The TSA and its ever disappointing act

May 26, 2016 on 3:31 pm | In Airline News, Airports, security | 2 Comments

So the TSA doesn’t have enough staff to manage itself appropriately at major airports and expects things to be particularly bad this summer.

Their go-to solution?  Dear Airlines:  Can you drop baggage fees?

Give me a break.  I hate baggage fees at least for the first bag checked and even I think that’s a stupid idea.  The revenue impact that has on the airline is so large that I would actually suggest it more economically smart for the airlines to just fork over money to the TSA to hire people instead.

The TSA hasn’t managed itself competently.  It has a long history of criminal behavior by its officers.   The agency has never competently staffed itself at many airports.

I am reminded of the year I spent one afternoon in San Francisco last fall.  I needed to change terminals at SFO and had to leave the security area to move from the International Terminal to Terminal 2.  That took about 3 hours primarily due to standing in line for security.

Was the hold up due to that many people?  Nope.  If you had staffed the other 4 scanning machines I would imagine that things would have proceeded in a timely manner.  But instead we had a 2.5 hour line wait at a major international airport on a Tuesday afternoon.

We don’t take security seriously and we don’t staff for it seriously.  We don’t even use all the money taxed for it.  Instead, we re-allocate taxes raised for security to reduce the deficit.

Care to guess who is responsible for that exceptionally anti-business move?  That would be the Republican led Congress.

When we don’t adequately staff something like this, it is a billion dollar impact to our economy.  We literally impede commerce within this country.  This isn’t about people who should just shut up and wait an extra 10 minutes before taking a trip to Disney World.

To the contrary, most air travel is business related and contributes heavily to our economy.

We should have a big problem with how travel is impeded in this country.  It’s not a “this is the wealthy” moment.  It’s a “this is an economic driver for this country” moment.  All too often we think the only people using the airlines and airports are the elite.  That’s just not true.  We think that only travelers are affected by what happens in our airline transportation network.  That’s not true either.

So what are you going to do about it?

 

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Alaska Airlines merging with Virgin America reminds me of the AOL / Time Warner merger

May 23, 2016 on 12:48 pm | In Airline News, Airlines Alliances, Mergers and Bankruptcy | No Comments

When AOL merged with Time Warner to become an even bigger media company, a primary reaction was a dot com bubble was buying a multi-generational colossus.

But others who paid attention were quite a bit more concerned in the dissonance between the two companies in terms of leadership and culture.  In short, they were incompatible and didn’t understand each other.

I understand the desire for Alaska Airlines to buy an airline.  They are in a “eat or be eaten” world and presently look very attractive as a hors d’oeuvre for a much bigger airline.  So buying someone lets the airline continue to exist rather than become food for another.

Pardon me.  This merger is nuts.

The airline fleets are entirely at odds with each other.  The service products are entirely at odds with each other.  The networks are somewhat at odds with each other and where they aren’t . . . it doesn’t mean Alaska Airlines is going to pick up the customers from a consolidation point of view.

The company cultures are way at odds with each other.  Alaska Airlines has a multi-generational history and a very unionized, very conservative airline culture.  Virgin America is the millenial who just turned 24 and thinks they should be a vice president in their first job.

What bugs me more about this is that no one seems to be calling anyone out on this.  That alarms me.  Analysts and everyone else shouldn’t like this merger at all.  It doesn’t speak to merger synergies and it doesn’t look like a merger that is easily accomplished which means it looks like one hell of an expensive merger.

In the face of incredible and record setting airline profits in the past 2 years . . . no one seems to care very much.

And that’s what scares me about this industry.  It appears to be losing its focus again.

 

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SWA, SWAPA and 737MAX

May 19, 2016 on 12:37 pm | In Airline News | No Comments

Southwest pilot’s union, SWAPA, is suing Southwest to prevent them being forced to fly the 737MAX as they believe it’s not covered in the contract.

I understand the move.  This is the pilots wanting a new contract with an industry leading raise.  It’s designed to raise public awareness and tension with the company.

It is a contradiction in so many ways.  First and foremost, the 737MAX is no more than an update to a long existing aircraft flown by the company.   To see it as a new aircraft type and force that issue is a giant stretch at best.

However, we wouldn’t be seeing this if Southwest were able to get a deal done on the pilot’s (and other unions’) contract(s).  Fear of an industry leading contract is reasonable and particularly so for Southwest since they no longer have the lowest costs in the business.  It’s a reasonable fear.

Which means the pilots could stand to have a gut check.  Wanting the most is not unusual.  Wanting it against the specific conditions of your airline and its future is self-defeating.  And while Southwest isn’t bankrupt and isn’t likely to go bankrupt soon, it would be in the interests of the pilots to learn from 30 years of lessons.  Namely that over-reaching has never done an airline nor a union any good in this business.

Failure to achieve a contract is a pox on both houses.  Both can give and both should reach for a contract that starts asap.

