jetBlue smokes competition in J.D. Power survey

The 2009 J.D. Power and Associates 2009 North American Airline Satisfaction Study was released earlier today, and jetBlue came out top, not just in the low-cost carrier group but overall, as well - for the fourth year in a row. For the 'traditional network carrier' category, Alaska topped the list for the second consecutive year. (Just to be clear, JD Power defines low-cost carriers as airlines that "operate single-cabin aircraft with typically lower fares," while 'traditional network carriers' "operate multicabin aircraft and use multiple airport hubs." It also considers AirTran to be an LCC, although it does operate multicabin aircraft.)

I spoke with Paula Sonkin, VP Travel and Real Estate at J.D. Power, who said that cost was the biggest influence for most passengers, and they've not been favorably impressed by the various sources of ancillary revenue (read: fees and charges) that the airlines have added recently. This, along with with declines in in-flight service, has led to overall customer satisfaction with airlines this year on the decline for the third straight year, reaching a four-year low (ouch). The only airline that improved its position versus last year was Southwest.

That's not to say that everything is gloom and doom, however. Sonkin pointed out that the airlines that did well - for example, Alaska, which was 4th place in 2007 and rose to 1st last year - did so because they focused on improving the things that were in their control. Fuel prices, a weak economy - those things can't be changed, and the things that occur as a result (such as increased fees and lowered employee morale, which can lead to poorer service) can be expected, if not necessarily liked. But Alaska really made strides because it improved its pre-flight process - that is, its website, the ticket booking process, and especially the check-in process, which the airline made faster and friendlier. Also on the plus side, passenger-reported flight delays and check-in times were reduced, and the general on-time arrival rate went up by more than 5% versus last year. “Despite the economic stresses that airlines are under, they are recognizing the value of passengers’ time and trying to make air travel more expedient and efficient,” said Dale Haines, senior director of the travel practice at J.D. Power. “Unfortunately, any improvements in customer satisfaction are being offset by passenger displeasure with cutbacks on in-flight services, increases in fees and issues with the helpfulness and courtesy of flight crews.”

jetBlue did very well, especially in the aircraft category (of course, flying a bunch of relatively new planes with in-flight TV might help), although Southwest really managed to place a strong second place (tied with WestJet), and the trend is that the airline is closing the gap with jetBlue. All of the airlines were scored on a 1000 point scale, and interestingly, even the lowest-ranked low-cost carrier (AirTran) still managed to beat the top-ranked traditional network carrier (see charts below). Delta and Continental performed adequately for the network carriers, with US Airways (haven't they branded themselves an LCC?) coming in dead last - maybe it was that whole experiment with charging $2 for drinks that really did them in. For the full results, head over to J.D. Power.

photo by MHJohnston from Flickr, licensed under the Creative Commons

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Standing only flights on Spring Airlines?

That's right - CCTV is reporting that Chinese carrier Spring Airlines is looking at standing-room only flights on some of its Airbus A320s. The airline, billed as the first low-cost carrier in China, will try to get regulatory approval for the idea by the end of the year. Apparently, the new passenger layout means that the A320s can fit up to 40% more passengers (that's quite a bit) as well as cut costs by 20%. "It's just like bar stools," the airline said. "The safety belt is the the most important thing. It will still be fastened around the waist."

Spring Airlines wants the standing-only flights as a way to cope with capacity issues - it can't get a hold of new planes quickly enough to keep up with passenger demand. According to Spring Airlines President Wang Zhengua, the idea for the flights was proposed by Chinese vice premier Zhang Dejiang: "He suggested that, for a lower price, passengers should be able to get on a plane like catching a bus, with no seat, no luggage consignment, no food, no water, but very convenient." Wang also says that airline has been told by Airbus that the idea was safe, so "once the government approves it formally, we'll try it."

Apparently the tickets that require you to stand in the aisle would be 20% cheaper. I'm not sure whether the entire aircraft would be standing-only, or if it's just additional standing in the aisle. But this might be a novel, if somewhat uncomfortable, way of dealing with the problem of undercapacity - that is, if it gets regulatory approval, as the Chinese aviation authorities still require that passengers are seated for takeoff and landing. Maybe Vice Premier Zhang can do something about it, but in the meantime, let's not give Ryanair's Michael O'Leary any ideas...

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Problems ahead for global airline alliance immunity

The Department of Justice recently expressed objections to the antitrust immunity agreement that nine Star Alliance carriers (plus Continental, which will be a Star member later this year) are seeking. The airlines, which include United, Lufthansa, Air Canada, SAS and Swiss (but notably, not US Airways), have been looking to obtain global immunity from antitrust laws for some time now. In April, the Department of Transportation gave the carriers a tentative green light, but last Friday, the DOJ instead called on the DOT to "deny the broad requested immunity and instead grant a more limited immunity" - probably just a more limited transatlantic cooperation.

Right now, Continental technically competes with Star Alliance members on its routes, but under the proposed immunity agreement, that competition would be eliminated. The DOJ went further in its explanation, saying that Asian and Latin American routes flown by United and Continental would probably see price increases, as the airlines would no longer be competing. And the DOJ also took fault at some transatlantic routes; Continental has a pretty extensive list of European destinations, and the DOJ said that competition on some routes between the US and some of those cities would decrease substantially.

