Monthly Archive for May, 2011

A Few Thoughts on Flying Last Week

Published
by
Dan Webb
on May 31, 2011
in US Airways and Virgin America
. 2 Comments

I was very excited for my travel last week, as I’d be flying out to San Francisco to be on Virgin America’s inaugural flight to Chicago O’Hare. The flight from Boston to San Francisco was great, as was the inaugural flight.

Unfortunately, getting home didn’t work out too well. See, Virgin offered to comp all of my flights, so I decided to try an ORD-SFO-BOS routing. Yes, it’s very much circuitous, but I figured I’d be saving some money and I would actually be productive during my flights thanks to Virgin’s power and Wi-Fi. I did something similar for Virgin’s Toronto launch last summer and it actually worked!

But seriously, next time I try to book a 30-minute connection, someone please talk some sense into me. The O’Hare departure left six minutes late, the flight ended up landing in SFO fifteen minutes late, and I ended up deplaning just as the door was closing on the Boston flight. To make matters worse, the next flight was the red-eye, which had no seats!

Since I had to be home for Friday morning, I began frantically searching for a way home. My best bet, it appeared, was a US Airways itinerary to Providence with a connection in Philadelphia that would get me in around 11:45pm that night. Fortunately, I decided to talk to a US Airways airport agent about it, who said that the SFO-PHL flight was delayed enough that I would end up missing my connection.

I continued looking around for options, and US Airways kept looking like the best one. I ended up booking an SFO-PHL-BOS itinerary. I wasn’t exactly looking forward to a red-eye in the back of an A321, but it would get me home. The flight was much more expensive than I had hoped, but I did arrive as scheduled Friday morning.

So, I’ve learned my lesson. Had I had at least an hour layover, I would’ve been fine. But in the future I shouldn’t let saving a few bucks blind myself from realities. In this case, I should have just booked a ORD/MDW-PVD flight a few weeks before my trip and have been done with it.

Nevertheless, the trip was a very interesting one. Due to the fact of my extreme sleep deprivation during the week, I’m not sure if I have enough details to write up a whole trip report. :D But I will provide a few thoughts on Virgin and US Airways, and hopefully later this week I’ll have some more on the Chicago launch and some of the interviews I did while there.

