About me

My name is Tom, and I've been interested in the airline industry for as long as I can remember. I love the airplanes themselves, of course, but also the concept of flight; I'm still amazed that you can, relatively cheaply, fly across the continent and back in the same day. Furthermore, the airline industry is seemingly almost always in some sort of turmoil, so there's never a dull moment.

Back before my sophomore year of high school, I created this blog as way to stay informed about the airlines and as a way of expressing my opinions about them. Since then, I've tried to keep it pretty active, although at times 'real life' kind of gets in the way. But I enjoy writing about the airlines, have been doing so for 4 years now (time flies), and hope to be doing it for some time to come.

Right now, I'm a sophomore at Hobart and William Smith Colleges in Geneva, NY, and planning on a double major in international relations and Russian area studies.

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United pilots: remove CEO

The Air Line Pilots Association (ALPA) and the United Airlines MEC (Master Executive Council) have created a website, GlennTilton.com, which calls for the removal of Glenn Tilton as United's CEO. The website said, "As professional pilots, we believe in accountability. Glenn Tilton, Chairman, CEO, and President of United Airlines, has failed all of us… costing shareholders, employees, and the travelling public billions of dollars."

Is Glenn Tilton to blame for United's troubles? The website says he is. "To Glenn and his staff, responsibility for United’s predicament belongs to everyone and everything other than themselves... Their excuses include high fuel prices, increasing costs of security, more competition, and stronger regulation, and they see themselves as victims of these uncontrollable factors. It just isn’t right, and it just isn’t true. These same factors influence every airline, and all the others are handling challenging conditions much better than United."

Or are the pilots just upset with management? Leave your opinion; please comment!

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American's new deal with BA, Iberia

American Airlines, Iberia, and British Airways announced earlier today that they were forming a three-way alliance that would allow them to cooperate on flights between Europe and North America. Although the three airlines are already part of the oneworld alliance, the deal allows them to work more closely together and to cut costs. Not surprising, Virgin Atlantic's Richard Branson took a dim view of the deal, which he said would create a "monster monopoly".

The announcement comes at a time when other airlines are also seeking to link up: United, Continental, Air Canada and Lufthansa are working on a transatlantic alliance, similar to the AA/Iberia/BA one announced today.

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Farnborough Airshow Review, Day 3

A quick summary of orders at the Farnborough Airshow on July 16:

Boeing

• Malaysia Airlines ordered 35 737-800s.
• Aviation Capital Group ordered 15 more 737-700s.

Airbus

• Netherlands-based lessor AerCap launched the A320/A321 freighter, with an order for 30.
• Asiana Airlines ordered 30 A350 XWBs, with 10 options.
  

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American to retire A300

photo by Vidiot

American Airlines CEO Gerard Arpey said earlier today that the airline's fleet of Airbus A300s, which were due to be retired by the end of 2012, will instead be phased out by the end of 2009. Right now, the type is based at either JFK or Miami (there still is a significant AA A300 presence in San Juan, but this has declined as AA has started to downsize operations there slightly) and flies mainly on routes to and from the Caribbean. The A300 is also a pretty versatile aircraft - it's used on AA's Miami - Orlando route three times a day.

It's unclear as to what American will replace the A300 with, but they might not choose to replace it at all. Instead of going for higher capacity, AA might just choose to have higher fares for fewer seats.

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Farnborough Airshow Review, Days 1 and 2

The Farnborough 2008 Airshow, which runs from July 14 to 20, is the first major airshow to be held since the Paris Air Show last June. Boeing VP Randy Tinseth pointed out on his journal a few ways that the aviation world has changed since the Paris show:

• There have been 2,678 commercial airplane orders (Boeing and Airbus)
• Oil has gone from $67/bbl to $134/bbl
• Jet fuel has gone from $2.12/gal to $3.92/gal
• The U.S. dollar has gone from 0.75 euros/dollar to 0.64 euros/dollar, and from 123 yen/dollar to 107 yen/dollar
• The market has continued to liberalize with “open skies” between the EU and the U.S.
• And worldwide aviation traffic continues to grow

The economic situation that the airline industry's in has only gone downhill since last year, so some expect that, as a result, there will be fewer orders announced at this year's airshow. So here's a quick summary of the orders placed from days 1 and 2 (July 14 and 15). It should also be noted that Airbus tends to "save up" announcing orders until airshows, while Boeing tends to announce them on a more regular basis.

Boeing

• Dubai-based low-cost startup FlyDubai ordered 50 737-800s, worth $3.74 billion at list prices.
  
• Ethiad Airways ordered 35 787-9s and 10 777-300ERS, worth $9.4 billion.
• Nigerian airline Arik Air announced an order for seven more 737s.

Airbus

• Aeroflot ordered five A321s.
• Dubai-based Aircraft lessor DAE Capital ordered 30 A350-900s and 70 A320s.
  
• Aviation Capital Group ordered 23 A320 family aircraft.
• Tunisair ordered three A350-800s, three A330-200s and ten A320s.
• Qatar Airways ordered four A321s.
• Ethiad Airways ordered 20 A320s, 25 A350 XWBs and 10 A380s.
  
• Saudi Arabian Airlines ordered eight A330s.
  

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Northwest to cut 2500 jobs, add fees

photo by caribb

Northwest Airlines announced yesterday that it would be laying off 2,500 employees in all groups of positions (pilots, mechanics, flight attendants, and other employees), but that it would first be looking for volunteers to leave the company. A variety of "voluntary programs including early-out programs, voluntary leaves, work rule modifications and attrition" will be offered, with the airline moving to furloughs as a last resort.

