Monthly Archive for April, 2010Page 2 of 3

Southwest and WestJet Call It Quits

Published
by
Dan Webb
on April 19, 2010
in Southwest and WestJet
. 0 Comments

Hello, and welcome back to another exciting edition of “Airline Soap Opera Theater”! Where we last left off, low cost carriers Southwest and WestJet were preparing to consummate their cross-border relationship, but it kept getting delayed when Southwest’s work on the IT side of things took longer than expected. And then, WestJet’s new CEO said in an interview that they were interested in a partnership with Delta.

Not surprisingly, on Friday Southwest announced that it would be ending its partnership with WestJet – before the two carriers even started exchanging passengers.  Southwest says that WestJet requested “a number of changes” in the agreement, and has decided that having each airline go its own was a better idea. While we won’t know for sure, my guess is that Southwest wanted to be WestJet’s sole American partner, and WestJet started to not like that idea.

Of course, in my book, it’s not the news that is the most interesting, but what each airline will go on to do.

First, let’s look at WestJet. If a partnership with Delta actually develops that makes them even closer to SkyTeam (a partnership with AF-KLM already exists). It’d be interesting to see if they end up joining the alliance, as that’d be a first for an LCC. But it would make sense for SkyTeam – with Air Canada already tied up in Star WestJet is really the only other viable option to play ball in Canada.

Another interesting aspect of a Delta-WestJet partnership is the slot swap, an item that Southwest recently brought up in a filing regarding the compromise suggested by US Airways and Delta. Under the FAA’s proposed ruling, the airlines shouldn’t give up slots to codeshare partners. So, if Delta and WestJet were to codeshare, would that put WestJet’s possible YYZ-LGA flights in further jeopardy? I think we might have to wait on the DOT for that one.

And what about Southwest? The company’s EVP of Strategy and Planning, Bob Jordan, remarked that “we remain interested in exploring the possibility of one day offering service to Canada if it makes sense for Southwest and for our Customers. That would not rule out future codeshare relationships with Canadian carriers, or flying north of the border ourselves.”

It would certainly be interesting if Southwest were to go it alone here, but I’m not sure how interested they would be – I don’t think that any potential Canadian stations could really generate the frequency that they usually like to have. Plus, when the WestJet deal was first announced Southwest was very clear that they didn’t want their own metal touching Canadian soil – WestJet would take care of all the operations. That being said, maybe Southwest learned a thing or two about the Canadian market as it got the codeshare ready.

And what about Canadian partners? The only airline really left here is Porter. It would only take care of the Eastern half of Canada but it would be at least something. And it would make sense, I think. Porter’s range is limited thanks to the very short runway at its Toronto base – and a codeshare with Southwest could really open some opportunities to the West. Porter already flies to Midway and from my experience it is a pretty easy airport to have a connection – and it would become even easier once Billy Bishop Airport, Porter’s base, has pre-clearance facilities, it will become even easier.

As always – we’ll have to see.

Geek Test – The Answer

Published
by
Dan Webb
on April 16, 2010
in Uncategorized
. 0 Comments

Thanks to those who participated in the geek test a couple of days ago whether it be on the blog or via Twitter. People got the issue in the Midwest ad very quickly. In 2003 Midwest received its first 717s, yet the tail in the ad is that of an E-Jet. Plus, the registration is for an old Midwest 717, not an E-Jet.

And what’s wrong with the Badger? Well, no one got this one, but you had to watch Brian Bedford’s speech this week to get it. The badger will end up on an Embraer 190 but in the Frontier and Midwest ads the animal tail is on an Airbus.

Thanks for playing!

Some New Hawaii Flights Already Getting Cut

Published
by
Dan Webb
on April 15, 2010
in Continental, Delta and US Airways
. 2 Comments

The Hawaiian market has certainly been fun to watch, as we’ve seen so many carriers announce new flights there over the past few months.  I think it’s fair to say that Alaska has been the most aggressive here by starting flights out of its Seattle base but also taking advantage of routes that were cut after ATA and Aloha’s passenger operations went bust. But other airlines have been trying to get in on the action as well, and it appears that some of the flights that have been announced are already getting cut.

