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Aviation History
1978
1978 - 0303.PDF
FLIGHT International, 25 February 1978 519 theless, the airline is not unhappy with the resulting compromise. The emphasis on freight means that Northwest's already low passenger break-even load factor can go even lower when there is a fully loaded wide-body belly. On its Seattle-Tokyo monopoly route, for example, Northwest would only need a passenger load factor in the 20s to break even, according to sales vice-president Robert J. Wright. These break-even figures are not applicable to other airlines, of course. In 1976 Northwest needed an average 42-9 per cent and achieved 48-4 per cent. The carrier closest to Northwest was National, which at 47-8 per cent needed nearly five percentage points more. Nyrop's debt-equity philosophy is a key to this success, as is Northwest's high productivity. CAB figures for 1976 are not available, but, according to Nyrop, "if we had had the other trunks' costs, we'd have lost money." His com pany's high productivity-to-cost ratio was not achieved through low employee wages, by the way. Braniff took the 1975 honours for lowest average labour cost per employee, with Northwest ranking fifth. Northwest is among the world's major all-cargo carriers, with a fleet of pure-freighter 747Fs It is thanks to its productivity and cost structure that Northwest can continue to chase the first-class passenger, and continue to fly Seattle-Tokyo with 40 per cent load factors and make money, although it recoils from the possibility of competition on the route. "We'd starve to death with another carrier," insists Wright, eyeing United's bid to gain rights. (As these pages close for press, the CAB is recommending to President Carter that United should get the route.) He feels the same about Japan Air Lines' ambitions for Chicago-Tokyo authority. Northwest was chalking up 38 per cent load factors on Chicago-Anchorage and 28 per cent on Anchorage-Tokyo before it inaugurated a four-a- week Chicago-Tokyo non-stop service in June. It is using 747Bs to compete with Pan Am's 747SP service out of New York. Northwest is not at all pleased with the trend in the US to promotional fares, which Wright views as "kind of like a death wish." He sees TWA's recent $99 Super- Coach proposal for a Chicago-Los Angeles 707 service as "absolutely nutty." Instead, Northwest would rather cut general fares than introduce "gimmicks." One of Northwest's biggest complaints is that its efficiency, which could benefit the customer, is not being rewarded with new routes. Help may however be in the wings, at least in the US, where new CAB chairman Alfred E. Kahn seems inclined not to protect carriers whose costs are higher. Similarly, Northwest's charter operations shrank in 1976, a year when other airlines were greatly increasing their charter revenues. "We don't have a charter fleet," says Wright, referring to other airlines' fleets of obsolete aircraft. Wright believes that such carriers would be better advised to "sell the planes and get rid of the pilots." Northwest's withdrawal from lata is right in line with the rest of its decision-making. When the organisation can straighten out its so-called "administrative problems," Northwest will re-enter. But, says Wright, lata "lacks leadership at the business level. The conferences are per mitted to be a forum for carriers to flog their own selfish interests." Besides, he tells Flight, "Northwest took a look at 20 years' worth of lata fares on the Pacific, saw that rates had been open more than closed, and found the terrible threats of open rates weren't so harmful—so why not get out of the club?" Much as Northwest may sometimes alienate other members of the industry establishment by its independent stances, in the end admiration for its abilities is great. As far as hardware decisions are concerned, "you have to go a long way to beat them," one Air Transport Association official has said. Northwest has won renown for its work in areas such as meteorology, clear-air tux-bulence, and the plotting and solving of "upsets" in the early days of the jet airliner. Noise abatement pioneered More recently, the company has been blazing trails in the areas of noise abatement and flight training. Its "get- em-high-fast" procedure is being adopted, with some modifications, by the rest of the US airline industry. The Northwest-initiated Line Oriented Flight Training (LOFT) has been embraced by US carriers to improve recurrent flight training for pilots and flight engineers. Northwest received Federal Aviation Administration exemption last year to use LOFT for its pilots. Under LOFT, a full cockpit crew uses a visual simulator to fly a typical line segment for which a variety of problems and occurrences have been pre-programmed. LOFT is designed to replace the usual (and practically useless) repetition of manoeuvres and procedures now required for recurrent training. The FAA seems to accept the concept but is moving so slowly that the ATA airlines have requested an exemption similar to that obtained by Northwest. They could then use LOFT procedures until the regulations were changed. What then of the future for an airline that knows its own mind and acts sometimes as if it is being held back by the other members of the industry? Financially, 1977 looks like being a high-flier for Northwest. Then there is its new route between Chicago and New Orleans, on which it competes with the profitable and efficient Delta. As one observer says: "That should be a match worth watching." Also worth watching will be Nyrop's successor as president, M. Joseph Lapensky, who has been at North west even longer than Nyrop and who served as the company's chief financial officer before becoming president last year. Although Nyrop's impending retirement is con sidered by many to be a loss for an industry regarded as lacking financial management, Northwest is expected to carry on as usual under Lapensky, run by the same collec tion of "calculating businessmen." Northwest will not order a new type of aircraft in the near future. Nyrop doesn't like the look of the 767 with the proposed engines, or of a twin DC-10. What he does want is "increased productivity that will give greater fuel efficiency." But, he notes, "just to get an airplane sized between the 727-200 and the DO10" does not interest him. He believes that he can put a DC-10 on flights which normally fill a 727 and still make money. At Northwest's break-even load factor, Mr Nyrop, we agree 100 per cent.
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