Monthly Archive for January, 2011

Virgin America on IFEC

Published
by
Dan Webb
on January 31, 2011
in Virgin America
. 2 Comments

One of the most distinguishing features of Virgin America’s current onboard product is the airline’s Red system, which offers live television, movies, music, and more. The system is also utilized for ordering of drinks, food, and other onboard shopping.

I would argue that Virgin’s entertainment offerings are far ahead of other airlines in the domestic market, but that doesn’t mean the airline is stopping. In fact, Virgin is currently planning on launching an upgraded IFE system next year.

Virgin America CEO David Cush wouldn’t share all the specifics with me when I spoke with him last week, but he still mentioned a few very interesting features.

David said Virgin passengers will find “more entertainment options than you have today” on a “bigger, clearer screen.” He also mentioned new “interactive features” that will allow users to “interact with other guests on the aircraft as well as guests on other flights while you’re in the air.”

Virgin’s current system already has some features to allow passengers to interact with each other, like seat-to-seat chat, but interaction with people on multiple flights is new. “It may be gaming with the person who’s flying on a different airplane than you are,” said David.

Now, obviously interactive features with other aircraft would require some form of connectivity. Virgin America’s fleet is already equipped with Gogo, but I was wondering if Virgin was willing to look elsewhere. David told me that Virgin is “we’re looking…at Row 44 and the satellite providers,” but noted the airline “quite happy with Gogo right now.” He also said that Gogo is “aware that bandwidth requirements expand quite rapidly…they’re aware of that, they’re working hard on it. That having been said, we’re looking at other options in the future.”

Anyway, I’m really looking forward to seeing these changes. I find it very interesting that Virgin is looking at upgrading its system after being around for a few years, but then again Red is one of the airline’s most distinguishing features – might as well enhance a feature that differentiates them from the competition, I guess. (How many of Virgin’s passengers select them because of IFE?  I wonder.) One item I’d love to see added (in addition to what David said) is a new remote – right now the keyboard is a little tough to use. Obviously, space is limited, but I found that the keys weren’t all that responsive.

US Airways Adding 12 A321s This Year to Replace 737 Classics

Published
by
Dan Webb
on January 28, 2011
in US Airways
. 5 Comments

We’ve known for awhile that US Airways would be taking on 12 A320-family aircraft in the second half of this year and 12 more in the first half of 2012, but we didn’t know much more other than that. Fortunately, the carrier’s investor update released this week reveals some more details.

The airline now reports that all 24 aircraft “will be used to replace the Company’s legacy 737 fleet.”

According to US Airways’ latest fleet plan, all twelve of the aircraft delivered this year will be A321s, with three aircraft coming in the third quarter and the rest in the fourth. These deliveries will bring the A321 fleet to 63 aircraft.

Photo Credit: US Airways.

Meanwhile, the airline’s fleet of 737-300s will shrink by 12 aircraft. Two aircraft will leave in the second quarter, two in the third, with eight more leaving in fourth.

Over the past few years, US Airways’ fleet of 737-300s has shrunk by nearly 75%. At the end of 2005, 75 of the type were in the fleet, with 35 at America West and 40 at US Airways. Now the airline operates only 19 of the type.

In addition to the 737-300 reductions, one 737-400 will also be leaving the US Airways fleet in the fourth quarter, bringing the fleet to 39 aircraft. According to US Airways’ 2009 annual report, all of the airline’s 737 classics are leased.

It appears that the 737 Classics have stuck around a bit longer than originally planned. From US Airways’ 2008 annual report:

At December 31, 2008, we had 91 aircraft with lease expirations prior to the end of 2011. These include lease expirations for 30 Boeing 737-300 and 14 Boeing 737-400 aircraft that are being replaced by Airbus A320 family aircraft to be delivered under the Airbus purchase agreement discussed above.

At the time, US Airways was operating 30 737-300s, so one could assume whole fleet would be gone by the end of 2011.  Meanwhile, 40 737-400s were the fleet at the time, so one would guess that fleet would be down to 26 airplanes by 2011.

