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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I have a problem with the picture being painted

March 26, 2014 on 1:00 am | In Airline Service | No Comments

There is an opinion piece written by former Captain Les Abend on CNN’s website opining that the best explanation for what happened to MH370 is that there was a catastrophic event aboard the airliner that disabled all comms and then the pilots and that the plane simply flew itself until fuel exhaustion crashed the airliner.  You can read this opinion HERE.

Let’s review the ideas one by one:

1)  The airliner had a fire or similar event that disabled all radios and communications.

An event disabling all 5 radios would almost have to involve the cockpit being removed from the airliner.  We know this didn’t happen.  Boeing has built redundancy into these aircraft but has also gone to fair trouble to ensure that a problem in one part of the plane doesn’t take out all of a system.  Antennas are separated.  Power sources are different.  You really cannot lose all the radios simultaneously without something literally destroying the aircraft.  Could they go out one by one?  Yes.

2)  He suggests that the callout of 35,000 feet is what pilots do to remind ATC to give them a higher clearance.  Well, that’s true but what Mr. Abend neglects to mention is that 35,000 feet is a fairly high altitude and to go much higher so early in the flight wasn’t necessarily practical.  To make the callout several times when already at a very high altitude and when there was no weather to clear, is suspect.

3)  It’s suggested that a smoldering fire began to insidiously take out comms slowly, one by one.  What this ignores is the fact that the electronics bay doesn’t just provide communications.  It houses systems for the instrumentation of the entire aircraft.  A “smoldering fire” would have been taking out other systems that would have caused alerts left and right.  This aircraft is also a “fly by wire” system and those electronics reside, in part, in the electronics bay as well.   Fires aren’t selective in what they impact.  And electronics bays are heavily monitored for fire and smoke.

4)  A degraded autopilot maintains course to the next waypoint and then remains in “heading mode” at high altitude.  Pilots to do not stay at 35,000 feet in an emergency that they have to get an airplane onto the ground.  To the contrary, they descend, work the checklists and start communicating their descent so that they don’t collide with other aircraft.  Furthermore, the “nearest airport” wasn’t actually southwest and on the other side of the island.  One with a really long runway was in that direction.  Other commercial airports with sufficient runway length for landing existed.

Navigation of the airliner is dependent on many systems that include the autopilot and instrumentation such as GPS and other nav aids.  Absent these aids, that airliner will become lost.  A smoldering fire that disables pilots, doesn’t continue to smolder without affecting the airframe for 6 to 7 more hours.
I realize that its hard for commercial pilots to accept that a fellow pilot would do something nefarious.  Yet. . . . we know that that has happened many times over the course of commercial aviation history.  It happens.  it’s ugly and it’s terrible.  But it happens.

I also realize that it’s nice to make pilots out to be heros who die in action.  Yet, we also know that not every pilot is a hero.  There are limits to every person.

We don’t know what happened.  And we won’t know what happened over the Gulf of Thailand ever.  Not in the cockpit.  The voice recorder doesn’t record that long.  We will have some record of what was programmed, what the flight control inputs were and what was alarming and what wasn’t.  It will tell a story but it won’t tell the whole story.  It will tell the “what” but not the “why”.

And only if we find the aircraft.  But suggesting that this airliner was a ghost ship that crashed is foolish and fantastical does no one any good in looking at this event.

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No difference

February 26, 2013 on 1:00 am | In Airline Fleets | No Comments

A comment found on Executive Travel’s website and made about the A380:

“Actually, there’s no difference between flying 30 passengers and 526,” says Harald Tschira, a Lufthansa first officer.

The main differences really center on what you have to learn about the systems of the aircraft.  On a larger aircraft, there are more systems to learn than, say, on an Embraer ERJ-140.  But the flying and, most specifically, the act of preparing for departure, flying a route and landing, is pretty much the same from one aircraft to another.

The idea that a larger aircraft is more difficult to fly is also specious.  It’s not.  In fact, large aircraft can often be easier to fly than smaller aircraft.

Upgrading into larger aircraft is often a large benefit for pilots because it means they’re flying flights with more hours / flight which means they have to fly fewer flights overall each month.

Nominally, you are putting more experienced pilots into cockpits of aircraft carrying more people and that might mean you have fewer accidents where there are a large number of casualties.  But I really don’t think that is substantiated by statistics.  When aircraft crash, they’re of all makes and models.  The Air France Airbus A330 disaster was a total loss of life, for instance.  Theoretically, that aircraft was staffed by very experienced pilots who all did the wrong things to recover the aircraft.

Is there a huge difference between the aircraft of size and regional jets?  No, not really.  A qualified pilot could fly either with the existing training.  Is there a reason to have the most qualified pilots on the largest aircraft?  No, not really.