First, let’s take a look at US Airways. The airline decided to experiment a bit and use a 767-200 for Charlotte-Honolulu service instead of sending it to Europe. It appears that the flight now goes away on September 8 (that’s the last redeye arrival from HNL), though that same article mentions that a seasonal service might be possible, depending on the flight works out over the summer. I’m not exactly holding my breath on that one. US Airways does tell me that they’re adding a second flight from Phoenix, though. According to their timetable, it will start on September 9. Like the current single nonstop, a 757 will be used.

Meanwhile, Continental has decided to start increasing its Hawaii capacity as well. One of the more interesting moves was launching service from Orange County, a city that has lacked nonstops since Aloha left. Continetal’s flights to Honolulu and Maui will be suspended on September 12, but will come back on November 20 and December 16, respectively. So it appears the airport will hold on to the flights, albeit seasonally.

Finally, Delta is making some moves as well. Its originally announced service between San Diego and Honoulu, a route that has been tried and dropped by a few carriers over the years, is ending earlier than originally planned. The airline will begin flying the route as scheduled on June 3. Once Delta stops flying the route, Hawaiian will be the only carrier with a nonstop between the two cities.

Meanwhile, Portland-Honolulu, an old Northwest route, will be cut on August 30. The carrier tells me that the route just wasn’t profitable during off-peak times and says that that they are “are hopeful that we can serve the Portland-Honolulu route seasonally in future years.” But a competitor has already decided to hop on the route – Alaska Airlines (a partner of Delta’s) announced yesterday that it would launch daily service starting September 20, complementing existing Maui service.  Finally, Delta’s still planning to run thrice-weekly service to Honolulu from Detroit as originally announced.

So the Hawaiian market continues to be an interesting one to observe. And it will become only more interesting with Allegiant begins its service there with 757s later this year.

Geek Test: What’s Wrong with These Frontier/Midwest Ads?

Published
by
Dan Webb
on April 14, 2010
in Frontier, Midwest and Republic
. 6 Comments

Not surprisingly, Frontier is rolling out some new television ads specifically tailored for the Milwaukee market now that the Midwest name is going to be phased out. To be honest, I really like them. The first spot is says goodbye to the Midwest brand name, while the second is the same banter among the Frontier animals that we all love, while introducing the Frontier name (and the new badger tail) to Milwaukee. (Though, the Frontier name is probably already well-known in Milwaukee, considering it’s been Midwest’s partner for a few months, and Frontier A319s have been flying some Midwest routes.)

Anyway, I did notice a few little things in the ads that are a bit off. Since my first “geek test” about one of Southwest’s ads was so popular, I figured I’d do it again.

From the first ad, what’s wrong with this frame?

And then I noticed that both the first and second spot have the same error. Here are the respective frames:

No prize for this little contest, except the personal satisfaction of knowing you’re a true airline geek. :D Leave your guesses in the comments!

Frontier and Midwest to Consolidate Under Frontier Name

Published
by
Dan Webb
on April 13, 2010
in Frontier, Midwest and Republic
. 4 Comments

Well, this was the day that many – industry observers, passengers, and most importantly, employees – have been waiting for. Not surprisingly, Republic Airways has announced that it will be consolidating the Frontier and Midwest brands under the Frontier name.

Photo Credit: Midwest Airlines.

Why does that make the most sense? Well, let’s be honest – Frontier is the larger carrier of the two right now, and probably has the better brand recognition. In addition, the Midwest brand has slowly been degraded over the years. The airline that used to be known for business-class flights out of Milwaukee is not what it used to be. So I think it’s better to move on with the Frontier name. That being said, Republic will have to work at building up brand recognition. Frontier is still a “hometown” airline much like Midwest.

So what will the product look like? Well, we don’t have that many details at this point. But, Midwest fliers do not have to worry about the cookies – those will be brought to the entire merged airline. My guess is that the cookie represents an easy way for the airline to differentiate itself from competitors. Meanwhile, the Frontier fliers will be happy to know that the animal tails will be sticking around. And a new aircraft will feature a badger – the Wisconsin state animal – on its tail. And of course, the airlines’  will be merging their frequent flyer programs.