In the same 2008 report, the carrier said it planned to take delivery of 72 A320-family aircraft and 10 A330-200s from 2010 to 2012. But in 2009, US Airways deferred 54 of these deliveries, leaving 24 A320-family deliveries and 4 A330-200 deliveries. The airline said in its 2009 annual report that the deferrals would not “significantly alter our capacity as we are currently in the process of extending leases for certain aircraft originally scheduled to be replaced during 2010-2012.”

That annual report said 33, 28, and 26 mainline leases would expire in 2010, 2011, and 2012, respectively. It will be interesting to compare those numbers to US Airways’ 2010 annual report, which should be coming out in a few weeks.

Also – US Airways will be taking on 757-200 this quarter, which will bring the fleet back to 24 aircraft after one left the fleet in 2010.

Anyway, I’m finding it interesting that US Airways selected the A321 here – the A319 and A320 are the closed to the 737-300 and 737-400 in size, so it’s an interesting increase in gauge. It’ll be interesting to see how US Airways plays with these new aircraft, and also what members of the A320 family will be delivered in 2012.

The other thing that interests me – I wonder if US Airways will ever end up with some A320neo aircraft? I would guess that the fact the airline is one of the largest Airbus operators in the world would certainly make them a candidate. I think what could end up answering this question is the capability of the A321neo. The current A321 aircraft has been a great replacement for the domestic 757s, but doesn’t have the legs for US Airways’ Hawaii or European routes operated with 757-200s. I wonder, could the A321neo manage Phoenix – Honolulu, for example?

US Airways CEO Doug Parker talked about new aircraft during the Q&A of the airline’s earnings call, and mentioned that “we have, as some as some other airlines do, a 757 problem,” which is that the aircraft  ”can fly missions that no other airplane can fly” but the type will “need to be retired at that point.”

It’ll be interesting to see how this all plays out!


Virgin America Continues to Pursue O’Hare Service

Published
by
Dan Webb
on January 27, 2011
in Virgin America
. 3 Comments

Virgin America has been looking to launch service to Chicago O’Hare for a couple of years now. The market appears to make perfect sense for them as it’s a very large business market for both Los Angeles and San Francisco. Unfortunately for Virgin, it’s had some trouble forging a deal with the city of Chicago to get access to O’Hare.

But it appears there’s a chance things could change in the near future. Virgin America CEO David Cush told me last week that that he is hopeful that Virgin will have “something positive to announce” over the next few weeks.

“The city is working very hard on it. We are in, I would say, very intense and fruitful negotiations with the city,” said David.

He also noted that Virgin has “been clear with the city and with others that if we can solve this problem we’ll be there in May and we’ll be there with five flights a day.”

I didn’t ask David for a breakdown, but I’d reckon three of those five flights would be from Los Angeles, with the other two from San Francisco.

“It’s kind of an unusual negotiation because we’ve been clear that we will start O’Hare in the first or the second quarter. We just don’t know what year yet,” David said.

He added that Virgin is not not interested in launching service “after the summer peak” or “going into the winter period,” noting that demand to Chicago is cyclical.

On Alaska and the 737-900ER

Published
by
Dan Webb
on January 26, 2011
in Alaska
. 1 Comment

Yesterday, Alaska Airlines announced an expansion of its order book with Boeing by ordering 13 737-900ERs, a new aircraft type, along with two 737-800s, which currently make up the largest part of Alaska’s fleet. Alaska hasn’t made a final decision on the configuration of the aircraft, saying they will seat between 178 and 184 passengers.  That’s 6-12 more seats than existing 737-900s, so I’d reckon that’s one or two more rows of economy. For comparison’s sake, Alaskas 737-800s seat 157.

Here’s a chart of the previous and new delivery schedule through 2014:

A little bit of background on the 737-900 – Alaska was actually the launch customer for the type, taking deliveries of twelve aircraft from 2001 to 2004. Overall, the -900 wasn’t all that popular with customers, with only 52 were delivered.

In 2005, Boeing launched the new 737-900ER, which offered multiple improvements over the original type, such as more passenger capacity thanks to more exits and a flat rear pressure bulkhead, increased maximum growth takeoff weight,  and additional range (which varies based on options for auxiliary fuel tanks). The aircraft entered service in 2007 with Lion Air, and so far nearly 300 of the type have been ordered. One can view the aircraft as Boeing’s closed replacement to the 757-200, and the  closest competitor to Airbus’ A321.

