October 2005 Archives

Worldspan, the number four of the four major Global Distribution Systems or GDSs, has long had one indisputable boast: it may not be visible universally but that's because it's in the back office everywhere. Worldspan is the power behind many of the best-known consumer sites, and travellers and buyers are often using Worldpsan when they're dealing with a trusted outlet or bargain-hunting.

One of the best-known nameplates that Worldspan has long powered is Expedia, the former unit of Barry Diller's InterActive Corp. empire. Diller bought Expedia from its developers, Microsoft, and making the site a 'must-go-to' for early adapters, before spinning off Expedia earlier this year.) Worldspan is also the power behind Orbitz.

Now though the Atlanta-based Worldspan is taking it on the digital chin, the latest blow coming as AirTran takes its entire inventory off of Expedia, a major source of Worldspan revenue. The profitable low-cost carrier, also based in Atlanta, said that it had nothing against Expedia but had signed a deal with Cendant that makes the distribution and travel services giant a main external outlet for AirTran. Like most LCCs, Air Tran relies heavily on its own website, but with the Cendant deal, it will use Galileo and Apollo, the Cendant-owned GDSs. That meant an end to the Worldspan outlet and with that an end to Expedia as an outlet for AirTran tickets.

The news comes just two weeks after AirTran reached a deal with the largest GDS, Sabre, in a pact that AirTran's chief executive Joe Leonard calls a real breakthrough on costs and a boon for Sabre's Travelocity unit. The news also comes just a month after two of Worldspan's largest airline customers (and former owners), Delta and Northwest, each went into bankruptcy reorganisation and weeks after Worldspan's single largest customer, Orbitz, sued Worldspan in what is widely seen as a prelude to ending the relationship entirely. And Orbitz, incidentally, is owned by Cendant, which means it would make sense for it to use sister Cendant subsidiary Galileo, not Worldspan. The woes just won't end for Worldspan

Delta's plans to wrap Song, its discount "carrier-within-a-carrier" into mainline - "grown-up" - Delta may have led to false joy in some quarters.

For nearly a decade, the airline had gone back and forth on attempts to fend off expanding low-fares East Coast competition with such attempts as the ill-fated Delta Express, and this week, about six weeks after it went into bankruptcy, Delta said Song was gone. Sort of.

That's led some to say it a swan song, but we wonder if this may be a premature obit. Delta plans to migrate the more successful features of Song, including its leather seats and its in-flight entertainment, to about 150 of its 757s used on high-demand, long-distance routes throughout its domestic network.

It will get rid of the slightly nauseating greenish blobs that have decorated Song's 48 dedicated 757-200s. But underneath the plain old red, white, and blue Delta paint scheme that will cover the blobs on about 150 of Delta's planes in all will be a new look and feel inside. By May, the 150 upgraded 757s will have Song's live Dish TV, its MP3 music, its on-demand, videos, films and games. All are infinitely preferable in-flight entertainment to the Delta offering of none or a wobbly movie. They may also have Song's designer menu items, which are certainly preferable to the traditional fare even if it's not really gourmet. (This last is undecided).

As the ever perceptive Jamie Baker of JP Morgan says: "In contrast to proclamations of Song's underperformance, its expansion appears to validate the product." Song's 757s will lose some capacity as Delta mainline adds first-class seating, bringing seats down from about 199 economy seats to about 185 per plane.

That's good news for revenue in general since it does take some capacity out of the system while giving Delta more of the widely demanded premium seats for sale or upgrade.

Good news for Delta maybe, but maybe not for JetBlue Airways. Song had long considered JetBlue its main competitor, and had in fact inflicted some injuries, JetBlue chief executive David Neeleman conceded at the last quarterly. If the new Song-heavy, or perhaps we should call it Sequel, is deployed widely on transcontinental routes where JetBlue has performed strongly, it will be a test for both.

We'll never know if Song made money, as Delta would not break out Song earnings, even though Raymond James analyst Jim Parker thinks it was losing as much $58 million a quarter. Similarly Ted by United won't give separate results either. However, United claims Ted's 47 planes are full, and that Ted pays his way enough to earn nine more A320s by next year for a total of about 15% of United's domestic system capacity.

It's an interesting case of corporate survival: in September 2004, Song, begun in April 2003 for about $65 million in one-time costs, won a last-minute reprieve from a widely expected termination when Delta chief executive Gerry Grinstein announced his major transformation plan.

