Monthly Archive for August, 2011Page 2 of 2

Teamsters Sue Republic Over FAPA Concessions

Published
by
Dan Webb
on August 10, 2011
in Frontier and Republic
. 0 Comments

The International Brotherhood of Teamsters has filed a lawsuit against Republic Airways Holdings and Frontier Airlines, alleging that Frontier’s then-pilot union, the Frontier Airlines Pilots Association (FAPA) colluded with management in an attempt to interfere with a pilot election taking place at Republic.

(The Teamsters announced the suit on Wednesday last week — though I didn’t notice the suit until I was scanning through Republic’s second quarter 10-Q, filed with the SEC last evening.)

“On the eve of the ballot count, FAPA gave pay cuts and other concessions to management in a desperate effort to avoid a vote of the pilots and short circuit the NMB [National Mediation Board] election,” said Captain David Bourne, IBT Airline Division Director in a news release. Bourne also said the deal would “help FAPA perpetuate itself at Frontier no matter what the outcome of the votes of the pilots.”

Republic unveiled a $100 million restructuring program for Frontier earlier this year, though that $100 million target was later upped to $120 million. As part of that program, a concessionary agreement was created and then overwhelmingly approved by FAPA membership in June. The Teamsters now seek to nullify this agreement.

In its 10-Q, Republic said if “the restructuring agreement is declared null and void, Frontier would lose approximately $9 million to $10 million in cost savings per year over each of the next five years”. The company also said that the IBT’s “allegations are baseless.”

Republic had previously outlined the savings from the pilot deal in an earlier SEC filing, saying that they would peak at $12 million in both 2012 and 2013, though savings would be realized from 2011 though 2016. The net present value of these cost cutting measures was calculated to be $39.3 million, the value of FAPA’s equity stake in Frontier.

The lawsuit comes after a period of interesting developments in the pilot labor situation at the Republic carriers. Earlier this year the NMB concluded after an investigation requested by the Teamsters that all of the Republic carriers were operating as a single transportation system. A union election was subsequently authorized. The Teamsters, the union that had already represented pilots at Republic carriers such as Republic Airlines, Chautauqua, and Shuttle American, won this election in June.

Before the Teamsters succeeded in their election bid, however, Republic had attempted to delay the tally of the election results, arguing that its restructuring and a planned reduction in its stake in Frontier could affect the ruling that all of the Republic airlines were composed of a single transportation system. The NMB denied this request.

 

Items of Note – August 8, 2011

Published
by
Dan Webb
on August 9, 2011
in American, Delta, Frontier, JetBlue and US Airways
. 1 Comment

So, lately I’ve been thinking about changing up the blog format a bit to make the site a bit more news-y. Sometimes there are stories that I just can’t analyze all that much, but I still think are worth a few lines, whether it be a link to a story or few thoughts of my own. I still plan on doing many of my traditional posts, but I want to give this format a try as well. Let me know your thoughts!

Delta Changes Equipment on LAX-HND
According to the always-informative Airline Route blog, later this fall Delta is placing its A330-200s on the Los Angeles – Tokyo (Haneda) route, a capacity reduction from the 777-200s currently operating the flights. Delta re-started service to Haneda from Detroit and Los Angeles in June after suspending flights in response to the March 2011 Japanese earthquake. Flights from Detroit, however, will be ending in a few weeks, something that is enabled by the extended dormancy waiver that Delta recently received from the DOT.

Frontier Announces Winter Florida Service
Frontier announced some seasonal Florida service yesterday. Some of the routes are normal resumptions, but the carrier is also adding new seasonal service from Des Moines to Orlando and Tampa, and from Madison to ORlando. Des Moines-Orlando is interesting as it appears that AirTran/SouthTran/Southwest is no longer in the market. Allegiant, however, flies from Des Moines to both Orlando (Sanford) and St. Petersburg.

The other interesting piece of the release is that service from Milwaukee and Omaha to the Tampa area has shifted back to Tampa International. Last year, Frontier had experimented with service to St. Petersburg from these cities.