So why do we do it?  Because that’s the way it’s been done since before airlines were profitable.  There was a correlation between an experienced pilot and his ability to fly a larger aircraft when airplanes were not automated.  Today, aircraft are all much more automated and have far better instrumentation which levels the playing ground.

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AA Pilot Contract Ratification

December 10, 2012 on 10:14 am | In Airline Service | No Comments

With the AA Pilot Contract ratified by the Allied Pilots Association, speculation as to what’s next has gone into full overdrive.  Some think American Airlines will make a case for its stand-alone bankruptcy exit plan and some think this clears the last hurdle for a merger with US Airways.

American Airlines has asked that the court set a hearing to approve the contract more quickly than the customary 21 days.  I suspect that request is more about checking the box quickly than anything.  With this contract settled, American Airlines is done with the big challenges of reorganization in its mind.

Is it done?  Frankly, we’ve seen them address costs in a very aggressive manner and not just in the area of labor.  AA’s fleet has been slashed of aircraft and leases on other aircraft have been renegotiated.  Costs have been addressed more than adequately.

But where is the revenue plan?  It remains the cornerstone market strategy of old.  Routes haven’t been radically altered and hubs haven’t been re-tooled and new markets haven’t been explored.  Bankruptcy reorganization gives AA time to work on this area too and it appears there has been no real interest in putting in the same effort here as what has been done to costs.

My concern is that American Airlines has achieved another 10 year holding action.  Time will tell but this reorganization feels like the company has puts its hopes into the cost cutting basket without truly addressing the need to grow revenue and, frankly, repair relations with employees.

I sit amazed that the company hasn’t acknowledged its challenges going forward with respect to employee morale.  Were I an analyst, I would be worried about this companies exit from bankruptcy not because the employees would intentionally sink the ship but because a service company such as an airline is extremely dependent upon its employees providing a positive experience.

American Airlines seems to think it’s still the dominant player in all its markets and that people don’t have choice.  That’s just not true.  Los Angeles and New York City are extremely competitive marketplaces and areas where other airlines have been much more aggressive than AA to date.  Chicago is a very, very competitive market with United Airlines and Southwest Airlines eating at American’s constituency every day.  Miami / Fort Lauderdale has a tremendous amount of LCC competition and airlines are flying to South America from other gateway cities and competing just fine with AA.  Dallas / Fort Worth has increasing competition at DFW airport and the prospect of a fairly unlimited Southwest Airlines in 2014.

The differentiating difference for an airline over the next 3 ot 5 years in the SuperLegacy category is going to be service and its those employees who have been roughed up badly who will be delivering it.  What’s being done to sooth those wounds and what’s being done to incentivize a positive experience for passenger?  A plan for this would be a good thing.

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ALPA reacts with paranoia

November 11, 2012 on 1:00 am | In Trivia | No Comments

Lest anyone of you believe that the new movie, Flight, bears any resemblance to the real world, ALPA has released a statement defending its pilots:

“Hollywood dramas can make riveting entertainment and a compelling character study may sell tickets, but fiction on a movie screen doesn’t represent a profession in the real world.

“The more than fifty thousand ALPA pilots in the United States and Canada embody the highest possible standards of training and professionalism.

“These standards are borne out every day, as we safely transport hundreds of thousands of passengers and tens of thousands of tons of cargo across the country and around the world.

“We all enjoy being entertained, but a thrilling tale should not be mistaken for the true story of extraordinary safety and professionalism among airline pilots.”

I admire how they carefully ignore the number of incidents in which pilots have been found to be intoxicated and about to pilot an aircraft over the last 5 years.

Dear Pilots:  The history of Hollywood has made it clear that what goes on in that movie is sheer fantasy.  Should anyone in the public think that a pilot could be that drunk and pull off a recovery like that, well, you wouldn’t want them flying with you anyway.

Your professionalism is already well known and the public knows that pilots both in North America and across the world act with care and are trained extremely well (except the guy in China who managed to fly without a license).  There is no need to be paranoid that people might think that that is an ordinary reality.  I have a suggestion:  Get out and see a movie and relax.

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US Airways Pilots

October 23, 2012 on 12:09 pm | In Airline News | No Comments

US Airways pilots feel there is nothing in the way of negotiating a new combined contract with US Airways after a ruling made last week that essentially said that the airline and union may do so but there is no cover from a lawsuit necessarily.  A ruling that I feel probably lacked the clarity all were hoping for but which was  a correct ruling.  You can’t give legal cover to people from lawsuits like that.  You don’t know the nature of the lawsuit until it happens.

I agree that US Airways pilots are in desperate need of a new contract.  It’s been 7 years now and it’s time for a successful airline such as US Airways have a truly combined operation.  This is true for US Airways flight attendants as well.

But primary fault in this delay is largely due to the pilots.  Neither group (US Airways and American West pilots are the two groups) could agree on seniority integration and after an arbitration ruling, the US Airways (original) group broke away from ALPA (who represented both groups)  and by sheer numbers formed a new union.  The two sides have been at war in a courtroom since.