Coming in a few months earlier, Grinstein said he had doubts. Most observers thought that Grinstein accepted their conventional wisdom, that Song, like Delta Express, or Shuttle by United, or Continental Lite, or US Air's MetroJet, was a failure, but Grinstein said a year before the bankruptcy that Song's bold plan had value; a loyal choir, he said, had persuaded him.

Even though some of the choir left Delta around the time of the bankruptcy, Grinstein let it be known that Song was a viable laboratory for finding out what works. And rather than being confined to the lab, the successful parts of the experiment are to be transplanted throughout the company.

If it succeeds in creating a personality for Delta domestic long distance, and makes Song not a sub-brand but a service mark, well, the lab will not have produced a monster after all.

The possibility of Iceland's FL Group making a bid for easyJet is back on the agenda after the company increased its stake in the low-cost carrier from 14% to just over 16%.

"It is an indication of interest," admits Stefan Vilner, director of marketing and sales at Scandinavian low-cost carrier Sterling. Vilner has more than a passing interest in developments as FL has also just agreed to buy his airline.

Sterling has built up a strong position in the Scandinavian market, and is slap bang in the middle of integrating recent acquisition Maersk Air. FL is the parent of Icelandair, so Sterling now faces the prospect of sitting alongside the Icelandic mainline carrier.

As a result, plans by the budget outfit to launch long-haul low-cost flights from Copenhagen to Florida are on hold, although Vilner also sees opportunities with the Icelandair connection.

While there is little direct route overlap, becoming a sister company to easyJet would pose more challenging questions for Sterling.

Certainly one to keep an eye on - as Vilner jokes, a month is a long time in Sterling.

Giving a new meaning to the concept of 'terminal', a Belgian mortuary firm's latest undertaking, as it were, has brought a new niche to airport customer service. The firm, Sophia, has opened an upscale facility at the Brussels airport for coffin and casket shipments. Seems that large numbers of North African immigrants to Belgium want a final resting place in the homeland and Sophia thinks that the loved ones deserve something better than a cargo shed while waiting for that final flight. If this kicks off a trend, airports could see stiff competition.

JAL's decision to join oneworld is a major coup for the alliance, and will see the group leapfrog SkyTeam in terms of revenue and more-or-less level pegging in terms of revenue passenger kilometres (RPKs).

A quick glance at 2004 figures suggests that, with JAL included, oneworld would have been around the 650,000 million RPK mark, just shy of SkyTeam's 675,000 million figure. And in terms of revenue, oneworld would have brought in around $77.3 billion, compared with $73.6 billion for SkyTeam.

Oneworld is also closing the gap on Star, which had a 763,000 million RPK figure for 2004, and turnover of $98.5 billion.

The inclusion of JAL also fills a gap in terms of geographical coverage, providing a presence in North Asia. Indeed, oneworld is now tussling with Star for the title of most complete geographical reach, having already lined up Malev and Royal Jordanian to join the alliance over the next two years, providing a presence in the Middle East and Eastern Europe.

The move will also have ramifications within the alliance, which has traditionally relied on a collection of bilateral relationships. Will the sheer scale in terms of size and numbers see a more centralised oneworld, which already has a stand alone management team?

The inclusion of JAL alongside Cathay Pacific and Qantas also represents something of a geographical shift within oneworld, with the Asia-Pacific carriers no longer looking like the junior partners to the British Airways-American Airlines power bloc.

The union that struck Northwest Airlines last August, the Aircraft Mechanics Fraternal Association, has changed its tune again. A week ago, it said that it would let its members vote on Northwest's last offer, a step that was universally seen as a sign of weakness, that the union was the first to blink. After all, Northwest had continued flying through the walkout and had hired replacements for strikers; the airline blamed its bankruptcy on fuel, not on the strike.

Now the union is saying 'not so fast.' AMFA, as the union is called, has decided that it won't let the rank-and-file vote because Northwest added language to its offer that the union claims violates its constitution. The language, it turns out, is a "no retribution" clause that Northwest designed to prevent lingering hostilities or distractions after the strike. Northwest has said that it cannot change the wording of the offer. But the union says that this clause would interfere with its right to discipline its members and "as a result, AMFA will remain on strike". OK, says Northwest; it will continue hiring replacement workers permanently. Solidarity, but maybe not forever.

The US is not about to sign up to list banned airlines, with Federal Aviation Administrator Marion Blakey says that blacklists "are not the answer, as we see it it now". She told an international safety conference near Washington that "action by government agencies to oversee airlines is the answer". Public demand for disclosure of banned carriers grew to fever pitch in Europe after crashes by little-known carriers in recent months-and disclosure that a major crash early, that of Flash Airlines in Egypt in January 2004, was on a carrier that was banned in some EU countries but not in others.