So, what implications does this have? First, it shows that the federal government is getting more serious about enforcing anti-trust policies, especially under the new presidential administration (as had been expected). Secondly, it could have serious effects for a similar agreement that rival alliance oneworld is trying to put together, and could be in the shape of things to come for such global agreements. And the DOJ statement also goes after cooperation between United and Continental on domestic US routes; "a sweeping grant of immunity raises significant concerns about harm to domestic competition," it said - something that might indicate obstacles to a potential United-Continental merger.

photo by caribb

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ANZ presents 'bare essentials of safety'

Last month's Air New Zealand TV ad was enormously popular, having generated almost two million views on YouTube (and also a lot of free publicity). Seeking to build upon that, the airline has released a new safety video for its Boeing 737-300 aircraft, featuring crew members wearing nothing but body paint. Maybe this will cause people to finally start paying attention to those safety videos...

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"The Blue Skyway" flies again on Continental

One more airline adds a 'retrojet' to its fleet. Continental has recently taken delivery of a brand-new Boeing 737-900ER that's painted in 'The Blue Skyway' livery, in preparation for the airline's 75th anniversary on July 15. The paintjob was first used on Continental planes back in 1947. Here you can see it on a DC-7 back in the day, and much more recently on a shiny 737 (photo by Drewski2112).

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Maybe Air India is "too big to fail"?

Looks like the Indian government is getting set to perform a bailout of ailing flag carrier Air India, which has lost almost $1 billion in the last fiscal year. Indian Civil Aviation minister Praful Patel sounded an awful lot like Barack Obama talking about GM when he said that "it doesn't mean there is a checkbook open to Air India... It will be difficult for the government to keep continuing our support unconditionally."

In order for Air India to get the money (over $800 in the form of equity and loans), though, the government is forcing the airline to cut costs and become leaner and meaner (sound familiar?). Air India has to submit a cost-cutting plan to the government within one month, including a plan to cut personnel costs and dump unprofitable routes. Not that long ago, the airline attracted quite a bit of attention after deferring the salaries of its employees for two weeks; more recently, Air India's senior mangagement have been asked to work without pay next month.

Maybe keeping Air India afloat is a point of national pride; after all, the airline has always been the state-run flag carrier. But is the Indian government really going to be able to force a bloated, government-owned entity to slim down? Air India's main rival, the privately-owned Jet Airways, also posted a loss for the last fiscal year - but it was just under $200 million, which is a heck of a lot less than Air India's.

photo by hartlandmartin from Flickr, licensed under the Creative Commons

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It'll cost you $2 to watch this safety video

Here's a clip from MADtv showing a fictional airline safety video... although it's two years old, it seems to be ahead of its time when it comes to predicting excessive airline fees ("Seatbelts can be purchased for $5"). While airlines won't be charging for seat belts, they can (and often do) charge for just about everything else. Good old Ryanair might come to a lot of people's minds, let's remember than on Ryanair, they wouldn't even give you that single peanut for free. (Thanks to FlyersView for the heads up.)

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Republic buys Frontier and Midwest

I can't think of a time when an airline company has purchased two airlines in as many days, but that's what has happened, now that Republic Airways Holdings has agreed to not only purchase Denver-based Frontier Airlines, but also long-struggling Midwest Airlines. If it wants to pull off the hat trick, then all it needs to do is purchase one more airline.

You might not have heard of Republic before - and that's not surprising, since the airline doesn't fly under that name but under three brands: Chautauqua Airlines, Shuttle America, and Republic Airlines. Still haven't heard of any of those? That's because they're the ones who do some of the flying for the regional airline brands, like United Express, Delta Connection, US Airways Express, AmericanConnection, and Continental Express. Republic Airways has been pretty successful, because of the increase in regional airline flying and the fact that their labor costs are relatively low (flight crews aren't as senior, meaning they aren't paid as much).

Under the terms of the first deal, Frontier, which has been stuck in Chapter 11 bankruptcy for more than a year, would walk out of bankruptcy court as a fully-owned subsidiary of Republic, but keep flying under its own name. Of course, the deal's not final yet - if another company places a higher bid for Frontier next month at a bankruptcy auction, or if the bankruptcy court turns the deal down, then the takeover wouldn't be completed.

Why did Republic go after Frontier? One scenario claims that Republic, which does some flying under the United Express banner, could turn around and sell Frontier's assets to United Airlines, which competes head-on with Frontier at Denver.

As for Midwest - well, let's just say that the writing's been on the wall for quite some time now. The airline is a sad shell of its former self - remember when they had all of those DC-9s and MD-80s and the nice seats and good food? Last year, Republic loaned Midwest $25 million - a lifeline that helped it stay out of bankruptcy, but one that by no means helped the overall financial situation. The airline fought off a takeover attempt by AirTran last year, but times have since gotten a lot more tough.

The airline was recently sued after falling behind on aircraft payments, and it would have had to have faced the prospect of going up against not only AirTran but now Southwest at its Milwaukee hub, so it's got to be pretty good for Midwest that Republic stepped in. The current plan is to have Midwest continue under its own brand name, just like Frontier, but the 717s will be ditched in favor of Embraer 190s.

photo by E-Mans from Flickr, licensed under the Creative Commons

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An interview with Mark Malkoff

Mark Malkoff is a New York comedian with a fear of flying, and has taken a pretty novel approach to confronting his fear: he's been spending the entire month of June living on a plane. Well, not just one, of course; he's been eating and sleeping on quite a few AirTran planes since the month began. He stays in touch with the rest of the world through Twitter and his website, MarkonAirTran.com, where he posts some pretty amusing videos he's taken on board. Last week, The Airline Blog had the opportunity to ask him a few questions:

So first of all, why did you agree to do this? Did you approach AirTran or did they approach you?
I got the idea a year and a half ago to stay on a plane for an entire month to get over my fear of flying. AirTran had liked my previous work. I wanted to do the project. We sat down and it immediately became clear it was a good fit.

