Archive for the 'Uncategorized' Category

Chart of the Day: Average Airfares (Nominal and Real)

Last week the DOT released the latest data on average fares, and while the data showed that while fares in the fourth quarter 2011 jumped significantly from the same period one year prior, but on a real basis are still lower than they were over 15 years ago.

The average domestic airfare in the fourth quarter last year was $368, a 10% year-over-year increase, and 28% higher than the average airfare in 1995. But when adjusted for inflation, fare are 13% lower than they were over 15 years ago. The DOT uses the Consumer Price Index (CPI) to make its adjustments to the nominal fare numbers, so one could conclude that the prices of other consumer goods have increased more than airfare.

So — yes, fares are higher than they were a year ago, but when looking at this long-term air travel still looks pretty affordable.

Random Chart of the Day: Change in Net Margins

Well, it’s certainly been awhile since I’ve posted. I’m currently wrapping up the semester at school, and a bunch of committments there have really been hampering my blogging time. Sorry about that!

It’s also been awhile since I’ve whipped out one of my random charts. Here’s a graph of the change in net profit margin for the first quarter, using the net profit ex-item numbers reported over the past couple of weeks.

One caveat — the Southwest result for the first quarter of 2011 does not include the AirTran results.

But the results are interesting. The first quarter appears to have been very strong for Delta, who generated an ex-items loss of $39 million, a large improvement from a $320 million loss in the same period the year prior. American and US Airways also saw their margins improve by 3 points or more.

Of course, this chart just looks at the change in margin, and ignores size of the profit/loss. Alaska, for example, noted that it posted its second-best first quarter profit ($28.3 million), while American lost $248 million ex-items.

JetBlue Seeks Codeshare With Emirates

JetBlue Airways has requested authority from the Department of Transportation (DOT) to place Emirates’ code on some of its domestic flights around May 1, according to a filing with the agency. The two carriers became interline partners in late 2010.

Initially, the codeshare will involve JetBlue service from its New York (JFK) hub to Boston, Buffalo, Burlington, Charlotte, Chicago, Fort Lauderdale, Washington (Dulles), Jacksonville, Orlando, Portland (Maine), Raleigh, and Tampa.

The deal means that Emirates will have a new US-based codeshare partner (none are currently listed on its website). The airline had previously codeshared with Continental, but that arrangement ended last year.

JetBlue’s codeshare deal with South African will also be expanding at the beginning of next month as well. South African noted in a recent DOT filing that its code will be placed on JetBlue’s JFK-Cancun flights.

 

Pinnacle to Wind Down Q400 Operations

As everyone has probably read by now, Pinnacle filed for Chapter 11 bankruptcy protection this week. This development, while certainly not happy, is not surprising, either. Pinnacle has already been working on restructuring, and CEO Sean Menke wrote in January that it was “possible that we may ultimately conclude the best way for us to achieve our goal is to use the court-supervised Chapter 11 process.”

One of the more interesting parts of Pinnacle’s plan is a complete cessation of Q400 flying for United, an operation that the airline had picked up in its acquisition of Colgan Air. Menke wrote in January that “the payments being received from United/Continental are not covering the expenses to operate the Q400s.” A chart of the wind-down can be found in one of Pinnacle’s court filings:

The big question, of course, is how United replaces that feed, and there have been very few details on that. United told the Cranky Flier that the airline is “working with Colgan to transition their flying for United Express to other carriers,” but there aren’t many details beyond that.

Why I Picked Acela Over Flying

Next week, I’m slated to be on Virgin America’s inaugural flight to Philadelphia from Los Angeles, which should be a blast. Of course, my going on the trip meant I had find a way to get back to Rhode Island. Fares to Providence from Philadelphia have been pretty reasonable over the past few years thanks Southwest’s presence on the route, but they pulled out of the market earlier this year. The cheapest one-way fare on US Airways was over $380, and I wasn’t too keen on paying that much, so it was time to look for a different option.

After some poking around, I decided that Acela was the way to go. Sure, the train ride is about three hours longer than a flight, but the train compensates in some areas. For example, there will be a shorter cab ride from my hotel to the train station than the airport. More importantly, I can arrive at the train station a lot closer to departure time. With all those factors considered, I’m guessing the train will only be about an hour and 45 minutes (ish) longer than a flight would have been. That’s still a bit less convenient , but I’m not sure if that time savings is worth the more than $200 fare difference.

Plus, Acela has some other nice perks like 2-2 business class seating with over 40 inches of pitch. In addition, while my electronics usage would be limited on a flight, I can work for the entire ride on Acela, which also features power at every seat and Wi-Fi, though the latter has been a bit spotty for me in prior experience.

I’m sure US Airways knows better than I do on how to price its short-haul markets, and I’m certainly a bit more price-sensitive than other travelers thanks to my college student budget. Still, in the Northeast Corridor (one of the few places in the US where high speed rail makes sense, in my opinion) I think there’s a very strong competitor in Acela, especially when there’s such a big fare difference. While a stronger case for taking Acela over flying can be made for slightly shorter trips like Boston to New York, I think it’s also a viable option for both business and leisure travelers alike on the trips that are a bit longer.