And US Airways doesn’t know who the legitimate combined union is really since there has been no ruling on the fight itself.

Successful airline merger seniority integrations that have taken place since the US Airways merger were based on relative seniority.  This meant that for seniority purposes only, the two lists were merged in a manner that more or less preserved each parties seniority position in the new company.

It’s our view that this is both reasonable and right as a method for combining pilot groups (or other labor groups).

Sadly, US Airways (original) pilots want date of hire as the defining measure for seniority integration.  This would lead to a large group of US Airways (original) pilots sitting at the top of the food chain and blocking promotion for years for the younger America West group.  Not very fair and particularly so when you consider this:
It was US Airways (original) that was bankrupt (again) and about to sink to the ocean floor.  Not America West.   America West was health and in possession of an excellent management team who ultimately proved to be more than capable of not just running a combined operation but improving operations tremendously while consistently earning profits.

Yes, I think that US Airways pilots deserve a contract.

I also think the two groups should shake hands, adopt the original arbitration ruling and immediately go to the negotiating table for a new contract with unity.   That’s what moves this process forward.

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Pilot Furor

October 2, 2012 on 1:00 am | In Airline News | No Comments

Terry Maxon who is the regular reporter for all things airline related at the Dallas Morning News and the primary contributor for the Dallas Morning News Aviation Blog has created an uproar among American Airlines pilots by suggesting that AA either suddenly has a vast number of its fleet experiencing serious maintenance problems all at once or something is up among the pilots and/or mechanics.

As a result, he’s gotten many emails from AA pilots contending that maintenance is the real issue  and that pilots are simply going by AA’s own book when it comes to dealing with those issues.

AA’s fleet is old by any standard and, yes, maintenance issues should be pretty common particularly among the MD-80 fleet.   Let me point out that the MD-80 fleet is only 191 strong now and is getting replaced rapidly by new build 737-800s.

AA has the following fleet count:

  • MD-80:  191
  • 737-800:  186
  • 757-200:  105
  • 767-200:  14 (and to be replaced by A321NEO aircraft)
  • 767-300:  58
  • 777-200:  47

205 aircraft in AA’s fleet could be categorized as “very old”.  These are the MD-80s and 767-200s.   Most of the 767-300 aircraft are actually not that old as aircraft go and should be categorized as “appropriate” and that accounts for 58.  The same is true for the 757 fleet and that gives us another 105 aircraft in the “appropriate” category with an average age of just 17 years.  For the relatively low cycles the 757 fleet has, that’s perfectly acceptable.  The 767-300 aircraft tell a story similar to that of the 757 fleet and total 58 aircraft.   The remaining aircraft (737/777) total 233 aircraft.

Now, please remember that fleets change and my counts may be off by a few aircraft but how I’m categorizing them isn’t.  So, let’s look at what is old vs new in the AA fleet:

  • Very Old Aircraft (MD-80 and 767):  205  (34% of the fleet)
  • Old But Appropriate (757 & 767-300):  163 (27% of the fleet)
  • Young Aircraft:  233 (39% of the fleet)

I think the pilots are overplaying their story of age and poor maintenance.  Furthermore, I’ll point out that other airlines run similarly old or even older sub-fleets with nary a problem.  Airlines such as Delta, for instance.

And despite how old those MD-80s are, they are also by all accounts some of the most durable aircraft around and very capable of flying with deferred issues.

Sorry AA pilots, I think you’re right in that some stuff has been deferred, some maintenance not done as regularly but I also think you are still playing “the game” with the company too.  If you think I’m wrong, contact me and give me real evidence that you aren’t.

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Shades of Eastern Airlines

September 28, 2012 on 1:00 am | In Airline History, Airline News | No Comments

The Fort Worth Star Telegram’s Sky Talk blog has a story about how Maxim Group analyst Ray Neidl sees a similarity in the behavior of American Airlines pilots and how Eastern Airlines pilots managed to drive their own company into the ground 20+ years ago.

While I agree with Neidl seeing similar behaviors that are similarly irrational, I don’t necessarily agree that the same outcome is likely.  Eastern Airlines pilots did what they did, in part, because it was very hard for airline labor not to believe that an airline such as Eastern would be allowed to go bankrupt and effectively liquidate itself.  This, despite seeing Braniff vanish just a few years before.  There was a belief, at that time, that management would cave in to labor or that Congress would intervene.  Neither happened.

Today, I think that AA pilots know a little better.  That said, things are already getting out of hand.  What pilots don’t appreciate is that their small individual actions have a massive combined effect.  The press on this issue is already exposing just how far this has gone and just how little room there is for it to go further.  Furthermore, I think we would have to see a greater indicator of irrational behavior on the part of the APA board and leadership before determining that the risk is realized and the threat of demise imminent.

