PlaneBuzz

On what is supposed to be one of the busiest travel days of the year -- I wonder if you folks out there are experiencing what I experienced yesterday as I traveled back to the Worldwide Headquarters.

That experience? A plane that was just a little over half full.

I've received a number of notes today from folks -- all of whom have either commented that the airports at which they work are busy -- but not that busy -- or that planes that have been flown on have not been packed.

Great if we look at this from a passenger standpoint.

Not so great for those of us who know what this means to the airline industry's revenue numbers for the month.

Posted by Holly at 3:15 PM | Permalink | Comments (0)

Subscribers to PlaneBusiness Banter can access this week's issue here.

Posted by Holly at 1:40 PM | Permalink | Comments (0)

Good morning everyone. It's Holly. I'm back at my post today after having enjoyed a wonderful time on the Emerald Isle last week. My thanks again to Sally Lieble, President and COO of Airport Terminal Services in St. Louis. Sally, a PlaneBusiness Banter subscriber, was Chairwoman of this year's International Ground Handling conference in Dublin, and was the person responsible for asking yours truly to speak at the event.

Great conference. Beautiful country. Wonderful people.

A shout out also to the folks at US Airways. I flew the airline's Envoy trans-Atlantic product on this trip, and generally speaking, I was very happy with the product and the service. More on that in this week's PBB.

(I'll talk more about it here too!)

This week's Turkey Day Holiday Edition of PlaneBusiness Banter will be posted in just a bit.

Posted by Holly at 8:31 AM | Permalink | Comments (0)

Well, well, well.

Longtime readers of PlaneBusiness Banter know that I have, more than once, knocked Southwest Airlines' and their efforts to court business travelers -- if the airline was not going to have a presence in New York City.

Not too long ago, I was listening to three businessmen on their way to Dallas lament about the fact that yes, they would fly the airline more if they just flew to New York. But as it was, they were "stuck" with flying American because they had no choice.

Yes, well, my point exactly. Corporate travel managers found it hard to take the airline seriously as well, if they couldn't send their employees to New York.

No surprise then that when three of us media types were asked at the recent Southwest Airlines' Halloween celebration in their "Are You Smarter Than A Fifth Grader?" skit what city we'd like to see Southwest fly to -- I wrote down LGA.

Ask CrankyFlier . He saw it.

CEO Gary Kelly, who was standing right behind me in his ZZ Top garb must have thought I'd been eavesdropping on his communications. One thing for sure -- he certainly got quiet. (After helping me out on the five Great Lakes question.)

Today -- the airline announced that it has agreed to pay $7.5 million for bankrupt ATA Airlines' landing slots at New York's LaGuardia Airport.

Southwest would get 14 slots in the deal, enough to operate seven takeoffs and seven landings per day at LaGuardia.

The deal is dependent on approval by U.S. bankruptcy court. If approved, Southwest expects to begin flying to LaGuardia next year.

Posted by Holly at 5:16 PM | Permalink | Comments (0)

Greetings earthlings. Yours truly is in Dublin, Ireland this week, having been asked to be the token U.S. representative on the opening panel discussion at the 10th annual Ground Handling International conference.

Things I have been impressed with so far at the conference:

Turnout. There are more than 400 people here, and very few are from the U.S. Since the target number for the conference was right around 400 --the turnout was just as expected. Bravo - considering the current industry and economic conditions.

Vendor participation: Again, one of the strongest we've seen at any industry conference this year.

Ireland: It is indeed very green from the air when you fly in. Unfortunately, as we were driving in last night to dinner in the Centre City, I was dismayed to see that Dominos is here. Just what I want to do -- order a Dominos pizza in Dublin.

Irish Tea: The best. Always has been one of my faves. Even better in person.

Flight over on US Airways: Hey, I have no complaints whatsoever. I thought the service was excellent, the food was even better, and all in all -- I was very pleasantly surprised.

First question I was asked by a European after I arrived: "So what about the political situation in the U.S. now? (Immediately followed by a comment) "I'm so glad you folks changed your government." It's been a recurring theme in various forms. Everyone wants to talk to you about it. Everyone seems very happy that "you Americans came to your senses finally."

My thanks to Sally Leible, President and COO of Airport Terminal Services, a PlaneBusiness Banter subscriber, who asked me to join GHI with their conference this year. It's been great to mingle with folks from all over the world -- something I think should be mandatory for all of us in this business.

At least every six months.

Posted by Holly at 5:02 PM | Permalink | Comments (0)

Subscribers can now access this week's issue here.

Posted by Holly at 11:18 PM | Permalink | Comments (0)

Earlier this week I talked about how I had been rather inundated with emails from Southwest Airlines' pilots (and other employees) concerning the airline's announced codeshare agreement with Mexican carrier Volaris.

Since that time, the email bag has continued to fill up.

Now, not only am I hearing from pissed off Southwest pilots, I'm hearing from other Southwest pilots who tell me, "Well, if you have the highest paid pilot group in the country, what do you expect Gary Kelly to do?" One Southwest pilot wrote me, "You can't have it both ways. We are blessed with the contract that we have and have had. But reality is what it is. And if the airline can fly shorter-haul routes more cheaply using pilots from other airlines -- guess what the airline is going to do."

So both sides of the argument are making their voices heard.

