moved to JFK. Though one issue with a JetBlue partnership is time – passengers heading west would backtrack a bit by connecting in JFK or BOS.

Anyway, Porter still has some major cities missing from its route map that it can serve easily – Philadelphia and Washington, D.C. seem to stick out the most to me. But the range of the Q400 out of YTZ does make me think about how Porter will expand in the years to come.

Anyway, since this is one of my long, rambling, speculation-filled posts, I’d love to hear your comments. :D

AirTran Responds to Southwest

Published
by
Dan Webb
on March 30, 2010
in Uncategorized
. 1 Comment

Remember that Southwest ad about its “Bags Fly Free” campaign? Well, the rampers (by the way, Southwest uses real employees in ads, not actors) in the video were standing in front of an AirTran 717. Honestly, I doubt that Southwest was taking a shot at AirTran specifically – it could’ve been any other airline, really (maybe except JetBlue). And since the ad was shot at Houston Hobby, there really weren’t a whole lot of choices as to what airline would be made fun of. :D

Anyway, AirTran decided to respond to the advertisement with an YouTube video using the old “cattle call” stereotype that surrounds Southwest’s boarding process, and also shows off AirTran’s business class seating. Of course, I could write for awhile here comparing the offerings of the two airlines, but that would be, er, boring. So take a look:

YouTube Preview Image

Really, kudos to AirTran for such a swift response. It really made me laugh!

A Very Interesting Gogo Promotion

Published
by
Dan Webb
on March 29, 2010
in Random
. 5 Comments

Well, I’m a bit late to this game thanks to a hectic week at school last week, but I wanted to share a very interesting promotion from the folks over at Aircell. Phone manufacturer HTC just released its new HD2 to the public. Currently the phone is only available on T-Mobile. Included with the phone is six free months of Gogo inflight internet service.

This is a very smart move on Aircell’s part, I think. First, smartphones are an important segment, accounting for 30% of usage, and Aircell says that it is a “growing trend.” And I would not be surprised at all if this segment eclipses laptop usage in the years to come for a few years. For example, more and more people are buying smartphones, and those who purchase one nearly always has it on his or her person, while only some travelers will be hauling a laptop with them. Second – let’s talk about battery life. If I’m on a transcontinental flight, my laptop is probably going to die after about two and half hours if there’s no power available (which is the case on many aircraft). But an iPhone/Blackberry/whatever can do a transcontinental flight with ease. Finally, I think  laptops are pretty cumbersome to use in coach, while it’s pretty easy to use a smartphone.

But here’s another interesting point on branding. Aircell likes advertising the Gogo brand, and airlines that have the service need to display the Gogo logo, etc. That’s one reason Southwest ended up picking Row 44 – it has completely control of the branding. We’ll have to see how that decision pans out.

Latest ATA Yield Data

Published
by
Dan Webb
on March 26, 2010
in Finance and Industrywide
. 0 Comments

Earlier this week the ATA released its latest monthly yield data with February’s results, and thanks to favorable comparisons the results look pretty good when one looks at year-over-year change:

But before we get too excited, let’s look at a couple of other things. First, here’s year-over-year comparisons for this month’s results compared to 2009 (shown in the graph), but 2008 and 2007 as well.

Another handy graph is the 12-month moving average of yields:

So, basically, yields have been slowly increasing or staying flat for the past three to four months. But considering the results that we’ve seen in the past year, I’m cool with that.

You can see the raw data here.

The Slot Swap: Other Airlines Share Their Thoughts

Published
by
Dan Webb
on March 25, 2010
in American, Continental, Southwest, United and Virgin America
. 0 Comments

Yesterday, I wrote about the latest moves in the slot swap and the additional four airlines that have now become players in the deal. But other airlines submitted comments to the FAA/DOT about the issue, and I found some of them interesting. While they might not be directly involved in the deal, they do have other interests that could be potentially affected by it. So let’s review.