“Our fuel costs have more than doubled in the past year,” said Doug Steenland, President and CEO. “In order to manage through this unprecedented fuel challenge, we have to take action to both control costs and increase our revenue... These reductions are the direct result of our extraordinary fuel costs and the necessary actions we must take to right-size our airline and eliminate unprofitable flying." Last month, Northwest said that it would reduce its system capacity by 8.5%.

In additions, the airline is introducing a set of new fees: for travel in the US and Canada, it will charge $15 for the first checked bag, $25 for the second and $100 for three or more checked bags. Northwest also rolled out new fees for using frequent flier miles as well as ticket changes. Steenland said, “We expect these three incremental revenue enhancing measures to generate $250 million to $300 million a year, which will help ease the burden of these record high oil prices.”

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Vladivostok Avia starts US service

For those of you in the US who have been wanting to fly on a Russian-built aircraft, here's a new opportunity: Vladivostok Avia has started seasonal twice-weekly service from Anchorage to Vladivostok, via Petropavlosk-Kamchatsky. The first flight, which arrived in Anchorage on Monday morning, was flown by a Tupolev TU-154, although the airline has said that the route will be flown with newer Tupolev TU-204 airplanes. The flights will be carried out until September 15, and if this summer's flights are a success, the airline might continue them next summer.

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BA's OpenSkies to merge with L'Avion

British Airways has announced that it will purchase Paris-based premium carrier L'Avion to add to its OpenSkies premium transatlantic subsidiary. The deal, which only set back BA $52 million in cash, will be completed this month, and OpenSkies will formally combine with L'Avion shortly thereafter.

In a statement, British Airways head Willie Walsh noted that "L'Avion is a successful airline that has built up a premium business in a relatively short period. It has many synergies with OpenSkies and buying it provides a larger schedule and an established customer base."

L'Avion flies Boeing 757-200 aircraft from Paris Orly to Newark, and is the last of the independent premium transatlantic airlines surviving - MAXjet, Silverjet, and EOS have all become victims of higher oil prices.

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Continental to join Star, link with United

photo by sea turtle

Even after merger talks between United and Continental fell through a few months ago, the two airlines are still interested in cooperating - yesterday, they announced plans to start codesharing and for Continental to join Star Alliance, of which United is a member. According to an email sent out to Mileage Plus members, United expects the deal to start sometime in 2009.

It remains to be seen what this means for US Airways, which has been a Star member for a few years now. It's possible that it could remain in Star, but having three US airlines in the same alliance could lead to some overlap.

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Continental rejects United as merger partner

photo by Drewski2112

Well, it was a bit of a surprise. After the linkup between Delta and Northwest a few weeks ago, many (myself included) expected to see continued industry consolidation. And a merger between United and Continental was seen as a likely one; rumors floating around pointed to an announcement as soon as this week. The merger would have created an airline that might rival Delta/Northwest in size, as well as international coverage (United's strong Asia presence would fit nicely with Continental's extensive European route network).

But last week, a little something occurred that made Continental think twice: United posted a $542 million loss for the first quarter of 2008. Even in the airline industry, a half billion dollar loss is pretty big, and it's a sign of an ailing airline. United's huge loss scared away Continental, which announced on Sunday night that it was abandoning merger talks with United.

The airline made the announcement in a letter to employees from CEO Larry Kellner and President Jeff Smisek. "We want you to know that our Board of Directors met today and has unanimously supported management’s recommendation that, in the current industry environment, the best course for Continental is to not merge with another airline at this time," it read... The Board very carefully considered all the risks and benefits of a merger with another airline, and determined that the risks of a merger at this time outweigh the potential rewards, as compared to Continental’s prospects on a standalone basis." The letter - which never identified United Airlines by name - went on to say that the airline will "continue to review potential alliances and our membership in SkyTeam. We are considering alternatives to SkyTeam as we carefully evaluate which major global alliance will be best for Continental over the long term."

Continental's decision is certainly a setback for United, which has been looking to merger for some time now. I don't think that the decision to not merge was arrived at easily, since there could have been some benefits from linking with United. But the folks over at Continental are betting that a merger with United, which is racking up heavy losses, could also drag them down as well. Even though Continental definitely wants a better Asian route network - and they could have obtained it through a merger with United - it might be able to get it another way. If United files for bankruptcy again, Continental might be able to grab the Asian routes by themselves, without having to deal with United's poor financial shape.

Continental has also reportedly been in talks about forming a three-way alliance with American Airlines and British Airways, although, from an anti-trust standpoint, this might be a bit difficult.

And as for United - well, this is certainly bad news. CEO Glenn Tilton tried to remain upbeat in a statement released Sunday night: "Our strategy is consistent. Consolidation is underway - ensuring you have the right partner is everything. We will pursue all options to ensure a strong, sustainable future for our airline and will not shy away from the tough choices necessary to create value for our shareholders and benefit our employees and customers." A United-US Airways merger might happen, but I don't know if it will do much good. Both airlines are still dealing with their respective trips to bankruptcy court, and I don't think that a merger between them will solve anything.

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Eos Airlines shuts down

New York-based premium transatlantic carrier Eos Airlines filed for Chapter 11 bankruptcy protection yesterday and operated its last flights earlier today. The airline flew Boeing 757-200s between New York-JFK and London's Stansted Airport, but had plans to expand to other destinations.

Eos' shutdown was not necessarily expected, but given the current state that the industry's in, it wasn't too surprising, either. MAXjet, another premium transatlantic carrier, stopped flying in December.

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US Airways CEO mentions mergers

photo by caribb

In a letter sent to employees yesterday, US Airways CEO Doug Parker said that "airlines are going to have to make dramatic changes" if they want to survive. Although he said that he couldn't "comment on any specific discussions or transaction," he said that the media have suggested that US Airways is in merger talks with United and that American would make a good match as well. "Rest assured," said Parker, "if US Airways chooses to participate in any industry consolidation, we will do so because we believe it is the best interests of our employees and our airline."