I will, however, reserve my right to change my opinion based on union behaviors over the next few weeks.  If we see union leadership fail to reign in these behaviors, I’ll fully acknowledge the likelihood that the airline starts a downward spiral financially.

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Interesting viewpoints in the DFW area

September 27, 2012 on 1:00 am | In Airline News | 2 Comments

It’s no surprise to anyone who lives in the Dallas / Fort Worth area that the local newspapers are awfully friendly towards its local airlines.  Both the Dallas Morning News and the Fort Worth Star Telegram tend to be very forgiving of American Airlines in particular but even Southwest Airlines gets a pass on occasion.   The area is dependent upon this industry in many ways and, to some degree, it’s OK.

One local reporter working for the Dallas Observer, Jim Schutze, is a man I respect quite a bit.  He worked for the Dallas Times Herald when it was in operation and then moved on to working as the Dallas bureau chief of the Houston Chronicle and writes for the Dallas Observer as well.  Schutze is a liberal and, in this town, liberals don’t get much play.  Balance between liberal and conservative viewpoints in the DFW area is a myth.  That said, Schutze is first and foremost a balanced reporter who exemplifies what journalism once was and rarely is today.

Schutze wrote THIS entry on his Dallas Observer blog regarding American Airlines and, curiously enough, Mitch Schnurman, a reporter for the Dallas Morning News and, until recently, the Fort Worth Star Telegram.  It was Schnurman who wrote scathing attacks on American Airlines management through the summer for the Star Telegram and caught national attention.

Schutze takes issue with the fact that in a recent Dallas Morning News column Schnurman took pilots to task this time for the AA operational slowdown without taking note that the pilot’s deed have resulted in a new development:  AA wants to go back to the bargaining table with the pilots.  He’s not wrong:  that is news.

Both are right.  The greater news was that AA is taking a beating and needs to come to a better agreement with its pilots.  But the pilots are, in fact, driving their company to the wall and that can only happen for so long before real and permanent damage gets done.

As I keep pointing out:  The pilots didn’t get their attitude today because they were treated appropriately by management.  Management didn’t lead them well at all.  However, you can only beat your own company up so long before not only does the board and creditors lose faith in the management, the public will lose faith in the airline.  When the public loses faith in the airline, that is a very, very dangerous thing.

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It will get worse

September 24, 2012 on 11:59 am | In Airline Service | No Comments

Over the weekend, I was contacted by several people about the American Airlines “pilot strike”.  Yes, everyone was talking about the pilot “strike”.  No, I’m not kidding.

There is no pilot strike.  There is no APA union sanctionized work action going on right now.

But . . . there does appear to be an informal “work to rules” campaign going on right now if anecdotal reports are to be believed.   It appears to be focused on maintenance items and most particularly oriented towards equipment that nominally can be “MEL’d” (Minimum Equipment List) for continuing a flight.

It would appear that the mechanics are cooperating as well.  By that I mean the mechanics are dutifully investigating and writing up problems in a meticulous manner.  All of this is resulting in big delays within the American Airlines network and it appears to include American Eagle labor as well.

While it may not be organized by the union, I would expect AA to go to court and ask for a court order to the union to stop these actions.  US Airways suffered similar actions in Charlotte and Philadelphia about a year ago when US Airways (EAST) pilots decided to throw a temper tantrum at that airline.  US Airways went to court and got a court order issued to the union to stop that behavior.

In other news, another American Eagle flight was delayed for 4 hours when two flight attendants decided to have a public spat with each other and the captain of that flight decided the two couldn’t work together.  Whether or not the pilot was smiling as it all went on, we do not know.   It appears that one flight attendant called for their colleague to stop using their phone during taxi and everything went down hill from there.

This stuff is going to get worse, much worse, before it gets better.  Expect American Airlines to suffer increasing delays and cancelled flights over the next 2 to 3 months at the least.  Labor is unhappy and labor is making its unhappiness known in very troublesome ways.

This isn’t just because of bankruptcy or reduced benefits, it has much more to do with the open loathing labor has for AA executive staff with CEO Tom Horton being at the top of that list.  The hostility is raw and angry and unlikely to fade any time soon.

And I repeat again:  This is why I do not believe that American Airlines has its revenue problem solved for exiting bankruptcy.  All the corner strategies and alliances in the world cannot stop labor from sabotaging the company’s reputation.

Customers are getting angrier by the day and voicing that anger in very public ways.  I think we will see traffic erode on American Airlines over the next 3 to 4 months at minimum and possibly longer.  Once you lose those customers, it will be very, very hard to convince them to come back.  They are already abandoning AA as a travel option wherever possible according to anecdotal reports.