The airline and its unions have to come to grips with the fact that the airline is changing, the airline industry has changed and while record profits are seen today, there is nothing in the airline industry that is less volatile than it used to be.   That said, both parties should realize that they enjoy success and wealth today because of the unique special relationship that the airline and unions have historically enjoyed.  That relationship was about getting deals done that benefited both parties without being harmful to either.

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Smisek goes down like Frazier

September 8, 2015 on 10:55 pm | In Airline News | No Comments

There has been a federal investigation going on into the actions of David Samson, former chairman of the Port Authority of New York and New Jersey and the man who controlled Newark’s airport.

Today, that probe took down United Airlines Chairman, CEO & President Jeff Smisek as well as 2 other executives (Nene Foxhall and Mark Anderson, both senior vice presidents of the company).  Smisek’s resignation was announced as a result of an internal probe conducted alongside the Federal investigation.

Everyone added the words about this resignation not being an admittance of guilt, etc.

Don’t kid yourself.  If Jeff Smisek and two other senior executives suddenly resign, it wasn’t because nothing wrong was found.  To the contrary.  And it wasn’t a resignation so much as I’m sure these executives were encouraged to depart or face consequences far worse immediately.

Samson is accused of using influence to get United to put a flight in between Newark and South Carolina where Samson had a vacation home.

It’s notable that United “owns” Newark Airport so tightly and with such advantage it’s impossible for other airlines to gain any space at all.  They have Newark locked down the way Southwest has a stranglehold on Chicago Midway and Dallas Love Field.

What worse, Smisek is an attorney.  He really does know better than to allow his airline to influence an executive in that manner.

What happens next?  Someone named Oscar Munoz becomes United’s new President and CEO and Henry Meyer (an independent United director) is now Chairman of the Board.

Is that good?  I don’t know.  Right now, an incompetent fool can make money running an airline.  I would hate for these new guys to get the idea that they are airline geniuses.  Airline geniuses are defined much more by events seen in 2008 and 2009 than they are today.

This is bad for United.  There really wasn’t a need to cultivate such a relationship in this current airline era.  Smisek had everything going for him and his airline already and to influence Samson for more would have just been greed.

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Venezuela goes old school

July 9, 2014 on 11:36 am | In Airline News, Trivia | No Comments

Airlines such as American Airlines and Delta Airlines are sharply reducing the number of flights they are flying to Venezuela at this time.  The problem is that while they like the flying, they can’t get their money out of Venezuela.

Most recently, American Airlines has said it has over $700 million that it cannot retrieve from the greedy hands of Venezuela’s government.  $700 million is a lot of money for any company and even for an airline, that’s a lot of cash. News reports now say that nearly $4 billion (with a “b”) is being restricted by Venezuela due to currency restrictions in place.

Venezuela (and some other countries) are greatly restricting the amount of foreign currency that can leave the country at any one time.  Because of rampant inflation and hyper-inflation induced by socialist movements in such countries, these nations now have a severe problem is coming up with enough “hard” currency to pay their global bills.

That’s significant when it comes to Venezuela because this is a nation that has had a profitable oil export going on for years.  Typically that brings in more than enough foreign currency to balance outflows for most nations.

The worst of this is that as these balances grow in these countries, they look more and more attractive to hold on to.  $4.9 billion is a lot of money to a nation such as Venezuela.  In fact, it’s about 1% of Venezuela GDP.

Think about that for a moment.  For foreign airlines alone, Venezuela is intentionally restricting as much as 1% of its GDP.

How is this done?  The nation devalues its currency strongly and regularly.  An airline such as American Airlines sell a ticket for say, $200, it’s paid for (in Venezuela) in Venezuelan Bolivars at the official exchange rate.   That exchange rate is set by the government.  But the government changes that rate arbitrarily and lower before that money gets to the airline.  Here is a simplified example:

SuperStar Airlines sells tickets in Venezuela for Bs 1000.00 (One thousand Venezuelan Bolivars).  Juan Diaz purchases a ticket and pays in cash Bs 1000.00.  The exchange rate is (officially set by Venezuela) set at 4 Bolivars to $1 US.  The airline collects this money into a Venezuelan bank account in that currency.  Now, periodically, SuperStar Airlines would like to have that currency sent back to its headquarters in the United States.  But the Venezuelan government makes this very difficult to do because it’s a large sum of money.  Basically, this currency has to be sold for dollars and the only place those dollars can be purchased (legally) is the Venezuelan government.

So the Venezuelan government “sells” dollars for an exchange rate that is set at Bs 5 to $1 and suddenly the money that SuperStar Airlines has is now worth much less.

What makes this worse is that the Venezuelan government is maintaining several different exchange rates that are “official” and those are egregiously unfair to the businesses such as airlines operating to and from that nation.  In addition, the government is devaluing its currency more in the exchange rates that primarily effect foreign businesses.  Furthermore, it’s only permitting a trickle of cash to be exchanged and sent out of the country at a time.

This results in a condition where it just doesn’t make sense to fly to Venezuela.  Actually, it doesn’t make sense to do any business in Venezuela and one could be tempted to call Venezuela the Alitalia of countries at this point.  When you can’t make money and take it back home periodically at a rate that allows you to earn a reasonable profit, you just have to stop doing business in that country.

