Long-time industry analyst Jim Parker offered an interesting point in his opening remarks recently at the Raymond James Growth Airline conference.

Parker thinks as employee groups seek to regain some concessions made early last decade as a host of carriers spent time in Chapter 11, there could be some leeway in the size of jets flown by mainline regional partners.

He sees a potential to renegotiate current scope clauses to move the dial from 70-seats to 90-seats.

SkyWest CFO Brad Rich is certainly keen on the idea -- but he's also aware of the sensitivity of regionals operating larger jets creates at mainline pilot groups.

Sensitive indeed -- when my colleague Mary Kirby wrote about a potential stretched E-195X, and that American might have an interest, I prodded the pilots. They unequivocally told me that flying belongs to them. Of course, the stretch would be larger than the current 115-seat E-195, so you could see why mainline pilots believe they should operate the aircraft.

Still, it is something interesting to watch as contract talks continue at some of the US majors.

In the mean time, enjoy this fun, but totally unrelated E-195 promotional video from Brazilian carrier Azul.

Just stumbled across this colourful and entertaining rebranding job on one of South African budget carrier Kulula's aircraft - the Flying 101 design giving an idiot's guide to all the elements on an aircraft.  I can't see any sign of any more details from the airline yet, but the blog sites linked to below have more pictures and details.

PSFK.com

http://www.swiss-miss.com/

For more on Kulula check out their website HERE

Kulula

And for more about Kulula's sense of humour, check out our recent blog on one of the interesting options available on their automated answerphone.

Almost two decades after the old giant Aeroflot operation was split up with the creation of around 300 regional operators, reports suggest Russia has scrapped plans to create a new powerful airline group under the RosAvia banner and is instead looking at privatising the six Russian opeators which were to form the backbone of RosAvia, and merging them into Aeroflot. Read the ITAR-TASS report here. The RosAvia project was itself established out of the collapse of the AirUnion grouping in 2008.

Reports, citing Russian transort minister Igor Leviten, suggest the merger would increase Aeroflot's domestic market share from 15-20% to 30-35%, and that 15 air carriers controlled around 80% of the market share as of the end of 2008. "This means that the process of the sector's consolidation is under way. This is a global trend and the same can be seen in other countries," he is quoted as saying.

It comes just days after a deal was agreed under which Russian tycoon Alexander Lebedev sold his 25.8% stake in Aeroflot to the state, increasing the latter's stake in the carrier to 77%. More on this here.

More signs of an improved economic picture today from Ryanair, which minimised third quarter losses and raised its full-year guidance today off the back of better than expected yields. In essence the carrier has not had to discount fares as much as it expected to fill its aircraft. While year-over-year yields were still 12% down in the third quarter, this is better than the 20% fall it had anticipated - and it expects a further improvement in the last quarter with yields down around 7-10%.

So have European economies turned the corner?  "We are seeing demand returning, not to pre-2009 levels, but they are moving back up in places like Germany, France, Spain, Italy and Scandinavia," Ryanair deputy chief executive Michael Cawley said during a third quarter results conference in London today. But he says other markets, such as the UK and Ireland, are seeing slower signs of demand recovery

Ryanair retains its long-term aim of doubling passengers and profits by 2013 full-year, but there was something of a caveat today - or as Cawley describes, a clarifying of the conditions needed to achieve this. The carrier maintains its plans to double passenger and profits, but says this is subject to fares and fuel. This reflects that at the time it set out its target, average fares were at €44 and oil at $68 a barrel - and average fares were down at €30 in the last quarter and oil at around $72 a barrel.

"We have just clarified the circumstances under which it [doubling profits] will happen," says Cawley. "Will we have oil at $68 again, who knows? Could it go back [to $68]? Absolutely," Cawley says, noting oil was lower than this during the last year. Similarly, pointing to the historical precedence of Southwest Airlines, he notes declining yields could stabilise as average traffic growth slips into single-digit figures - reflecting the much larger base on which Ryanair will be growing.

What of two other key elements for Ryanair - ancillary revenues and its new aircraft order?