Would US Airways be a good match for United, which has been seeking out merger partners? They already code-share (a benefit that the Delta/Northwest combination has), and US Airways has a strong presence in the Northeast and Southeast (two areas where United's route structure is weaker). But I don't see US Airways' route network as being as much of a plus for an airline like United, which needs more international routes. Of the six largest legacy carriers, US Airways has the smallest international route network. United might prefer a rumored merger with Continental to one with US Airways.

US Airways still has problems of its own, too, from its last merger (between US Airways and America West). And let's not forget that the last time United and US Airways tried to merge, it was rejected by the Justice Department on anti-trust grounds.

By the way, here's the original message sent out by Parker (posted on the US Aviation boards):

From: Corporate Communications
Sent: Wednesday, April 16, 2008 8:36 AM
To: Corporate Communications
Subject: USNews Now: An Important Message from CEO Doug Parker
Importance: High

An Important Message from CEO Doug Parker

April 16, 2008

Dear Fellow Employees,

With the recent news of a potential Delta/Northwest merger, analysts and media are speculating about the next potential combination. While we had hoped to remain on the sidelines of this speculation, today’s Wall Street Journal suggests we may be in merger talks with United and another article in the Dallas Morning News suggests we might make a good merger partner for American.

While I can’t comment on any specific discussions or transaction I certainly didn’t want you to hear this speculation without hearing directly from me about what this might mean for US Airways.

Most of you know my views on consolidation and those have not changed. Our industry is far too fragmented and consolidation, if done properly, could result in a much healthier industry which would be good for our employees, our customers and the communities we serve. Rest assured if US Airways chooses to participate in any industry consolidation, we will do so because we believe it is the best interests of our employees and our airline.

Despite all of the challenges of merging two airlines, we are a much stronger company today as a result of the merger of US Airways and America West. We posted the highest pre-tax margin of the big six airlines in 2006 and even with our operational challenges we posted the second highest pre-tax margin in 2007.

And we have an improving airline. We’ve made great strides with our operational improvement plan, including top three performances in on-time arrivals for three consecutive months. As we continue through 2008, we feel extremely good about our ability to continue to improve our operational performance relative to the industry.

But we can't ignore what's happening in the world around us. Oil has risen to over $113 per barrel and Wall Street is anticipating a recession that, if it happens, will lower all airline revenues. And the DL/NW combination potentially creates a formidable competitor. In that world, all airlines are going to have to make dramatic changes to their existing business models in order to be viable.

I know airline merger speculation can be distracting so for now, I encourage all of us to remain focused on running a great airline. Our work on the reliability, convenience and appearance initiatives continues and we are running an extremely reliable airline as a result. Whatever we do, we will always take great care to ensure the path we choose returns value to our shareholders and customers, and also provides long-term stability for our employees.

Thanks for all you do for our customers and keep up the great work.

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Delta and Northwest announce merger

It's official: the long-anticipated merger of Delta Air Lines and Northwest Airlines has finally been announced. The combined carrier - already billed as "America's premier global airline", will be known as Delta and will be based in Atlanta. Delta CEO Richard Anderson would head up the new airline.

A press release by the airline touted the benefits of the merger; it "creates a company with a more resilient business model that is better able to withstand volatile fuel prices than either can on a standalone basis." The release went on to say that "the merged airline will maintain all hubs at Atlanta, Cincinnati, Detroit, Memphis, Minneapolis/St. Paul, New York-JFK, Salt Lake City, Amsterdam and Tokyo-Narita... Delta customers will benefit from Northwest’s extensive service to Asian markets and Northwest’s customers will have access to Delta’s strengths across the Caribbean, Latin America, Europe, the Middle East and Africa."

Of course, the merger still needs to clear regulatory hurdles, and there's always the issue of the pilots at both airlines, which haven't yet agreed on seniority. But if the merger goes off successfully, it will create the world's largest airline. Also, keep a look out for a United-Continental merger, which has been rumored to occur if a Delta-Northwest merger was announced - it could be announced very soon. (Although United has favored a merger for some time, Continental has said it would consider it only if a Delta-Northwest deal went through.) More details of the Delta-Northwest deal will be revealed tomorrow at a press conference featuring both CEOs in New York, but until then, check out the website that Delta set up about the merger.

I've also posted below the internal memo sent out to employees today at Delta, which sheds a bit more light on the merger process (click on the images to view them at full size):

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Virgin America gets more support

photo by Drewski2112

Even after a wave of airline bankruptcies has recently shaken the US airline industry, Virgin Group chairman Richard Branson said on Thursday that he is "extremely pleased" with the airline's performance and that it is "well ahead of budget". He was also predicted that "in three or four years time, it'll be flying to all the major American cities."

In addition, the Wall Street Journal reported today that British and American investors in the airline are planning to infuse approximately $100 million of new capital as the airline plans to expand. The money will certainly help Virgin America stay afloat amid high oil prices and a weak economy.

CEO David Cush has said that Virgin America is on track to become profitable by 2010, although the airline is currently losing money. He also said that the airline might be able to take advantage of some of the recent turmoil in the industry, which has caused other airlines to scale back service and reduce capacity in some markets, to gain a foothold in markets where it doesn't currently operate.

In January, Virgin America was able to sell 65% of its seats - significantly lower than the 80% industry standard. Cush has recently said that this figure has improved to just over 70% - still below average. Branson, however, stated that the low figure is not surprising, given that the airline started operations eight months ago.