This is what many airlines are doing now.   One thing that the former President (of Venezuela) Hugo Chavez understood was that he needed foreign businesses to do business in Venezuela and he kept this game at a tolerable level.  New President Maduro and his government is not making it tolerable because to do so means they cannot throw money at their citizens to stay in power.

And staying in power is important.

This is very reminiscent of how many nations in South America operated in the 1960′s, 1970′s and 1980′s.  And it killed those economies.  Airlines had to be very creative with how they got money out of those countries legally.  Braniff was very good at this but even Braniff would find itself doing very odd things from time to time.  For instance, its leather seats came from leather from Argentina. That leather was “exported” by Braniff because they had to buy something to take “value” out of the country.  Leather was a  way to get “value” out of Argentina.   Other times, executives would travel to the Latin American country in question, buy financial instruments of various types (often bonds) and then stuff their suitcases with them and come home.  I know this because that is exactly what my father had to do at Braniff more than once.

When an airline gets to the point that it says it is untenable to continue business in a nation, that’s pretty bad.  Airlines will do business with just about anyone if there is money to be made.

I strongly suspect that Venezuela’s response will be that their airline will fly people where they need to go.  Except . . . how will that airline gets its money out of those countries when they use retaliatory measures (allowed) against Venezuela?  This is only one chapter of a multi-story chapter.  Stay tuned for more.

 

 

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United Airlines: Failure in the face of historic success

July 3, 2014 on 12:50 pm | In Airline News | No Comments

First Quarter earnings last year in 2013 for United Airlines was a disappointing loss of $362 million.  United worked extra hard to deliver even worse results in 2014 with a loss of $580 million.

All of this in the face of historic and near historic profits being enjoyed by airlines across the United States.  American Airlines Group is having a banner day but we’ll have to excuse some of that blistering performance as it’s most recently out of bankruptcy and it has yet to stabilized in its merger.  Regardless of my dampening the mood on AAG, they have done far better out of the gates than virtually any other airline and that ain’t nothin’.

It bets the question of what will happen to United Airlines and I keep visiting this subject as things keep getting worse.  I strongly suspect we will see a change in leadership in the near future at that airline as these results won’t be tolerated for very much longer.

That won’t solve the problem, however.  United’s problems are both organizational as well as culture based.  This isn’t an airline whose employees want transformative change.  In fact, there is a belief that if the leadership would just get out of the way and give them what they want in salaries, the airline will operate profitably. Each union holds the company hostage with poor performances and behavior that is a patient wait for the company to start to teeter again.

Overthrowing leadership rarely gets you what you want.  An ailing airline doesn’t provide leadership in salaries, growth or quality of life.

It will take a transforming leader to turn United Airlines around at this point and I think that person will be very hard and very elusive to find.  Such a leader will have to gain the trust of both sides of the company (United and Continental) will simultaneously imposing change and bringing about vastly better operational efficiency.

That’s a tall order for that airline.  Who do you hire?

It will be tempting for someone to hire a CFO from another airline.  United has enough financial management to run 4 or 5 airlines.  Those good enough for the job have the dream jobs of their careers already.

And the excellent Continental Airlines leadership is just kind of . . . gone.

It will be tempting to find someone who is already a top CEO or who has retired from an already successful company.  I believe United will need someone hungry to lead and transform rather than someone who has the mission to act as steward for the airline.

The right leader is always out there.  The trick is to find her or him in time.  The UAL Board will have to remove the current leadership, find a steward and then go on a search to find the right person for the company.  Waiting very long simply means that the company loses more money.  The merger is almost 4 years old now and no modern airline merger had bled red ink like this one.

I would go look at the leadership at airlines such as American Airlines Group (but be prepared to fight Doug Parker hard for any of them), Southwest Airlines and Delta Airlines.  I would look hard at Alaska Airlines as well.  Find your man, give him carte blanche to execute change and step back to see what happens.

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Envoy: Only a matter of time

May 2, 2014 on 1:25 pm | In Airline Fleets, Airline History, Airline News, Mergers and Bankruptcy | 1 Comment

I honestly think it’s only a matter of time before the American Eagle spinoff, Envoy, is shut down.  Unable to get an agreement with the pilots, American Airlines has decided that Envoy will not receive new aircraft for new flying.

Instead, new aircraft will go to other regional airlines and Envoy now faces a 3 to 4 years dry season and a wind-down of the EMB-140 fleet.

In part, I do think that pilots wrongly played tough in their latest negotiations.  I think that getting an agreement that kept them in the game was a far smarter bet than to reject the agreement and find themselves in a business that has no prospects.

If I were a pilot at Envoy, I would move heaven and earth to get a job with a “major” and move on with life.  Only if I had retirement prospects over the next 2 to 3 years would I hang on.

The choices are slim out there.  Pilots cling to the idea that a pilot shortage will change things.