Virgin America

One might wonder why Virgin might be commenting here. They’re a West Coast airline, and due to the perimeter rules at LaGuardia and National they could not fly there anyway. Currently, the airline flies to New York’s JFK and Washington’s Dulles form its Los Angeles and San Francisco bases. Well, Virgin is more concerned about other slot-controlled airports in general. From its comments:

…the US Airways—Delta transaction should, however, only be the first step in addressing the serious competitive problems at each of the slot-controlled airports in the United States. In this regard, the DOT/FAA’s stated concerns and policies outlined in the proposed decision for LGA and DCA should also be made to apply equally at Newark’s Liberty International Airport (“EWR”), where one airline—Continental—has been awarded the overwhelming majority of slots, 73 Fed. Reg. 29550 (May 21, 2008), and controls nearly 65% of all domestic passenger enplanements 3 as well as at New York’s John F. Kennedy International Airport (“JFK”), where Delta and one other airline have been awarded the majority of all slots at that airport.

(Emphasis mine.)

And then:

…Virgin America further requests that the DOT/FAA quickly move forward to create a permanent mechanism by which new entrants and limited incumbents may gain entry to these or any other slot-controlled airports…

So Virgin basically wants it easier for them to get more slots, and of course they would qualify since they would be a “limited incumbent” at JFK. Looking for ways to get new slots is nothing new for them.

American/Continental/United

I’m grouping these guys together because they all had the same basic message here – that the FAA is not authorized to require these slot divestitures. A big reason for submitting these comments is because they have interests at other slot-controlled airports. But while all the airlines had the same general point, but I did find some interesting nuggets in each: Continue reading ‘The Slot Swap: Other Airlines Share Their Thoughts’

Delta and US Airways Adjust Slot Swap

Published
by
Dan Webb
on March 24, 2010
in AirTran, Delta, JetBlue, Spirit, US Airways and WestJet
. 3 Comments

Remember the slot swap? The one that many thought were dead when the DOT announced the concessions that it would require? Well, US Airways and Delta announced their own compromise earlier this week that’s very interesting. The airlines says that if this idea isn’t approved by the DOT, the deal’s off. So here’s the breakdown of the deal.

First, let’s take a look at Washington-National just because it’s the simpler one. DOT/FAA wanted US Airways to give up 14 of its 42 (33%!) of its new slots, a pretty hefty piece of the pie. US Airways has said that if the deal is approve, it will give JetBlue five slots at the airport. DOT wanted carriers that didn’t serve or had a small presence at DCA and LGA, and JetBlue fits the bill since DCA would be a brand new destination for them. JetBlue has said that they’re interested in the airport, though it’s kind of tough to guess where they’ll serve. For example, flights to their hubs in Boston and New York would make sense for connecting traffic, but there’s plenty of capacity in these markets already. And that pesky perimeter rule prevents service to the West Coast. Florida service could be likely as well.

Next up is LaGuardia, where Delta plans to sell up to five slots each to AirTran, Spirit, and WestJet. AirTran and Spirit are already there, but their share is small enough (less than 5% of slots) to satisfy the DOT’s guidelines. If the deal were to go through, this would be WestJet’s second attempt at LaGuardia service after cutting Toronto flights in 2005. Right now the airline is present in New York with a seasonal flight to Calgary from Newark, though that couldn’t be moved over due the perimeter rule. So Toronto and Montreal would be the big markets here, both of which already have Air Canada service. Porter goes to Newark, too.

So what will the DOT think of this one? I’m not so sure. For LaGuardia Delta comes close to what the DOT wanted by giving up 15 slots (DOT was throwing around the number 20), or 75% of what the DOT was suggesting. But US Airways is only offering up 35% of the DOT’s suggest divestiture.

But if this works out, it’s certainly good news for Delta and US Airways. By selling slots to specific carriers and only giving up to five total, they get to control the amount of competition present at the airports. And the limited amount of competition was something that was brought up by Southwest in Monday filing on the slot swap – and they were talking about the larger number of slots that was being suggested by the DOT.

Southwest and a few other carriers submitted comments to the DOT about the deal earlier this week, and tomorrow I’ll be covering those in more detail.

Want to Win a Trip To Australia? Here’s Your Chance!