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Frontier files for bankruptcy

photo by Drewski2112

Denver-based Frontier Airlines filed for Chapter 11 bankruptcy protection earlier today, citing a move made by its credit card processor, First Data Corporation, which has started withholding a larger percentage of proceeds from ticket sales.

"To be clear, we filed for very different reasons than those of other recent carriers, and our customers and employees can be confident that we intend to keep on flying and providing outstanding service and products," said Sean Menke, Frontier president and CEO. "Given the recent progress we have made towards strengthening our balance sheet and obtining additional financing, it is truly unfortunate that we have had to take this action."

Frontier's bankruptcy filing stems from what are known in the industry as "holdbacks". A bank that processes an airline's credit card purchases holds onto a certain percentage of the proceeds until the passenger actually flies. As of now, that percentage for Frontier is locked at 45%. But First Data was going to increase that to 50% immediately and to 100% by May 1. By filing for bankruptcy, Frontier can avoid the increase.

Frontier isn't in dire straits like Aloha and Skybus were, but right now, a lot depends on public opinion. Travelers have been hearing about a lot of airline bankruptcies recently, and even if Frontier isn't on the brink of collapse, a bankruptcy filing might scare away customers.

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American cancels more flights

photo by caribb

Only a few weeks after canceling hundreds of flights, American Airlines today canceled over 900 flights, affecting an estimated 100,000 travelers. The airline also canceled 460 flights on Tuesday and nearly 1,100 yesterday. The cancellations, which affected American's 300 MD-80s, are in response to an FAA directive involving the covers of wire bundles for the MD-80's fuel pump.

The problem was first identified back in 2006, and if American had taken steps to solve the problem immediately, the current problem would have been averted. But instead, the airline is being hit with this crisis at a time when fuel prices and a weak economy are affecting airlines in general. Because the cancellations are their fault, American is responsible for handing out $500 travel vouchers and hotel rooms for travelers - not to mention paying overtime for mechanics. And, perhaps even more significant, is future business that will be lost.

CEO Gerard Arpey apologized: "We have obviously failed to complete the airworthiness directive to the precise standards that the FAA requires, and I take full responsibility for that," he said. But it's little consolation to the travelers affected.

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Austrian's 50th anniversary colors

photo courtesy of Austrian Airlines

To celebrate its 50th anniversary, Austrian Airlines has painted an Airbus A320 (OE-LBP) in a "retro" colors. Austrian's first flight was on March 31, 1958, from Vienna to London (via Zurich) on a Vickers Viscount. Austrian is the latest European airline to commission such a livery - others, such as Lufthansa and SAS, have done so as well.

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Skybust: Skybus ceases operations

photo by OZinOH

Skybus, the Columbus, Ohio-based no-frills carrier that famously started flying last May with $10 fares, announced on Friday that it will stop flying on Saturday, April 5. It becomes the fourth US carrier in less than a week to shut down (joining Aloha, Champion Air, and ATA). The news only broke late on Friday night, surprising both customers and employees.

"Skybus struggled to overcome the combination of rising jet fuel costs and a slowing economic environment," the airline said in a statement. "These two issues proved to be insurmountable for a new carrier. We deeply regret the impact this decision will have on our employees and their families, customers, vendors, suppliers, airport officials and others in the cities in which we have operated. Our financial condition is such that our Board of Directors felt it had no choice but to cease operations."

Why did Skybus fail? It's a question that will probably be debated for some time to come. Obviously, fuel costs and the state of the US economy are two major factors, but they've impacted every airline, not just Skybus. Here are a few Skybus-specific thoughts:

• Skybus did fly from secondary cities that, in many cases, were too far from the "major" cities that they were trying to market to. For example, what was listed as Hartford, CT on their website was really Chicopee, MA. In some cases, this was OK, but because there aren't many ground transportation options between these city pairs that Skybus chose, it was sometimes difficult and expensive to get to their destination city.
• Skybus also flew cross-country routes with a rather small fleet of Airbus A319s (it had only 12 planes at the time of shutdown), which meant that its airplanes weren't flying as many hours a day as they could have. Skybus' small fleet also left it vulnerable to losing money on under performing routes.
  
• Skybus didn't offer the option for connecting flights, meaning that they really limited themselves to those who were just flying between two cities that the airline served directly.
  
• Rapid growth. While this isn't necessarily a bad thing, Skybus did expand too quickly. It often would start out a new route and soon abandon it if it didn't make money, and while this can work, Skybus' small fleet meant that a significant proportion of its airplanes were on money-losing routes.
• Little customer service, in my opinion. Skybus didn't even have a toll-free number for passengers to call if something went wrong with their travel plans. And although the airline tried to get passengers to purchase food and drinks on board the plane (none were provided for free), its attempts to get passengers to dispose of the food and drink they already had always seemed unusual.
  

Regardless of the reasons, the failure of Skybus (and the other airlines that have closed in the past week) are indicative of the tough times that the US airline industry faces - we're likely to see more tough times ahead and, sadly, more airline shutdowns, in the coming months.

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ATA ceases operations

photo by Drewski2112

ATA Airlines announced today that after filing for Chapter 11 bankruptcy, it has "discontinued all operations and cancelled all current and future flights". "Following the loss of a key contract for our military charter business, it became impossible for ATA to continue operations," the airline said in a statement. "Unfortunately, we were not in a position to provide our customers or others with advance notice."

When it shut down, ATA operated 29 airplanes (Boeing 737-800s, Boeing 757-200s and -300s, DC-10s and L-1011s) and carrried about 10,000 passengers per day. The airline's 2,230 employees will be laid off.

The statement made by the airline said that "a primary factor leading to these actions was the unexpected cancellation of a key contract for ATA’s military charter business, which made it impossible for ATA to obtain additional capital to sustain its operations or restructure the business." ATA's chief operating officer also attributed ATA's shutdown to "the tremendous spike in the price of jet fuel in recent months".