The so called pilot shortage has been spoken of for 10 years and never really has materialized.  Airlines have figured out how to deal with such shortages in ways that don’t count on pilots. I wouldn’t be betting on a shortage that has never materialized to date.  It’s possible that it will but betting on it only makes you look naive at this point.

I fully expect Envoy aka American Eagle will be shutdown in less than 4 years.  I do not think it has good prospects for a merger either.  They have nothing but a very senior pilot base that has shown intransigence towards the changes in the industry.  Why merge with that when you can just wait for the creature to die?

No, I think Envoy will join Comair (ex Delta) in a very undignified death.

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Jet Who?

May 1, 2014 on 12:30 pm | In Airline News, Mergers and Bankruptcy | No Comments

jetBlue hasn’t impressed me in a long, long time.  That’s a shame because this airline was quite literally the best funded, most successful start-up airline ever until the board panicked and asked David Neeleman to leave the leadership.

Neeleman has two qualities I really like when it comes to airlines.  He knows how to sport real opportunity and meet it with innovative solutions.  He also knows how to learn from mistakes.

Since his departure, jetBlue has worked on growing routes on some of the least profitable routes ever.  This airline has stuck to the northeast corridor and Florida like a bad stain on a white shirt.  There is no real growth and jetBlue let its relationship with American Airlines influence it’s strategies in ways that were laughable.

Laughable because American Airlines tossed aside that relationship instantly upon a change in the regime at AA.  There is no leadership at jetBlue, only stewardship.

With a still low cost workforce, an efficient fleet and an opportunity to draw upon the largest O&D markets in the world, it barely turned a profit.  Other airlines with far less advantages are doing dramatically better.

Without better leadership, I really don’t know where jetBlue goes.  I don’t even necessarily see added value in this airline when it comes to mergers.  Their position at JFK is somewhat valuable but only marginally so as that airport is less effective than La Guardia or Newark.   They have some valuable slots but they’re not ideal.

Spirit Airlines and Allegiant are going to nibble at their business from the bottom.  Southwest and SuperLegacy airlines are going to intrude on their marketshare more and more from the top and there is no great alliance to be had with anyone else in my view.

There was, in my opinion, one great merger opportunity but it would have required a very strong leader with a lot of courage.  I could have seen a merger between jetBlue, Virgin America and Frontier.  There was enough fleet harmony, relatively few seniority issues and core strengths in area of the United States to make that work.

The combined airline could have focused on the West via Virgin America and Frontier Routes using SFO, LAX and DEN and could have used jetBlue assets and strengths to make inroads in the midwest and tie together the East and the West.

But Frontier is going ULCC.  Virgin America has slowed its growth but improved its profitability greatly.  And jetBlue is just stagnant.

More importantly, I don’t see enough of a leader at any of those airlines and I don’t see enough of a leader sitting on the sidelines to make it happen.

jetBlue had its growth and had its momentum killed with the Neeleman ouster and that’s a shame.  It’s gone from jetBlue to jetWho? over the past 8 years and what a lost opportunity that is.

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Dallas and The Gates

April 29, 2014 on 12:44 pm | In Airline News, Airports, Mergers and Bankruptcy | 1 Comment

The City of Dallas’ transportation committee met, deliberated behind doors and then decided to push the Love Field Gate Issue up to the full city council yesterday.  I noticed that one particular person was involved in the hiring of L.E.K. Consulting to determine who should get the gates:  Aviation Director Mark Deubner

Deubner seems intent on making a hash of managing Dallas Love Field in ways that go beyond the norm for this day and age.  Deubner is the same person who made a hash of the negotiations surrounding the Braniff Maintenence and Operations building on Lemmon Avenue last year.   It’s become quite clear that Dallas Love Field won’t be thriving under this man’s direction.

I think that the City of Dallas getting involved in this issue is going to backfire on the city in ways that City Council Members can’t entirely imagine.  First and foremost, it’s unwise to interfere with the United States Justice Department and the disposition of antitrust issues.  Second, the City Council has no legal standing to determine who gets those gets short of crazy arriving on the door step.

And Virgin America getting those gates isn’t crazy.

If the cities of this country want to control their airports better and do more for their local citizens (aka The Consumers), then they need to stop making long term, exclusive leases on gate space.  Auction it off on short term leases or control it on a flight by flight basis.  Keep your flexibility and sell your city like nobody’s business.

But you don’t get to make deals and then revisit just part of them.  If the City of Dallas attempts to control who gets those gates under the present circumstances, they’ll be a part to several lawsuits in which the only sure loser will be the City of Dallas.  And it will cost the city millions of dollars with zero possibility of an outcome that benefits its citizens (aka The Consumers.)

In fact, when Aviation Director Mark Deubner hired L.E.K. Consulting, he exposed the city to a lawsuit right there.  He forced the city into taking a position by virtue of asking a consulting company to establish what was best for the city when the city didn’t have any business asking that question at this point.

So, now it is entirely possible that even if the Dallas City Council leaves the issue alone and permits the gates to be sub-leased, other airlines may well sue the city because it doesn’t fit anyone else’s notion of what should happen.