How much progress have you made in getting over your fear of flying?
My fear has gotten tons better. If I started at a ten, I'm now at a 3. Talking to the AirTran pilots has really helped. Also, just flying 13 to 14 hours every day has gotten me used to it.

What do you like best about living on the plane? And the worst?
The best are the AirTran flight attendants, and the wifi when I'm up in the sky. I don't think I'd survive without the wifi. It allows me to keep in contact with friends, family, and people on Twitter. The worst is washing my hair in the airplane bathroom. Sleeping alone on the plane isn't fun, either.

What do you mostly eat? Where do you get your food from?
Nice people bring me food from the airport. I try to stick to fruit and vegetables. I take a lot of vitamins every morning.

So far, what's the strangest experience you've had while living on an airplane?
People taking my picture while I'm sleeping was strange. Also, a few times I was sleeping alone on the plane at night [when] it started moving, being pulled to another gate. The first time it happened, I wasn't told ahead of time. I was just happy it didn't take off.

How difficult is it to keep track of where you're flying, and where you've already been?
I never know where I am, where I'm going, and how many times I've been to a particular city. For instance, I thought I was in Milwaukee for the third time and it was the eighth.

What are some of the little things that you do to try to keep some semblance of a 'normal' daily routine?
I wake up, get clean, dress, brush my teeth, eat fruit, check my email, and then see what cities I'm flying to that day. I don't usually know until the day before, but all the cities kind of blend together.

I saw the video of you getting showered down by the fire trucks at Flint airport. When you don't have the opportunity to do that, how do you keep clean?
I use baby wipes and wash my hair in the airplane bathroom. It's not fun, trust me. Getting hosed down on the tarmac in Flint was the cleanest I've been in weeks.

Is AirTran giving you frequent-flier miles? Do you get to keep them?
I hope so! My wife flies with me on the weekends. AirTran threw us an anniversary dinner on the wing of a plane. It was kind of incredible. The videos are a lot of fun. Passengers love being a part of it. We put up new content every day at markonairtran.com. My favorites are bingo with passengers, a flight attendant washing my hair mid-flight, and [playing] Twister.

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OpenSkies to become ClosedSkies?

If you're not familiar with OpenSkies, it's the premium transatlantic brand that British Airways launched a year ago with some BA 757s, which fly in an all-business class configuration. It merged with French competitor L'Avion last July, and the process was completed in April. The subsidiary took advantage of the identically-named Open Skies treaty, which allows European Union airlines to fly from any EU country to the US.

But The Guardian is now reporting that BA, faced with deepening financial troubles, is looking at shutting down or selling off OpenSkies. BA, which itself developed much of its product around catering to business travelers, has been adversely affected by the drop-off in business travel over the last year, and it's not unreasonable to think that OpenSkies, an all-business class airline, must be affected in the same way. "Every part of our business is under review in these difficult and challenging times," said a British Airways spokesperson. "Closing [OpenSkies] would have no material effect on our financial performance," said CEO Willie Walsh. "But the team there knows that it will close if it does not deliver on its business plan."

The report conflicts with recent statements by Dale Moss, OpenSkies' managing director. "We are not on the business plan that we set out, but we are not far off - we are probably nine months off where we wanted to be at this particular time," he said. Moss stressed that despite the downturn in business travel, the airline will continue flying. More importantly, Moss said that OpenSkies will try to use its lower cost base to compete more effectively against its transatlantic competitors. But BA's operating in crisis mode, and if the operation isn't making money, then its future looks bleak. The fact that Walsh is publicly talking about giving OpenSkies the axe can't be a good sign.

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BA's 'value calculator' goes after Ryanair, easyJet

If nothing else, British Airways certainly deserves credit for their latest attempt to fight back against its two main low-fare rivals, Ryanair and easyJet. The airline has launched a "value calculator" on its website, which illustrates the various "hidden" fees that have made the low-fare airlines famous. BA shows what Ryanair and easyJet charge for checking baggage and food and drink, among other costs, and then contrasts those with BA's "no extra charge" column. You can check off as many boxes as you wish, and the total at the bottom of the columns update "With British Airways," the website says, "the price you see is the price you pay."

BA has a point. Alison Hunt recently wrote an article where she researched a long weekend trip in Venice from London on BA and Ryanair. She notes that if "you were to fly with Ryanair (£157.06), check into the hold just one piece of luggage (£20 in fees, both ways) weighing 23kg (another £120 due to the expensive restrictions Ryanair places on heavy luggage), pay by non-VISA Electron debit card (£20) and spend £8 each on sandwiches and drinks on each flight (£32) you could be looking at a grand total of £349.06 - £64 more than BA. Eek!" £350 is a far cry from the base £9.99 fare that Ryanair advertises. In other words, if you were to take advantage on Ryanair of the little 'extras' that you didn't pay any additional money for on BA, your ticket would end up being more expensive.

But the popularity of Ryanair is due to its 'a-la-carte' pricing - if you don't want it, you don't have to pay for it. Assuming that you didn't check any bags or purchase any food or drink onboard, you'd still have to pay Ryanair's ridiculous online check-in fee of £5 and debit card charge of £10. But even with the £15 in fees, your new price of £172.06 would still be less than BA's £285. And Hunt assumes that you'll forget your boarding pass, which Ryanair charges £40 for doing. If you keep track of things, your cost will be even less.

The moral of the story - be careful when booking on low-fare carriers, because sometimes you might end up being charged for a lot of 'extras' that you didn't know about. But if you're smart about it, you can still end up saving a good deal of cash flying on Ryanair or easyJet versus on British Airways.

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Good news about United? I can't remember any

I really can't remember the last time that I heard some good news regarding United Airlines, at least in terms of financial performance. Let's see here... good news, good news, good news... can't think of any. If you can, please do let me know.