The airline was founded as American Trans Air in 1973 and changed its name to ATA in 2003. It filed for Chapter 11 bankruptcy once before in 2004, and emerged in 2006.

ATA was founded in 1973 and recent=

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Branson launches V Australian

As an Open Skies agreement between the United States and Australia takes effect, Richard Branson's newest addition to the Virgin fleet was announced earlier this week. V Australia, a division of Australian carrier Virgin Blue, will fly from Sydney to Los Angeles starting in December, competing with Qantas and United (which are the two airlines that currently fly the route). Branson said that "there is going to be very fierce competition, as there is with Virgin Blue and Qantas in Australia, and fares will definitely drop quite dramatically across this route... Our philosophy is never to go out with an empty seat."

Fares are relatively cheap - V Australia's return economy seats start at $1899. A special promotional round-trip fare of $777 for the first 1000 US passengers to book sold out quickly. In terms of aircraft, V Australia will start out with a single Boeing 777-300ER (it has ordered 6 total). Right now, Los Angeles is the only concrete destination, but the airline has also been interested in flying to Japan. It has also applied to the US Department of Transportation for approval to operate from Sydney to San Francisco, Las Vegas, Seattle, and New York.

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Champion Air to cease operations

photo by Drewski2112

Minneapolis-based charter carrier Champion Air has announced that it will end operations on May 31, after 11 years of flying. “This is a sad day for the entire Champion family,” said Champion President and CEO Lee Steele. He went on to say that Champion's "business model is no longer viable in a world of $110 oil, a struggling economy and rapidly changing demand for our services" and that "the management team and our board of directors have decided that the best course of action is to cease flying and to wind up our operations in a responsible, deliberate manner.”

Steele said that the airline was experiencing a "perfect storm" from a slow economy and the current state of credit markets, which had a "negative impact" on the airline's attempts to attract investors.

Champion's end marks not only the end of the airline but also for Boeing 727 passenger service in the US (Champion operates a fleet of 16 Boeing 727-200s). This announcement comes just days after Aloha Airlines' surprise shutdown, which also meant that another 'old-style' airplane, the Boeing 737-200, left US scheduled passenger service.

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Aloha to end passenger service

photo by Cubbie_n_Vegas

Only days after filing for Chapter 11 bankruptcy protection (for the second time in as many years), Hawaiian carrier Aloha Airlines announced that it will terminate all passenger service effective today. The airline has been fighting a three-way price war with Hawaiian Airlines and startup go!, which is owned by Mesa Air Group.

"This is an incredibly dark day for Hawaii,”" said David A. Banmiller, CEO of Aloha. "“Despite the groundswell of support from the community and our elected officials, we simply ran out of time to find a qualified buyer or secure continued financing for our passenger business. We had no choice but to take this action." In a statement released by the airline, Aloha said that it "deeply regret[s] the impact this will have on our dedicated employees who have made Aloha one of the best operating airlines in the country... unfortunately, unfair competition has succeeded in driving us out of business, bringing to an end a 61-year-old company with a proud legacy of serving millions of travelers in the true spirit of Aloha."

Hawaiian Airlines met with Aloha early yesterday to try to work out a deal to save Aloha. The deal was viewed by Aloha executives as a "last resort", and would have involved Hawaiian keeping the Aloha name alive and operating inter-island and possibly a few inter-island routes. But the deal fell through after Hawaiian was willing to put up only about $5 million in cash (in comparison, Aloha was losing $5 million a month). This is indeed sad news for aircraft enthusiasts, too - Aloha was the last scheduled operator of the Boeing 737-200, and one of these airplanes was painted in a retro livery a few years ago.

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"Defective airplanes or parts"? I think not

This morning I reported on how several U.S. airlines that operate the MD-80 had to perform additional checks on wiring covers. A few hours later, I received a comment on that blog post that was rather entertaining. (Here are a few excerpts - for the entire comment in all of its gloriousness, click here.)

To: NATIONS OF THE WORLD – GOVERNMENTS, EMBASSIES, AND PRESS (Please See The Distribution List Below). DEFECTIVE AIRPLANES AND PARTS POTENTIALLY ABOUT TO FLOOD THE MARKET
Dear Your Excellencies, And Other Honorable World Citizens:
I am a lawyer in New York, an American citizen, and a man who greatly values the sanctity of human life.
Airline companies within the United States may be about to seek to “dump” defective aircraft upon, and/or sell harmful cannibalized aircraft parts to, businesses and citizens within your respective many countries...
To the extent that you may not already be aware of the current aviation safety crisis occurring now in America that has caused this clear-and-present threat, please inform your countrymen and countrywomen of this potentially-imminent and hazardous occurrence. Please ask your country’s officials, private firms, and citizens, to be vigilantly on the look-out for offers to buy these defective airplanes or parts. It is important you ensure that your friends and neighbors do not buy these items. The safety and lives of your fellow citizens may depend upon it...
...The fleets of a number of United States commercial airlines are deteriorating. Our federal government in the U.S. has finally caught up to the decay. We in America are now effectively in the painful process of outlawing these aged, dangerous planes – and holding civilly and criminally accountable those malicious individuals that would continue to sanction their use, regardless. This threat to us is from within. The airline companies’ next move will be to try to jettison the bad planes for profit.

My first thought was that this was a Nigerian spam comment, or something of the sort. It turns out that although it wasn't a spam letter, it had just about the same amount of factual value. The safety checks that have been carried out throughout the past month have more to do with making sure that paperwork is up-to-date, rather than having "dangerous airplanes". The US is home to some of the safest airlines in the world. There is no "current aviation safety crisis" in this country, as the author of the comment writes. As far as I know, none of the airlines are looking to "“dump” defective aircraft" - they're merely making sure that the planes get another look-over. And besides, even if they were, would you likely need to "ensure that your friends and neighbors do not buy these items"? I don't know about you, but I'm not shopping around for "defective aircraft" or "harmful cannibalized aircraft parts".