If Mark Deubner had left things alone and the City of Dallas had left things alone, they would have been fairly protected and any outcome would have at least benefited the citizens (aka The Consumers) marginally more than the present situation.  Neutrality was the smart play here.  And an abiding desire to interfere on the part of City Management has exposed Dallas to consequences that will cost a great deal of money.

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Let’s take a shot at United Airlines

April 26, 2014 on 3:48 pm | In Airline News, Mergers and Bankruptcy | No Comments

Continental and United Airlines announced their merger in 2010 and here in Q1 of 2014, I think that their earnings are shameful.

That’s because they didn’t have any earnings in Q1.  Instead, they had $609 million in net losses.

It’s been 3 years since they were able to close on the merger and begin integration.  It’s been more than a year since they acknowledged that they had problems in their integration.  This picture isn’t getting better, it’s getting worse.

Jeff Smisek famously joked that by having Continental merge with United, he saved United from having to marry the ugly girl. The ugly girl was US Airways.

The ugly girl married American Airlines and reported a Q1 net income of $408 million.  With the ugly girl management (Doug Parker & Company) in charge and they’ve barely gone to work on AA operations.

Seems to me that marrying the ugly girl would have been the smart thing.

Everyone looked at US Airways and sneered.  Delta, Continental and even American Airlines.  But the ugly girl kept earning money.  Big money for an operation that was nominally second to every other legacy airline when it came to advantages.

Jeff Smisek worked so hard to avoid the ugly girl that he made a compromised deal and the merger of equals ultimately resulted in a merger where United effectively took over Continental.

Let’s be clear about something:  Continental Airlines, at that time, had a great and profitable operation.  United Airlines did not.

United needed someone to move it past the Tilton Era and into competition with Delta.  Continental didn’t want to lose in the merger game but it had options.  At the least, Continental didn’t need to be the most eager bride around. I always thought it prescient that Smisek saw Continental as the bride rather than as the groom.  Sometimes our statements speak volumes.

Three years later, United doesn’t have it’s act together and it shows zero signs of getting its act together. I fully expect Jeff Smisek and his team to start getting smacked around pretty badly by financial analysts.  Particularly since even Southwest Airlines who merged with AirTran at the same time has now found itself experiencing great joy in the financials game.  The airline with the highest costs (Southwest) is beating an airline with lower costs (United).  Badly.

What to do?

In an ideal world, Smisek would take stock of whose departments ain’t making it and hire new people.  Go hire the best and get them from whoever he can.  Pay them what they need to make a jump.  And do it now, not 6 months from now.

The ranks need to see a new sheriff in town (even if he looks like the old one) and the executive team needs to get the message that performance does, in fact, count.

United employees are, traditionally, their own worse enemy and they remain so today.  They will sink that airline to spite their own faces and the worst part of it is that they will take very good Continental employees down with them.

It will cost to fire some of that executive team.  It won’t cost nearly as much as keeping them on.  Right now, it’s costing $609 million a quarter.

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The A380 in Dallas

April 7, 2014 on 8:47 am | In Airline News | No Comments

Emirates has announced it plans to serve Dallas with its flagship A380 on October 1st of this year.  The aircraft will replace a Boeing 777-200LR and will offer 223 more seats than the current 777.

Why?  Houston has service to the Middle East because of the oil business.  Dallas has it because of the IT business.

The Middle Eastern carriers are the airlines of choice for entire families from India and Pakistan when traveling between the United States and the Indian sub-continent.  Currently, many going to India actually travel down to Houston to fly home because the seat availability is better and the prices are cheaper.

Emirates knows it can reliably fill the A380 by lowering prices.

Quite frankly, I think this is being put into place today rather than next year or the following to ensure that a base of travelers is built up before American Airlines can deploy its 787 aircraft on a direct route to India.  (American’s 777 aircraft don’t quite have the range for the trip but the 787 will).

I think this is a powerful pre-emptive action on Emirates part to subdue QATAR, Etihad and American Airlines and it will likely work very well for them.

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MH370: Is Malaysia responsible?

March 30, 2014 on 2:23 pm | In Airline News | No Comments

I am disturbed by the rather harsh criticism laid upon Malaysia by China and Chinese families with respect to MH370.  I can certainly make allowances for people in distress and I have both empathy and compassion for those people.

But for China to imply that Malaysia has been irresponsible or incompetent is just grossly unfair.

For Chinese citizens to insist that the aircraft is intact and its passengers alive but hidden by Malaysia is . . . stupid. No matter how much grief you feel.

A person or person(s) commandeered an aircraft over a sea, artfully steered it past two nations and then steered a course into one of the most remote oceans in the world.

My point is that this wouldn’t be easy for anyone.  There have been up to 12 aircraft from at least 5 nations assisting in the search.   Nations with satellite imaging capability have scoured the seas over and over trying to sense wreckage and debris.  The United Kingdom and IMMARSAT went to great lengths to establish where this aircraft went and have continued supporting the search.

Many, many nations have lent support in a variety of meaningful ways.  If this airplane has not been found, it’s not because anyone is behaving slow, without care or without a sense of urgency.