On ancillaries - Ryanair revenues here grew only 6% in the third quarter, below the growth of passenger volumes due to "changes in consumer behaviour".  Cawley says the carrier had seen some "inhibitions" from passenger to spend as much on ancillaries. "That situation is beginning to stabilise and from here on we would see it growing in line with traffic," he says, adding it has always expected ancillaries to settle at around 20% of total revenues (for the first nine months of the current year ancillaries stood at 20.4% of total revenues).

On future growth - Cawley says there has been no contact with Boeing (or Airbus for that matter) since Ryanair announced in December it ended talks with Boeing after failing to secure the terms and conditions it wanted for a 200-aircraft deal to cover its 2013-16 growth. He said the carrier would only revisit this if Boeing called them with improved terms. In the absence of a new aircraft deal, it will press ahead with plans to generate up to €1 billion in surplus cash by the end of 2013, which would be available to return to shareholders through special dividents

"We are indifferently frankly," he says of whichever model it follows, but stresses the carrier's belief  in the viability of growing the business for both its existing aircraft, and for additiona aircraft, if a future deal is ever struck. "I've never been as optimistic as I am now about Ryanair's ability to join points A-to-B 200 times a year."

For more on Ryanair, read the recent Airline Business profile of Michael O'Leary and his importance to the Ryanair business model.

Watch Michael Cawley talk about the carrier's 3Q results in this Bloomberg interview .

 This weekend JetBlue reaches a major milestone and potential customer service disruptions as it makes a key shift to the Sabre customer service system.

Almost a year after unveiling its plans to switch from its current Navitaire platform that doesn't have the same sophistication as Sabre, JetBlue is now making the cutover.

Studying the lessons learned from its low-cost peers -- most recently and notably WestJet -- JetBlue has taken tender consideration to put measures in place to mitigate the inevitable glitches and disruptions tied to such a significant change in back-end technology.

In fact, JetBlue CEO Dave Barger during the carrier's earning call said he called out to WestJet, "and Sean [Durfy, WestJet CEO], and his team, they've been very helpful in terms of lessons learned".

Disruptions in WestJet's cutover were well documented, and JetBlue has apparently studied WestJet's experience.

Barger says there's a bit of an intentional take-down in the schdeule this weekend and also stresses internally JetBlue is "really managing expectations that it takes a period of time before people are proficient".

But JetBlue understands the short-term pain is worth the role Sabre will play in executing its long term strategy. The switch allows JetBlue to have a full-fledged codeshare with Lufthansa.

In essence Sabre gives JetBlue the necessary foundation it needs as the airline continues its transition from a pure low cost carrier. 

Yet Barger remains realistic about JetBlue's expectations for an entirely smooth cutover. "I'm not going to tell you we're overly confident, but I think there's some really good planning that's gone into place with this transition."

As much as I'd like to publish the telephone number for South African budget carrier Kulula's wacky automated answerphone - which wishes you an "awesome day" and asks if you want the president's job - I suspect it would simply unleash an avalanche of calls from people with no intention of booking a ticket.

(All right, if you insist, it's +27 11 921 0111 and press '1' for Kulula.)

A nascent recovery in business traffic and fewer junk fares are fuelling mild-mannered optimism among US carriers. But what is it going to take to sustain profitability for the long-term, or even for near term?

Analysts are firing that question to airline chiefs a lot during the current earnings season.

Here's what Continental's new CEO Jeff Smisek has to say --

"I think there are a couple of structural changes. One I think you're seeing the industry further, not only unbundle its product, but discover its merchandising power, and the ability to sell goods and services and generate ancillary revenue that has a very significant margin.

The second structural change I think is the transformation of self-service in this industry Customers are demanding more and more and expecting more self-service....during the purchase process, post purchase at the airport after the flight itself."

Smisek believes the promising technology will not only offer better customer service, but should also generate significant cost savings for airlines.

And what about Smisek's counterpart at fellow Star Alliance partner United?  Glenn Tilton echoes Smisek's sentiments, but also takes the US government to task for taxation and outdated air traffic control system.

"...structural issues exist beyond the control of a single airline that will play a considerable role in enabling sustained profitability for this industry....numerous structural hurdles such as excessive taxation, inadequate air traffic infrastructure and outdated regulation must be addressed if we're ultimately going to achieve this goal."