Since then, the Commission has voted in favour of a single, integrated community-wide list of banned airlines. The head of the French civil aviation authority, DGAC Director-General Michel Wachenheim, told the FAA conference that even though blacklists "are not the ultimate solution" they do respond to strong public pressure. But Wachenheim said that a list publication in and of itself does not improve safety since the listed carrier is already banned. And the pressure of media focus is enough to form a de facto backlist, several noted journalists said.

 They call Denver the Mile High City because of its Rocky Mountain surroundings. It could be also called that because it’s one of the very last remaining fortress hubs. Now though the enemy is at the gates or will be soon when Southwest takes on Denver early next year. Denver had long been one of those big airports where conventional wisdom had it Southwest would never go. Denver, they said, was like DFW or Atlanta: just not in line with Southwest’s philosophy of going to a secondary airport (look at Love Field in Dallas or Birmingham, in northern Alabama, a few hours’ drive from Atlanta). But Southwest has been taking on big city airports for a while. Remember it went to Philly in spring ’04, taking on monopolist US Airways. 

Denver isn't a monopoly though because decade-old discounter Frontier co-exists there with United, and it is Frontier, not United, that Southwest threatens, Merrill Lynch analyst Mike Linenberg says. At Denver, United’s approximate 57% market share is followed by Frontier’s, which has a 19% share of Denver traffic. Southwest has a lower unit cost (pennies per seat mile, or CASM) of 7.8 cents versus 8.9 cents for Frontier, and a much stronger balance sheet with $2.3 billion in cash versus $174 million for Frontier at 30 June, notes analyst Jim Parker of Raymond James & Associates.

Frontier knows it faces a challenge and within days of the Southwest announcement had said it would beef up frequencies from Denver to each of its five top destinations by January, including Dallas/Fort Worth, Phoenix, Las Vegas, Salt Lake City and Chicago Midway, all Southwest cities. Frontier will also add a seventh daily flight between Denver and Las Vegas, one of Southwest’s busiest cities. Southwest briefly served Denver in the early 1980s and it is one of the few cities that the airline has left. Two decades ago however Denver was another far less efficient airport and United wasn't the only network carrier there: Continental was a major player. Now, says Southwest, Denver’s a more efficient and less expensive airport.

Delta Air Lines has become the latest US carrier to state its support lifting ownership levels beyond 49%.  Its managing director for the Atlantic region, Loren Neuenschwander, makes clear that the carrier is prepared to see this restriction lifted as part of an EU-US open skies deal. "If you look at Singapore International Airlines' 49% stake in Virgin Atlantic, it hasn't had any impact on Virgin's business model," he observes. "25% to 49% just doesn't present you with any challenges."

There is plenty of support within US airline boardrooms for an end to ownership restrictions. There is little sign, however, of airline chief executives hammering on the doors of Congress and the White House demanding a change, although United Airlines chief executive Glen Tilton has been made his views on the need to ditch the restrictions pretty clear.

With the UK now apparently willing to see London Heathrow opened up, and the likes of Delta apparently happy enough to get slots through alliance partners, the issue of ownership and control is increasingly looking like the key obstacle to a deal. Labour unions, fearful that that a relaxation will open the way for airlines to ship in cheap labour, are less than keen on the idea, and the military are worried that their ability to requisition aircraft will be compromised - although Neunenschwander notes that this directive has never been invoked in Delta's 75 year history.

Congress will need some convincing that these issues can be dealt with if it is to give the nod to lifting the restrictions, and has been less than enthusiastic on the move from a 25% to 49% cap. A more concerted effort by the US airline industry to explain the economic and consumer advantages of a deal to Congress, unions and the military could well be necessary to ensure talks do not come up against a brick wall yet again.  

Delta has been true to its word: It said it would fly where there might be profits. Now it is poised to move dramatically into international service where profits can still be made and where low-fare rivals can still be avoided. Delta claims it will be the largest carrier flying across the Atlantic by next summer when it will have added 11 new markets from two airports: JFK in New York and Hartsfield-Jackson in Atlanta, where Delta is based.

Delta, which just over a month ago filed for Chapter 11 bankruptcy protection, had already announced some of the individual routes. Once it has begun service to and from cities such as Edinburgh, Budapest and Venice next year, Delta said, it will surpass competitors like American Airlines, British Airways and Continental Airlines on the long-lucrative North Atlantic.

But New York-based consultant Craig Jenks says that behind the bold announcements lay some careful moves. Some of these routes are ones that Delta had operated before and suspended, and Jenks notes that on just four of the 11 routes will Delta be a complete newcomer. Some of the European cities are new to their US departure points but are cities that Delta already serves from another US city; indeed only 6 of the 11 new services involve new stations.