Thoughts on Flying Virgin Ameirca and US Airways Last Week

  • Virgin America gets the little touches down pat. I was impressed to see that at Boston, the station manager’s business cards were available at check-in and at the gate. That tells me two things. First, Virgin actually cares what its customers think. Second, it’s willing to empower its front-line to deal with issues rather than have everything be dealt with at headquarters.
  • Another nice touch is Virgin’s kiosks, check-in counters, and gate counters. Apparently they’re a bit lower than those at other airlines, which makes them feel a bit more accessible.
  • Little touches are nice, but they don’t matter when the important things are off. For example, I arrived for my flight back from O’Hare a bit after 5 am. The Virgin check-in desk was supposed to be staffed by then, but no one was around yet.
  • Last week I arrived into Boston very early, and got to the Virgin gate area just before the first flight to LAX was set to depart. I was surprised to see the captain walking around the gate area and introducing himself to passengers. I doubt that’s really common an any airline, but that gesture was definitely appreciated by all.
  • The “wow” factor after flying Virgin America wears off after a few flights with them. That’s not a big deal – Virgin sets a high bar and you begin to expect that. (And hopefully, in Virgin’s case, that’s why you become loyal…)
  • When I missed my connection in SFO, the Virgin America gate agent was incredibly apologetic about the whole situation. I bet many employees at other airlines wouldn’t do that.
  • One possible opportunity for service recovery at Virgin – offering up access the Virgin Atlantic clubhouse, even for a fee (the lounge is currently open to First Class, Main Cabin Select, and Elevate members for a fee). That would certainly make a stay at SFO much more enjoyable.
  • I’ve been slightly disappointed with Virgin’s cabin service with my few flights on them. On the non-inaugural flights I’ve flown, I’ve always purchased some kind of snack or meal, and I’ve been a bit disappointed with the delivery. Basically, if Southwest can always deliver free snacks with a smile, I feel Virgin could do the same with a $10+ meal.
  • That said, one of the flight attendants on my ORD-SFO flight deserves mega kudos for trying to help with my connection. When I mentioned I had a connection, she helped me find space for my bag further up on the aircraft. Unfortunately I still didn’t make the flight, but she was very generous nonetheless.
  • I was pleasantly surprised by US Airways’ service on my flights. The flight attendants were…experienced, for lack of a better term. They just did their jobs really well. On my SFO-PHL flight, the three FAs who were mainly helping out in the back (I think that’s where they were stationed, at least) worked really well together, and one was particularly helpful in helping passengers find space in the overhead bins.
  • Somehow, just somehow, I was able to sleep for most of my SFO-PHL flight. I normally can’t sleep while flying, so apparently I was quite sleep-deprived.
  • My SFO-PHL flight was packed. I’m the fact that it was Memorial Day weekend helped, but it got me thinking how much US Airways’ West Coast redeyes feed the first bank of morning departures in Philadelphia.
  • The SFO-PHL flight was operated by an A321 in the Stephen Wolf-era colors. I have some great memories with that livery, and it will be sad to see it finally go away. The dark fuselage is still quite distinctive.
  • One can really sense US Airways’ on-time performance. Both of my flights began boarding earlier than scheduled.
  • The gate agents for the SFO-PHL redeye were announcing before boarding that overhead space would be out by the time the last zone would board, and started offering free checked bags. The fact that some passengers can end up with a free checked bag while others have to pay $25 just doesn’t seem right to me. Granted, I realize the airlines need as much revenue as they can get, but still…
  • Final thought on Virgin America – they have an amazing product, but sometimes the more comprehensive schedule of a network carrier comes in handy. Granted, my issues were completely self-imposed, but I still think my point is valid.
  • And one last thought on US Airways – the airline appears to have the basics down pat. It’s been great to see the airline improve its operation, especially in-terms of on-time performance. Now, it’d be great for the airline to start improving its product a bit, but it needs to be careful here, as the company uses its cost advantage to account for a revenue disadvantage. Either way, catching up to other competitors by adding first class to RJs is a great step in the right direction.

Catching Up on Some Delta Schedule Changes

Published
by
Dan Webb
on May 26, 2011
in Delta
. 3 Comments

Over the past week or so, Delta’s been making a few adjustments to some Delta Connection routes, and I figured they were worth sharing.

Delta has been (interestingly) building up its route network out of Raleigh-Durham over the past year or so, filling the void as American has continued to trim down its further hub. The carrier is now adding thrice-daily service to Baltimore, beginning this September.

I found this interesting  for a few reasons. First, Delta will (obviously) be going head-to-head against frequent Southwest service, though perhaps Delta is hoping for (loyal) business travelers to choose them over Southwest. Second, this is not Delta’s first time taking a shot at the Raleigh-DC market. In 2009 it added RJ service to Washington-National, but the route didn’t last, so I find it interesting they’re now trying at Baltimore. (Based on this week’s slot swap news, however, Delta might not have many DCA slots to spare in the future.)

In addition to this new service, Delta is trimming its recently-added flights from Raleigh to Providence and Albany in September.

Delta is also planning on axing its regional service from Jacksonville to Miami. The route was announced back in March by the airline, which said at the time it would help provide connections to its new nonstop service to London-Heathrow. Delta’s new routes to Miami from Orlando and Tampa, however, are still in the carrier’s timetable.

Finally, Delta’s making an interesting move in Houston. Delta currently serves both Intercontinental and Hobby, though the latter airport only has service to Atlanta. But this September service from Cincinnati and New York-JFK will be shifting to Hobby. I wonder why? I suppose one could make the argument for convenience.

 

 

Delta and US Airways Announce New Slot Swap Deal

Published
by
Dan Webb
on May 24, 2011
in Delta and US Airways
. 1 Comment

Can you believe it’s been nearly two years since the slot swap was first announced? In case you need a review — US Airways and Delta announced they would make a trade of slots at New York-LaGuardia and Washington-National. Regulators, however, were concerned about the competitive effects of the trade and wanted some slots to be divested at the airports for carriers that did not serve or had a limited presence at these airports.