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Now it gets real sketchy for AA going into the fall season

September 19, 2012 on 11:46 am | In Airline News | 1 Comment

Scott McCartney, Wall Street Journal blogger, is now advising readers to book away from American Airlines citing the fact that their operations are in a shambles and can’t be trusted.  American Airlines is reducing its schedule voluntarily for the next 2 months because pilots are retiring in higher than expected numbers and others are calling in sick at higher than expected rates.

Is there a sickout going on?  I suspect not.  I don’t even think there is a “work to rules” effort going on right now.  I think that pilots are just kind of *done* with their employer right now.  There is no reason to make the extra effort for their job at this point.  If someone feels like they may be about to get a cold, I think they’re just calling in sick as opposed to hoping for the best and making the flight anyway.

I think other pilots see the writing on the wall and realize that their retirement is going to be improved by hanging around this airline.  If they’re eligible, they’re leaving in many cases.

This is what I meant by American Airlines still having many, many problems with their service and operations in light of the rather hostile actions that have gone on between the company and its unions.  You can force the issues, fight in the court room and win the battles during bankruptcy but . . .

What do you have to succeed with even upon bankruptcy exit?  Not much.  Hostile workforces don’t help retain existing customers and attract new ones.   This is the revenue side many have spoken about and I continue to question AA’s premise that it can operate successfully on the revenue side upon bankruptcy exit.

All of the employees who are directly involved in serving AA customers are now royally pissed off at the company and its management and do not feel motivated to do anything to help this company succeed.  And I can’t say that that attitude is undeserved.

This isn’t all about what American Airlines has done over the past 10 months either.  It’s about how American has treated its employees for as many as 7 years.  It hasn’t negotiated in good faith and it hasn’t really tried to achieve equitable contracts and if it had, quite frankly, I’m not sure we would see American Airlines in bankruptcy today.

Yes, I think the unions have, over the years, made unrealistic demands and have even been led by contentious people but leadership starts at the executive level, not at the union leadership level.  It’s an executive team’s job to make that side of the company work and to preserve a harmonious and productive relationship with its work force.  That just hasn’t happened at all.

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QANTAS pilots go at it.

August 22, 2012 on 1:00 am | In Airline News | 2 Comments

Two senior QANTAS 747 pilots got into a heated argument over what data to input into a flight management system for takeoff.   This occured on the QANTAS flight from DFW to Brisbane August 14.  Ultimately, the flight was cancelled and set to take off the next day due to weather.  However, it was determined that these two pilots could not work together and a replacement crew was sent.  Both pilots are now suspended from duty.

Was this a safety of flight risk?  Possibly.  The environmental data one inputs into a modern flight management system determines things like take-off thrust and the speed at which an aircraft should lift off.  On shorter runways, this can be criticial.  On a flight like the DFW to Brisbane one, it is particularly critical since the aircraft will typically be fully loaded with a full fuel load.  The flight is the longest that a 747 currently flies and is at the very edge of the range performance for a 747-400.  On the other hand, DFW possesses runways that are extraordinarily long and even with a slightly incorrect performance calculation, a pilot would be able to adjust and continue the take-off or even reject the take-off if he/she sensed a problem.

But getting along in the cockpit is critical and this speaks to two pilots acting very unprofessional just prior to a flight where working as a team is what gets the aircraft to its destination.  A destination that requires crossing 6000 miles of Pacific Ocean.

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The AA Pilot Contract

August 16, 2012 on 1:46 pm | In Airline News | No Comments

Bankruptcy Judge Sean Lane did not impose Section 1113 terms per American Airlines’ request on pilots yesterday but don’t think that that was a win for the pilots.  Judge Lane found two small areas where he disagreed with need.  The first was unlimited codeshares and the second was an overly large number of furloughs.

American Airlines will revise its proposed terms and hand them back to the court in days and something will be decided.  The pilots can crow victory for labor all they want, this wasn’t a win for them on any level.  American Airlines is going to get fundamentally what they want and the judge signaled that, so far, he sees nothing out of line with the forming business plan despite the specious arguments made by pilots that it was unsustainable.

The business plan isn’t pie in the sky.  I honestly don’t think they have made a strong business case for a long term view either.  The continued focus on costs ignores the revenue problem which, despite AA PR, remains pretty bad.  Costs are much easier to quantify and therefore generally remain in focus during bankruptcy.  Revenue is based on a plan and projections that fundamentally rely on business conditions that are assumed and the ability to execute the plan.

My reservations about American Airlines are based on two fundamental observations.  First, the executive team in place today is in no way fundamentally different than the one in place for the past decade.  Over that past decade, the executive team has not shown itself capable of executing a plan to success.  As a result, the company has lost more than $10 Billion over 10 years.  That is not a company proving itself.