It’s because this is a very hard thing to do.  Before anyone criticizes, we should remember that it tooks years to find Air France 447 in the middle of the Atlantic.  We knew far more about that flight and it was far easier to access the area and search.  Yet it was considered one of the toughest searches for an airplane done to that date.

What they’re doing in the Indian Ocean is nearly an order of magnitude more difficult.  The searches know next to nothing about flight path, motive or even the ocean area in which it went down.  But many nations continue going out day after day trying to find answers and doing so with utmost professional behavior.

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Eastern Air Lines is not coming back

March 28, 2014 on 12:48 pm | In Airline News | No Comments

There has been some news now and in the recent past about a group of people (some originally from Eastern Airlines) forming a new startup in the Miami area (in the old Eastern building).  Most recently there have been reports about an RFP (request for proposal) for up to 10 used aircraft that this new company can purchase.

The company is to start as a charter and use either Boeing or Airbus equipment to start.  This would mean Boeing 737 or Airbus A320 aircraft.

Need I remind anyone how the charter world typically does for any new business?  Or how badly charter companies do when they attempt to transition to a scheduled carrier?

While these people may have some money and opportunity to get started as an airline, I’m extremely uncomfortable with the trade on the Eastern Airlines name to start with.  First of all, if anyone thinks that Eastern Airlines left people with great memories of travel, they would be wrong.  The airline left most people with a bad taste in their mouth and there is a reason why the airline went bankrupt.

That reason wasn’t Frank Lorenzo despite how many want it to be.  It had a lot to do with a bloated operation that didn’t focus on customer experience.  People didn’t fly the airline and didn’t like the airline.  There was no legend of greatness in that airline.  It never was known for that even when Eddie Rickenbacker led the airline.

New airlines can be great things to watch and I get excited by them too.  But this isn’t the one to get worked up over.

When someone like David Neeleman comes into the marketplace and starts using an innovative strategy focused on customer experience using the right aircraft, then we can talk.  That person hasn’t shown up yet.

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MH370 and the data

March 25, 2014 on 8:44 am | In Airline News | 1 Comment

What I’m about to write could be seen as harsh but it needs to be written.

When people talk about their being no data about this flight, we have nothing but data.  In fact, we are in the unusual position of being able to only talk about the facts that we have rather than speculating on emotions and personalities.

Emotions and personalities will come later and actually be an important part of the conversation and investigations.

But today, when people say that there is no evidence. . .

You are wrong.  There is nothing but evidence.  And the evidence says this aircraft was commandeered, flown by programmed waypoints at high altitude (30,000 or more) to  a point in the southern Indian Ocean approximately 1200 to 1800 miles west of Australia where it ended flight.

Because it is impossible, not merely improbable, for an aircraft such as the Boeing 777 to land on an ocean and keep afloat, all passengers must be presumed as dead.  The southern Indian Ocean is no place for human beings without protectioin, shelter and sturdy watercraft, they would not survive.  They would not survive even on a life raft.  Hurricanes have passed over this area already during this search.  This is not a hospitable place even for United States naval vessels.

For those who think the 777 can survive a water landing such as the A320 that landed in the Hudson River:  there couldn’t be a greater difference in the circumstances between two such events.  Civil commercial aircraft are not designed and are not capable of surviving a landing in the seas and weather offered by the southern Indian Ocean.  This area is considered one of the most dangerous areas of ocean in our world.

For those of you who believe this must be a hijacking and that this aircraft and its passengers are being kept hostage somewhere. . . you only do a disservice to the loved ones of those passengers to promote hope with this theory.

The science and mathematics used to track down this airplane are irrefutable.  Even if we did not have such information, hostage takers don’t take 230+ people and hold them incommunicado for 2+ weeks.  In fact, you really can’t hold a 777 without it being seen for 2+ weeks.

This aircraft went into the southern Indian Ocean.  All lives were lost and it’s a very sad moment for their families and friends.

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Batteries and the 787

January 14, 2014 on 1:52 pm | In Airline News | No Comments

There is a news report that the 787 has experienced another battery incident in Japan.

And when we digest the sensational reporting, we find that . . . not so much.

A single battery cell “vented” as designed when a 787 was undergoing scheduled maintenance.  The 787 was owned by JAL and US authorities have not decided to investigate.

Which brings me to another, related issue:  The 787 battery fix.

This is a fix that by all appearances has done exactly what it was designed to do which is to inhibit the problem from occurring but also protect the airliner if it does occur.  That single cell venting mentioned up above?  That’s a design working as it is supposed to.  A cell may destruct but now it can’t induce a runaway event in the battery itself.

I think quite a few people owe Boeing an apology for their rather strong criticisms of the battery fix design and what it would mean.  One of those people would be Elon Musk who famous tried to tell the chief engineer at Boeing how to fix the problem.  It’s notable that the Tesla S car is now the focus of . . . wait for it . . . batteries catching fire after accidents.