So why does this airplane make sense for Alaska? Well, let’s look at an example in Boeing’s press release – Seattle to Orlando. Right now, it appears that the largest aircraft Alaska can toss on the route is a 737-800, and the airline operates two flights per days with that aircraft type. Let’s say Alaska wants to increase supply because demand is strong. Well, that means a third flight needs to be operated with a 737-700 or 737-800, and that comes along additional costs like additional flight crew. Those costs could make an increase in capacity uneconomical. But, if an 737-800 is an upgraded to a 737-900ER, then maybe the additional capacity makes sense, especially as the 737-900ER should have lower unit costs than the 737-800 (partially driven by less fuel consumption per seat).

The 737-900ER should also offer more attractive costs than Alaska’s existing 737-900 fleet. One way I like to look at it is weight.  The 737-900ER’s operating empty weight reported by Boeing (based on a base two-class configuration) is very slightly (less than 100 pounds) lower than that of the original version, and plus it can seat more passengers. So one way to look at is that there is less empty weight per passenger on the -900ER. Fuel burn per seat is also lower on the -900ER than it is on the base version.

Meanwhile, other fixed costs are better spread out thanks to the 737-900ER when compared with a 737-900 or 737-800. For example, two pilots are still required, and the seating configurations of the 737-800, 737-900, and 737-900ER all require four flight attendants as per FAA regulations. Assuming that Alaksa staffs all of the aircraft types with the same number of FAs, that means labor cost is more effectively distributed among passengers.

Anyway, it’ll be interesting to see how Alaska distributes these. I wouldn’t be shocked if some of them ended up at the high-yield, slot-controlled DCA. Alaska uses slots exempt from the airport’s perimeter rule to serve Los Angeles and Seattle. I was also wondering if Alaska would have the 737-900ERs equipped for ETOPS operations so they could fly to Hawaii. An airline spokeswoman that the -900ER “could be used in certain Hawaii markets, but we have not yet made a decision to order the aircraft ETOPS equipped.”

I’m about to hit 600 words here…how do I tie a bow on this one? I guess I’ll just say I like this move.

Horizon Air Dropping its Own Brand, Remaining CRJ-700s Leaving This Year

Published
by
Dan Webb
on January 25, 2011
in Alaska and Horizon
. 4 Comments

Alaska Air Group, parent of Alaska Airlines and Horizon Air, reported fourth quarter earnings of $1.28/share (excluding special items), exceeding a mean analyst estimate of $1.02/share, according to the company.

A major part of today’s earnings news is some changes at Horizon Air that the company’s management has been hinting at over the past few months. One of the most recognizable is Horizon adopting the mainline Alaska brand. Horzion still gets a decent shout-out on the side, but obviously the Eskimo is instantly associated with Alaska:

Photo Credit: Alaska Airlines.

We’ll see the first Q400 in this color scheme in a few weeks, and Horizon also says there might be some newly-delivered Q400s that fly without a livery as Horizon schedules painting.

While I’m sure this move is very disappointing for many Horizon employees, it makes sense. Over the years Horizon has become less and less independent of Alaska. Having all of Horizon’s flying fall under a capacity purchase agreement beginning this year was, I think, the final step that made Horizon like most other regional carriers. Considering that tickets are booked through Alaska, I think this is logical from a brand consistency sense. At least some of the unique features of Horizon, like free beer, will be sticking around.

Another interesting change at Horizon is that the CRJ-700s will be going away for good this year. That’s not entirely shocking because it’s been planned to eventually eliminate that fleet, but now we have a more specific timeline to play with.

Back in 2010, Horizon said in an SEC filing that it had “entered into an agreement to dispose of eight CRJ-700 aircraft in the first half of 2011 through either sublease or lease assignment to a third-party carrier.”

Now, in an investor update filed today, Horizon says that it will remove all thirteen CRJ-700s this year, four of which will be removed this quarter. ”These aircraft will be either be, leased, subleased, or assigned to a third party,” says Horizon.