In his blog post What a Difference a Decade Makes on the Wall Street Journal's website, Scott McCartney rounded up a few interesting statistics that looked at United and Southwest - both today, and ten years ago. United has dropped from the largest airline in the US to the third-largest; its North American passenger traffic for the first five months of 2009 is down 26% from the first five months of 1999. Between 2000 and 2008, the airline's fleet as been cut by a third; its passenger numbers have dropped 38% and its workforce has been cut in half. In the last ten years, the airline has also had to deal with one of the largest Chapter 11 bankruptcy filings in American corporate history.

So the news about United has been pretty bad for the last ten years, and there's no sign of that changing. Even though it tried to strike an upbeat tone with the recent news that it was shopping around for new planes, the recent financial numbers that it has posted are pretty ugly - if you've got shares in United Airlines, the numbers are likely to make your teeth start itching. Traffic fell a whopping 12.3% in May, and the airline expects the amount of money that it makes for every mile that a seat flies (also known as 'unit revenue') to drop 18 to 19 percent this quarter, compared to a year ago.

And Fitch downgraded United's debt ratings, saying that its "credit profile is likely to weaken further, as extreme pressure in the revenue environment continues to undermine the positive cash flow impact of lower jet fuel prices in 2009." United's "heavy exposure to premium business markets" means that it's been hit particularly hard by the cutback on corporate travel spending.

But perhaps the most visible sign of United's financial distress came when TV host Jim Cramer blasted CEO Glenn Tilton on his show, Mad Money, saying that Tilton belongs on the CEO 'Wall of Shame' because United's abysmal stock performance is awful, even for an airline. The airline's shares have lost 88% since it left bankruptcy back in 2006, and are down 63% just this year.

Nobody's really predicting the imminent death of United, nor are they saying that the airline is likely to file for Chapter 11 a second time. And when the entire industry is facing its worst crisis since, well, the last major crisis a few years ago, it's unfair to think that United is going to start posting a profit or something. But the results that UAL has been posting have been significantly worse than the industry averages. United's got some strong assets - a sturdy, if somewhat tarnished, brand name; membership in the Star Alliance; some good international routes. But there's always been gloom-and-doom talk about how a big US carrier needs to fold in order for the rest of the industry to return to profitability, and if United doesn't want to be 'that one,' it had better come up with a better plan for financial viability, and soon.

photo by superciliousness from Flickr, licensed under the Creative Commons

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An interview with JetAmerica

New start-up airline JetAmerica has attracted a lot of attention recently, and not all of it has been positive. Sure, the flying public (and Jay Leno) have been talking about the airline's much-promoted $9 fares, but some have been doubtful of JetAmerica's business strategy. I figured that it would be a good thing to let someone with ties to JetAmerica to have an opportunity to elaborate on the airline's plan for the future.

As head of World Satellite Television News and Media Relations, JetAmerica's official media relations firm of record, Bryan Glazer is JetAmerica's spokesperson. He has many years of experience with the airline industry, having previously worked with clients such as Virgin Atlantic and jetBlue. He also reported on airline-related news stories for various television news outlets. I recently had the opportunity to talk with Glazer about JetAmerica; a transcript of our conversation (edited for brevity and clarity) is below.

Let’s start with the current business climate. With a weak economy and rising oil prices, now is definitely a challenging time to be starting an airline. How will JetAmerica succeed where others haven’t been all too successful?
The climate is really good for a startup air carrier. The reason that I say that is, you have all the major carriers that are cutting back on services; cutting back on flights, [and] in some cases increasing fares and continuing to increase additional expenses for baggage, etc. We’re going into markets where there is no competition on these routes.

If you take a look at the routes from South Bend, Lansing, Toledo, and Melbourne, Florida, into the New York metropolitan area, into Newark Airport, the people in these communities have, for years… been forced to fly on cramped turboprop planes and regional jets. They’ll have to endure very long layovers and arrive at their destinations anywhere from 7 to 10 hours later on a flight that should take under 2 hours in most cases. So we’re really not faced with competition. These routes are being served by major carriers, but they’re not getting any big jet service... [With the major carriers] they’re looking at round trips that, in many cases, start at $500.


In other words, you’re not looking at going head-to-head up against the big guys?
No, we’re not, because they are not running on these routes at all. They are, but they’re [flying] small turboprop planes and regional jets...


Some people have been scratching their heads over JetAmerica’s decision to have Toledo as a hub… there just doesn’t seem to be that big of a market there, at least in terms of O&D traffic.
Well, actually, if you take a look, statistically, people who live within a 75-mile radius of an airport will drive that far to get to an airport. We’re looking at a population base of approximately five million people in a radius of 75 miles from Toledo. The enplanement numbers specifically show that approximately a million customers a year... within that 75-mile radius fly from either Toledo Express [Airport] or Detroit Metro [Airport] to the New York metropolitan area. When I say they’re flying out of Detroit Metro, it’s because they choose to drive that far, or they’re taking the puddlejumpers and doing the connections through Detroit with Northwest or O’Hare with American.

The population base and the enplanement numbers do exist to substantiate why we can fly from Toledo to Newark… It’s more about, are you willing to get on a puddlejumper, pay $500 for round-trip airfare with 21 day advance notice or as high as $1100 at the last minute as opposed to paying anywhere from $9 to $199 on JetAmerica… You really need to look at the big picture, which is, take a compass, twist it around 360 degrees, and look at what’s there, and in each case [referring to South Bend, Lansing, and Melbourne], you’re looking at 5 million people.