Second, business conditions in the industry are too volatile for making sound projections.  Delta Airlines exited bankruptcy with a business plan based on $80 / barrel oil prices.  Within months they were faced with $130 / barrel oil prices.  The airline industry is subject to strong influences from a variety sources that are entirely outside of the airline industry’s control.  The sum of American Airlines’ plan for revenues is “the other guys are doing this and we therefore think that with reduced costs, we can do that or better.”

The problem with that is you only know how the other guys are doing today, not how they’ll be doing tomorrow.  The other guys have other issues to cope with that aren’t always the same issues that AA is presented with.  Delta fixed many of its issues with a merger and built an unparalleled network as a result.  Then they doubled down and did a deal to capture the NYC market.  United did its merger in the reality that to compete with Delta, it needed scale and it remains to be seen that the ContiUnited merger is a true success.  There is evidence that they’ll succeed, we can’t declare it a success quite yet.

My problem with American is that, so far, the business plan seems to ignore weaknesses that are inherent in the system today.  In part, the Cornerstone Strategy relies upon capturing market share in very competitive markets.  Anyone who follows this industry knows that in light of the capacity restraints that airlines have shown, American Airlines has been the least effective in this and hasn’t shown much restraint.  Furthermore, to gain that market share means getting it on price (which sets off an industry war on fares) or on service.  American Airlines continues to do virtually nothing to improve service and demonstrate that it has a handle on service issues and can get its employees to assist in raising the customer experience level.

I think American Airlines needs a team that can execute a revenue and service plan.  That team sits at US Airways, not American Airlines.

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American Airlines Pilots

April 13, 2012 on 1:00 am | In Airline News | No Comments

There is an internal letter from within American Airlines being circulated on various news sites written by John Hale, American Airlines chief pilot.  This letter casts doubt that AA pilots would support the idea of a merger between American Airlines and US Airways.

First and foremost, I don’t know how much credibility I can give the characterizations in the letter since it does, after all, come from the one pilot in American Airlines with a strong incentive to calm concerns coming from the American Airlines executive team.  He is answerable to them much more than his fellow pilots in the job he holds.

Second, I don’t think pilots like any mergers really.  The seniority issues are very stressing.  But in this case, I don’t know that AA pilots have quite as much to fear as in many mergers.  AA pilots are much more senior than US Airways pilots in general.  Furthermore, US Airways pilots don’t have seniority integration and new contract.  But if there were a merger, the pilots who are divided at US Airways are vastly outnumbered by AA pilots in sheer quantities.  With quantity comes power.

Third, I think executives and other parties are quite afraid of Doug Parker.  It’s obvious that the AA executive team would prefer to be the leads in any merger.  It’s also obvious that they aren’t in a good position to make that demand.  Doug Parker and his team make a very strong operational team and that alone speaks to opportunity from such a merger.  They should be afraid of him:  He knows how to run an airline in today’s environment.

And the AA executive team should be afraid of US Airways.  They’ve learned from other mistakes, they have cash and they have a track record for running an airline that is disadvantaged compared to other legacy airlines and with a fractured labor group.  US Airways makes money *despite* having two pilots groups and two flight attendant groups.  They can manage new parties in that mix.

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US Airways and Pilots Settle

January 12, 2012 on 9:03 am | In Airline News | No Comments

US Airways and its pilots have come to an agreement to drop the lawsuit that US Airways filed against its union for a work slowdown.  A permanent injunction will be entered into the record, US Airways will be the “winner” and both sides pay their own legal costs.

Color me wholly unsurprised.  This was a bad move on the part of the pilots union as there was already precedent in courts going against them and it wasn’t a good way to get the company’s attention. 

Instead, the union should be working to unify its membership and get them on an integrated seniority list and then a new agreement with the airline.  These pilots have been working off two different seniority lists and without a new negotiated agreement since 2005.  That’s 6 years of bickering that admittedly, has benefitted US Airways in that it has kept pilots wages relatively lower than its competitors. 

The dysfunction shown by US Airways pilots has stunned me at times.  Particularly that of the “East” pilots (aka former US Airways pilots and not America West pilots).  First rejecting an ALPA negotiated integration and then forming a new union that could be under the control of the “East” pilots, no one has benefited from this behaviour. 

Furthermore, it’s hurt the company as well.  Until its labor problems are smoothed, US Airways doesn’t look like a good merger partner to anyone else.  After all, who wants to have three different pilots agreements and a labor group that has to be operated like three different airlines?

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Southwest / Airtran Pilots Ratify

November 17, 2011 on 1:00 am | In Airline News | 1 Comment

Am I the only one who missed the pilots of Southwest and Airtran ratifying their seniority agreement? My excuse was a weeklong bootcamp training session at my company. What’s yours?

The highlights are that both groups overwhelming approved the agreement with in excess of 90% of both groups voting and inexcess of 80% of each voting group saying “Yes”.