Worthy of note is that previously Horizon had said it had “accelerated the delivery of the eight remaining Q400 aircraft on order to 2011 to coincide with the anticipated exit dates of the CRJ-700 aircraft.” That would keep the fleet at the same size in terms of numbers of aircraft with the previously CRJ retirements, but with the changes announced today the Horizon fleet will actually shrink slightly this year.

Anyway, interesting stuff at Horizon going on. Alaska also made some news today with an order for 13 737-900ERs, and I’ll be getting to that later.

Say Hello to Frontier’s Latest A320

Published
by
Dan Webb
on January 24, 2011
in Frontier
. 3 Comments

Last week, Frontier Airlines took delivery of its latest A320, which flew from Hamburg to Milwaukee with a stop in Gander. The aircraft, registered N208FR, is the first of three A320s that Frontier is leasing from Dublin-based AWAS.

The aircraft’s delivery marks the return of Charlie the Cougar to Frontier’s family of spokesanimals. Charlie was previously seen on an A318 (N807FR, c/n 2271) that was parted out after it was returned to GECAS, according to Flightglobal.

Photo courtesy of Frontier Airlines.

Frontier will be receiving more A320s over the next few months. That latest 10-Q (third quarter) of parent company Republic Airways Holdings notes that “during 2010, the company entered into agreements to lease seven A320 aircraft for six years from the date of delivery.  These aircraft will be delivered between January 2011 and June 2011.”

Worthy of note – Republic’s second quarter 10-Q said this: “In June 2010, the company entered into agreements to lease six A320 aircraft for six years from the date of delivery.  These aircraft will be delivered between January 2011 and June 2011.” That same filing also said Frontier would acquire 14 A320s from January 2011 to November 2014 through purchase or lease, while the later third quarter filing upped that number to 15. So it appears one more A320 has been leased.

Meanwhile, Frontier is adding new A319s to the fleet. The third-quarter 10-Q filing says that “in October 2010, the Company entered into agreements to lease three A319 aircraft for eight years from the date of delivery.  These aircraft will be delivered between October and November 2010 and are expected to enter revenue service for Frontier between February and April 2011.”

A quick check of CH-Aviation would indicate that these aircraft are now registered as N951FR, N952FR, and N953FR. These three operated for Mexicana until this summer. It appears those leased aircraft were repossessed when the carrier hit financial trouble, so maybe Frontier was able to get these aircraft at a favorable price?

Frontier will build its E190 fleet later this year, with six E190s slated to arrive from August to December, part of a deal to acquire up to 24 of the aircraft that was announced in July. The remaining 18 orders can be converted to E195s if desired.

Virgin America Boosts Existing Routes, But Cuts Toronto

Published
by
Dan Webb
on January 21, 2011
in Virgin America
. 2 Comments

Virgin America just announced a few network changes occurring in April…let’s take a look.

First, the airline is boosting its still-new service to Dallas-Fort Worth. The airline will add a third frequency from LAX and SFO. Here’s how the new schedule looks, with the new flights highlighted:

I like this change. Virgin America certainly has a much better product than American, but is a little weak in the schedule department, so this helps. I still think if the first LAX-DFW departure was earlier in the morning it’d be a bit more preferable for travelers looking to maximize their time in Dallas.

Some other routes are getting a boost as well. On April 6, San Francisco – Las Vegas will get an additional flight, so six roundtrips will operate during the week.

SFO-San Diego was recently cut to three roundtrips, but on April 6 the route will be restored to four flights. (For historical context, Virgin launched that route with three daily flights in 2008 but it was boosted to five a few weeks later.)

Right now SFO-Dulles is served with two daily flights, though a few times each week there’s a third in each direction. On April 28, a  daily mid-morning IAD depature is added along with a daily SFO departure in the mid-afternoon. So on some days there will be four SFO-IAD flights.

So, where is this capacity coming from? Well, Virgin is still growing its fleet, of course, but Toronto service is going away. It’s always sad to see an airline eliminate a destination, but this make sense. In July the airline’s load factor was just about 70%, and I’m guessing it hasn’t been much better this winter.