It’s been said that you’re using the Ryanair model as a basis for JetAmerica. To what extent do you plan on applying that model?
In many ways, we’re mimicking the business model of Ryanair. Ryanair is the most successful airline in the world. The reason that is is because they’re using Boeing 737 jets; they’re not using 747s, for example. These jets have long range and short range capabilities. And the airports that Ryanair primarily serves, although it’s branched into larger ones, are secondary airports that have huge population bases that, again, would normally have to connect to larger airports... Ryanair is an a-la-carte airline, where you pay for everything; same on JetAmerica.

The only difference is that we will never have pay toilets on our planes; Ryanair is seriously talking about that. JetAmerica is not looking at a pay toilet situation… We’re an a-la-carte air carrier, but we’re going to draw the line on what is acceptable and unacceptable. Pay toilets are unacceptable. We do look at what you’re getting for your $9; you have to pay service fees, the September 11 fee, the taxes, the “convenience” fee to book online or to call reservation agents. When all is said and done, the reality is, $9… ends up being $25. It’s still quite a bargain.


JetAmerica’s flights will be operated by Miami Air. Are there any plans to have JetAmerica operate its own aircraft with its own crew?
There are no immediate plans… that say that we’re going to purchase aircraft. We have a very conservative business model, which is, why buy an airplane when the market is flooded with relatively new, clean, mechanically problem-free aircraft? Why buy it?... Why have the problems of owning an aircraft that cost $50 million and getting the financing, when you can simply outsource, or subcontract, an aircraft from a very reputable outfit like Miami Air... Miami Air services some of the best-known NFL, NHL, MLB teams. They’re not going to be putting their multi-million dollar players on DC-3s that don’t operate. Miami Air has an excellent reputation; they’ve been in business for 16 years… and the owner of the company makes sure that the oil is changed and the sparkplugs are changed on those airplanes every night. Those airplanes are probably better maintained than other aircraft out there today.

I point to somebody like Allegiant that’s running MD-80s… some of these aircraft are twenty years old. Granted, Allegiant is the most profitable airline in the US right now, but who wants to ride on those planes? Maybe the leisure traveler who’s willing to get from point A to point B on a Greyhound bus. We’re not a Greyhound bus, we’re an a-la-carte carrier, and so subcontracting is a really good idea.


You mentioned Allegiant Air… They’re an airline that has taken up point-to-point flying, somewhat similar, I think, to what JetAmerica is looking at.
Right, they’ve applied the Ryanair model, same concept.


And so, do you think that JetAmerica can become similar to Allegiant Air?
I wouldn’t even make that distinction. I mean, Allegiant Air is a completely separate animal. But there are some similarities in the business model... [But] in terms of analogies, you’re comparing apples to oranges. We’re running 737s and they’re running MD80s. Totally different animal.


Allegiant Air’s success has, in part, to do with the fact that it serves leisure markets, like Las Vegas and Florida. Taking a glance at JetAmerica’s initial route map, there don’t seem to be as many cities that leisure travelers might want to visit on vacation...
I agree with you, but let’s take a look at the points where they’re going. First, they’re going to New York, so we’re going to New York… we’re [also] servicing central Florida and the I-95 corridor, as far north as Daytona and as far south as West Palm Beach [via Melbourne]. We’re not currently flying to Las Vegas, which is a very appealing destination for many people, and the Las Vegas economy’s not doing that well these days too… We’re going to be bringing onboard more aircraft every quarter with the concept of having at least twenty jets by the year 2010. If you look at where are our future focus cities are, if they should come to fruition, these are all underserved markets.

One of the great things about these underserved markets is that they have small community air service grants. You can actually go ask an airport, like Melbourne, Lansing, South Bend, and Toledo, to help you fund your start-up air carrier. And in this particular case, the small community air service grants are given by the Department of Transportation to these airports to entice big jet air travel for their communities.


Speaking of the subsidies…
Not subsidies, grants. Big difference; these aren’t tax dollars, they’re grants.


So the grants, then, that JetAmerica is getting, in the form of lowered airport fees and assistance in advertising and marketing… How essential are those to the JetAmerica business plan? In other words, how reliant is JetAmerica on those grants?
We’re reliant on the airports to help us with marketing, and waiving their landing and takeoff fees. That’s pretty substantial; at some of these airports, that’s above a quarter of a million dollars. Startups can go to the airports and say, help us with our advertising and public relations and marketing campaigns. Right now we’ve got spots out there that have been produced, and the airports are placing them in their local markets. They’ll probably be more inclined to spend more of their small community air service grants once we have an airplane and we’re up in the air, which will happen on July 13th.

...Toledo has had its [grant] money sitting since 2006 and it’s decided not to use it until [JetAmerica] came aboard. Michael J. Stolarczyk, who is the president and CEO of the Toledo Port Authority, and he’s the one… who went looking for an air carrier to service his market. He went on LinkedIn and found different airline executives and approached them, and that’s how he found John Weikle… He knew that people in his community wanted non-stop air service to New York and Florida… You can’t run an air carrier on small community air service grants… you can get some seed money, and some waivers, but they aren’t going to last forever.


One last question: I’m sure that you have encountered your own fair share of doubters and naysayers who are pessimistic about JetAmerica’s long-term survival. What do you have to say to them?
I have seen consultants make forecasts that say that we have a good shot because we’re a start-up and we’re coming in at a time when there are a lot of cutbacks. I’ve seen naysayers that say that we wouldn’t have a chance. We’re going to take a roll of the dice here; we have a calculated crap shoot, meaning that the odds are with us, not against us. The ‘house’ is the ‘big boys,’ and they’re not going to win. They’ll do everything to prevent us from winning. United Airlines was quoted as saying, Chicago is our home, and we’re going to do everything to protect that. Continental Airlines is going to do everything to protect Newark Airport.

