April 2010 Archives

What if labour and management at US carriers actually tackled the host of challenges they consistently lambast rather than drone on about them constantly?

"How do we get to the point where we actually do something different rather than talking about challenges," asked American's SVP of Human Resources Jeff Brundage at the recent Phoenix Sky Harbor International Aviation Symposium.

Brundage and his team are in the midst of negotiations with all of American's labour groups, and two of the groups have asked to be released from mediation. But for now the discussions are pressing on as each side works to get a viable outcome from the talks.

But how do you negotiate in these times? Airlines and their respective labour groups have been trapped in a vicious cycle of negotiating contracts in relatively better times that eventually are wiped out through re-organisations either outside or inside Chapter 11.

Brundage posed an interesting question during the symposium.  Is the current situation the industry finds itself in during the initial phases of a fragile recovery a true market reset or another typical stage of the tyical cycle?

And while unions are certainly fighting to regain concessions they agreed to early this decade, issues like anti-trust immunity and consolidation pose a new level of uncertainty to negotiations. "More often I have questions rather than answers," says Transport Workers Union international administrative vice president John Conley.

So is there an ultimate solution to this quandary of being stuck in negotiating contracts that are only vaporised when times get tough?  Well Brundage believes it is going to take a structural change in the business to reverse the long-standing trend, perhaps through the way negotiations are governed in the USA.

A chronic problem with labour negotiations in the USA is they drag on for what seems like forever for both sides. One point made by ALPA president John Prater during the symposium is during the pre-deregulation era in the USA managment and labour were continuously negotiating different sections of a contract rather than tackiling all 30 or so sections at once, which can leave some negotiations languishing for years.

With the US National Mediation Board handling about 81 some odd cases in mediation, and with airline contracts representing north of 50 of those, saying that something has to give appears to be a gross understatement.

Picture credit: German Flag on the U-Bahn by cameronparkins

The Airline Business team are back on the road again this summer and it seems like Germany is the place to be for airline conferences .

We've got Aircraft Interiors coming up in Hamburg on 18-20 May and then we're off to the IATA AGM in Berlin on 6-8 June.

This is the bit where you come in. We're after some top tips on what to do in these two great German cities. We'll then compile your suggestions and publish them in the Airline Business Dailies which will be handed out at the shows and available on our website.

We're happy to give you a mention as a small thank you for your help, but if you'd rather remain an elusive mystery contributor, we will protect your anonymity - whichever you prefer.

So, where are the best places to eat in Berlin and Hamburg? Are there any secret places, off the beaten track, which you'd recommend? What are the must-see sights? Are there local delicacies which people visiting the conference should try?

There are lots of ways to get in touch with your suggestions:

-Message me through my VictoriaOnAir Twitter account

-E-mail me at victoria.moores@flightglobal.com

-Or respond to this blog by adding a comment below

Thanks in advance for your help - I look forward to hearing from you soon!

Best wishes,

Victoria

Yesterday I popped in to London to catch up with fellow Cranfield University alumnus Julian Carr (pictured), who has just become managing director of bmi's budget arm bmibaby.

Over a glass of orange juice (it was an unusually hot day here), Julian ran through his priorities for the coming months. Click here to read the write-up from our chat.

It seems that bmibaby's staff are collectively breathing a sigh of relief after new bmi chief executive Wolfgang Prock-Schauer confirmed that bmi will not be broken up. Here's a link to a recent video interview with Prock-Schauer, who explains his strategy for bmi as a whole.

Last year, we caught up with Julian and a few others to see what their views were on the future for ancillary revenues. To see the new bmibaby chief on camera, take a look at the video here.

I was in a card shop, close to the Airline Business offices earlier this week and my ears pricked up at the mention of air travel.

A well-spoken (and obviously well-travelled) man was standing at the till, explaining to the staff why he was sworn off air travel.

He griped that flying is disrupted by the "scare of the week, day or month". While I'd like to come up with a strong counter argument, that's a big ask right now.

"It's easier to stay put," he moaned. "If it's not strikes, its bird flu or a volcano."

This was one random overheard conversation, but if this is the sentiment of the travelling public, airlines have got their work cut out.

Hard not to smirk at this audacious bit of Germanwings publicity. Not just for its admirable timing, while the cabin crew are otherwise occupied, but also for the fact that it manages to snipe two of its competitors in the same commercial. One-upmanship with style.