Delta and US Airways didn’t really like that idea, but they came up with their own compromise with a smaller amount of slots being divested to airlines selected by Delta and US Airways. The government didn’t go for it, and then the deal went to court.

And now we’ve been waiting ever since…until yesterday! The carriers dismissed their case and have submitted a new proposal to the DOT. Let’s compare the original deal to what was announced yesterday:

Original Deal

  • US Airways gives Delta 125 slot pairs at LaGuardia (and the option to lease 15 more)
  • Delta gives US Airways 42 slot pairs at National
  • Delta also gives US Airways rights to operate to Sao Paulo starting in the second half of 2010
  • Delta also gives US Airways rights to fly to Tokyo-Narita, but US doesn’t plan to start service until 2015

New Deal

  • US Airways gives Delta 132 slot pairs at LaGuardia
  • Delta gives US Airways 42 slot pairs and National
  • Delta also gives US Airways $66.5 million in cash
  • Delta also gives US Airways the rights to operate to Sao Paulo beginning in 2015
  • The carriers are willing to give up sixteen slot pairs at LGA and eight at DCA

So let’s look at the changes. Why is Delta getting more slots at LaGuardia? Who knows. Their plan for New York might have changed a bit and they might now be planning on some divestitures. The Tokyo-Narita part of the deal isn’t needed anymore thanks to a new open skies agreement between the US and Japan. I’m not sure why the date for Sao Paulo service changed, but it could be because US Airways and United have already set up a temporary deal for US Airways to get access there. The cash to US Airways probably compensates for many of these changes. US Airways hasn’t said what they’ll do with it, though I would point out that $66.5 million more than compensates for US Airways’ planned upgrades of regional aircraft.

The possible slot divestitures are very interesting. Take a look at this press release from last year about the proposed Delta-US Airways compromise emphasis mine):

With the new six-way agreement, Delta would operate an additional 110 slot pairs at LaGuardia; AirTran, Spirit and WestJet would obtain five slot pairs each at LaGuardia from Delta; US Airways would acquire 37 slot pairs at Reagan National; JetBlue would gain five slot pairs from US Airways at Reagan National; and US Airways would gain access to Sao Paulo and Tokyo.

Meanwhile, here’s an excerpt from yesterday’s US Airways SEC filing about the deal:

In addition, if required by the regulatory authorities, the transaction could result in the divestiture by Delta of up to 16 slot pairs at LaGuardia and eight slot pairs at Reagan National to airlines with limited or no service at those airports.

I need to do some more digging, but I’m wondering what that exactly means for this deal now that Delta is divesting the slots at both airports. If Delta is on the hook at DCA, and not US Airways, does that mean US Airways gets 42 slot pairs no matter what? I need to research this further.

Anyway, let’s see what the government thinks of the deal this time around. The industry has changed a lot since August 2009. Continental and United have since announced and closed their merger. Southwest will have access to both airports involved through the merger with AirTran, and now JetBlue has a presence at DCA.

But I think this deal could lead to some interesting benefits for consumers. Delta plans to up-gauge regional routes currently flown by US Airways out of LGA, and US Airways says it will add at least fifteen new destinations out of DCA. In addition, the carriers planning some facility upgrades at LGA. Delta will start flying out of Terminal C at LaGuarida (in addition to D and the Marine terminal) and connect it to Terminal D. Delta will convert the US Airways Club in Terminal C to a Sky Club, and US Airways is planning on a brand new lounge at LGA.

Anyway, this is certainly an exciting move. Let’s see how this develops.

Talking to Virgin America About…er…Everything

Published
by
Dan Webb
on May 23, 2011
in Virgin America
. 1 Comment

A few weeks ago (April 27), I had the opportunity to chat with Virgin America’s CEO, David Cush. Unfortunately, final exams happened and I got way behind on writing up this piece. Better late than never, I suppose.

In the past with executive interviews I’ve bounced between posting them or installments or going in one shot. This time I’ve selected the latter. The post below is pretty lengthy, but I think you’ll find some of the topics covered, such as hedging, growth plans, fleet moves, and distribution pretty interesting.