We’re not as heavily financed as jetBlue, but we have a niche market, and that’s all we’re looking for. I’m sure people said that about Allegiant; they certainly said it about Southwest, when it came about; they said it about just about every start-up. Some have come and gone. The odds are on our side. This is a calculated crap shoot; this is not a spin of the wheel. The odds are with us.

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Buying airplanes, the Ryanair way

As airplane manufacturers gear up to pitch their products at the annual Paris Air Show, they're uncomfortably aware that the market for new airplanes is at its lowest in years. The realities of the tough market conditions aren't lost on Ryanair chief Michael O'Leary, either. But while Airbus and Boeing are struggling with a significant drop in orders, O'Leary is figuring that now's the time to open up the wallet, much as United is planning on doing; he knows that he's likely to get a better deal out of them when they're desperate for customers.

So the recent report that Ryanair is looking at ordering 300 new airplanes from either Airbus or Boeing should come as no surprise. That's a lot of aircraft - without a doubt, Boeing CEO Jim McNerney is salivating at the prospect of what he's labeled "the deal of the year." Ryanair is one of Boeing's best customers, operating a fleet of almost 200 Boeing 737-800s. CEO O'Leary, notoriously brash with his public statements, has told a group of Boeing employees that he would help them "kick the shit out of Airbus," and later told them that they "make the best goddamn aircraft in the world." "We love Boeing," he said. "Fuck the French."

So then why did Ryanair mention that it is considering an Airbus product? It has made fleet standardization one of the key points to its success, and there's no chance that it would operate both the 737 alongside the A319 or A320. And Airbus itself has said that it's not in talks with Ryanair; sales chief John Leahy told Dow Jones that "we're not negotiating," saying that Ryanair had set price expectations that were "unrealistically low."

The answer comes down to the fact that Michael O'Leary has always driven a hard bargain. He waited to order the initial batch of 737s until 2002, when Boeing was struggling after 9/11. But the order for Boeing was never a foregone conclusion; instead, he brilliantly played Airbus and Boeing off of each other, reportedly faxing the latest offer he received from Airbus over to Boeing and vice versa, in an attempt to get a lower price. Airbus offered to sell him A320s at half price, and O'Leary had apparently even shaken hands with the Airbus CEO before switching at the last minute to order from Boeing at even lower prices. O'Leary didn't mince words when recounting how he managed to get a spectacular deal from Boeing, saying: "We raped the fuckers."

But O'Leary can't fall back on competition between Boeing and Airbus to get a good deal anymore. Boeing knows that at the end of the day, barring some unforeseen tectonic shift, O'Leary will continue to be a devoted Boeing customer. And so it will be interesting to see how Ryanair will try to continue to get low, low prices on its new airplanes.

photo by Drewski2112 from Flickr, licensed under the Creative Commons

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Passenger survey ranks best, worst airlines

Seatguru.com has released the results of its 2009 survey of over 1600 fliers. Airlines were ranked based on the quality of their in-flight service (food, seating, and flight attendants). Unsurprisingly, Singapore Airlines came out the clear winner, having the highest rating for flight attendant politeness, best food, and most comfortable business-class seats. British Airways also scored well in the flight attendants and food categories.

American, United, and US Airways could definitely use an overhaul of their in-flight service; the three airlines were ranked as serving the worst food, having the worst economy-class seats (jetBlue had the best) and the rudest flight attendants (with United coming in dead last here). Nobody's saying that they have to become like Singapore Airlines, but surely a few improvements here and there might be a sound investment? After all, how many people choose to fly on one of the US legacy carriers because of service? With the possible exception of Continental, I'm betting that very few actually do. Most people buy a ticket on United or American or Northwest because of their route network, or maybe a good price that they managed to get. If one of those airlines improved its in-flight product above its competitors - nothing drastic, necessarily, but maybe politer flight attendants, cleaner planes, and more comfortable seats, for a start - then maybe people would go out of their way to fly that airline. Just a thought.

A few other interesting tidbits from the survey: fliers perceived international airlines to be safer than US domestic airlines, and more people felt safer in the front of the aircraft than anywhere else. 13% of fliers said that they had "knowingly transported banned items through security," although no examples of what these 'banned items' could be were provided. And "for those who didn't mind celebrity seatmates, preference went to the President & First Lady."

photo of a United 737-300 cabin by caribb from Flickr, licensed under the Creative Commons

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US Airways CEO: Consolidation needed

It seems like a few years can't go by without US Airways CEO Doug Parker talking about a merger. Parker came over from America West Airlines when it merged with US Airways in 2005, and by the end of 2006 had made a hostile bid for Delta. That fell through pretty quickly, but didn't put an end to speculation that Parker would be interested in shopping his airline around or looking to combine it with another. Back in April 2008 Parker mentioned in a letter to employees that the airline would merge if the time was right, and yesterday, addressing the company's annual meeting in New York, he said that further consolidation was much needed in the airline industry.

"The industry continues to be far too fragmented... The result is far too many hubs across the nation and far too many seats competing for those same passengers," Parker said. He also stated that the Delta-Northwest merger was a good thing, since it went pretty far in helping to simplify the industry, but that it wasn't enough: the industry needs to get smaller if it wants to become profitable.