Published
by
Dan Webb
on March 23, 2010
in Random
. 315 Comments

If you read other BoardingArea blogs (and you should!), you’ve most likely seen the current contest that’s going on as the result of a partnership between BoardingArea and American Express. The prize?  A seven-night trip to Australia’s Gold Coast that includes roundtrip airfare, hotels, meals and transportation. Awesome. Oh, and you’ll earn miles and points on the air and hotel, too.

So how can you win said awesome prize? Simple, just answer this question in the comments section of this post: What’s your top tip for travelers who want to earn and use their loyalty points? There are twenty blogs doing this, and you can enter on each one.

You can check out all the details here, and see the terms and conditions here.

Good luck! Get commenting! :D You have until March 28 to enter.

Delta Announces New LAX Service, Expands Shuttle to Chicago

Published
by
Dan Webb
on March 22, 2010
in Delta
. 1 Comment

Last week, Delta had an interesting announcement, which involved boosting LAX (primarily by reinstating canceled service), and expanding the Delta Shuttle brand to the New York – Chicago market.

First, let’s look at LAX. First, Delta is entering the Los Angeles – San Francisco market. You’d think that with all of the competition on the LA – Bay Area route, Delta wouldn’t want to touch this route with a ten foot pole, but they’re not going here for O&D traffic only. In the press release announcing the new service, the airline cited that the service would help connections for those flying to LAX on SkyTeam partner carriers. Delta is going with five frequencies per day, three with CRJ-900s, and two with 737-800s.

Delta will be using the 737-800 on some of the new routes. Photo credit: Delta.

Next for LAX, Delta has announced nonstops from Columbus, Hartford, and Raleigh. That service really isn’t new – Delta is reinstating the routes after cutting them in 2008 as fuel prices were rapidly rising. Columbus service will be daily, and Hartford and Raleigh will run Sunday-Friday. It’s great to see the service come back, though I’m not a big fan of the westbound schedule – every departure is in the evening, which isn’t all that convenient. Hartford’s flight, for example, leaves a bit before eight, and arrives a few minutes before 11 in Los Angeles, which doesn’t seem to be all that attractive to passengers. My guess is that the motivation behind the schedule is utilization – these aircraft were probably going to sit on the ramp overnight anyway, so Delta can do that instead of adding aircraft. Meanwhile, the eastbound flights are all redeyes.

But let’s get to the meaty part of the announcement – the expansion of the Delta Shuttle brand to Chicago. Right now, Delta has nine roundtrips between Midway and LaGuardia. Those will be going away in June 10 (though the Delta.com schedule has yet to be updated), and the service will move over to O’Hare with an additional two roundtrips, for a total of 11.

So, why move over? Well, I guess one could say that O’Hare is considered the “business” airport for Chicago, even though one could make some good arguments for MDW being better. (The way I see it – MDW is close to downtown and more convenient if you’re visiting, but ORD does have good access for those who live in some Chicago suburbs.) This move puts Delta head-to-head with United and American, who will have 16 and 17 departures from ORD on June 10, respectively. Clearly, Delta is putting its money where its mouth is in terms of winning New York.

The service will be operated with Embraer 175 aircraft, just like the current service to Midway. Delta also uses the 175 on the shuttle route from LaGuardia to Washington-National. That will help Delta for a couple of reasons. First, it restricts the capacity they’re throwing in so it makes the move a bit less risky. But more importantly, that means they’re paying the lower costs for regional carrier service, which gives them a bit of an edge over the competition. (Though United does have a few E170s on the route already.)

Another exciting part of this announcement is that we might actually see the airlines compete on product. Because it’s a Shuttle route, Delta will offer free coffee, tea, and newspapers at the gate, give out free bagels in economy before 10 AM, and provide free wine and beer in economy as well. Plus, Delta is offering a meal in first class on the route, even though it’s less than 900 miles (the threshold on other routes).

So that makes me wonder if United and American will be doing anything to compete. Right now, ORD-LGA is part of United’s poorly-promoted Business1 service. That used to include meals, but has since been watered down over the years. I wouldn’t be surprised if United breathed some new life into that product.

Anyway, interesting stuff from Delta. Let’s see how it works out for them, especially ORD-LGA.