This is good for Southwest, Southwest’s pilots and Airtran’s pilots. Conflict erodes profits and eroded profits at Southwest hurt everyone’s fortunes. More importantly, there is a template for coming to agreements among other unions.

Furthermore, Southwest can get on with the business of harmonizing and integrating Airtran. The sooner that gets done, the sooner the synergies of the merger are realized.

The question is this: Will the other unions avoid the mistakes that Airtran’s ALPA group made?

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What do people want in a new labor agreement?

October 17, 2011 on 1:00 am | In Airline News | No Comments

When I think about various labor negotiations going on in the airline industry, I become fairly sure that the issues are fairly close to the same for everyone.   If you ask most people what they want from their job, they’ll generally respond with a desire for their work to be valued more now than 10 years ago, an opportunity to play a role  in their destiny, job security or even just the opportunity to not look over the shoulders for a while.

The order of priority is different for each person, of course, but at the end of the day, it’s about their role being valued.  I could spend days writing about how an airline such as Southwest injects this into their culture but they really are the exception to the rule.

American Airlines is negotiating furiously with its pilots this weekend and I wonder how that has gone for both sides.  I would imagine that for the pilots, the goals are better wages, a retirement that has some security to it, opportunities to rise within the seniority system and leadership. 

For the company, I would imagine the goals are better productivity, fewer obligations to a pension system that is unsustainable in the long run and the opportunity to introduce change quicker in response to a market that changes weekly in this era. 

Ironically, I suspect they are not far apart in their goals but how each perceives a win is probably very, very different.  American Airlines “wins” by being able to announce an agreement that offers them greater flexibility and predictable costs that are now worse than the industry average.  The company must show shareholders, investors and the financial world in general that they have a sustainable operating model for the future or the leadership involved will be asked to leave.

Pilots achieve a “win” very differently.  At AA, the pilots are a very senior group and when you reach a certain age, you want life to be just a little bit easier, not more difficult.  They’ll want better wages, a high degree of certainty when it comes to their retirement and schedules that aren’t so bruising. 

One of the biggest obstacles in this scenario is seniority.  The seniority systems closely ties pilots to the airline and makes it very damaging for a senior pilot to leave the company at any time before retirement.  Those who have tens of years invested in it don’t want to see it gone. 

Seniority systems also tie pilots to flying that they often do not like.  Pilots are humans and some enjoy doing just a few long but punishing international flights and some would actually prefer to spend 2 or 3 or 4 days doing domestic turns but sleeping in their beds more often. 

Even if you didn’t get rid of the seniority system, it would be helpful if pilots weren’t paid by the size of aircraft they fly but, rather, purely on seniority at the company.  The work involved with flying a 777 or an MD-80 is actually really not much different.  It isn’t more work to fly a twin aisle vs a single aisle airliner.  Sometimes it is different work but it isn’t “more”. 

Frankly, it would be to the advantage of safety if we could get more grey hairs flying those domstic single aisle airliner flights.   They’ve been there and done that in more circumstances and know the pitfalls better than any junior pilot does. 

Wouldn’t it be more interesting if a pilot were able to choose his destiny without having to take  a penalty because he or she doesn’t enjoy flying 777s to India and actualy prefers flying from Dallas to New York City and back more often? 

A win here would be to decouple seniority with aircraft type.  Let pilots choose what they want to fly without penalty.  Let them match their preferences to a situation where they feel they have a strength rather than be tightly bound to a style of flying they hate. 

Stop forcing them to upgrade to new aircraft and even from First Officer to Captain.  Does it really matter if a man prefers to stay a senior FO to becoming a junior Captain?  It really doesn’t. 

My suggestion here is that it would be better for both parties to quit trying to hammer square pegs into round holes.  Find ways to let pilots do the kind of work that best fits them without financial penalty.  Instead, ask for more productivity within that work and build schedules that allow pilots to achieve their monthly hours without having to be away from home for 15 to 20 days per month.  Offer incentives for those pilots to live inside their base. 

Make it possible for pilots to live a productive and rewarding life.  The happier and more rested they are from a schedule that does work for them, the more productive, safe and agreeable your workforce will be. 

It would be great to see both unions and airlines think outside of the box on these issues.  Find a way that makes both sides happier with their circumstances.  Refuse to give into inflexibility.  Be fair and trade a happier life for more productivity.  Ask for opportunities for “fence off” a portion of flying to test different work models and find those that do work for both.  Experimentation is what both sides need and it will offer the chance for both sides to try something new without having to commit to a change for years and years. 

Identify styles of flying and group them into schedule groups that pilots can bid into.  Pay pilots a wage based on seniority but not on aircraft size.  Pay pilots a bonus for living at their base instead of commuting.  Pay another bonus for taking on productive schedules.   Offer the opportunity to go fly the same aircraft in a very different setting for a limited period of time so that pilots can explore what works for them without having to make decisions that could affect them and their families for years. 