The interview was prompted by Virgin’s fourth quarter results, though we didn’t talk about those much. The carrier did not achieve a full-year operating profit as it had predicted in the past, though its operating and net income for 2010 improved compared to a year prior. Results for the fourth quarter, however, were slightly worse than a year prior. Virgin’s net loss for the quarter was $25.1 million, compared to $18.8 million one year ago, for example.

Anyway, on to the interview.

My first question for David was on Virgin’s fuel hedging efforts. Virgin’s earnings release mentioned that the airline had hedged for roughly half of its 2011 fuel consumption. The day before I interviewed David, Delta said when it announced its first quarter results that it would be shifting many of its hedging positions away from West Texas Intermediate to Brent crude (and heating oil), saying that it “repositioned its fuel hedge portfolio in response to the dislocation in price of West Texas Intermediate crude oil (“WTI”) to jet fuel.”

David said that Virgin has no plans for a similar move, saying that “the spread is already…pretty wide given its historical averages. Basically, if we moved into Brent now, we would be buying that spread. I certainly wish I had moved into Brent six months ago, but doing it now in our view is essentially…betting on a widening spread between WTI and Brent, and we don’t anticipate that happening, the $12-14 right now we think is about as wide as it will go.”

[Ed. Note – over the past month the spread has roughly stayed in that range.]

Photo Credit: Brandon Farris

Virgin has decided to slow its growth plans, and will be taking six fewer aircraft in 2012 and seven fewer in 2013 than originally planned. I asked David what that meant in terms of new Virgin cities. “What that probably means is two destinations fewer in 2012 and one or two in 2013,” he replied.

The decision to take on thirteen less aircraft does not, however, affect Virgin’s recent order with Airbus for 60 aircraft (30 A320s with sharklets and 30 A320neos). “We’re taking the full orderbook as scheduled from Airbus,” said David. If Virgin was planning to take on those thirteen aircraft in the 2012-2013 time period, it would have reached out to lessors.

Despite slower-than-planned fleet growth in the near-term, Virgin still aims to expand its route map during this time period. David told me it is “highly likely” will add one more destination this year, “likely in the fourth quarter” and “given the aircraft we have coming next year I would imagine we would add one or two destinations in 2012 and one or two destinations in 2013,” he added.

I was wondering what Virgin’s needs for financing in the future would be. David said that “with current fuel prices and current ticket prices, essentially the entire industry is going to be running big operating losses so that will drive some capital needs. But what we expect to happen is either fuel prices will come down or either ticket prices will come up to balance with fuel prices. Assuming we get that balance…in some reasonable amount of time…then at that point we have no additional capital needs going forward, that we’ve arraigned for the capital that we need.”

“The only capital we will end up needing, off course, is for the aircraft coming beginning in 2013,” David added.

Since David mentioned ticket prices, I decided to ask how much of Virgin’s higher fuel prices the airline as able recover. “We think we’ve captured about half of it. The unfortunate thing, of course, is given how rapidly fuel prices have gone up, only capturing half of isn’t great…we’re hopeful that if fuel prices stabilize where they are today or drop, that we’ll still see some pricing traction going forward,” he said.

Photo Credit: Adam Schofield

With that, I moved on to some individual markets. I was very interested in David’s thoughts on Dallas-Fort Worth, especially. DOT traffic data has shown that flights in January were roughly half-full. Granted, it’s a new market that’s a fortress hub, but that seemed low. David told me that DFW is “a tough market. We knew it would be going in. First quarter’s not a great quarter for DFW. What we saw was traffic growth throughout the quarter. We were quite happy with the way March turned out.” (Virgin later told me they had achieved a 71% load factor on DFW-LAX in March.) David also mentioned that Virgin had added a third frequency on both of its DFW routes in April, and that it would “take us a little while to fill the loads backup with that extra frequency.”

I then moved on to Chicago, where Virgin will launch service next week. David told me that Virgin is “quite happy with the way Chicago’s going” and that “it’s booked at about the same level as the rest of our long-haul network, which is unusual for a new market.”

As we approached the end of the interview, I asked about Virgin’s plans to codeshare with V Australia/Virgin Australia. Originally there was talk of a filing with the DOT for that partnership at the end of last year. According to David, however, the deal has been delayed because Virgin America has all “internal resources focused on a successful and uneventful transition” to Sabre, which is slated to be completed by October 2011. This upgrade will make it easier for Virgin America to participate in codeshare partnerships, and “by [the] first quarter of 2012, you’ll see us doing a number of these codeshares,” said David.