Virgin had a great product on its first international route, but its biggest competitor, Air Canada comes much closer to Virgin than other airlines in terms of hard product. I mean, Air Canada has one LAX-YYZ flight with flat-beds! Also, with only one flight each from LAX and SFO, Virgin didn’t have the greatest schedule when compared to Air Canada.

So the Toronto cut makes sense. Personally, I think one of Virgin’s weaknesses is its schedule on some routes, so one would imagine that additional frequencies should make them a stronger competitor in these existing markets.

Updated at 10:39 PM to fix my DFW schedule.

A Walk Through TechOps

Published
by
Dan Webb
on January 21, 2011
in Delta
. 3 Comments

When Delta invited me down to Atlanta a few months back, I was really hoping I would be able to tour the airlines huge TechOps maintenance operation. Fortunately, my wish is granted, and I was allowed to take a tour (with a PR escort, of course).

TechOps is something that sets Delta apart from its peers. While outsourced maintenance has become more and more common as a cost-cutting measure, Delta has taken a different path and has become a provider of outsourced maintenance for other airlines. By doing so, Delta gets to utilize its existing maintenance facilities (making maintenance of its own fleet more cost-effective) while generating additional revenue to the tune of $500 million per year.

What really impresses me about TechOps, however, is the types of aircraft it will service, such as the 737, 757, 767, 777, A318/319/320/321, A330, MD-80/90, and MD-11.

The way I like to think of it – virtually every major airline across the globe could have at least part of its fleet serviced by Delta – and not just in Atlanta. Delta offers line maintenance service in 24 domestic and 22 international stations.

Anyway, here were some of the highlights:

This 737-800 (N932DA), originally delivered in 2000, was one of the last in Delta’s fleet to receive blended winglets.

This wall features (nearly) all of the logos of Delta’s ancestors. It’s not pictured here, but a spot has already been reserved for Northwest.

This is certainly one of the best views to have at work!

TechOps repairs composite materials as well (primarily on the 737, 757, 767, and MD-80). Here’s the oven when composite materials are “baked,” so to speak.

Delta also has multiple paint bays in Atlanta. Here a 737-800 prepares to receive the airline’s latest livery, revealed in 2007 when Delta emerged from bankruptcy.

Delta also has extensive engine repair operations in Atlanta, and services a variety of powerplants, from the CF-34 on the Bombardier CRJ to the CF6-802B on the 767-400ER.

Engines are run in this test bay to monitor performance. Just in case, that window is made a of three-inch-thick bulletproof glass!

If I learned one thing on the tour, it’s that aircraft and engine parts are very expensive, which certainly increased my appreciation of the magic of flight. When we travel it’s easy to forget what the incredibly-complex machines that make commercial flight possible

I found the decal shop in TechOps the most interesting. Why? Frankly, I never knew this place existed. It’s one of those small parts of an airline that most travelers never consider, but has a very important role. For example, if it wasn’t for this shop’s work, passengers wouldn’t be able to find their row or learn if their aircraft is equipped with Gogo.

Anyway, visiting TechOps was, simply, incredible. Seeing a whole bunch of aircraft getting repaired, overhauled, and painted is an airplane dork’s dream!

Should Southwest Add a Points Multiplier?

Published
by
Dan Webb
on January 20, 2011
in Southwest
. 4 Comments

Over the past couple of weeks, I’ve been thinking about Rapid Rewards 2.0. I can see why Southwest made the change – it makes total sense to make the program the most rewarding for those who spend more money, which Southwest’s current system doesn’t do all that well.

For example, if I want to fly from Providence to Baltimore the cheapest fare is $49. I’ll get one Rapid Rewards credit after that flight. But if I pay over three times that ($165) for Business Select, I will only receive an extra one quarter of a credit.

The same inequality exists for those on long-haul flights – a PVD-BWI and PVD-LAS flight will earn the same on most fares (though the Business Select bonus jumps from 0.25 to 1 credit).

That being said, the Rapid Rewards changes could leave some fliers feeling a little short-changed. In fact, I think the way Southwest set this up ends up punishing some. Southwest’s site only shows the lowest non-refundable fare by default, so even if I want to pay a higher fare for more points, my only option is a non-refundable fare, which can be prohibitively expensive.