In terms of inflight entertainment, LiveTV will remain on the Airbus fleet. The airline is “still exploring other in-flight entertainment options and plan to have some form available in each of our aircraft by 2011.” That’s interesting – I wonder what they mean by “each of our aircraft.” Does that include the E135/E145 aircraft that are currently based in Milwaukee? We’ve seen other airlines put IFE on the E170/E175/E190 already, but not on the ERJs, as far as I know. But I wouldn’t be surprised if Frontier ends up with internet service at some point. 2011 is kind of an ambitious goal, and Aircell has be priding itself on very fast installations. But that’s just my guess, here.

What’s the timeline here? The two airlines plan to merge their operations – everything in the back of the house – by November of this year. So one would guess that once that happens we’ll probably see travelers booking all of their flights on one website. The complete branding integration should be completed on October 2011.

So now a huge step is out of the way – at least the airline has a single brand name to use, which I think is the right move. But their are challenges ahead. Integrating the IT systems of the two airlines is no easy task. There are still labor issues to sort out. The company needs to get all of its employees behind the new brand to ensure that customers receive a customer experience.

That being said, the company has an exciting few months, with more aircraft arriving and many new routes launching over the coming weeks. I am the most interested in how the airline develops its two hubs. We’ve already seen some moves there with Frontier announcing Denver service to some long-time Midwest cities. And plus the airline has that smaller third hub in Kansas City that is seeing a bit of growth as well. And plus, there’s that CSeries order to think about.

Anyway, this is a very exciting day. So let’s enjoy it. But of course we’ll all be having fun watching two airlines become one. Meanwhile, you can find the official website about the integration here.

On a side note, I have to laugh a bit about the whole fleet being repainted in Frontier colors. Take N874RW, an Embraer 170. The aircraft was wearing Frontier colors when Republic was operating some aircraft before Frontier’s bankruptcy. Then, it eventually ended up in a Midwest scheme.

So those are my initial thoughts for now. But I’m sure I’ll be writing more about this soon!

Merger Talk and Airline Stocks

Published
by
Dan Webb
on April 12, 2010
in United and US Airways
. 1 Comment

I’m sure that by now everyone has read about the rumors about a US Airways – United deal. To be honest, I’m not going to write about the merits of such a deal at this point – everything right now is highly speculative and I think the topic was beaten to death last week. But let’s take a look at what the merger rumors did to the respective stocks. Actually, US Airways didn’t move a whole lot – the stock was down 1.08% last week, though the rumors gave the stock a bit of a boost at the end of the week. United’s shares moved a bit more and were up 5.07% over the week.

But the most exciting moves were in terms of volume, especially for US Airways – 52.3 million shares trades hands on Thursday due to merger rumors. That’s about 370% higher than average for the past three months. But here’s a staggering statistic – that number of shares represents about a third of the entire company!

Click to enlarge.

United also saw a dramatic increase in volume, with 30.7 shares traded. That represents a smaller increase than US Airways – a 192% increase over its three-month average – but it’s still pretty darn big. Last Thursday wasn’t the stocks biggest day in terms of volume this year, however – that honor goes to February 9th with volume of 31.2 million shares. On that day United released its traffic results for January. Of course, traffic results are always important for investors, but this was the first time that United gave a monthly revenue estimate, and provided actual revenue data  back to the first quarter of 2008. It appears that investors, armed with new data,  discovered that the stock was undervalued and made plenty of buys. In fact, the stock was up 17.5% that day.

Click to enlarge.

So, naturally, merger rumors generated lots of activity in the market last week, though the news didn’t make a huge impact on the prices of shares like United’s actual revenue numbers, probably because the there wasn’t any real news here – just rumors.

Thanks, Southwest!

Published
by
Dan Webb
on April 12, 2010
in Southwest
. 0 Comments

Back in January I wrote about Southwest exhibiting capacity restraint, noting how the airline’s boost in load factor helped boost PRASM despite a decrease in yield. Apparently, Southwest thought it was good enough to put in their employee magazine, LUVLines! Each month, a blog post about the airline is featured in the magazine, which I think is great. Many thanks to Southwest for doing this, especially since this is the second time I’ve been featured in few months! (Thanks also to Southwest’s Christi Day for sending me a hard copy.)