Speaking of Sabre, I chatted quickly with David about distribution and why Virgin was pursuing the upgrade earlier in its history than, say, JetBlue. “Knowing the power of distribution, that’s really motivated us to go forward with this…I know what this…can do on the revenue side,” he said.

Since David mentioned the revenue benefits, I figured I’d ask about the distribution issues going on at American, where that carrier is focusing on the costs of using the GDS system. “What they’re doing makes a lot of sense for them, what’s we’re doing makes a lot of sense for us,” said David. He proposed that if you compare the two carriers, a far greater share of Virgin’s tickets are sold by the airline directly when compared to American.

Overall, I was pleased with the interview. I wish I had focused a bit more on financial results, but fortunately I’ll have another chance to catch up with Virgin this week (hopefully).

 

Some Interesting Slides from United

Published
by
Dan Webb
on May 20, 2011
in United
. 4 Comments

Like Delta, United also had an investor presentation yesterday. (Well, American, JetBlue, Southwest, and US Airways did too, but I’m still going through them.) Here are a few of the highlights.

First, we’ve heard plenty about airlines adjusting fares to fuel. United produced a really great chart showing their fare adjustments along with fuel price:

Next up was a graph on industry capacity showing that, other than Southwest, major carriers are still holding capacity below pre-financial crisis levels:

Last up was a graph of ancillary revenue (including Continental). Not surprisingly bag fees really increased ancillary revenue per passenger. I’d love to see this graph change over the next couple of years as Economy Plus is rolled out to the Continental fleet:

Edit: Forgot to link to the whole presentation. It’s here.

Highlights from Delta’s Investor Presentation Today

Published
by
Dan Webb
on May 19, 2011
in Delta
. 0 Comments

Delta filed an investor presentation with the SEC today and also put out a press release on trans-Atlantic capacity. Let’s take a look.

The carrier’s news release states that it along with its SkyTeam joint venture partners – Air France, Alitalia, and KLM “will adjust their combined network and decrease capacity by reducing frequency on selected routes during the fall and winter seasons and right-sizing the joint venture fleet across the Atlantic while introducing seasonal flying to warm weather destinations.”

The news release doesn’t elaborate further on any of these adjustments, but the investor presentation shows the dramatic change in capacity plans. One interesting thing to consider here is that Delta has said some widebody retirements are in the cards.

Delta also had some details on its own capacity, saying system capacity would be down 4% after Labor Day. Note that only few weeks ago the airline said it “expects system capacity for the post-Labor Day period to be down approximately 3% compared to the prior year period.”

Meanwhile, Delta went through some of its current results, noting increases in RASM over the past two months:

Anyway, those were the key takeaways for me. You can view all the slides here.

Idle A321 Observations

Published
by
Dan Webb
on May 17, 2011
in Airbus
. 1 Comment

A couple of quick thoughts/observations on the A321/A321neo, courtesy of leasing giant International Lease Finance Corporation (ILFC).

In March, ILFC and Airbus announced they had signed a memorandum of understanding for 100 A320neo-family aircraft, comprised of 75 A320neos and 25 A321neos. The MOU made ILFC the first customer for the A321neo. A few weeks later, the MOU was firmed up, though the breakdown of the order was not discussed in the press release. It did mention, however, that the  ”agreement between Airbus and ILFC provides for model flexibility which initially includes both A320neo and A321neo types.”

ILFC’s 10-Q from last week, however, had some more details:

On April 22, 2011, we signed a purchase agreement to acquire 80 A320neos and 20 A321neos from Airbus. The first aircraft is scheduled to deliver in 2015. We had entered into a memorandum of understanding with Airbus to acquire such aircraft during the first quarter of 2011.

I find it interesting that the orders for the A320neo have increased by five and the A321neo orders have decreased by the same number. Maybe I’m reading too much into it at this early stage, but I’m just wondering what’s driving the change.