And none of Delta's new routes are in the "dynamically growing US-Asia non-stop category," he says, noting that the carrier does not have the equipment to enter most of these routes. It is relying heavily on its B767 fleet, some of which it had used in domestic service. Only one of the new Delta routes is beyond 6,000 miles and so the beyond range of its 767s: this is Atlanta-Tel Aviv, to be to enter most of these routes. It is relying heavily on its B767 fleet, some of which it had used in domestic service. Only one of the new Delta routes is beyond 6,000 miles and so the beyond range of its 767s: this is Atlanta-Tel Aviv, to be operated with B777s starting next March.

The latest round of EU/US aviation talks may have opened with publicly flouted high hopes but for some insiders the hope is tempered. Just hours before he got on a plane from Washington to Brussels to head up the US delegation at the talks, State Department aviation negotiator John Byerly told a small group of airport people that he would not use the word ‘optimistic’. “That word characterized my perception in the spring of 2004, before it became apparent how discordant at that time were the interests and relationships among the Commission, member states, and European stakeholders. Let’s say instead that I’m ‘hopeful’,” Byerly told a group headed by Washington Dulles boosters and others. After the last go, when US hopes were dashed at the last minute, he said it was realistic to hope that a first-step agreement can be reached, not necessarily at the Brussels talks, but rather during the second round of negotiations already scheduled to take place in Washington in mid-November.

The US will again offer the new concept that it had hoped would drive the last round to a successful conclusion, the concept of the European Carrier. Byerly quoted his Transportation Department counterpart, Jeff Shane, in describing the concept:  an EU-based carrier could offer services originating anywhere in EU territory, not just at points in a carrier’s home country. In others words, as Shane has said, the US would open its market to competition “not just from Lufthansa at Frankfurt, not just from Alitalia at Milan, not just Air France at Paris, not just from KLM at Amsterdam, but potentially from any and all EU carriers at every EU city”.

But Byerly conceded to the USA/BIAS group (US Airports for Better International Service) that the US was not yet ready to offer a finished version of its liberalised airline ownership policy, and said that it is still working on raising the limit from 25% as the law now stands. “The administration is aware of the keen interest of European parties in this issue”, Byerly said, adding, “What is important, however, is to emphasize that this issue is being considered by the administration on its own merits and cannot be linked to air-services negotiations”.

Still, one USA BIAS leader, Leo Schefer of the Washington airports task force, said he thought that the timing was ripe because the US Congress is not focused on the issue but is not obsessed with the midterm congressional elections. Byerly said the time is opportune because “the European Commission has made crystal clear that, in the absence of an agreement in 2005, it will take legal action to force the termination of all existing bilateral air services agreements with the US.”  No one wants that, everyone says. But Byerly was firm: “For our part, we will insist that, in addition to maintaining all the traffic rights that we secured in bilateral Open Skies agreements with fifteen EU member states, a US/EU agreement must expand Open Skies to the remaining ten countries. And lest there be any misunderstanding, this includes full fifth freedom rights, both within and beyond the EU. Any other result - some quirky concoction one might call ‘Open Skies Lite Plus’ - makes no sense and is an absolute non-starter.” Whatever that may mean, one can still have hopes as well as optimism.

It may not have been exactly unexpected but the news that Mesaba Airlines, a Northwest Airlink feeder, had gone into Chapter 11 bankruptcy certainly tells a sorry tale. It had been almost entirely dependent on Northwest for its revenue, and since Northwest went into its own Chapter 11 on 14 September and withheld about $30 million it owed Mesaba, the vultures had hovered. Still, as regional expert Doug Abbey of the Velocity Group says, Mesaba has a place in the history books as one of the oldest in the class. started way back in 1944 by a bush-pilot type who took the name from an American Indian word for 'soaring eagle' it grew from one $1,300 plane flying paper-plant workers in the rugged Upper Michigan/Minnesota region and eventually became one of Northwest's two major feeders, carrying about 10% of the major's traffic. In the 1990s, it came under control of Carl Pohlad, the wealthy Minneapolis investor who also owns the Twins, the baseball franchise there; its parent, MAIR Holdings, became a hot stock as well.

