May 2007 Archives

It's almost routine to hear about airlines now coming out of bankruptcy. Northwest Airlines did its emergence from reorganistion the other day slightly differently, with a massive presence at the New York Stock Exchange to demonstrate to investors that the airline was back and open for business and investment. When companies go public and want to mark their initial flotation, their executives will often go to a stock exchange floor for a ceremonial ringing of the bell that marks the start of trading for the day. Northwest chief executive Doug Steenland said that the carrier set a New York Stock Exchange record for the number of people on the bourse's podium for a first day of trading ceremony. "We had 18 people, including 13 of our finest employees, breaking a record that was set (in 1999) by the World Wrestling Foundation, which only had 17!" Steenland told reporters and Northwest employees. (You'll see the bell-ringers plus an NYSE official here; none of the people in this picture, Northwest assures us, wrestles for a living.)

Lining up: Brazil's biggest airline, TAM, says it has moved toward solving a problem that global airlines call a new frontier: how to find new ways for people to pay for their tickets. TAM has just announced that people in Brazil can pay for their TAM tickets through Brazil's national lottery-ticket outlets. People would have to make a reservation first, either by calling the company or by going on line, and then would have to go pay with cash or another cash-proxy. As TAM's finance vice president, Libano Barrosso, explains, "We hope to reach an audience that does not own a credit card but can afford the promotional fares offered by TAM". The lottery, CAIXA, has more than 9,000 outlets throughout the country, and they have staggered hours, making it possible for working people to pay for tickets outside of office hours.

Pascal Burg, a payments expert at Edgar, Dunn and Co., says this is the first such arrangement he has heard of. He says that some airlines have developed ways to accept payment at banks or post offices, which in some countries serve as banks. Burg says a major problem for airlines in developing countries is that credit-card adoption rates actually lag Internet adoption rates, so a person with Internet access will still pay cash, and he adds that lotteries often hold the status of a trusted institution. One can but hope, though, that the game-of-chance mentality does not transfer from the lottery ticket.

The way things are going regional jets will soon be flying across the Atlantic.

Flyglobespan at the end of last week became the first carrier to use Boeing 737s in normal passenger configuration on a transatlantic route. The Scottish budget carrier has launched a daily Glasgow-Boston service with a Boeing 737-700 (see picture). The flight also stops at Knock in Ireland two days per week.

The glory days of Caribbean air travel are clearly in the past - soon there will not be a single Caribbean carrier operating Western widebody aircraft.

Air Jamaica has decided to drop its only long-haul destination, London Heathrow, from the end of October. This follows a decision earlier this year by BWIA successor Caribbean Airlines to drop its Heathrow service.

Caribbean Airlines recently returned its only widebodies, two Airbus A340s, making it an all narrowbody-operator with six Boeing 737-800s. Air Jamaica's two A340s (one of which is pictured above) will also now be returned, leaving it an all narrowbody-operator with 14 Airbus A320 family aircraft.

Airlines have known for a long time that flyers come to their website just to browse or do a little price shopping. Then they go someplace else to buy because they figure Travelocity or Orbitz or Expedia or someone else can give them the best price. Perhaps the carriers' 'best-price' guarantees, promising that no middleman can have a lower price than the airline's own website, just haven't worked as well as one would have thought, but people are still shopping around and away from airline sites more than the carriers would like. So some airlines are changing the way they display fares to convert browsers into buyers. American, the largest airline in the States, has revamped its website, aa.com, so that people won't have to make choice between either searching for flights based on price alone or searching for flights by departure time. Dan Garton, American's executive vice president, says, "In reality, most people want both". The new aa.com display shows viewers all airfares offered for a particular American route on a selected day. People will be able to see the different types of fares and meaningfully descriptive names such as 'Economy Super Saver' or 'First Flexible', rather than the corresponding fare-codes ('YKXE7') that make sense only to airline reservations people, travel agents or, in some cases, to truly obsessive frequent flyers who track these things.