By the way, who wrote that comment? A click of the author's Blogger profile reveals that he is none other than John J. Tormey III, Esq. A quick Google search turns up the fact that he is involved with the "Quiet Rockland" project, which appears to be concerned with aircraft noise. What airplane noise and "defective aircraft" have in common is not immediately apparent. Tormey also writes a blog entitled "THE END OF SOUTHWEST AIRLINES" in which he writes vitriolic blog posts. These have titles like "THANK YOU FOR FLYING AIR KEVORKIAN a/k/a SOUTHWEST AIRLINES - YOU ARE NOW FREE TO SPRINKLE YOURSELF ABOUT THE COUNTRY" and "Thank You For Flying Air Kevorkian - I Mean, Southwest". In a blog post entitled "NO LUV LOST," he quotes himself as saying that "the persons that should be flying Southwest at this point, should be only those referred by Doctor Kevorkian."

I'm saving Mr. Tormey's comment and writing about it because I think it's rather hilarious. I don't think he realizes that Southwest Airlines has never had a fatal accident due to "defective airplanes".

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American, Delta inspect MD-80s

photo by Kevin Boydston

American Airlines yesterday announced that it was canceling 300 flights on Wednesday in order to inspect wiring covers in its 300-strong MD-80 fleet, with an American spokesperson calling the move an "abundance of caution" by the airline. Later in the day, Delta also said that it would voluntarily reinspect 117 of its MD-88s as well as 16 MD-90s. Delta said that as of last night, it had not found any problems, but the airline was nonetheless forced to cancel about 325 flights yesterday, with a few more following today.

Other airlines flying the MD-80 also reviewed their fleets as well: Allegiant Air said that it reviewed its 35 MD-80s without needed to cancel flights; a spokesperson for Alaska Airlines said that its 10-strong fleet of MD-80s operated "normally".

The checks come at a time when airlines are scrambling to comply with FAA audits and safety directives. Earlier in the month, the agency fined Southwest Airlines $10.2 million for flying 46 of its Boeing 737s without proper safety checks. American Eagle grounded 25 CRJs last week in order to double-check inspection papers on the hydraulic systems and rudders.

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ANA to start budget airline

photo by Giyu (Velvia)

Japan's All Nippon Airways, which has been experiencing increased pressure in recent years from growing low-cost carriers in Asia, has announced plans to launch a budget airline of its own. ANA is considering a joint venture with another Asian airline, and the new carrier could be flying as early as March 2009. The Wall Street Journal has reported that the airline would probably be based in another country in Asia - Japan is noted for higher labor and operating costs.

The planned startup also comes at a time when ANA faces increased competition at its hub at Tokyo's Haneda Airport, which is due for expansion in 2010. A spokesperson for ANA said that the budget airline wouldn't fly under the ANA name.

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United to downsize fleet

photo by Drewski2112

United Airlines, facing a slumping economy and rising fuel prices, announced today that it would ground 10 to 15 of its "older, less fuel efficient, narrowbody aircraft" as part of a plan "to offset what could be more than a $1 billion increase in fuel costs in 2008". "We are taking a prudent step now by reducing our fleet, taking assets out of the network that don't make sense at these fuel prices, to better position United to be successful in an ever-challenging environment," United CFO Jake Brace said. "United has an aggressive five-year plan focused on creating shareholder value. We have led the industry in reducing domestic capacity and continue to lead efforts to pass commodity costs onto our customers, as other industries do." As for which type United will ground: probably either some of the Boeing 737-300s and/or -500s.

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Northwest: $100 oil to lead to mergers

photo by caribb

Oil, which has been hitting record highs seemingly every day now, has always been a problem for airlines. But when the price of oil starts getting above $100, it becomes a really big problem. On a pre-recorded telephone message for Northwest employees, CEO Doug Steenland said that oil was becoming a "serious budget-breaker". "If fuel remains where it is today, our increased fuel costs will again create a difficult financial challenge for the airline... This rapid increase in fuel is one reason we continue to believe consolidation in the industry is inevitable." Meanwhile, Northwest's merger talks with Delta are currently in hiatus while pilots unions at both airlines try to figure out how to combine their seniority lists.

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US Airways to start charging for bags

photo by Typophiles

Less than a month after United Airlines announced that it would be charging most passengers $25 to check a second bag, US Airways has announced that it would do the same, starting on May 1. US Airways claims that higher fuel costs are partly to blame and said that this new luggage fee will give the airline $100 million in additional revenue. It's a sign that the à-la-carte baggage trend is continuing throughout the major carriers - it's not unreasonable to say that by summer, virtually all of the majors will have adopted this fee.

And speaking of US Airways, the airline has been seeing some labor strife recently. Unions unveiled a 30-foot rat outside of the airline's headquarters, which supposedly symbolizes US Airways management. And CEO Doug Parker said that "our industry is in a mess, if you haven't noticed... we're about to head into what looks like another downturn."

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Presidential candidates and their airplanes

photo by Drewski2112

With all the recent news about Super Tuesday in the US, I thought it would be interesting to see what airplanes the candidates are using. Apparently, Democratic front-runners Hillary Clinton and Barack Obama are both chartering Boeing 737-800s from ATA (Clinton has already dubbed hers "Hill Force One"). On the Republican side, now-former candidate Mitt Romney used a chartered Xtra Airways Boeing 737-400 (and even though he also chartered an Embraer regional jet from ExpressJet for press use, the press was billed for it); John McCain uses a jetBlue Embraer 190 (with DirecTV in every seat, of course). And the lucky one of these candidates will be able to use Air Force One next year...