Find a way to make your people happy and you’ll find that the “costs” involved with that are far less than the costs that come from cranky pilots who are forced into demanding more money just because they feel so trespassed on by being made to fly schedules and aircraft they do not enjoy.

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More thoughts on AA

October 5, 2011 on 1:00 am | In Airline News | No Comments

Over the past several days, we have seen quite a ride for American Airlines’ share price.  There has been rampant speculation that the decline in share prices were due to the higher than average number of retirements at the end of September.   Some think the pilots “know something” and are sure there is going to be a bankruptcy.

I am by no means high on American Airlines.  To the contrary, I think they continue to act as if their problems are being fixed or are not that severe and I think the executive leadership is approaching irresponsible in certain areas. 

That said, we’re also talking about a company that has enough unrestricted cash to live unconstrained for another 4 years.  That doesn’t spell bankruptcy.  The pilots don’t know anything special and, frankly, they probably know less than many. 

But I do think this reflects the frustration and negative emotion that many feel about this company.  I think there is a sense that there are growing missed opportunities to come out alive and healthy.  I think many people have looked for a reason to dump their shareholdings and they finally found one that works for them. 

But I also think that I’m tempted to buy up AA stock right now because not only do I think they survive in the near term and not only do I think they won’t enter into bankruptcy, I think their share price will climb considerably over the next year from where it is today.   Because everyone likes a deal and right now AA stock is a pretty good deal.

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Do autopilots dull airmanship skills?

September 6, 2011 on 1:00 am | In Airline News | No Comments

Earlier in the week, I read a brief CNN report about autopilots and automation dulling the airmanship skills of commercial pilots and found myself physically wincing at the idea that many would read this. 

I winced because this is a nuanced issue rather than something to be “announced” with a brief report.  It’s unnecessarily scary and just puts more rumour into the mill.

The commercial pilot today does use their flight management systems in all phases of flight and that isn’t a bad thing, it’s a good thing.  It allows for more precision and more precision means less delays and greater safety.  Part of those systems helps avoid collisions with other aircraft and other parts allow a pilot to route their aircraft around thunderstorms instead of right into them.  They allow better fuel management which means not only can the aircraft carry less fuel, it also gives the pilot a better picture of how much fuel they have left and therefore a better picture of when it is time to bug out to another airport.

You really have to walk in another man’s shoes to truly understand the job they do.  I haven’t served as a pilot but I do know the airline industry quite well.  Let me say this:  I have no problem with the level of training that pilots undergo today and I have no problem with the level of skill they fly with.  Today’s first year first officer receives better training and better oversight than ever before.

Think I’m wrong?  Ask an older pilot about the days before Cockpit Resource Management came into vogue.  First officers duties in those days often amounted to getting coffee and doing the dirty work without ever really getting to fly.  Now, those new first officers get to fly regularly and under the supervision of captains who have been trained well and who are in possession of the knowledge that a team works better than an individual.

Experience counts in the pilot’s world.  Flying the real thing with the stick or yoke does improve skills.  It’s true that airlines would prefer that not happen too often because the imprecise flying does incur a cost.  Simulators can do many things and help with many things but time in a simulator is also very expensive. 

Could there be a bit more hand flying both on takeoff and landing as well as at altitude?  Probably.  The Air France disaster shows just how important it is to understand flying at altitude and how much that experience counts. 

Lest you think that that experience at atltitude comes with no cost, it doesn’t.  Hand flying a commercial airliner at 35,000 feet in the air comes with conditions that are very unforgiving of a mistake.  There are times when the difference between overspeeding a wing and stalling a wing is just tens of knots in speed.  That automation keeps it there with computers and full digital control of engines.  It’s actually *safer* than hand flying and there is a reason why you don’t read about pilots playing with the aircraft by hand while transiting the country. 

They don’t want to die anymore than you do.

The automation is safe and pilots allowing the automation to do that work is safer than the alternative.  That said, I do wish airlines would schedule time in a simulator for those conditions that don’t come with penalties.  It’s the kind of experience that is hard replicate and it would help if a pilot were allowed to “push the envelope” under those conditions to understand better, through experience, what happens when “things go wrong”.   Removing any punitive actions for “crashing the simulator” would encourage them to learn just how wrong things can go in a very short time.  Knowing it and experiencing it are two different things.

Conditions for training pilots can always better.  But it’s also a balance between needing them to be working “the line” and training.   At the end of the day, it really hasn’t ever been safer to fly and pilots have never been better trained.

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Monday Trivia: ALPA

September 5, 2011 on 1:00 am | In Trivia | No Comments

ALPA, Air Lines Pilots Association, is the central figure in the history of organizing pilots into a union.  It was and remains the biggest influence on the conditions under which pilots fly.

Question:  Can you guess how old ALPA is?

The answer after the fold:  (more…)

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