 

 

Multiple Carriers File for New Beyond-Perimeter DCA Slots

I’ve already written plenty about the new beyond-perimeter slots at Washington-National. To recap, the new FAA bill created sixteen new beyond-perimeter slots at the airport, enough for eight roundtrips. Four of these are four use by incumbent carriers, and three of them – American (Los Angeles), Delta (Salt Lake City), and United (San Francisco) – have already made their decision. US Airways hasn’t yet filed a notice with the DOT saying that they will be taking advantage of the new beyond-perimeter exemption.

The other eight exemptions are to be used by new-entrant or limited-incumbent carriers at the airport, and that’s where the fun starts. The government gets to decide what airline gets what, and earlier this week the applications were due. Four roundtrips can be allocated, but there are applications for ten. Here’s a summary of all of them:

I need to take a closer look at all of the applications (and play with some government data), but I  do have some initial predictions. First, I think Virgin will walk away with at least one roundtrip. United will be flying to San Francisco later this  year, but I think an additional flight is justified because it’s such a big market.

I think Southwest has a good shot as well. At 175 seats, their 737-800 is the largest aircraft in any of the proposals, and the DOT might find that feature appealing. Also boosting Southwest’s case is that it could also offer a few connections from Austin (i.e. Dallas and Houston) while offering continuing service to San Diego.

Before the DOT makes any decisions, the airlines (and other interested parties) are given a chance to submit comments, and generally the airline responses are the most fun to read. Those are due in by March 27th. You can track the entire proceeding here.

Virgin America to Apply for DCA Slot Exemptions

Last week I talked about how the new FAA bill created new beyond-perimiter slot exemptions at Washington-National, and how eight are reserved for new entrants. Virgin America will be applying for four of these to operate twice-daily service from its San Francsico base. I’ve written up the story (incluidng quotes from Virgin’s CEO, David Cush) for Flighglobal. You can read the story here.

Delta’s New Boarding Pass

I know I’m a few days late on this one, but I wanted to share (for those who hadn’t seen it already) that Delta has unveiled a new style of boarding pass – and I really like it! I’ve been unhappy with some airline boarding passes that make important information (like boarding time) hard to find, and this new format makes everything very accessible.

The extra white space does look a bit weird at first, but Delta is going to put it to use soon. The airline wrote on its blog that passengers will be able to “use a single document for up to four flight segments.” I hate keeping track of multiple boarding passes, so I look forward to this change.

Photo Credit: Delta Air Lines.

While Delta’s new boarding pass looks great, Virgin America’s (kiosk) boarding passes are still my favorite. All the important information is easy to find, their small size allows them to easily fit in a pocket without folding, and plus they are printed on thicker stock than other airlines use so they don’t crumple easily.

Charts of the Day: Traffic at Eliminated/Reduced Hubs

Earlier this week I was playing around with some DOT data, specifically DB1B (a 10% sample of tickets that tracks origin and destination passengers) and T100 (which tracks all traffic). By using these two databases together, one can get a decent estimate of how many passengers at an airport are actually flying to/from there or are simply connecting passengers.

I decided to do just that for three hubs that have seen days of higher passenger numbers – Pittsburgh, Cincinnati, and St. Louis for 2000 through 2010 (full-year 2011 data isn’t out yet). A similar pattern seems to emerge with each one. Despite big reductions in passengers driven by capacity cuts, total O&D traffic remained relatively flat — which I think shows that it’s a challenge for new entrant carriers to make a move in such cities since so much of the prior traffic was driven by connections. Cincinnati, I think, is a perfect example – Delta’s cut a load of flying, but I’d argue that most of those cuts were in areas where there wasn’t a bunch of local demand, and most of the connecting traffic could be funneled elsewhere.

Of course one wonders what cities could be at risk if we see yet another round of consolidation. The Charlotte Observer had a good story about CLT’s prospects in the case of any potential deals that involve a US Airways.

Anyway, enough rambling — here’s what I found:

A Quick Note on On-Time Statistics

Yesterday I was participating in the usual weekly recording on the Airplane Geeks Podcast, and I noticed that my fellow co-host Rob Mark wanted to discuss an article entitled “Delays Worse After JFK Runway Work Done.” Some interesting points about the DOT’s on-time database popped into my head as I was researching and preparing for last evening’s discussion, and I think some of them are worth sharing here as it shows the importance of properly using government data to draw conclusions.  Let’s take a look at two of the first paragraphs in the story:

When construction began in March 2010, officials said the revamped Runway 13R-31L would reduce flight delays by cutting the time planes spent traveling to and from the gate by up to a minute, or an estimated 10,500 hours a year.

But since the runway reopened in July 2010, the percentage of late arrivals and departures has increased.

When playing with operational data, it’s very important to be using the right statistics. According to the article, the runway was supposed to reduce taxi times, but instead uses late departures and arrivals to judge its effecgtiveness, which in my opinion is an error. First, departure delays are based on gate departure time, so a shorter taxi to the runway wouldn’t have any affect on departure delay. One could argue that a shorter taxi-in time for the inbound flight could lead to better departure performance, but I think that’s a pretty minor factor. Second, there are many factors that can affect flight delays, so using broad on-time statistics and implying that the runway is involved isn’t accurate. (Granted, the author does mention that delays have many causes, but that’s buried a few paragraphs into the article.)