Well an ash cloud follow-up really from Abu Dhabi's Etihad Airways, and rather a neat marketing touch at that.

The carrier took full page ads in the Financial Times yesterday with the headline: Clear Skies Ahead, and a personal message from CEO James Hogan updating its "guests" on the current traffic situation at the carrier.

"Thankfully the majority of our flight operations and schedules have returned to normal, and most of our stranded guests have reached their destinations. I would like to personally thank all of our guests for their patience and understanding during this crisis, and while we clear the backlog," said his letter.

The carrier says it will recover quickly from the disruption.

Such a smart marketing move is no real surprise from the 2008 winner in the Marketing category of our very own Airline Strategy Awards!

Several of Flightglobal's Washington-based editors were in Phoenix this week covering the MRO Americas show and producing our smart interactive magazines. Lead editor was our US Air Transport Intelligence editor Lori Ranson, who also introduced the interactive magazines via video.

Read the issues here.

Now maintenance might not be your bag but they are worth a look, if only because we could be doing one about your field of expertise shortly.

It was a sporty week for our team as we had to obtain some Phoenix based photographers at late notice as our man could not fly out from the UK because of the ash cloud disruption. But our stand-ins Thomas Boggen and Ralph Fresno did a good job.

Here is a link to our Flightglobal MRO Americas landing page,

and don't forget our first set of interactive Flight Dailies from February's Singapore Air Show.

Virgin Atlantic tweeted a response to Flightglobal following the news yesterday that a UK agency was looking into allegations of price-fixing on the London-Hong Kong route.

This is what it said;

VirginAtlantic @Flightglobal VA will defend itself against the allegations of 2002-06 VA don't believe we acted in anyway contrary 2 interests of consumers

We thought it was a remarkable use of social media.

The news today that the UK's Office of Fair Trading has launched a price-fixing probe into the alleged activities of Virgin Atlantic and Cathay Pacific Airways on the London-Hong Kong route will make uncomfortable reading for airline executives everywhere.

With the recent news agenda dominated by the ash cloud and the past 2 years dominated by the downturn, the spate of stories on passenger and cargo fixing had all but died down.

But it has re-emerged, and many will be asking what else is going on out there? Is this practice more widespread than anyone believed?

Unfortunately for Virgin Atlantic it is in the headlines once again over price-fixing. This time the roles are reversed, for Cathay has "blown the whistle". It was Virgin that blew the whistle on British Airways over price-fixing of long-haul fuel surcharges back in 2006.

Don't forget either the cargo price-fixing cases that involved scores of carriers - this dates back to 2006 as well.

In the cargo probes the fines are stacking up.

I know creditor lists which emerge when companies go into administration have a habit of showing up some pretty quirky items in amongst the financial carnage, but I can't get my head round this one. The administrator of cash-strapped English premiership club Portsmouth, in revealing debts in excess of £100 million, has just published a full list of creditors, which bizarrely on page 43 includes Middle East carrier Qatar Airways being owed the princely sum of 20 pence. Okay, air fares have come down a lot during the recession, but surely not that low....

...You can get more on the story here.

(Picture credit: Rex Features)

A while back, I asked you whether the short-haul business class cabin was dead. I posed this slightly provocative question via the Airline Business Blog, my VictoriaOnAir Twitter account and through the Interactive section of our April print edition.

I want to say a huge thank you to the readers who took the time to get in touch. You can see the final outcome in the article titled "Cabin Sickness" in our May print edition.

Sadly we didn't have space to run your full commentary in the magazine, so read on to see other Airline Business readers' thoughts in full.

Nothing like a few geological pyrotechnics to keep a lid on European delay figures.

Image: Eurocontrol Central Flow Management Unit

Travel in the UK is being severely disrupted today because of an ash cloud floating over the country which several airports closed.

The cloud is coming from northerly neighbour Iceland where volcano eruptions over the past several weeks have been creating this amazing natural phenonmenon.

For some great shots of the eruption see this story in the UK paper The Daily Telegraph.

For the latest news on how it is affecting airports and airlines see this link to the BBC.

What about an early warning system for volcanic ash?

How about a satellite-based warning system?

How did BA Flight 9 cope when all four of its engines stopped after it flew into a volcanic ash cloud in the 1980s?