If you've got any updates/changes to this partial list, please feel free to leave a comment on this post!

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Delta-Northwest, United-Continental mergers soon?

photo by Cubbie_n_Vegas

The Wall Street Journal is reporting that a merger deal between Delta Air Lines and Northwest Airlines could happen as soon as next week. Talks between the two were previously strained as the senior management of both carriers disagreed over whom would keep high-ranking management positions, but they have since come to an agreement.

As a result of Delta and Northwest's merger potential, merger discussions between United Airlines and Continental Airlines have also reportedly "grown more serious," said the article. United has proposed a merger with Continental before and has been turned down, but if Delta and Northwest announce a deal, Continental could change its mind very quickly and agree to merge with United, which has been actively looking for a merger partner for some time now.

An interesting point in all of these merger talks is Northwest's so-called "golden share" in Continental. This is basically some preferred stock that allows Northwest to abort a merger between Continental and another carrier. If Northwest and Delta do merger, however, Continental has the option to acquire the "golden share" for $100. Continental would be able to get the stock even if the Northwest-Delta deal later falls through.

The mergers raise a lot of inevitable questions - what types of aircraft will the combined operations operate (what will happen to Northwest's A330s)? Which hubs will stay open and which will close or be downscaled (Memphis, Cincinnati, etc.)? What international routes will be dropped or added? It's most likely that the answers to these questions will be worked out before the merger is announced (after all, it would be pretty stupid to merge first and then tackle those problems). As always, lots of things could happen. American Airlines, which is being left out of all of the "merger madness" at present, could intervene somehow. Labor unions or antitrust regulators could always prevent these mergers from going through (and with the size of these airlines, any mergers would get a high amount of scrutiny from the antitrust folks).

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United's luggage fees: a mixed bag

photo by kpishdadi

United Airlines recently announced that, "as part of its continuing effort to offer customers choice, flexibility, and low fares," it will start charging passengers who purchase nonrefundable economy tickets for US/Canada flights $25 to check a second bag (the first one is still free). Exempt from the fee are passengers who have Premier or higher status in Mileage Plus/Star Alliance will be able to go by the old rules of checking two bags for free.

This is certainly an interesting move by United - it's the first legacy carrier to introduce such a fee (discount airlines like Skybus have already made baggage fees an integral part of their business plans). Other legacies are no doubt paying careful attention to United's move here - if it works (i.e., passengers don't desert the airline), then it's probable that they'll follow suit and also charge more for bags. After all, by some estimates, United's move could make more than $100 million per year in extra revenue and cost savings - not an insignificant chunk of change.

So is United's move here good or bad? A bit of both, perhaps - a mixed bag (ha). They are running the very real risk of alienating some of its passengers, but this risk might diminish if the other legacies follow suit. And United might be able to convince some passengers that by not charging for bags that you're not going to check, they're passing the savings onto you...

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Branson to start Virgin Russia

photo by Cubbie_n_Vegas

The man that brought you Virgin Atlantic, Virgin America, Virgin Blue, Virgin Nigeria and others is preparing to do it again.

Billionaire Richard Branson has announced plans to start an airline in Russia, tentatively called Virgin Russia. He plans to take advantage of the oil-fueled Russian economy, which has given the average Russian more money (and an airline market that's growing at around 10 percent a year). "We hope to offer the Russian people a really good airline. We may be able to do it a little better than is being done at the moment," said Branson. "We're in discussion with two or three partners." Branson also noted that there are "150 million people here within a three-hour flight from Moscow."

Branson certainly faces some challenges in his new endeavor. He'll be taking a swipe at state-run carrier Aeroflot, and is seeking "two or three" Moscow-based local carriers to team up with him, although he has said that his partners don't necessarily have to be airlines - "what we are looking for is people we can trust, people we could work with," he said. The Moscow Times identified several possible partners as Russian startups SkyExpress and Red Wings.

And Aeroflot is currently dominant in Moscow, which isn't planning that to change. Aeroflot Deputy CEO Lev Koshlyakov said that the "Russian market is competitive and is attracting more and more interest, with various business models... A new player coming in will make everyone mobilize their resources." And Aeroflot CEO Valery Okulov asked, "Why should we fear competition? We have always struggled with competition, so what do we have to fear?"

The Russian government also has to be dealt with. It has been notoriously hostile to certain foreign investment (e.g. some oil projects), and although there's no indication that the government would block a Virgin investment, Branson should definitely keep this in mind.

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Ryanair in trouble over ads

(click on both to enlarge)

Irish discount carrier Ryanair is facing a bit of trouble after recently running two advertisements. The first features French president Nicolas Sarkozy with his girlfriend, French singer Carla Bruni. "With Ryanair," thinks Bruni in the advertisement, "all of my family can come to my wedding." This is a reference to the rumors of marriage between the two. A Ryanair spokesperson called it a "humorous comment on a matter of great public interest in France" and said that the airline apologizes "sincerely for any offence caused", but that's not satisfying either Sarkozy or Bruni: they're suing the airline separately for 1 euro and 500,000 euros in damages, respectively.

The second advertisement, touting "hottest back to school fares," apparently caused the British Advertising Standards Authority (ASA) to receive 13 complaints about it. "We considered that her appearance and pose, with the heading 'Hottest', appeared to link teenage girls with sexually provocative behavior and was irresponsible and likely to cause serious or widespread offence," the ASA said. Ryanair was ordered to recall the ad. But Peter Sherrard, head of communications for Ryanair, remained defiant: "It is remarkable that a picture of a fully-clothed model is now claimed to cause 'serious or widespread offence', when many of the UK's leading daily newspapers regularly run pictures of topless or partially-dressed females without causing any serious or widespread offence... This isn't advertising regulation, it is simply censorship. This bunch of unelected self-appointed dimwits are clearly incapable of fairly and impartially ruling on advertising."