And while we’re on the topic of the A321, ILFC’s annual 10-K filing from earlier this year and some interesting thoughts on some of its A321 fleet. It should be noted, however, is that the company only commented on its oldest, less-capable A321-100s and not the newer A320-200s:

As of December 31, 2010, ILFC had 13 passenger configured 747-400’s and 11 A321-100’s in its fleet. Management’s estimate of the future lease rates for these aircraft types declined significantly in the third quarter of 2010….The decline in A321-100 lease rates is primarily due to continued and accelerated decrease in demand for this aircraft type, which is attributable to its age and limited mission application.

I found the reference to the A321′s “limited mission application” very interesting. It makes me wonder if the improved performance of the A321neo due to improved engines and sharkelts is enough to make the aircraft more attractive to lessors and ultimately airlines.

Delta Gets the Groundings Started

Published
by
Dan Webb
on May 13, 2011
in Uncategorized
. 1 Comment

Delta has been saying for months now that it will be slimming its operating fleet to remove the least efficient aircraft types, including all the remaining DC-9s, Saab 340s, and 60 CRJs for a total of 130 aircraft, according to Delta’s latest earnings release. The carrier’s recently-filed 10-Q provides some more details on the most recent happenings, saying that “five DC-9, six SAAB 340B+ and 10 CRJ-100/200 aircraft…were grounded during the March 2011 quarter.”

The Saab fleet has already shrunk significantly. The latest Delta 10-Q says twenty of the aircraft were in service at the end of the first quarter of 2011, twenty-nine less than at the end of the same quarter in 2009. What’s interesting about that fleet is that it has often been used for government-subsidized Essential Air Service flying, and the retirement of the fleet could affect that. For example, here’s an interest snippet from a Mesaba filing proposing it continue EAS service to Watertown, South Dakota:

As the Department is aware, the Saab 340 aircraft are scheduled to be retired from Mesaba’s fleet by the end of 2011. No decision has yet been made on replacement aircraft or replacement flying. Accordingly, Mesaba’s bid is for a short term EAS contract period ending on November 1,2011. Mesaba will advise the Department as soon as a decision is made regarding long term plans for service at these communities.

It will be interesting to see what Delta selects as a replacement here.

Anyway, apologies again for the lack of content this past week. School is just wrapping up for me, and posting will be back to normal next week.

Random Airline Trivia

Published
by
Dan Webb
on May 11, 2011
in Uncategorized
. 13 Comments

Apologies for the lack of content of late. I’m in  the midst of final exams at the moment, and studying has been a bit more intensive than originally thought.

So, I figured for fun that I’d come up with some random airline trivia for fun. I don’t have a prize to offer or anything – so this is just for the sense of accomplishment you’ll get when you find the answers. :)

  1. Of what airline should you think when you read the phrase “chatham dockyard”?
  2. Which airline had “the best care in the air”?
  3. What airline did Atlantic Coast Airlines become?
  4. Who are the two engine manufacturers for the A320 family? (The current version, not the neo.)
  5. Which US airlines fly members of both 737 and the A320 families?

What’s Delta’s Next MD-90?

Published
by
Dan Webb
on May 6, 2011
in Delta
. 4 Comments

Delta filed its first quarter 10-Q with the SEC yesterday, and there was an interesting line on possible future fleet moves:

We are also evaluating the future replacement needs for our domestic mainline fleet. If determined necessary, we will seek to acquire previously owned aircraft or place an aircraft order to replace less efficient aircraft.

Of course, it’s not news that Delta is looking for new narrowbodies. We’ve known this for months. But the line about “previously owned aircraft” got me thinking. Back to that in a moment.

There are plenty of narrowbodies that could use replacing at Delta. The remaining DC-9-50s (currently being grounded) come to mind, as do the the now-retired DC-9-30s and -40s. The carrier’s fleet of over 100 MD-80s is starting to show its age (nearly 21 years on average), and the 757-200 (over 18 years) could possibly be considered as well.

Eventually, Delta will need to replace its 737-800s and the A320s acquired from Northwest, but that’s probably a bit further out.

With so many fleet types to consider, every major Western OEM has a potential hat in the ring. Embraer can pitch the E190/E195, Bombardier the CS100/C300, Airbus the A320neo, and Boeing the 737NG or whatever new narrowbody it announces (or a combination thereof).