Who could US Airways potentially merge with? The first option that people seem to mention is United. The airlines tried to merge back in 2000, but this was rejected on antitrust grounds; United and US Airways talked last year about a merger once again, but this time United walked away. Nothing has been ruled out between the two airlines in the future, though. American could be a good fit for the airline, too. And even if US Airways doesn't end up merging, the fact remains that capacity needs to be further cut for airlines to stay afloat during these tough economic times.

photo by matt.hintsa from Flickr, licensed under the Creative Commons

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America's top 'greenest' airlines

"Ever since jet engines have been roaring and guzzling Jet-A, kerosene-based refined petroleum, carbon emissions have been accumulating. Jet-Age progress has a price and with some estimates showing jet aircraft accounting for 11% of greenhouse emissions, it doesn't take a John Muir to discern that flying the friendly skies exacts a price on the environment," says a press release by the online 'guide to green living,' Greenopia, which has released a list of the top ten 'greenest' airlines in the US. Virgin America, thanks to its young fleet and other environmental efforts, came in first place. The airlines were scored in seven categories:

• Fuel conservation (do airlines have electric-powered ground vehicles? do they frequently wash their engines, which improve their efficiency? do they have winglets on their fleet?)
• Alternative fuel types (such as biofuels)
• In-flight recycling (after all, all of those cans have to go somewhere)
• 'Green' food options in flight (listed by Greentopia as 'organic, local, natural, or fair trade')
• 'Green' buildings and terminals
• Carbon offsets available for purchase
• Fleet age (not necessarily a perfect indicator of how 'green' an airline is, but generally speaking, the younger the airplane, the more fuel-efficient it is)

And the results:

1. Virgin America
2. Continental
3. Horizon
4. jetBlue
5. Southwest
6. Northwest
7. Delta
8. American
9. United
10. US Airways

For the full analysis of why each airline ranked where it did, head over to Greenopia's website.

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BA, AA hopeful for transatlantic alliance

American CEO Arpey. photo by AP

If British Airways CEO Willie Walsh had his way, he might want you to overlook all of the recent media attention his airline has garnered, almost all of which paints a gloomy picture for BA's future. First BA posted a record loss, and now there's threat of a possibly crippling strike this summer during a period that Walsh has said British Airways faces "our greatest-ever challenge." The Sydney newspaper The Daily Telegraph has said that BA is 'close to collapse,' and while that might be stretching things a bit, it certainly does a good job of illustrating the dire straits that Walsh now finds his company in. More recently, at the IATA summit in Kuala Lampur (which forecasted that the worldwide airline industry would lose $9 billion in 2009) Walsh believed that "this is probably the most difficult period in the history or our industry and I think that's shown in the IATA figures." If Walsh is to be believed (and I don't think he's making this stuff up), British Airways is currently fighting for survival.

But amidst all of the negative news, Walsh is trying to sound upbeat about one at least one thing: the proposed transatlantic alliance with American Airlines, saying that their case is "stronger than ever": "This is about leveling the competitive playing field and we are confident our case has significant merit... We expect to get approval in the current calendar year, which will allow us then to proceed with the joint business by 2010." American CEO Gerard Arpey also said that "we are confident of a positive outcome on both sides of the Atlantic." Addressing the two previous times that AA and BA applied for transatlantic immunity but were rejected, Arpey said that "it is open playing field across the Atlantic now," in reference to last year's Open Skies agreement between the US and the EU. And both airlines have made the case that since their chief rivals already have a similar deal (Delta and Air France-KLM, United and Lufthansa), it's only fair that the same privileges be extended to American and BA, too.

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As BA hurts, Iberia looks to Air France, Lufthansa

photo by jmiguel.rodriguez

The relationship between British Airways and Spanish carrier Iberia runs long and deep. BA owns 13.5% of Iberia and has two seats on its board, and the two airlines are members of the oneworld alliance. The airlines have been pursuing a merger for a while now, and back in February, Iberia chairman Fernando Conte said that a 'preliminary decision' on a merger would be arrived at in March. But only a few weeks ago, Spanish airline Iberia said that it indefinitely postponed the timeline for finishing up merger talks with British Airways; chairman Fernando Conte said that Iberia should instead "concentrate on the reestablishment of its financial solidity." Yet it's interesting how the announcement came right around the time that British Airways announced a record loss and reports emerged about how the carrier is struggling with a pension plan deficit of at least £1.2 billion ($2 billion). BA CEO Willie Walsh has even said that the airline "is in a fight for survival."

Hmm... coincidence?

Probably not. Although talks between BA and Iberia are still continuing, it's clear that Iberia is starting to question the financial viability of its British partner, and so reports that it's looking for a future partner with stronger financial performance aren't surprising. Iberia's finance director, Enrique Dupuy, said Wednesday that Iberia can't hold its own against what he called airline "megagroups", namely, Air France-KLM and Lufthansa. "A merger with BA is a good fit for Iberia, but a merger with Lufthansa or Air France would be quite a good fit as well," Dupuy said. "We have spent a lot of time examining these alternatives, and of course they are not ruled out, perhaps the most attractive aim is British Airways but we also have very attractive alternatives."

In a statement to The Airline Blog, Iberia's international press manager Santiago de Juan made clear that as of now, the only deal being negotiated is between Iberia and BA: "Mr. Dupuy said something Iberia has been saying for some time now, which is that Iberia wants to play an important role in the consolidation process the airline industry is going through. That means that Iberia has analysed the different possibilities for this consolidation process, Air France and Lufthansa included, but at this moment Iberia is in merger talks with British Airways and it is NOT in merger talks with [Lufthansa or Air France]." de Juan would not comment on whether Iberia's recent look at 'different possibilities' had anything to do with BA's financial trouble.