Sure, the new Rapid Rewards lets you purchase points from Southwest, but not everyone will probably think of that. As a result, I think it might be a good idea for Southwest to look at a mileage multiplier product, akin to what American, United, and US Airawys are already offering.

Here’s an example – let’s say I fly between PVD and MDW 10 times. I picked a random day in March to get the fares. To calculate a multiplier fee, I decided to price the extra points at $0.03/point, a bit higher than what Southwest will charge for buying points in blocks of 1,000. (There would probably be some additional tax added there as well.)

Anyway, here’s what I’m thinking. For redemption I’m assuming a “Wanna Get Away” fare at $99 x 60 = 5,940 points.

Let’s say I need to do ten PVD-MDW one-ways. Now, if I fly ten times on a $99 PVD-MDW fare, I won’t earn any awards in the process, so my total base fare is $990. If I double my points, I will have earned one reward (if I’m redeeming for the $99 fare) after nine trips. Even if I redeem an award for the 10th trip my total spending on base fare is $1,051.38 – a 6.2% increase. If I pay for three times the miles, I will have earned two awards by the time I’ve completed eight flights. If I redeem free tickets for the last two flights, I still would’ve spent $1,077.12 on base fare – an 8.8% increase in total spending compared to buying the cheap fare alone.

Personally, I think this could be an interesting ancillary product from Southwest that could benefit both the airline and passengers. Even if only a few hundred passengers opt for such a service each day it could still mean a few million dollars in additional revenue.

Just my random thought for the day. Am I crazy? Let me know…

Spirit Looks to Add Service to Toluca

Published
by
Dan Webb
on January 20, 2011
in Spirit
. 0 Comments

Spirit Airlines is looking to expand its reach in Latin America, as the airline intends to launch service to Toluca this June…this according to a filing made with the Department of Transportation.

In its filing, Spirit says it plans to launch service on or around June 3 from its Fort Lauderdale hub. The flights, to be flown with A319s or A320s, are tentatively scheduled to operate on Tuesdays and Fridays.

There’s no service between the two airports – though both American and Aeromexico fly to Miami from Mexico City.

If you’re not familiar with Toluca – the airport is often used as an alternate for Mexico City International. The two dominant carriers are LCCs Interjet and Volaris, though both serve Mexico City as well.

If Spirit launches the service – it would be the airline’s second Mexican destination, as it currently serves Cancun from Detroit and Fort Lauderdale. The route would also mark Toluca’s second American destination – Houston service is provided by ExpressJet for United.

Southwest And FlightStats – Mystery Solved

Published
by
Dan Webb
on January 19, 2011
in Southwest
. 2 Comments

Recently, there was some media buzz about FlightStats and its reports about Southwest’s on-time performance.

The first concern was that the reports indicated a steep decline in Southwest’s operational performance. In fact, December data only showed that a little over half of the airlines flights were arriving on time. What was also interesting is that there was a significant discrepancy (sometimes over a ten point spread) between FlightStats’ numbers and Southwest’s numbers in the monthly Air Travel Consumer Report released by the DOT.

It appears that the mystery has finally been solved. FlightStats was relying on an FAA data feed for Southwest’s gate times, and that source was changed in September, causing the discrepancy between FlightStats and DOT.

So, why didn’t other airlines that report data to the government see the see a hit in their performance? Well, a lot of other carriers provide their operating data to third parties, so FlightStats had another good source for gate times for those carriers. Southwest, however, does not share its data to companies like FlightStats.

Now that the problem has been identified, Southwest will be excluded from FlightStats’ monthly reports, though FlightStats hopes that will change. A company representative told me that ”we are committed to complete and accurate data and seek a direct relationship with Southwest to assure the public and the media useful, timely and accurate information.”

Whether that happens is a different question. A Southwest representative wrote in a post on FlyerTalk that “developing this kind of one-off, 3rd-party distribution capability isn’t an expense that contributes in any way to safety, low fares or customer service, which are our #1 objectives.”

Anyway, while FlightStats’ numbers for the past couple of months have been on the negative side – government statistics show that Southwest has had trouble with on-time performance of late. The airline was ranked 16th (out of 18 reporting carriers)  for November by the government. The airline ranked 17th in October.