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United would consider leaving Star Alliance

photo by striatic

According to United Airlines CEO Glenn Tilton, if United had to leave Star Alliance in order to finalize a merger, it was prepared to do so. "You can assume that absolutely everything goes into the mix of consideration," he said in a Chicago Tribune article published yesterday. The quote has sparked rampant speculation on internet forums as to whether or not United would actually seriously consider withdrawing from Star. United is one of Star's founding members, and is close partners with another founding member, Lufthansa. United makes a lot of money off of the feed that it gets from Star members (and vice versa).

There's no reaction yet from Lufthansa, arguably United's closest member. United does provide Lufthansa with a significant amount of connecting traffic, and losing United wouldn't be good. Lufthansa has covered its bases in the US market a bit with last year's investment in jetBlue, but jetBlue can't give them anywhere near the same amount of feed that United can. Perhaps Tilton's comments might be meant to scare Lufthansa into making an investment in United (as it did in jetBlue) - in this case, United's ties with Lufthansa and Star would probably be stronger than ever.

Of course, all of this is assuming that United is actually serious about leaving Star. United will probably remain in Star as long as it is financially viable; if a better alternative arises, United will probably do the sensible thing and 'go for it', even if this means dropping in Star in favor of another alliance. (A United-Delta or United-Continental merger might mean that the airline could join SkyTeam, but this seems more likely with the former.) For United, the most important item on the agenda is making money, and if this means merging with another carrier and leaving Star, then a United-less Star could indeed be a possibility.

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Delta moves toward merger talks with United, Northwest

photo by Franco Folini
Publish Post

Delta Air Lines, which has reportedly been interested in a merger for some time now, has requested permission from its board to start "formal" merger discussions with United Airlines and Northwest Airlines soon, with a plan to choose one of the airlines with which to merge.

In the last few years, Delta has carried opposing views on mergers: it exited Chapter 11 bankruptcy last year after successfully fighting off a hostile takeover proposal from US Airways. But soon after leaving bankruptcy, it started exploring its merger options, and has been the target of merger rumors before (such as this past November, with United Airlines). And with a stagnant economy and oil prices at nearly $100 a barrel, mergers might help relieve some of the pressure that the US airline industry is feeling right now.

A Delta-Northwest or Delta-United deal would probably create the world's largest airline (currently American). So which airline could it be? Back in November, Northwest was (and still is) seen as the most likely candidate, because the route structures of the two airlines has less overlap. And Delta CEO Richard Anderson has ties with Northwest, having worked there for 14 years and ultimately rising to the rank of Northwest CEO. But the main problem with a Delta-Northwest tie-up is the fact that two hubs - Delta's Cincinnati and Northwest's Memphis - would probably be shut down, due to their close proximity to each other. This might create trouble from both unions and politicians.

The possibility of a combined Delta-United has been raised before, and United management has been advocating industry consolidation for quite some time. But it will be some time before any merger plans become concrete, and even then, they can still fall apart quite easily. But this time, it appears that the unions - at least at Delta - are more supportive of the merger idea than they have been in the past. Lee Moak, chairman of the Delta pilot's union, said in a letter that “consolidation may indeed be at our door... We do not oppose consolidation, and may even determine that consolidation is desirable.”

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British Airways launches OpenSkies

Although it’s no secret that British Airways has been looking to expand in the transatlantic market, the airline made an announcement yesterday that it is starting an “airline within an airline”. OpenSkies, as the new entity is called, will start flying in June with a single Boeing 757-200 from New York to either Paris or Brussels. Another 757 is planned to join the fleet later this year, with six aircraft in all by 2009. In a statement, Willie Walsh, BA CEO, said that "by naming the airline OpenSkies, we're celebrating the first major step in 60 years towards a liberalized US/EU aviation market which means we can fly between any US and EU destination”. Future cities will probably include Milan, Frankfurt, Amsterdam, and Madrid.

This is a smart move on BA’s part – the Open Skies agreement signed between the US and the EU would add a lot of pressure at BA’s London Heathrow hub. Currently, only United Airlines, American Airlines, BA, and Virgin Atlantic can fly from the US into Heathrow, but this is expected to change soon as more US carriers add the airport. It’s also a smart idea that British Airways decided to buck the “premium transatlantic” trend that pushed MaxJet into bankruptcy last month – OpenSkies will have business class, premium economy, and economy class (each with 24, 28 and 30 seats, respectively). But BA isn’t alone in this area – British carrier bmi, Delta Air Lines, and Air France/KLM are all expected to follow suit with Heathrow-US routes.

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Aeroflot retires Tupolev 134

photo by Leonid V. Kroujkov

First off, happy new year! It's been a while since my last post, so here's a short story that might be of interest: Russian carrier Aeroflot retired the Tupolev Tu-134 on Monday, December 31, with a flight from Kaliningrad to Moscow. The 14-strong fleet of 134's will be replaced by Airbus A319s and A320s, as well as the Sukhoi Russian Superjet-100 (starting in late 2008). It's too bad that the Soviet aircraft are being retired, since they provide a nice contrast to the rather boring stream of short-haul Boeings and Airbuses that are so common nowadays. But the Soviet models are rather noisy and polluting (the Tu-134 was banned from flying to Europe since 2002 for this reason). I'm not sure when the rest of the Soviet planes in Aeroflot's fleet will be retired (the Tu-154 is the main model left), but I've heard rumors that it will happen before 2010.

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