New technologies bring about new problems.  Sometimes those problems aren’t fully uncovered until something goes into service and that doesn’t mean aircraft (or cars) shouldn’t go into service.  We also shouldn’t be quite so quick to condemn an aircraft for a problem related to that new technology.  When the battery grounding was going on, there were several Talking Head experts opining that this aircraft is a failure and should possibly be permanently grounded.

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American Eagle: Losing a name

January 5, 2014 on 2:00 am | In Airline News | No Comments

American Eagle Airlines is going to be changing its name.

Why?  Because American Airlines wants that name for all of its connector services and American Eagle will be operating connection services with several other airlines for American Airlines.

Put another way, it’s American Airlines’ name to do what it wants with it.  Given what a strong brand it is, I would want to use it for all my connection services too.

What will it be?  You can bet it will be something fairly meaningless and without inspiration.  Because American Eagle will have to become a stand alone airline and operate among all the other regional airlines.

American Eagle is going to have some hard times ahead of it.  It will have to compete for AA’s business as well as business from other airlines and that is a cutthroat business.  Its pilots are going to have to swallow hard on contract changes that will see them go from being an arm of American Airlines when it comes to pay and benefits to becoming “one of the other guys”.

That will be hard for everyone under the American Eagle name today.

But American Airlines is not losing a name.  It will keep the American Eagle name but it will simply apply it to all flights being performed by regional airlines under its umbrella.

And that’s probably as it should be.

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Love not War

December 23, 2013 on 2:00 am | In Airline News, Mergers and Bankruptcy | 2 Comments

The flight attendant unions of American Airlines have decided to make love, not war, again.  There is a deal in place for the APFA (Association of Professional Flight Attendants) to represent the flight attendants of the merged airlines of US Airways and American Airlines.  The Association of Flight Attendants (US Airways) is leading its members to the APFA to get a new “industry leading” contract in place.

The AFA (US) gets to have some voice in their destiny in the process.

It’s great that they want to move forward and I have no doubt that working in unity would yield a better outcome than otherwise expected.

But I’m not sure these groups are really going to get along well.  It remains to be seen and I would love to hear from a US Airways flight attendant about their views on working together with the APFA and Laura Glading.

On the one hand, the APFA does very well in marshaling their membership to speak with one voice.  But they do tend to keep talking about 20 years ago and restoring things to the way they once were.

If I were in either union, I would want a union leadership that got me a good deal for today’s conditions in airlines.  And that doesn’t mean a bad deal or a concessionary deal.  It means a deal structured around how the airline industry is working today.  If I were a leader, I would make these my goals:

  1. Workplace flexibility:  The ability to work my job, earn my salary at a living wage and still be able to cope with a modern set of challenges in my family.  How about flight scheduling that is a win-win for both the airline (in terms of productivity) and the flight attendant.
  2. A salary rate based the hours I work rather than the size of aircraft I fly or the distance I fly.   Re-think how salaries should be paid so that the actual effort expended is in sync with the pay earned.
  3. The ability to actually take charge and deliver great customer service to my passengers without fear of retribution for daring to use my mind.
  4. Managers who empower rather than punish.  This is very, very important.  Give the flight attendants a chance to show what they can bring to the company and its financial performance.  They might possibly be the most important part to a turnaround.
  5. A retirement plan based on a modern model (401K) designed to minimize risk to my retirement but also reward my service time.  AA has some of the best financial managers in the world, ask them to go to work at finding a way for my union to experience real growth in my retirement.

And it’s time to realize for everyone, management, all unions and all other employees are all One Team.

Live by each others efforts and die by each other efforts.  Anyone who wants to go to “us vs them” should be sidelined.  This isn’t about just making the airline successful someday.  This is about making the airline successful as fast as possible and sharing the rewards of that success among all the members of the company.  The faster a real, consistent profit is earned, the faster everyone can start sharing in that.

I would want to get to that point quickly because earning more money in 2015 is a whole lot better than earning more money in 2018.

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Change, it’s coming

December 15, 2013 on 11:37 am | In Airline News, Airline Service, Airports, Mergers and Bankruptcy | No Comments

With the US Airways / American Airlines merger done this past week, everyone is speculating on change we can expect but in the Dallas / Fort Worth area, I think we can expect change in at least 4 different areas and it’s all good for those in this metropolitan area.

1)  American Airlines will slowly return to being the on-time, service oriented airline that it once was.  Parker & Company know how to fix operational issues and get planes going where they need to go.  I also think we’ll see the benefit of code-share flights through the system to destinations that might well yield lower prices.

2)  Southwest Airlines will be unchained on October 13, 2014.  On that day, Southwest can fly where it wants to from Dallas Love Field as long as it is in the domestic 48 states.  This will not only offer us opportunities to fly non-stop to major cities in the US but it will also put some competitive pressure on American Airlines (and other airlines) on routes to and from the DFW area.

3)  Ultra Low Cost Carriers will move quickly to find their toehold at DFW.  There is a lot of low-hanging fruit to be had in this area and Spirit Airlines has figured that out.  I expect Spirit, Allegiant and Frontier to all try to get gate space and establish operations in this area.  Those ULCC airlines will put some competitive pressure on both American Airlines and Southwest Airlines who both could use it in this area.