The fact that Delta is interested in “previously owned aircraft,” however adds a very interesting twist on how to think about Delta’s future narrowbody fleet. This line would imply that Delta been pleased so far with its decision to build up its fleet of MD-90s with used frames.

Photo Credit: Jay Bowie

With that in mind, one should consider what used aircraft could be utilized. For the DC-9, one could consider secondhand members of the A320 family, especially the A319, and maybe by a longshot, the A318. The 717 comes to mind as well, though the vast majority of that fleet is caught up with Southwest/AirTran and will be for the conceivable future. Another possibility is the 737-700, but so far Delta has kept that fleet small and for certain missions.

On the MD-80 side, used A320s or 737s could certainly be utilized. Finally, for the 757 there’s the off-chance of some secondhand 737-900s being used on some missions, but that’s unlikely. The A321 would be a much more likely contender.

The common thread here is used A320-family members. Delta could build up its own fleet with secondhand aircraft that are more effciient than existing narrowbodies. Sure, a current-technology A320 might not be the greatest but it will still beat an MD-80 and will be cheaper than a new build.

The next question, of course, is if the price of an older aircraft is enough to compensate for the slightly poorer cost performance of a new aircraft.

Fortunately, the existence of the A320neo has the possibility to do just that, depeneding who you ask. There have been some critics of the neo program who believe it could drive down the values of current A320s.

Is the A320 Delta’s next MD-90?

The Latest on Delta-V

Published
by
Dan Webb
on May 4, 2011
in Delta, V Australia and Virgin Blue
. 0 Comments

I had been meaning for awhile to write about the latest on the proposed immunized alliance between Delta and Virgin Blue, V Australia, and Pacific Blue, but I got stuck into schoolwork. The re-branding that Virgin just accomplished and the expansion of the existing codeshare agreement, however, got me thinking about it again.

Last year, the DOT tentatively denied the application for anti-trust immunity. You can read the entire ruling here, but this line sums it up pretty well:

There is little evidence at this point to conclude that the proposed alliance will benefit consumers to the degree necessary to justify a grant of antitrust immunity.

Since then, Virgin and Delta have been working to help make this deal work. There have been a couple of interesting DOT filings of late that outline their progress.

One issue mentioned in an October filing from the carriers was that while “the V Australia and Delta systems are already fully compatible” there was a “compatibility issue is with Virgin Blue’s short haul networkreservation system, which is hosted by Navitaire.” The carriers reported, however, that they had “devised a manual work-around solution, which they arecurrently using to support the limited beyond codesharing that has been implemented.”

More progress on this front was made a couple of weeks ago, as Delta reported to the DOT that Virgin Blue had completed a systems upgrade on April 17. Because of the change, “compatible systems and procedures are now in place to support automated codesharing acrossthe Delta/Virgin Blue Group networks under the proposed joint venture, including the display of DL* code on flights operated by Virgin Blue and Pacific Blue,” according to Delta.

Another interesting filing that had cropped up of late was the public version of the capacity commitment between Delta and Virgin. We had known for awhile about this agreement. In a January filing, the carriers said they had committed to not “reduce nonstop service between the U.S. and Australia below their respective historicalservice baselines as a result of the Department’s approval of and grant of antitrust immunity.”

The public version of the agreement has further details. Will Horton has a pretty in-depth look at the details over at his Wings Down Under blog, but I’ll provide the highlights here.

Both airlines plan to maintain historical levels of service. On Delta’s side that means seven departures from the United States during the peak season and six during other times. For V Australia it will be 14 departures during the peak season and 11 in off-peak times. Each carrier will operate a peak schedule for at least six months of the year.

The airlines do say, however, that they might have to reduce service in the case of extreme factors beyond their control. They specifically mention the price of WTI crude going over $120, a drop in the AUD:USD exchange rate below 0.8:1, a drop in the Dow below 9,000 or the ASX below 4,000, and events like natural disasters and terror attacks. If the carriers end up reducing service due to external factors, they will “seek prior approval from DOT to continue the effectiveness of antitrust immunity absent the capacity commitment.”

Interesting stuff – let’s see if the DOT likes what it sees.