UK NATS has issued this statement at 0600 GMT today:

NATS has restricted the number of aircraft flying into UK airspace because of an ash cloud caused by the volcanic eruption in Iceland. Volcanic ash represents a significant safety threat to aircraft. We are monitoring the situation with the Met Office, Eurocontrol and neighbouring countries, and working closely with the airlines to help inform their decisions about their operations. Anyone planning to fly today should check with their airline before going to the airport.

After his first formal meeting with his fellow oneworld Alliance chiefs Japan Airlines' new president Masaru Onishi has concluded it would be diffcult for most carriers to withstand current operating conditions without being a member of one of the leading global airline alliances.

It's an endorsement oneworld, led fiercely by American Airlines, has worked to sustain during the last few months as Delta was just as intense in its efforts to lure JAL over to the SkyTeam grouping.

You know how it turned out. JAL opted to stay with Oneworld as it seeks to revitalise itself through a formal restructuring and government support.

Now JAL has teams in Dallas at American's HQ studying the carrier's approach to maintenance, purchasing and other aspects of the business, says Onishi, who delivered a speech at the conclusion of the Oneworld Governing board meeting on 8 April in Los Angeles.

It's a different type of support American is lending to JAL than its pledge of $1.4 billion in financing offered by American, other oneworld carriers and venture capital firm TPG.

American chief Gerard Arpey says investement discussions are taking a "back seat" to other commercial opportunities between American and JAL. While financial assistance virtually topped the list of cooperation between the two carriers during the battle to keep JAL in the oneworld fold, Arpey says there "is not as much interest" in that particular type of aid at this point.

So as the financial pledges seem to fade away and the knowledge sharing starts Arpey believes JAL is "taking the appropriate steps to what we believe will be a successful restructuring". Onishi and new JAL chairman Kazuo Inamori are banking on that outcome.

Here's a quickly snapped shot of the chiefs after their meeting concluded.

You'd have to be suspended in another dimension to have avoided the frenzy set off by The New York Times reporting that United and US Airways were in "deep" discussions about a potential merger. 

The flurry of speculation triggered by two carriers that most likely routinely talk merger largely failed to acknowledge the fact the article also stated the discussions between United and US Airways could sputter out.

So before you start toiling over your Mileage or Dividend Miles status, let's just think about what has to happen for the carriers to tie the knot. I'll preface this by saying that one, I'm a sceptic, and that more often than not I'm wrong!

Labour buy in - Five years after the US Airways-American West merger pilot seniority remains unsettled, with former "East" pilots breaking off and forming their own union in 2008. And let's just candidly say the relationship between United and its pilots isn't exactly a bed of roses.

What was key for Delta in its merger with Northwest was getting the two pilot groups to agree to seniority prior to the deal's consummation.  Pilot seniority of the two groups at US Airways isn't exactly keeping its management up at night, so it doesn't seem like that's a priority for US Airways and United. But they should take some time to study Delta's astute decision to ensure the one thing pilots value the most was in the clear before anything else took place.

Even if United and US Airways use that playbook, Delta had an advantage neither of those two airlines has. Delta CEO Richard Anderson was a known quantity at Northwest Airlines, having had the same position at Northwest from 2001 to 2004.  Anderson had experience with both pilots groups, giving him an advantage in navigating through resolving the complex seniority issues.

Regulatory endorsement - If Delta and US Airways have challenges getting a slot swap at National and LaGuardia airports through the regulatory machine unscathed, how could you think the US Justice Department will rubber stamp this possible deal?  This Justice Department is really prickly about competitive issues, so you better believe United and US Airways should be ready to agree to some relinquishment of their strong presences on the US East Coast.

Now onto the curiosity raised by these "deep" discussions. What does United gain?  Not much in the way of a footprint in Asia, Europe or Latin America. Does this mean US Airways will be relegated to a glorified feeder for United's international network?  Does that create shareholder value?

No doubt as long as the speculation hovers United's and US Airways' stock prices will put on a strong showing, which might be why the "deep" discussions were leaked to the Times in the first place.

Photo credit  --AP Photo/The Arizona Republic, Cheryl Evans 

After years of trying Taiwan's China Airlines has finally made it to London with services from the end of March between Tapei and Heathrow.

The carrier's chairman Philip Wei tells Airline Business editor Mark Pilling about the significance of the move, how traffic is now flowing freely between Taiwan and China and whether the carrier could order new large airliners like the Airbus A380 or Boeing 747-8I. 

For more from the China Airlines party to celebrate its London launch read my earlier blog.