Don't come here: that's the subtext of the message that US airlines, airports, and even the FAA are sending this spring as they near a summer that by all predictions, expert and layman, is going to be just gosh awful. The airlines are hating it, because the more unhappy campers there are on the plane, the louder they cry for 'passenger rights' laws that would do helpful things like take them back to the terminals and keep them from flying to their supposed destinations.

Some of the big players such as LAX, the Los Angeles International Airport, where officials are telling flyers to prepare themselves for the worst, are outright saying, go somewhere else". One LAX official, Paul Haney, said, "this is the summer to do comparison shopping, not just for fares and schedules, but for airports" Haney suggested people think about using one of the agency's other airports, but not LAX. That's sort of like the old malapropism attributed to famed malapropist Yogi Berra ("when you get to a fork in the road, take it") of a popular New York City eatery: "that place is so crowded, nobody goes there any more".

Three years after cementing its merger, Air France-KLM today boasted a 32.5% year-over-year increase in operating profits and increased its return on capital employed target for the next three years to 8.5% from 6.5% last year.

The group is showing signs of confidence that its merger is paying off, and says its first joint cost savings programme, 'Challenge 10', will lead to a 3% reduction in unit costs over the next three years, most of which will come from productivity improvements.

We are always on the look out for funky, innovative or indeed terrible, examples of what airlines worldwide are getting up to on the web.

So, we have no hesitation in directing you to Air New Zealand's promotion "Pimp my Plane". It is a rip-off of a highly successful US TV show and has won an Australian gong for best online ad campaign.

Here are two words you don't often see together: Viagra and jetlag.
Researchers from the National University of Quilmes in Argentina has come up with the novel discovery that Viagra could alleviate jetlag symptoms in conjunction with light therapy - in hamsters at least.
According to the research, published in Proceedings of the National Academy of Sciences, hamsters injected with Viagra and also receiving light therapy, recovered up to 50% faster from forward shifts in their daily time cycles.

Since Varig was forced to leave the Star Alliance late last year as the amazing shrinking Brazilian carrier just got too small and then got bought by Brazilian discounter Gol, the Star Alliance, the oldest and largest of the global groupings, has been looking for a way to keep its Latin American offering strong. After all, it just won't do to have a gap in the fast-growing market, especially when rival alliance oneworld remains strong with a membership roster that includes LAN. Now, Star may be moving strategically toward geographic satisfaction as two of its largest members, Lufthansa and United, each signs its own bilateral deal with Brazil's TAM.

It's one of the oldest dodges in the Washington flak's big book of tricks: if you have bad news or new that's going to tick someone off, wait until Friday night when most people have either left their offices or are thinking about the weekend so much that mentally they've left the office already. It's the favourite time for a government official to resign after he's been found carousing on that lobbyist's yacht or for a congressman to apologise after a television station finds him delivering 'constituent services' in a certain comely constituent's boudoir at 3 am, or it's just a good way to get something out that's bound to anger someone somewhere. Like other federal agencies, the Transportation Department loves the Friday afternoon shuffle because news released on Friday goes into the Saturday paper, which has the lowest readership of the week.

British Airways is to set up an advisory board consisting of 12 children aged eight to 14 to help target the carrier's services at younger passengers.

The 'British Airways Kids' Council' will be tasked with advising BA on how to cater to the under-14s, which the airline says is a growing segment of its market. "The children of today are the travellers of tomorrow and we take them seriously as a consumer group in their own right," says BA.

So could this mean that in the future, aircraft will be equipped with partitioned areas exclusively for kids, complete with an on-tap ice-cream service and childrens' entertainers? A welcome relief for parents, perhaps, on long-haul flights!

Stefan Vilner, the man who has been at the helm of Danish low-cost carrier Sterling Airlines for four years, has been tempted to join another player in the low-cost sector.