4)  While I think United has missed a huge opportunity in the DFW area over the past 2 years, I have noticed that Delta hasn’t.  I expect Delta to work itself more and more into the DFW area and I think they will do this both at DFW and Love Field airports.  Delta has been doing very well at establishing point to point flights and encroaching on its competitors territory.  They pursue a modest push into markets with the resources that only an airline such as Delta has.

Most airlines know that there is a limited time left to encroach in this market and if you think that airlines executives aren’t worried about Doug Parker, you are only kidding yourself.  They know what Parker and his team can do with the resources that AA has and that is a big reason why many attempted to sabotage this particular merger.  Parker was never a great threat with US Airways because of the limitations it imposed on him and his team.

I said it two years ago and I’ll say it now:  As soon as American Airlines declared bankruptcy, that was the time to move hard into the DFW area.  Several airlines missed that opportunity to become entrenched (Virgin America and jetBlue) and some saw the opportunity and grabbed it solidly in their fists (Spirit and Delta).

It’s all good for those living in this area or those wanting to fly to this area.  In one year, I believe we will see much better services and air fares that remain competitive.  Don’t kid yourself, however, those air fares won’t be predatory.  They just won’t be exorbitant.  So if you’re waiting for an uber-bargain of the early 2000′s, your wait will be fruitless.

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The Middle East Comes Calling

December 14, 2013 on 2:00 am | In Airline News | 6 Comments

Etihad has announced less than daily service to start to and from Dallas / Fort Worth to Abu Dhabi with a 777-200LR.

Now DFW airport will enjoy services to the Middle East hubs by Emirates (daily), QATAR and Etihad.  If you think that suddenly that many people in the DFW area would like to fly to the Middle East, you would be wrong.

This is about developing a route to these hubs for follow on flights to these airlines other destinations in the Near East, Middle East, Africa and India.  This is about feed and this is about gaining a customer base before American Airlines becomes too big and too strong on those very same routes.

Because you can believe that a big part of AA’s strategy will be to grow internationally and those Middle East carriers’ route strengths are places where AA is weak today.  Dallas is a large and even growing IT hub and hires tens of thousands of contractors from India alone.  These carriers are the popular airlines for those people to fly.  The connections are more desirable and the service is perceived to be far better than any US or India based carrier.

Will it work for these carriers?  I kind of think that QATAR has the best chance since it gave in and joined Oneword.  American can feed that airline an immense amount of traffic.  The question is. . . will Parker & Company see QATAR as an ally or a foe as they work to expand American Airlines reach and attendant profitability.

I think Emirates and Etihad may well can survive on that route on the traffic to and from India alone.  Presently, there are many who travel to Houston first in order to take advantage of flights on those airlines to India.

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American Airlines orders new regional jets

December 13, 2013 on 2:57 pm | In Airline Fleets, Airline News, Mergers and Bankruptcy | No Comments

American Airlines didn’t waste time in making a new order for new regional jets.  The order is split between Bombardier and Embraer.

Bombardier CRJ900:  30 orders / 40 options

Embraer E-175:  60 orders / 90 options

The CRJ900 jets will go to US Airways wholly owned subsidiary PSA and, as you can imagine, PSA pilots are thrilled.  The Embraer jets are To Be Determined and, as you can imagine, the American Eagle pilots are way less than thrilled.

I honestly can’t read the motives of American Eagle pilots.  That airline is grossly overburdened with expensive 50 seat (or less) regional jets that will be going away.  Make no mistake, even if the capital costs are exceptionally low for keeping those planes, they are going away.  They are inefficient, costly to maintain and frequently break down at this point.  They are becoming quite old and they don’t fit the modern world model.

American Eagle pilots, represented by ALPA, haven’t found an agreement with American Airlines.  American Airlines president Scott Kirby thinks they can put a deal together and I think that . . . maybe not.  AE pilots are very well paid and many have decided to make a career at that airline instead of doing what most other pilots at other regional airlines do after a few years:  transition to a mainline airline.

I think AE pilots want to be paid like mainline pilots with mainline schedules.  If true, I think that American Airlines has a solution for that problem:  sell or shut down the airline.  In case anyone wasn’t watching, there really aren’t any buyers for expensive regional airlines with old equipment.  Comair anyone?

I feel bad for the AE pilots because they have a lot to lose and they don’t have much bargaining power.  If a deal is made, I would make sure that AE pilots have the right to upgrade into mainline AA operations for the next 10 years.  Pilots who stay in the regional airline game for their career can expect to see bankruptcies, consolidations, strikes and layoffs that are reminiscent of an era already gone in mainline operations.  Fighting won’t change that.

The best favor a union could do for those people is find a way for them to move up and out.

Oh, and those Embraer jets that just got bought?  They aren’t going to be committed to American Eagle until and if there is a contract.  Wait too long and they’ll go to someplace like Republic who already operates them and who already works for American Airlines.

 

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