Hard to tell precisely what German model-maker Schabak has printed just behind the cockpit windows of its Qatar A380, but it looks suspiciously like the Star Alliance logo.

If it is, then Qatar Airways isn't biting. "Artistic licence," scoffs a source in the sandpit.

Breaking news: Southwest is attaching a trailer to its aircraft to handle all that free checked luggage!

In early December a fairly reliable source pointed me in the direction of London Gatwick where, he suggested, a wheelchair-bound EasyJet passenger had been denied boarding by a gate agent on account of being unavoidably deceased.

The passenger's lack of responsiveness at check-in, for the flight to Morocco, had allegedly been attributed by his companion to deafness.

EasyJet, sadly, had no record of the incident. Nor did a Gatwick Airport spokesman, who insisted that security personnel would have caught the cadaver before it reached the gate. Probably.

After inquiries to South East Coast Ambulance and Gatwick Airport police similarly turned up no evidence of post-mortem skulduggery, I reluctantly chalked it up to urban legend.

So you'll forgive me if I'm less astonished than I ought to be about this story which, as Yogi Berra might have said, feels like déjà vu all over again.

So it all started with Delta and US Airways offering WestJet five pairs of slots at LaGuardia as part of a strategy to approve their massive slot swap at LaGuardia and Washington National Airports.

Then new WestJet CEO Gregg Saretsky said the carrier could forge ahead with a Delta codeshare before launching its long-awaited and highly-anticipated codeshare with Southwest Airlines.

Southwest now appears to be smarting over being shut out of the LaGuardia slot allocation and WestJet's potential deal with Delta through a terse warning today that it could cut ties to WestJet even before they launch a codeshare.

Basically from what I can tell Southwest and WestJet possibly had a bit of exclusivity tied to their codeshare since Southwest said a WestJet-Delta tie-up would be "inconsistent" with the current pact Southwest and WestJet have in place. Southwest is also warning that if the WestJet-Delta deal goes ahead, it will offer its customers service to Canada through "the most efficient means possible".

It's anyone's guess what's happening behind the scenes here.  A deal with WestJet would give Delta, an anchor of the SkyTeam alliance, a foray into to Star's territory in Canada dominated by Air Canada. It gives WestJet a partner with more breadth and depth than Southwest.

Still, it could also be a forceful gesture by WestJet to send strong message to Southwest to get its collective technological house in order, flip the switch and get on with their partnership.

Either way Saretsky has certainly raised eyebrows during his transition to WestJet's top spot.  

OK it's April Fool's Day but this is no prank. Simply a collection of offbeat airline videos, many of them ads, for a bit of fun over the Easter weekend.

No 1: The AirTran Airways stampede - a low-cost carrier extolling the virtues of assigned seating, business class seats and Wi-Fi

 No 2: Southwest's Battle Cry - Making the point with plenty of skin on show that it is good to fly bags for free

No 3: Air New Zealand's safety video - now a YouTube favourite with over 5 million views! This is just a classic

No 4: If it's an anime video it's got to be a Japanese carrier - and it is: All Nippon Airways

And finally, No 5: Spain's Vueling - to the tune of "When love takes over" seemingly the whole of the airline's HQ gets involved in this epic "Vueling together"

Enjoy - and Happy Easter!

Hats off to the team at CAPA for their "scoop" this morning about Lufthansa buying Air France, along with a series of other fantastic breaking stories.

To give you a flavour, here's the Lufthansa-Air France story.

"In breaking news, Lufthansa is to acquire a majority shareholding in British Airways and Air France. The move is designed to simplify the European aviation network and help rationalise the airport hub system. Lufthansa CEO, Wolfgang Mayrhuber, said "we've bought nearly everyone else in Europe and these two were sticking out like sore thumbs. This way we can combine our flight attendant unions and have much more impressive strikes too." A European Commission spokesman, asked about the competition implications of the purchase, suggested the Commission would look favourably on the acquisitions, saying "we are getting really fed up with all these applications for antitrust immunity and this should make the whole thing a lot easier for everyone". SAS CEO, Mats Jansson, when asked for comment, said "we are awfully peeved that we are now the only ones who haven't been bought. We could bring another 30 unions to the party, so I really don't understand why we are being left out." No new theme tune has yet been announced for the mega-airline."

I'd strongly recommend going to the full article for some more of today's astounding market updates.

Seen any other amazing aviation stories today? Please share the links with other AB Blog readers by posting a comment below.