The millionaire brought in highly respected airline executive Bryan Bedford to run Mesaba, making it one of the better managed regionals in the country. It prospered even with relatively fuel-thirsty Avro RJ85s (the updated BAe 146) and the nimble Saab 340B twin prop. At one point, Mesaba had a holding company called AirTran, which later became the parent of the discount carrier of that name in Atlanta, while the regional shell became MAIR Holdings. In 2000, Northwest moved to buy Mesaba outright, but reversed course in 2001, instead deciding it would strictly controlling its pricing, scheduling and routing. Warning Mesaba that if it couldn't get its costs down, it could not have any of the CRJ-200s that it had ordered, Northwest forced the carrier into a rigorous cost-cutting exercise. Although the other leading Airlink, Pinnacle, won most of the new jets, Mesaba's vigorous efforts paid off: after spending $7 million getting FAA approval to fly jets, it won rights to as many as 15 of the Bombardiers. At the Mesaba filing on 14 October, the airline's president and chief executive, John Spanjers, said he was bitterly disappointed but had little choice after Northwest said it likeley would probably not let Mesaba have any more than two of the RJs and would take away most if not all of the Avro RJ85s that Mesaba subleased from Northwest. MAIR's plan for Mesaba now: shrink enough to that it is the right size for the flying-and the revenue-that Northwest decides it should have. If worse comes to worse, says regional consultant Jim Parker of brokerage house Raymond James & Associates, Mesaba will be left trying to reinvent the turboprop with the 49 Saab 340Bs that it still has. That would be an interesting experiment in back to the future.

Southwest is gambling on someone else's website. The low-cost king, which helps keep costs low by strictly limiting how and where it distributes seats, is for the first time selling travel packages on a website it doesn't control. It signed a deal with lasvegas.com to sell packages for air fares and hotel rooms in the betting mecca.

Southwest has long refused to offer flights or packages through major sites such as Orbitz, Travelocity or Expedia because the Dallas-based airline wants to maintain control and costs. But the busiest carrier at the gaming city's McCarran International Airport, with about 200 flights a day, Southwest is locked in battle with America West, now US Airways, and the new US Airways is growing there. Orlando-based Southwest Airlines Vacations, operated by Milwaukee-based Mark Travel, has been Southwest's only package outlet for more than 15 years.

Other low-fare carriers generally follow Southwest's distribution philosophy, and one Southwest acolyte, jetBlue, last year went so far as to pull out of giant GDS Sabre altogether. However, AirTran, another graduate of the Southwest school of keeping costs down, went rebel this week and signed a deal with Sabre, the former American Airlines affiliate that owns Travelocity.

US gas pains are cramping airlines nationwide. American says fuel costs will force it to cancel about 1% of its flights, maybe 15 daily roundtrips from its O'Hare and DFW hubs, through January, while its Eagle subsidiary is pulling down some 550 'light load' flights this month alone to save in fuel; Delta just tried a similar cancellation policy.

Now Spirit Airlines says it will halt its flights from Washington's close-in Reagan National airport to the Atlantic Coast holiday area of Myrtle Beach, South Carolina, next month because gassing up at that little airport now costs it more than twice what it did when Spirit began the service last fall. At more than $3 a gallon by the time it's pumped "into the wing", the fuel costs give Spirit no choice, it says, but to suspend the MD-80 flights. What makes it more painful is that Spirit went through a lengthy competition to win the Reagan landing slots for the service.

Jackie Thompson writes: Aircraft manufacturers at the recent ERA general assembly in Gothenburg were surprisingly unanimous about one thing - the expected demise of the market for the 50-seat regional jet. They agreed that over shorter stage lengths of around 200nm, the 50-seater is losing popularity as it becomes economically unviable due to eye-watering fuel costs and falling yields. Whether they are manufacturers of turboprops, regional jets or both, they are predicting a migration away from the 50-seater up to 70 to 90-seat regional jets. Saab Aircraft Leasing gave two examples of carriers shedding their 50-seat aircraft: Swiss is getting rid of its 50-seater Saab 2000s and Regional, the Air France/KLM Group subsidiary, needs to consolidate its mixed Embraer, Fokker and Saab fleet and is set to offload its six leased 2000s next year. It is not often that rival manufacturers are all singing from the same hymn sheet, but on this subject they are all in tune.

Eos, the all first-class super luxury challenger in the New York/London market, may be winning headlines with its 18 October launch, but its rival, MAXjet Airways, is sticking to its schedule to begin service 1 November on that route.

MAXjet, started by industry veterans including Shepherd System travel-services founder Mike Malik, plans a slightly less utopian super-business class atmosphere at business-plus fares; it too will fly between JFK and Stansted airport. Now MAXjet has added two B767s to its fleet with a signed lease for one, which will be its second aircraft, and a letter of intent for its third aircraft. MAXjet chief executive Gary Rogliano says it will use the added capacity either for three daily transatlantic flights or a second daily transatlantic flight plus a new charter operation.