A Few Route Announcements from Virgin America

Published
by
Dan Webb
on March 19, 2010
in Virgin America
. 2 Comments

Virgin America made an interesting announcement yesterday with some route developments. First, service between San Francisco and Orange County is going away on May 26. My guess is that yields weren’t all that great on the route – United was already there and Southwest hopped onboard once Virgin announced service. So Virgin probably saw greener pastures in other markets. And those markets are Orlando and Toronto.

There aren’t really a whole lot of details on Toronto yet, as all that Virgin has done so far is apply to the DOT for authority to fly there, and the earliest service will start is this June. Not surprisingly, there will be one nonstop each from SFO and LAX. The former has service from Air Canada and United, and the latter has service from American and Air Canada.

Orlando will be Virgin’s second Florida destination after Fort Lauderdale was launched a few months ago. Orlando is also interesting since its a pure leisure market, while Virgin has traditionally been focusing on routes with strong business traffic.

San Francisco is the smaller of the two Orlando markets (a bit more than a third of the LAX market), and I think it also has the most logical schedule. There’s only one other player in the market, United, with a daily A320 roundtrip, and Virgin completely avoids them. United’s flight from SFO leaves at 3:15 pm, and the MCO-SFO flight leaves at 6:55 am the next day. Meanwhile, Virgin’s flights are at 9:50 am and 6:00 pm, respectively. I think that’s a smart move on Virgin’s part. Its also worth noting that the two airlines probably have different objectives here – Virgin is most likely focusing more on O&D, while United probably has SFO connections in mind.

But for Los Angeles, Virgin’s schedule competes with everyone else’s, though it is a bit harder to avoid competing flights (and do well) when there are already five nonstops total from American, Delta, and United. Virgin’s LAX-MCO flight departs at 8:25 am, five minutes after American’s morning departure. Meanwhile, the MCO-LAX flight departs at 7:15 pm, 15 minutes after United, and 25 minutes after Delta. That competition should explain why Virgin’s introductory fare on the route is $50 lower than SFO’s.

I’m really interested in how Virgin will promote this service, as I really think they have a good product for traveling families. They have a very strong in-flight entertainment product, and power at every seat to keep kids’ electronic toys charged for the entire five-hour flight.

So, Virgin keeps on truckin’. I’m interested in seeing their fourth quarter numbers. The DOT releases the results for all carriers on May 10, but hopefully Virgin will give us an early peek. Meanwhile, Virgin has said many times that it’s been examining Chicago as a market, but nothing has moved there. They’ve claimed that it’s been hard to negotiate for gate space, but I wonder if there are any other factors in play.

Photo Credit:

http://www.flickr.com/photos/slasher-fun/ / CC BY-SA 2.0

A Quick Look at Boston-Baltimore

Published
by
Dan Webb
on March 18, 2010
in AirTran, JetBlue and Southwest
. 5 Comments

Earlier this week, AirTran said it would be offering double A+ Rewards credits between Boston and Baltimore for trips booked and flown between March 15 and May 21. The airline has run a similar promotion before, but has now sweetened the pot by making those bonus credits eligible for elite status. My guess is that AirTran wants to build up some loyalty, since right now consumers only concerned about price can find a great fare Southwest, AirTran, or JetBlue.

That promotion made me want to investigate the market by looking into T100 data – and it’s very interesting to look at. Traffic has flourished with passenger counts increasing over 150% year-over-year in December (the most recent data). And control of the market has shifted a good amount. In December 2008, AirTran had over 70% of the market with some competition from Comair. In December 2009, AirTran was still the dominant carrier, but its market share had eroded to 48%.

Fares on the route decreased over 28% to $95.65 in the third quarter of 2009 compared to the same period the year prior. That number, however, doesn’t paint a clear picture since Southwest entered in the middle of August and JetBlue launched in September. We’ll probably get some more clarity once the DOT’s fourth quarter data is released.

But this is a market that I’m very interested in and want to study further, especially in terms of connecting passengers. For example, how many of Southwest’s passengers are using Baltimore to get to the rest of their network? The same question can be asked for AirTran. Meanwhile, how many JetBlue passengers on the route are going to Boston to tap into their network? Hopefully my professors will be kind in the homework department in the near future so I can check things like that out. :D