Frontier Adds Two New Denver Destinations
The airline also said yesterday that it would add two new destinations from Denver – Little Rock (six times weekly) and Palm Springs (seasonal, thrice weekly). United has a presence in both markets. Meanwhile, Frontier is fine-tuning its capacity, adding a few flights each week from Denver to to Las Vegas, Madison, San Diego, and Santa Barbara for a short period of time.

In Other News…

  • The fight between US Airways and USAPA, the union representing the carrier’s pilots, continues to escalate with the airline now seeking a restraining order against the union. Fun times.
  • Much like Continental and Air France, American now has a new service that allows one to lock in a fare for an extended period of time.
  • Airlines appear to be rolling back the fare increases that came in response to the FAA tax holiday.
  • Vision Airlines announced that it is dropping five cities from its route map – Asheville, Chattanooga, Knoxville, Lafayette, and Shreveport – as part of its winter schedule. The carrier dropped service to a few other cities last month.
  • JetBlue will be operating charter flights to Cuba.

Why Delta and US Airways Should Look at Gogo Vision

Published
by
Dan Webb
on August 8, 2011
in Delta and US Airways
. 1 Comment

Last week, American announced that its fleet of 15 Boeing 767-200s, primarily used on flights from JFK to LAX and SFO, had been equipped with a new streaming entertainment system that will allow passengers to watch movies and television shows on their laptops for a fee. The system – Gogo Vision – is slated to be rolled out to more American aircraft this year.

The system streams the content from an onboard service through a Wi-Fi network, though one does not need to purchases Gogo’s inflight internet product to the use the system. Instead, one pays for the content he or she views.

While I haven’t tried the system myself and am by no means an expert – I think this system has some great potential at Delta and US Airways.

Delta’s inflight entertainment lacks consistency throughout its fleet. For example, there are some subfleets – like the ex-Song 757s – that feature personal televisions with on-demand entertainment – while the ex-Northwest Airbus fleet has nothing. (All mainline domestic aircraft now have Wi-Fi, though.)

Gogo’s new product, however, offers a new option for Delta where it can add IFE to aircraft without it and significantly reducing the number of modifications compared to the installation of a new embedded system. While there’d still be differences within Delta’s fleet, adding this option would be a good move, for consistency.

I think the argument for US Airways to adopt this new offering is even stronger. Three years ago, the airline decided to eliminate the IFE on its domestic fleet, arguing that getting rid of the sheer weight of the IFE system would reduce its fuel burn. While I’ve yet to see any official numbers, I’m willing to assume that this new Gogo offering is much lighter than what US Airways had in the past. In addition, this new solution makes IFE a new source of ancillary revenue.

Of course, there are many variables of which I do not have knowledge, such as the cost of installation, the weight of the system, the nature of the revenue split between Gogo/the airline. But from what I’ve see so far, I think this system has good potential at these two carriers.

 

 

US Airways Plans to Retire Some A320s in 2015/2016

Published
by
Dan Webb
on August 4, 2011
in US Airways
. 0 Comments

There was a very interesting footnote in a US Airways’ DOT filing yesterday about wheelchair storage:

US Airways plans to retire [REDACTED] existing Airbus A320s in late 2015/2016.

Sadly, there isn’t much detail there, nor is there much informatoin in the paragraph that references the footnote:

…by 2015, we will further consolidate our narrow-body aircraft around the Airbus A320 family as follows: [REDACTED] A319s, [REDACTED] A320s (up from [REDACTED] A320s today),20 and [REDACTED] A321s (up from [REDACTED] A321s today), and by phasing out [REDACTED] Boeing 737-400s, and [REDACTED] Boeing 737-300s.

But, either way, this is an interesting data point. Especially because, as per US Airways’ recently-released 10-Q, the carrier is receiving 12 A321s this year and 12 more A320-family aircraft next year. Its remaining orders for “46 A320 family aircraft are scheduled to be delivered between 2013 and 2015.”

And of course, the question of how/if/when these A320s will be replaced then comes to mind, especially as the retirements are set to begin when deliveries are slated to end.

According to the company’s annual report, 22 mainline leases are expiring in 2013 with 133 in subsequent years. Sadly, that isn’t broken down by aircraft type, but some A320s are probably mixed in there at some point, since 61 were leased as of the end of last year.