But this time it's not another low-cost scheduled airline, but a low-cost executive jet operator. Vilner is joining JetBird, a start-up airline backed by Irish entreprenuers (aren't they all these days?), that will offer on-demand private jet charter services across Europe.

"Alliances are here to stay", was the simple statement of Jan Albrecht, the chief executive of the Star Alliance, speaking at its 10th birthday celebration on Monday 14th May in Copenhagen.

In fact it was 10 years to the day that the then heads of Air Canada, Lufthansa, SAS, Thai Airways and United Airlines got their heads together to create Star. It was the first airline alliance, followed in short order by oneworld and SkyTeam.

The Delta guys - let's call them Delts, after that jocks only fraternity on college campuses that used to go around beating up little guys and kicking sand in the face of 98-pound weaklings who later became aviation writers - are on the go. Senior executives of the airline are making the rounds of major US airports to tout the rejuvenated, buffed up airline as it comes out of bankruptcy and prepares for a try at prosperity. They came out to Dulles the other day, but Jerry Grinstein, the chief executive who has guided the carrier through its reorganisation since it filed for bankruptcy protection in 14 September 2005 wasn't there. He'd been on trips to big hubs like New York or Salt Lake City, Cincinnati and so on a few days earlier, but just could not come to Dulles. So instead he sent a life-size cardboard cut out, similar to the full-size, stand-up figures that service families keep in their homes while the paterfamilias is on duty overseas. They dub these Flat Daddy or Thin Daddy, so the CEO promptly became 'Flat Jerry'.

KLM flight attendant Cliff Muskiet has a lot of wardrobes. He needs them to house his amazing collection of over 600 stewardess uniforms that he has amassed since 1980.

His website, which will leave you stunned, fascinated and potentially horrified, is simply a must-visit. Appropriately it is called "uniform freak".

I was lucky enough yesterday to get a guided tour of Heathrow's new Terminal 5 for an upcoming feature I'm writing for the June issue of Airline Business on the transformation taking place at the London airport.

As I donned my hard hat, safety goggles and big clompy workman boots ready to tromp around the construction site, I was struck by the thought that whoever said journalism was a glamourous career choice was lying.

Lack of glamour aside though, I couldn't help but be impressed by the sheer size of the main terminal building, particularly the height of it.

A good man goes south. Well, literally, not figuratively. Our friend Kevin Dillon, who led the Manchester, New Hampshire, airport through its period of greatest growth, making the Southern New England airport a low-fares Mecca, is leaving. He'll be heading to the Orlando, Florida, International airport, where he'll be number two. This is something of an end of an era for Manchester, which in 1998 won Southwest Airlines as a customer and changed the face of air travel in pretty much every place north of Boston. Manchester is a splendid example of the secondary or alternative airport syndrome, in which a relatively small and underserved airport wins low-fares service from Southwest, AirTran, JetBlue or another player that's attracted because the airport is close enough to a big, crowded and expensive hub airport that people will drive there.

After many a sine, cosine, squiggle and other tools of the economist's dismal science and troubling trade, a professor has reached the conclusion (sit down, please, wait for it) that some airlines have higher fares than Southwest but that some airlines actually really have lower fares than Southwest.

Professor Volodymyr Bilotkach, who teaches his equation-inclined trade at the University of California at Irvine, says that comparing Southwest fares with all fares on Orbitz and focusing in on last-minute fares, that sometimes Southwest fares are higher than those on Orbitz fares are lower. Professor B says he embarked on the study because Southwest has a reputation for low last-minute fares. That's news, but with Southwest attracting more and more business flyers, maybe he has a point.

Those web-savvy creative types at Singapore Airlines are at it again - this time coming up with an interactive website to mark the carrier's 60th birthday. SIA was founded on 1 May 1947.

We are always on the look out for funky, interesting or tragic airline web experiences and this one makes the grade - the funky category of course.