If we actually look at taxi times (which is included in the DOT data), the story at JFK looks quite different. The author compared October 2009 – March 2010 to the same period a year later. In the later period, taxi in times at JFK were shorter in five of the six months being compared. Taxi out times were shorter in four of the six months.

But while taxi time numbers are (in my opinion) more reflective of the runway’s impact on operational performance, there’s still some very important caveats to consider. First, the DOT data doesn’t have any information on weather conditions at the airport, so if one month is stormier than the other a fair comparison might not always be generated.

The other issue with the DOT database is that a bunch of flights aren’t included, as the data only covers domestic flying. Second, only carriers that “have at least one percent of total domestic scheduled-service passenger revenues” are required to share their data, so that excludes smaller airlines like Virgin America, Spirit, and a bunch of regionals. The only exception is ExpressJet, which reports voluntarily. Obviously this can be an issue at a major airport like JFK. Just for fun, I took the T100 segment data, filtered out flights operated by all-cargo aircraft*, selected airports with at least 10,000 departures, and determined how many of those flights were performed by carriers that didn’t report data that month:

The DOT on-time database is very powerful and has a wealth of useful information for those interested in operational performance. But one has to be careful with the data and understand its strengths and weaknesses when analyzing it.

*I was having a tough time with this decision. Obviously, freight and boxes don’t have feelings and won’t get ticked off about a delay, but those flights are still buzzing around and can have an effect on congestion. But in the end I felt that eliminated all-cargo flying was the best for this post.

A Couple of Thoughts on the Southwest/AirTran Network Changes

Last week, Southwest announced what AirTran cities will end up being converted to Southwest stations, and that included revealing a few more cities that would be eliminated. This announcement follows previous announcements in August and November announcing AirTran station closures. Here’s a chart of AirTran cities along with the number of originating passengers from August 2010 through July 2011, courtesy of the DOT T100 database:

The vast majority of the cities that are being cut are some of the smallest in the AirTran network. The two largest stations being eliminated are Dallas/Ft. Worth and Newport News/Williamsburg. Southwest cant serve the former due to the Wright Amendment, and the latter city was probably cut due to its proximity Southwest’s Norfolk operation.

By the way — It’s worth noting that the numbers for the two “smallest” cities – Bermuda and Des Moines – are a bit misleading. AirTran only started flying to Bermuda a few months ago, and the same goes for its own-metal flying to Des Moines, which had been previously served through AirTran’s small partnership with SkyWest. Also, while Washington-Dulles is one of the airports losing AirTran service, but that airport continues on as a Southwest station.

Cranky Flier already had a good rundown and analysis of the latest cities to be cut, so I recommend taking a look there. But this latest round of network changes has got me thinking about the Southwest network going forward. Here’s what CEO Gary Kelly had to say about the AirTran deal when it was announced:

It offers Customers more low-fare destinations as we extend our network and diversify into new markets, including significant opportunities to and from Atlanta, the busiest airport in the U.S. and the largest domestic market we do not serve, as well as Washington, D.C. via Ronald Reagan National Airport. The acquisition also allows us to expand our presence in key markets, like New York LaGuardia, Boston Logan, and Baltimore/Washington. It presents us the opportunity to extend our service to many smaller domestic cities that we don’t serve today, and provides access to key near-international leisure markets in the Caribbean and Mexico.

A lot of what Kelly mentioned in that quote is already done, at least to some extent. Southwest will be launching its own service to Atlanta next month, and it now has access to AirTran’s slot portfolio at LGA and DCA. The carrier is already adjusting its schedule at the former, and will be launching service from LaGuardia to Denver and to St. Louis. But further expansion at the slot-controlled airports is iffy – Southwest lost out to JetBlue in the slot swap and additional slots are hard to come by. (Though one possibility that comes to mind is a potential divestiture in any potential M&A activity with American crops up.)

And while Kelly did mention the opportunity presented by smaller markets, the cuts in AirTran’s smaller-city service would indicate that opportunities might be limited in this area.

So what’s next for Southwest? Near-international seems to be an important opportunity for them, especially as the airline plans to increase its Mexican flying to destinations like Cabo, Mexico City, and Cancun. And the fact that Southwest’s soon-to-be-delivered 737-800s will be equipped for ETOPS would indicate that Hawaii is a possible location for a future expansion in Southwest’s network. The expiration of the Wright Amendment in 2014 could open up some interesting opportunities from Dallas as well, though the number of gates at the airport is restricted.

Obviously, those three opportunities are significant, but I’m just wondering where Southwest sees itself growing over the next 5-10 years or so. It seems that Southwest might not grow significantly over that time period, especially as the carrier mentioned that its latest Boeing order “intended to predominately serve as replacement aircraft as the airline continues the modernization of its fleet.” Obviously, the airline’s orderbook of 737-800s will allow it to increase capacity on existing routes, but I’m just wondering how many cities left in the US that would support a Southwest level of service.