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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