Everybody wants a deal. Americans love a bargain, and their thirst for cheap or cheaper airfares is so deep and so ingrained that anyone promising an el cheapo airfares gets lots of attention. That's certainly the case with Skybus, a start-up that
promises 'ultra-low-fares' when it begin flights in late May from its Columbus, Ohio, base. The airline's strategy is that makes money on extras or ancillaries (drinks, pillows, seat assignments, etc.) after it unbundled its base fares. Skybus says its fares are low because it serves alternative airports, but that's where the questions come in.

The airline has announced its routes from Columbus--Oakland, near San Francisco, the Bob Hope Airport in Burbank, not that far from Los Angeles, Portsmouth N.H., not that far from (or close to) Boston, Bellingham, Washington, near the Canadian border and not that far from (or close to) Seattle, or Richmond, Va., Greensboro, N.C., Fort Lauderdale, Fla., or Kansas City, Mo.

Bryan Bedford's Republic Airways group reflects the great changes in the regional industry since the turn of the century At the turn of the century, the old Republic was nearly bankrupt, flying an ageing fleet of small turboprops, while in its home town of Indianapolis, the big player was ATA Airlines, a rising star as it entered low-cost scheduled service while shedding its charter past. Today, both carriers are still based in Indianapolis, but after 16 months of bankruptcy reorganisation ending in March 2006, ATA does not fly to Indianapolis any more and does much of its scheduled passenger flying at the behest of its investor and partner, Southwest Airlines. Meanwhile Republic is a holding company with the largest fleet of Embraers in the world and profit margin and growth rates unmatched by the majors. The Republic group, Bedford says, "has gone through every airline bankruptcy workout except that of Northwest", while increasing its revenues from about $150 million in 2000 to over $1 billion last year. He adds, though, "Of course we took our costs down over 50% over this time".

Bedford himself represents a generation of regional leaders, having entered the industry from an accounting background that brought him into contact with the airlines and eventually to the helm of Mesaba Aviation. At Mesaba, he helped create a strong brand identity that made it a natural as a Northwest Airlink partner while he learned the ways of the regional and the difficulties of transitioning out of turboprops - even the modern Saab 340 turboprop - and into jets.

At just 45, he plans to be at Republic for as long as he can see. And even though Republic flies for others, Bedford says he strives to build an identity through subtle branding on its aircraft, from seatback inserts to in-flight announcements.

The champagne was flowing at London Luton on Friday to celebrate Monarch's partnership with UK record label Hed Kandi, to produce flykandi. The assembled media hobnobbed before boarding Monarch's Hed Kandi-liveried Boeing 757 - see the picture to believe it.

The partnership between the low-cost carrier and Hed Kandi, which includes livery, logos, brand and web space, is worth £300,000 to Hed Kandi, and it is apparently the first time in history an aircraft has been liveried by a music brand.

It appears that the two Michaels at Ryanair are singing from different hymn sheets when it comes to the prospect of launching a long-haul low-cost carrier.

As exclusively revealed by my colleagues at Flight International, Ryanair chief executive Michael O'Leary has detailed his intention to launch a no-frills long-haul airline around the turn of the decade with a fleet of up to 50 Airbus A350s or Boeing 787s.

But speaking at this year's French Connect conference in La Baule near Nantes, Ryanair deputy chief executive Michael Cawley dismissed the plan disclosed by his boss as a "public relations stunt", adding that there is "no substance in it for Ryanair".

Southwest Airlines is a listening kind of airline. As it celebrates the first anniversary of its blog - called Nuts about Southwest - it has been listening hard to the comments made about its advance booking policy.

Fuming travellers had been telling the airline they were mad about not being able to book tickets over 90 days ahead. In total an avalanche of 274 people joined in.

So, Southwest has changed. As Michael van Houweling, online manager at the airline said at last week's Airline Distribution event in Ft Lauderdale: "You blogged, we flamed, we acted."