ATA Airlines, known as American Trans Air before it went into bankruptcy and took on Southwest as a code-share partner, says it will pull down some major routes from Chicago Midway to boost cash flow. Southwest is hungry for Midway growth, and these moves could open gates and doors.

What's interesting is that when Southwest took a 28% stake in ATA last December, it said its major motive was to get gates at Midway, its third largest operation, and, with 176 daily flights at 25 gates, its closest thing to a hub. The ATA announcement opens the way for that with word that ATA, founded as a charter line and sometimes called AmTran, would end flights between Midway and both Boston and Newark, N.J., at the end of October and would end its Midway to Minneapolis/St. Paul route on 1 December. ATA will also cancel new service between Midway and both Miami and Sarasota, Fla., service scheduled to begin 29 October. The announcements came from ATA chief commercial officer Subodh Karnick, known to network planners for his long service at Delta.

Technorati tag: ATA Airlines

Facing wage and work-rule concessions demanded by the bosses at bankrupt Northwest Airlines, the airline's flight attendants face another dilemma. The nation's major union for the trade, the Association of Flight Attendants, has been trying to bump the local and in-house Professional Flight Attendants Association as the union for the 10,000 cabin crew, but now, almost three weeks into the AFA organising drive, comes yet another union that wants to enlist the Northwest workers (and collect dues from them). The Transport Workers Union says it can do a better job than either AFA or the local union. TWU already represents flight attendants at Southwest as well as some mechanics at American; AFA is the big one, with over 46,000 members at United, US Airways, and 20 other airlines. The plucky PFAA, as the home-grown union likes to call itself, ousted the giant Teamsters union as the flight attendant union at Northwest in June 2003. No word if the Teamsters will try to take back the flight attendants.

Technorati tag: unions Airlines

Delta has quietly cancelled its plan to cancel selected off-peak flights that have light loads as a tactic to save on the fuel that's been harder to get since the hurricanes hobbled oil refineries in Delta's southeastern home territory. The airline says fuel supplies are reliable again, if reliably expensive; cynics say that the plan was technologically over-complicated because cancellations wouldn't be decided on until a day or two before the flight, leaving little time to alert those flyers who didn't tote a PDA, cell-phone or other hi-tech devoice. And the opportunity for misunderstanding, miscommunication, and mischief and passenger anger was pretty high as well.

Technorati tag: Delta Airlines

Sometimes when airlines downsize or shrink they call it 'right-sizing'. But a big move by jetBlue with its new smaller airplanes may be just the right way to use phrase. The low-cost leader has come out with the first routes for its Embraer E-190s and these are no small plans for the small planes. The 100-seaters are a turning point for low-cost carries, which some cynics such as those at American Airlines have begun calling 'LMO's or Large Market Operators to chide the category for its focus on bigger cities like Boston instead slightly out-of-the-way places like Burlington. (For those who don't place it, it's the diminutive capital city of Vermont, a small state with a big voice in politics.)

JetBlue plans new daily flights starting between November and March between JFK hub, where it adds seven more gates to a total of 21, and: Austin, Texas, with three daily frequencies; four new daily flights to Richmond, Va.; and increased frequencies to Buffalo, N.Y. and Burlington, Vt. The new nonstop routes will be flown with Embraer 190s, only the second type jetBlue flies in addition to its 156-seat A320s, of which it now has 82 and will add three more by year end, plus 16 next year. The Embraers, of which it takes eight this year and 18 next year, or one new one every 20 days, will be the first JetBlue aircraft with XM Satellite Radio as well as the live on-board DirecTV that has become a jetBlue trademark.

The boldest Embraer move: JetBlue will become a challenger on the high-frequency New York/Boston market with 10 flights a day between JFK and Logan. The move pits the carrier as a major competitor to Delta and US Airways in the high-frequency, high-yield shuttle markets between the two cities. Although the traditional shuttles use New York's LaGuardia airport, closer-in and favoured by business flyers headed for Wall Street or midtown, the move gives JetBlue much connectivity at its JFK hub and may be as much of a challenge to Amtrak's high speed Boston/New York Acela trains as to the shuttles, says Velocity Group consultant Doug Abbey.