Delta Offers Mileage Bonus on NY Transcons; American Matches

Published
by
Dan Webb
on April 9, 2010
in American and Delta
. 2 Comments

I’m a bit late to the game on this one since Delta announced its promotion last week, but I guess it was worth it since American just matched. Delta has been saying recently how much they want to “win” New York. Part of that strategy has included an aggressive move with transcontinental service that I think is very smart. The airline decided to bring some ETOPS 757s that were going across the Atlantic to domestic service. Instead of just using them along with regular domestic 757s, the company took advantage of the superior  international product onboard these aircraft and branded it as Transcontinental BuisnesElite with service to Los Angeles and United

But of course, it takes effort to gain market share in this market. American has its Flagship Service 767s while United operates its p.s. 757s here, both of which are in a three-class configuration and offer services that are closer to international service than domestic. And of course Virgin America and JetBlue are also competitors out of JFK, and Continental out of Newark, though I’d argue American, United, and Delta are the airlines mostly competing for premium traffic.

So last week, Delta announced a nice promotion for these route – 50,000 bonus miles for a roundtrip in BusinessElite, and 25,000 miles for a roundtrip in “premium” economy, though not for the most discounted fare buckets. Personally, I don’t like how Delta is calling their service premium economy. I mean, it’s a good product but, well, whatever. You can find more details about the Delta offer here.

Meanwhile, yesterday American matched the promotion – 50,000 bonus miles in first or business, and 25,000 bonus miles for the highest coach fares. You can catch all the details here.

So, if you were planning to fly this route anyway…this seems like a good deal.

Air Canada Beefs Up Service to LAX and SFO

Published
by
Dan Webb
on April 8, 2010
in Air Canada
. 2 Comments

This morning Air Canada issued a news release announcing that the company has “launched its California expansion” today with the inaugural flight between Toronto and Orange County. The airline has also announced its entrance into the San Diego market with a nonstop from Toronto beginning on June 17. But the airline also announced some interesting additions to its existing flights from Toronto to Los Angeles and San Francisco.

Both of these routes have very little competition at the moment – on each route Air Canada has four frequencies, while a US airline flies one. For LAX, that’s American. In San Francisco, United has one daily flight but Air Canada has a codeshare on it anyway. But Virgin America recently announced that it intends to launch service on these routes as early as June, pending government approval. Lo and behold, Air Canada is enhancing its service on both routes starting on June 1, which makes me think that the prospect of new competition from Virgin is the motivator for these moves.

San Francisco is pretty basic – a fifth frequency will be added using an A320. That means the earliest flight from Toronto to SFO moves up an hour and twenty minutes to 8 AM, and San Franciso will get an additional midday departure back to Toronto.

Los Angeles will remain at four frequencies to Toronto, but is replacing an A319 with an internationally-configured 767-300ER, which features Air Canada’s Executive First cabin with lie-flat beds (pictured above). The aircraft will operate the first YYZ-LAX flight be and then fly back to Toronto as the second departure from Los Angeles. So here the airline is boosting capacity but is also trying to provide a superior product (and therefore is charging a slightly higher fare compare to the other flights). On one hand I thought this might be a move to attract more premium traffic for those traveling across the pond to Europe, but the flight to YYZ arrives there at 8:09 PM. One can still make some European connections at that time but it’s definitely not the most attractive schedule for that purpose, which makes me think that Air Canada is really focusing on the O&D passengers between the two cities.

The 757 Has Legs!

Published
by
Dan Webb
on April 7, 2010
in Delta
. 2 Comments

Apologies for the short posts today. A finance midterm has gotten in the way of blogging. :D

Anyway, a friend pointed out an interesting flight that has popped up in Delta’s timetable – a nonstop from Tokyo to Seattle on a 757!

It appears that the airline is bringing one of its intra-Asia 757s back to the United States, and has decided that it would make sense to sell seats on the repositioning flight.

The route is definitely at the edge of the 757′s range, but considering that this configuration of the 757 seats less than others and that the route has a nice tailwind, it shouldn’t be a problem. But still, it’s a unique flight for sure!

Though one would guess that a SEA-NRT flight with a 757 would most likely need a fuel stop.