The other interesting thing is that the “up from” phrase is only used for A320s and A321s – so it appears that (as of now) that US Airways has no plans to expand the A319 fleet.

Southwest and the Full Fare Advertising Rule

Published
by
Dan Webb
on August 3, 2011
in Southwest
. 4 Comments

As many here already know, Allegiant and Spirit have each challenged some of the new DOT consumer protection rules in court (the two cases have since been consolidated).

Interestingly, Southwest has tossed its hat in the ring, though the airline’s complaint only deals with the full fare advertising rule. Currently, only some government taxes and fees (like the 7.5% excise tax) are included in fare quotations. Once the rule becomes effective, all taxes and fees will have to be lumped in.

Here’s what Southwest had to say in a recent DOT filing requesting a stay of the effective date:

[The rule] is based on unsupported speculation and conjecture that consumers are deceived by a practice that DOT has repeatedly reaffirmed over the years as being in the public interest, and which DOT, as recently as five years ago, found there was a “compelling” reason to continue. The Rule also improperly prohibits airlines from informing consumers of applicable fees and taxes in a conspicuous way that will ensure that the consumer will easily see and understand that important information.

What’s more interesting is Southwest’s estimated costs of complying with the new rule – which total $24 to $30 million. Interestingly, only $6 million of this total relates to the IT costs of compliance. The biggest component of the estimate is “$18 million to $24 million in previously expected revenue that would be lost by delaying for at least three months the implementation of certain critical revenue generating projects.”

Naturally, one wonders exactly what these “revenue generating projects” are.

Another one of Southwest’s complaints is extra complexity. The airline argued that “for most of Southwest’s 0&D markets it will be impossible for Southwest to advertise a single accurate price to cover all possible itineraries between the origin and destination points.” (For example, a connecting itinerary could contain additional government fees, like another passenger facility charge, or PFC.)

The airline also said it would “be uniquely hurt” by the new regulation due its recently-updated Rapid Rewards program, which is based on money spent with the airline. According to Southwest, the rule “will add a level of complexity to what is currently a straight-forward , easy-to-use process by consumers.” For what it’s worth – so far we haven’t seen anything from JetBlue or Virgin America on this subject – which have the loyalty programs that are most similar to Southwest’s.

Right now, the exact fate of the rule is still up in the air. The DOT has denied Southwest’s request to stay the effective date of the rule, and has done the same for a similar request from Allegiant and Spirit. The court case is still pending. Meanwhile, the DOT extended the effective date of the rule (along with some of the other regulations) after groups like the Air Transport Association requested more time.

 

Northwest Was Right on the Mark…Almost

Published
by
Dan Webb
on August 2, 2011
in Uncategorized
. 2 Comments

For some inexplicable reason, over the weekend I was taking a quick look at Northwest’s 1998 annual report, and found this interesting paragraph (emphasis mine):

Although the DC9 and DC10 average aircraft age exceeds twenty years, these aircraft have considerable remaining technological life, based upon the cycle life (capacity for number of landings) expected by the manufacturer and other factors. The Company also believes that these aircraft have economic value for the Company given its route network and maintenance programs. The Company programs to hushkit and modify the 173 DC9 aircraft. As of December 31, 1998, the Company hushkitted 130 of these aircraft and plans on completing the remaining aircraft by December 31, 1999. As a result of these programs, the Company estimates these aircraft could fly on average approximately 14 additional years beyond 1998 based upon the manufacturer’s expected cycle life for such aircraft and their projected annual utilization by Northwest. The Company estimates that its DC10 aircraft fleet could fly on average at least 20 additional years beyond 1998 based upon the manufacturer’s expected cycle life for such aircraft and their projected annual utilization by Northwest.

For the DC-9s, Northwest was right on the money — based on Delta’s previously-announced fleet reduction plans, the type will be gone by next year — 14 years after 1998.

The airline was a bit off on its estimates about the DC-10s, though. The last one was retired in the beginning of 2007.

Only a Few More Years…

Published
by
Dan Webb
on August 1, 2011
in Uncategorized
. 0 Comments

File this under completely useless airplane dork information…but I found it interesting that a Delta towbar was used to push back the 787 last week at Oshkosh.

Only nine more years until Delta gets to push back it’s actual 787s. :)