Along with the Embraer expansion comes a major expansion of jetBlue service from Boston Logan with new daily service to Austin,; Nassau, The Bahamas; New York (JFK); Richmond, and West Palm Beach, plus connections to 27 jetBlue cities, including 15 new connecting cities from Boston. By next April, the airline will have tripled the number of destinations out of Boston. Boston's a rare bean: it's not dominated by any one major carrier, notes Abbey, a regionals expert. American and Delta have both made bids to increase there, especially as one-time Boston powerhouse US Airways recedes, but the Embraers will be "a game changer" at contested airports like Logan and at long-lucrative mid-sized markets like Austin, he says.

Technorati tag: JetBlue Airlines

There is no bucking the trend it seems when it comes to regional operations at Europe's mainline carriers. Swiss is the latest major to hive its regional flying into a separate unit with the launch of Swiss "European" this week. It will put all of its fleet of 18 Avro RJs and seven Embraer ERJ-145s into the new subsidiary.

The carrier says it has wanted to make this move for a couple of years, and has tried before, but the project failed as unions failed to agree. Now, with crucial collective bargaining agreements expiring by the end of this year, Swiss is taking the plunge. Talks are underway with pilots and cabin crew to transfer to the new company. For the time being they will work on their current Swiss contracts until new deals are reached.

The aim is for Swiss European to achieve a lower cost structure compared to Swiss. It will not disclose how much it will save with this initiative, but it will contribute to the carrier's restructuring programme to improve its operating result by SFr300 million ($240 million) by 2007. Swiss hopes to breakeven next year and make a profit in 2007.

The launch of a new regional airline in Switzerland is a reminder of another successful regional from this country: Crossair. Now that was an interesting airline. It grew rapidly and became the benchmark for Europe's burgeoning regional sector in the 1990s. The slide started when it moved under the Swiss umbrella, and eventually took over its own parent. Now it is separated once again, although the Crossair name is still assigned to the history books.

Turning the undoubted opportunity of extracting greater sales from the airline's best-in-class website is a top priority for new British Airways chief executive Willie Walsh (below left at BA's Waterside HQ with Paul Coby, the carrier's CIO). Opening the carrier's IT Fair this week at its headquarters near London Heathrow, Walsh plans significant investment in the website with the emphasis on dynamic packaging. "Our recent refocus on ancillary revenues is paying dividends," he said.

Dynamic packaging is where customers are invited to buy other elements of their travel - hotels, car hire, insurance, tours etc - at the same time as they buy the airline ticket. It is more than simply clicking through to another supplier's website. "This is where travel companies put together deals," says BA's chief information officer Paul Coby. "It is as exciting and revolutionary as our original calendar-led selling."

Technically this is a challenge for an airline's IT team, particularly to obtain acceptable response times as customers seek quotes, and it is a challenge on how to package different products. Bascially the issue is how much discount to offer travellers for each new purchase. "You need to revenue manage all the extra things you are selling," says Coby.

BA already has some dynamic packaging on its website, with opportunity to upgrade to other fare classes for example. "The take-up is running twice as much as the business case," he says. Over the coming months BA will be promoting its dynamic packaging and further products will be added during 2006.

EasyJet is another carrier pushing on with the concept. It added insurance into the flight booking process earlier this year, and has just signed a deal with Europcar to offer car hire too. The car hire price is calculated in the background while the passenger is booking the flight and offered once the flight is selected. "We are nearer to offering a complete travel solution to our customers," said Rachel Start, online partnership manager at easyJet.

A wing and a prayer. That's a phrase that comes up a lot whenever an airline is in deep trouble, as Delta has been for months. The carrier marked its third week in bankruptcy reorganisation with the announcement of a new route, this one to Tel Aviv, Israel, starting in March. The airline already goes to Rome and over the summer increased its service to the Holy and Eternal City.

No word yet if Delta is thinking of winging its way to any of the holy cities of the Arabian Peninsula.

Technorati tag: Delta Airlines

Ryanair chief executive Michael O'Leary is predicting free airline travel as a standard business model within a decade. He claims that eventually "the spend on board will be so high that the flight will be free".

Speaking at a recent industry event, O'Leary was enthusiastic about the revenue-generating opportunities available to low-fare airlines. He foresees airport operators sharing car parking and retail revenues with airlines and huge potential for money-spinning activities onboard the aircraft such as buy-on-board catering, shopping and as-yet unavailable in-flight gambling.

Rival European low-cost carriers are not prepared to commit themselves to flying their passengers around at no charge quite yet. Ed Winter, easyJet's former chief operating officer, who retired at the end of September, said that his carrier's cost base is too high to permit such generosity. "Some 30% of our cost base goes on airport and ground handling charges, which is more than Ryanair," he noted.