It's no wonder Smisek and Tilton have like minds -- their carriers are embarking on an extensive domestic codeshare and forging transatlantic antitrust with Air Canada and Lufthansa.....Here's Smisek celebrating Continental's launch of flights from Houston to Frankfurt....

File this in the cautious optimism tray. A survey of businsses-focussed travel agents put together by US travel agency network Travel Leaders found that 28.6% expect busines travel booking to increase in 2010, while 38.3% think bookings will remain on a par with 2009. Only 11.9% expect a further decline.

The survey found that around a third of the travel agents said 11% or more of their bookings are in business of first class, while just over half said between 1% and 10% were booking premium seats.

Find out more on the survey here.

On a similar topic, the UK's Business Travel & Meetings Show recently surveyed 1,400 business travel managers. The results indicate some more positive sentiment - around a quarter expect budgets to rise in 2010 and a third plan to book more trips, and another almost half expect budgets to be stable. But this is a classic glass full or empty stuff, as a further quarter expect to have less money to spend in 2010. Perhaps most interestingly, a majority say they are being forced to adopt even stricter travel policies for the year. Crucially for network carriers around 44% said they would be booking lower class airline tickets.

Find our more on this survey here.

So there are some encouraging signs on business travel, and airline traffic figures are also more positive - IATA figures for December showed a 4.5% increase in passenger traffic and 24% increase in cargo demand compared to admittedly very depressed December 2008 figures. But the crucial question remains, how much are people actually paying or willing to pay? For airlines, yields remain the key.

For more on this, check out analyst Chris Tarry's view on where the airline sector is in its recovery in his latest market outlook column.

Photo source: Rex Features

Was 2009 the worst year for airlines ever? Yes according to IATA traffic figures for the full year, which were published this morning and show an industry-wide 3.5% slump passenger traffic last year and a 10% fall in cargo traffic. This marks the largest post-war decline in international scheduled air traffic, IATA estimating it has cancelled out two and a half years of passenger growth and three and half years of growth in the freight business.

You can read more from IATA on this here, but in brief passengers levels were 5% down in the three largest markets of North America, Europe and Asia. Growth continued though in the Middle East, traffic up almost 11%. Latin America, the only region whose carriers are expected to post a profit in 2009, was the only other region not to see traffic fall last year. Air cargo was down across all areas except modest growth in the Middle East, with double digits falls in North America, Europe and Africa.

For more on the regional picture and the prospects for 2010, check out our recent forecast infographic and article here.

Any reasons for cheer? Well passenger traffic in December was up 4.5% compared to the same month in 2008 - led by strong growth in the Middle East, Latin America and a recovering Asia-Pacific - while air cargo was up almost a quarter. But this merely clawed back the similar-sized falls endured in December 2008.

And while load factors during 2009 were largely stable as capacity was predominantly cut in line with reduced demand, yields have been hit. Despite a slight improvement in the yield picture in the latter part of the year, IATA still estimates industry yields remained between 5-10% down in December. So while traffic is returning, revenues are likely to take longer to recover, and IATA is still forecasting a loss of $5.6 billon for this year. This might not seem much like a postive, but after industry losses of $16.4 billion in 2008 and an expected $11 billion for 2009, crumbs of comfort are in short supply.

For more on where the airline industry is, watch our expert panel debate the challenges ahead in our special Airline Business Debate video.

It's Friday and perhaps I'm grasping at straws. But yesterday during Continental's earning's discussion carrier CEO Jeff Smisek was asked about the timeline for approval of a transpacific joint venture for Continental, United and ANA, and gave a somewhat interesting answer.

 

 "I am not even going to attempt to prognosticate on how quickly DOT and DOT can go through the process.... the applications for antitrust immunity with repesct to the treaty [Japan-US open skies], I belive are due in February."

 

The three Star carriers quickly submittted their application for antitrust approval in December 2009 after the open skies deal with Japan was concluded.

In the mean time you all know JAL has sought bankruptcy protection while weighing offers from American and oneoworld and Delta and SkyTeam for captial infusions.

So, if applications need to be submitted for review by US regulators in February, shouldn't JAL firm up its transpacific partner by then?  Let me know if I'm off on this one.