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United Airlines finally goes shopping

photo by Telstar Logistics

United Airlines is eying a large new order for up to 150 airplanes, worth $10 billion, according to an article in the Wall Street Journal. United is apparently choosing between Boeing and Airbus, and according to the article, it's an all-or-nothing deal, meaning that purchases won't be split between the two manufactures; this way, United might be able to get a better deal. And the deal shows that United has been thinking ahead, by waiting to order until bad times for the industry. This way, the planes could be delivered starting as early as 2010, when the industry is expected to look up.

The order also comes at a time when the airplane manufacturers are desperate for orders. Boeing, for example, has signed up 60 new orders so far this year, but has also lost 60. United is probably hoping that they can turn the manufacturers' desperation into their gain, in the form of lowered prices and permission to revise the order at a later date. I'm not exactly sure how United's expecting to pay for the order, especially given big losses and a pretty bad credit rating at the airline, but the article suggests that United might be seeking financing from the aircraft manufacturer, among other places. At the time of posting, United had not yet returned calls from The Airline Blog seeking comment.

So what planes are going to be replaced, and with what? The airline's A319 and A320 fleets are, on average, ten years old, and they're probably not going to go anywhere anytime soon. The 737-300 and -500 fleets are much older (20 and 17 years, respectively) and are already on their way out. United's new order is probably seeking to replace the larger 757-200, 767-300, and 747-400 aircraft, and maybe some of the 777-200s too. The airline has an average fleet age of 13 years - younger than most of its rivals - but much of that is due to the relatively young age of the Airbuses. The 757s are getting pretty long in the tooth, and it wouldn't be too surprising if they were replaced with the A321 or the Boeing 737-900ER. Neither of them could completely replace the 757, though; they'd probably just be used to replace the oldest ones or to simply supplement them. The 777s aren't old, either, since the 777 itself is a pretty new aircraft model. But United, being the launch customer for the type, has some of the oldest 777s flying, and some of those are the non-extended range variety. The different versions of the 787 might be a successful replacement for both the 767 and some of the 777s; maybe the A350 would work here too. And the 747-8 (which so far only Lufthansa has signed up for) might replace some of the 747-400s.

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A Virgin interlining agreement

photo courtesy flightglobal

'Virgin' airlines Virgin America and V Australia (part of Australian carrier Virgin Blue) announced that they're going to start a US-Australian 'interline' agreement that allows travelers to book travel on both airlines between the US and Australia. For example, if you lived in Boston, you could fly from Boston to Los Angeles on Virgin America and then from Los Angeles to Sydney on V Australia, all on a single ticket.

Despite the press releases heaping praise on "a seamless "Virgin" experience," an interlining agreement really doesn't make the relationship between the rather disparate Virgin brands any closer. Most airlines have various interlining agreements; for example, United and American have an interlining agreement with each other, and V Australia and Delta announced one back in March. For the traveler, this usually means that you don't have to retrieve your luggage in the stop-over airport and check it in again for the next flight, as you would have to do if you were traveling on two airlines that didn't have an interlining agreement.

An interline agreement shouldn't be confused with a code-share agreement. That's when an airline can issue a flight number for a given flight, even if its code-share partner is actually the one operating it. (This is a common practice among airline alliance members. For example, US Airways flight 5947 between Spokane, WA and Denver is really operated by United Airlines flight 812.) Both airlines can then sell tickets on the same flight.

As of yet, there's been no announcement of any code-sharing between Virgin America and V Australia. But fellow 'Virgin' companies Virgin Atlantic and Virgin Blue already codeshare.

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O'Leary: Ryanair interested in takeover of Lufthansa

photo by lorentey

European budget airline Ryanair head Michael O'Leary might have a history of making rather outlandish statements, and the announcement that he made this morning that Ryanair is "seriously interested" in taking over Lufthansa is no exception. According to an orf.at article, Ryanair "could almost buy [Lufthansa] in cash," according to O'Leary. This statement has been backed up over at the Financial Times, which also reports that O'Leary plans on expanding Ryanair's fleet by 15% and that the airline has 90% of the year's fuel hedged at $62 a barrel. According to financial results released on Ryanair's website today, Ryanair now is the largest airline in Europe by both traffic and market capitalization (€5.3 billion vs. €4.5 billion for second-place Lufthansa).

Lufthansa declined to comment on O'Leary's comments, although shares of the airline were trading higher on the Frankfurt stock exchange. And while I suppose that a takeover of Lufthansa could never be ruled out totally, I'm inclined to believe that O'Leary, being the king of free media attention, is just up to his usual tactics of getting some press coverage (or maybe even distract the media a bit from its announcement this morning of a lowered profit this year). A Ryanair takeover of Lufthansa just isn't realistic.

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Delta president: bankruptcy was a good thing

photo by Drewski2112

At a recent gathering of the Detroit Regional Chamber's Mackinac Policy Conference, Delta Air Lines president Ed Bastian said that Chapter 11 bankruptcy was a good thing for the newly merged Delta and Northwest, according to a Detroit Free Press article. "Bankruptcy worked for our companies... Now we stand as the strongest airline in the United States and the largest in the world," he said.

Yes, in terms of financial performance, bankruptcy did indeed 'work' for Delta. Just a few years ago Delta was struggling with high labor costs (some pilots at the airline were paid as much as $300,000), high fuel prices, and Song, a low-cost offshoot set up in 2003 to compete with jetBlue that ultimately failed three years later. It filed for bankruptcy in September 2005 and emerged in April 2007 a much stronger carrier, having cut labor costs and restructuring its route network, expanding its list of international destinations. And the merger with Northwest was well-timed and well-executed, with the airlines' route networks containing little overlap.

So even though Delta might be in a relatively strong position, I'm willing to bet that many of its employees have less-than-fond memories of the Chapter 11 process - recent grumblings over executive compensation being proof.

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