Where the competition does agree with O'Leary, however, is on the value of ancillary revenue streams to their future businesses and on the future of dynamic packaging - whereby passengers visiting an airline's website are given the option of booking car hire, hotel reservations and insurance as they make their flight reservations. 

You don't have to be bankrupt to pull down routes or park planes. Even 'healthy' carriers do it, which may be part of the point as to why they're not bankrupt. But it's happening as the cost of jet fuel forces airlines to cast a cold eye on the economics of each route and each flight.

American Airlines, the only major carrier to have avoided bankruptcy in the last 25 years, puts down more than a dozen flights as of today, the 5th of October, until the 30th of the month. American will monitor jet fuel prices and then evaluate reinstating the flights. Dan Garton, American Airlines executive vice-president, said: "Jet fuel prices have been rising even faster than crude oil prices for the last year, but it was the 39% rise in jet fuel costs in the last month alone that pushed us to make this decision."

From Dallas/Ft Worth the airline will cancel two Austin (Texas) flights and one each to Atlanta Hartsfield/Jackson, Denver, El Paso (Texas), Newark Liberty/New York, Washington Dulles, Houston Intercontinental (Bush), Kansas City, Chicago O'Hare, Toronto, and Tulsa (Okla.). The airline also is cancelling one flight each from O'Hare to Houston Intercontinental and Toronto.

Continental Airlines said it would take similar steps in the next weeks, and Delta followed suit. The Delta cuts are a temporary reaction to price spirals as Delta seeks sources to substitute for the Gulf of Mexico refineries that it used until the hurricanes hit. These suspensions, mostly on midweek days and at off-peak hours, are also to be temporary, says Delta. In one of its first steps after filing for bankruptcy protection 14 September, Delta announced a 15% capacity cut for its winter schedules.

American also announced that it will discontinue service between O'Hare and Nagoya, Japan, at the end of October because the cost of fuel made the economics of the flight untenable. Northwest, just days before it filed 14 September for bankruptcy reorganisation, cited fuel costs in its decision to end its New York-Tokyo nonstop route.

Visiting US airways the other day for a farewell luncheon was sort of sad. Quite, actually. The hallways were empty, the offices were empty and behind some of the glass doors you could see that whole departments just weren't there any more. The airline had invited some journos over before the headquarters flew to Arizona and the airline becomes America West with the US Airways name. It made one scribbler think of the days when the airline was freshly minted as US Air and the old name - Allegheny Airlines - as still a recent memory rather than a piece of the corporate archives. The offices were new, too, at least as of 1988, when then-chairman Edwin Colodny announced the move from the upper levels of a maintenance hanger at Washington National Airport, saying with great pride, "we don't have to live over the store anymore!"

The corporate archives were on the minds of some of the US Airways folks who have been around for a while and who are not planning to make the move out to the suburb of Tempeto stay with the new carrier. America West is a young airline - it started in 1983 and its first plane was only a decade old. US Airways by contrast began in 1939 as All American Aviation, a name that has a legacy only as an abbreviation in some pilot union communications that refer to the company as AAA. By the 1960s it was Allegheny and that changed to USAir in 1979, 11 years before it took over the larger and, some say, better-managed Piedmont; it became US Airways in 1997 in a major image overhaul.
The name may remain US Airways but the airline has acknowledged its need to preserve a sense of history with the decision to include the logos of some of the past airline companies as part of several new paint schemes the merged carrier is testing. Aircraft will have Allegheny, Piedmont, Pacific Southwest (see above) and America West logos on their sides; US Airways will also paint four aircraft in "throwback" or heritage paint schemes to replicate those of predecessors, much as American Airlines has done with a Boeing 737-800 in 1970s-era 'Astrojet' paint scheme or as Air Canada has done with an A320 in the livery of Trans Canada Airlines, a predecessor that had ceased to exist in 1965, before Airbus was making narrowbodies.

US Airways is also building up historical exhibits, mostly though employee volunteer efforts such as one at its former hub of Pittsburgh. US Airways equipment is also on display at the Baltimore/Washington International Airport - yet another former hub.

November First was to have been a big day for the upwardly mobile outward bound. Two new carriers with all-luxury cabins, Eos and MAXjet, each planned to start their premium New York (JFK) -London Stansted services that day. Both emphasise large amounts of personal space and in-flight service that gives a new meaning to raising the bar on raising the bar.

Now one of them, Eos, has moved its startup to 18 October after final regulatory clearance was granted.

Many are sceptical that the market has room for one, much less two, super-premium services on the intensely competitive North Atlantic, and the early Eos startup may just advance the day of reckoning as well.

Technorati tag: Eos MAXjetstartup Airlines