But even one Southwest Airlines' pilot who talked about how the pilots should not be surprised, given their current compensation level also acknowledged that "Gary blew it." A lot of the comments coming into me this week have talked about how after negotiating an agreement as part of the continuing negotiations between the airline and the pilots on a new contract that would allow codesharing -- that Gary apparently then went back to the union again wanting to renegotiate the deal -- and this is where things have now begun to unravel. Meanwhile, the airline stepped up and announced the codeshare with WestJet this summer.

And then there are pilots from other airlines. The notes from you folks tend to go something along these lines, "It's about time the guys at Southwest joined the rest of us. Welcome to the club."

As for the pilot union at Southwest, SWAPA president Carl Kuwitsky said in a letter issued Wednesday,

"While this announcement is yet another step in previously announced plans by the Company to form multiple codeshare alliances, it leaves a very unsettled feeling with many in our pilot group including your SWAPA leadership. In fact, it is very problematic for me personally and as a leader of our pilot group. Codeshare has the potential to severely affect the career of all pilots on our seniority list. At a time when our Company has stated publically that we are not planning to grow in 2009, we have embraced yet another codeshare partner who will benefit significantly from the codeshare partnership by experiencing double digit growth while our pilot group experiences negative growth with the capacity reduction in January. I cannot support these efforts and the cost to our pilots. Our Company needs to be committed to growing Southwest Airlines, not codeshare partners.

Volaris is mostly an unknown to our pilot group and your leadership. It is a two year old carrier with 19 Airbus 319/320 aircraft. They serve 23 cities in Mexico focusing on smaller satellite airports. One very troubling aspect to this announcement is that our Company is risking brand dilution by association with an unknown carrier. Our Company’s experience with ATA via a codeshare agreement resulted in numerous customer service and operational problems that reflected poorly on Southwest Airlines which adversely affected our brand. Additionally, when ATA went out of business, thousands of customers were holding itineraries sold by Southwest that could not be completed. Clearly the association with ATA reflected poorly on our Company. While Volaris may turn out fine, it does nothing to satisfy membership angst over potential brand dilution due to poor customer service or operational issues, especially when we could do some transborder flying and completely control our brand image. As employees all of us have worked very hard to build what we know as Southwest Airlines. We take great pride in our Company and what we have built. Our Company has a great responsibility to maintain that positive brand image. I must say that I am dismayed that the Company would risk its image by associating with such a young, unknown carrier."

This contract should have been wrapped up way before now. But it has now dragged on so long that the airline is looking at simultaneously trying to negotiate three major employee contracts at the same time. While the airline is now watching previously agreed upon sections of the pilot contract apparently go poof!, the TWU, which has been negotiating a new contract for ground workers at the airline, just asked, along with the airline, for the National Meditation Board to help in those stalled talks.

Then there are the flight attendants. Negotiations continue between TWU 556 and the company on a new contract there. Not much progress has been made as far as we can tell. According to the union's website, "...it is clear that we are still far apart on our Economic Proposals...."

Posted by Holly at 5:27 PM | Permalink | Comments (0)

Hello there, Godzilla here. I know it's been a while since I've graced the pages of PlaneBuzz, so to speak. I won't give the old "I've been too busy" because I hate when people use that as an excuse. No, I've not been too busy to write, perhaps I didn't think I had anything of value to add, though some would say I never let that stop me before. I've been filling my time doing some very un-airline/aviation stuff, some would say going back to my routes, er, roots. I'll fill you in later on that though, because I want to talk about the Texas - Two Step Delta is doing with their hub in Cincinnati.

An article on Cincinnati.com yesterday outlined Delta's plan to further reduce their CVG hub by another 12% this coming January. This cut follows a steady diet of previous reductions and downsizing/rightsizing or whatever the MBA catchphrase of the moment, that have been occurring for the past 4 years.

The truth is that reducing or eliminating CVG as a hub made sense even without the merger of Northwest, but adding the three NW hubs to the mix (affectionately known as Snow-town, Mo-town, and No-town), CVG is definitely superfluous. The problem is that the DL/NW merger is supposed to be a merger of addition and not subtraction. Uh-huh. According to the article January 2009 flying from CVG will be 33% less than January 2008.

As I said, that makes sense. What is irritating is the PR spin being put on the bad news so that the community actually thinks it is good news. Speaking about the announced reductions, the chairman of the Kenton County Airport Board, which controls CVG operations said -

"This is good news in that it keeps things pretty much as they are, but I would not say it is wonderful news,"

Well Mr. Chairman, the news might be good but the truth is not-so-good. Fully 85% of the operations at CVG will be in RJ equipment, and the number of banks at CVG will be reduced from 9 to 5. Glen Hauenstein is the person in charge of rationalizing the two route systems, which is not an easy task. However turning CVG into an RJ hub and giving it until the summer of 2009 to turn a profit is akin to throwing a drowning man an anchor.

"We really wanted to keep the hub there because of its location, layout and the great facilities, but it took us awhile to figure out how to do it," Hauenstein said. "So Delta is now reaffirming its commitment to the Cincinnati hub through the summer season of next year and then we'll take another barometer reading on how the economy is doing."

That's nice. We all remember how well the Independence Airlines hub did at IAD, right? They helped prove that the RJ isn't a low cost machine, it's a point-to-point O&D bird. Taking the wrong airplane and running it through a hub that used to have 9 banks and now will only have 5 means that the cost of operation at CVG for DL is going to be higher. The only semi-good news in all of this is that the CVG fares are high, which means DL will lose money more slowly, unless the economy continues to tank.

Although I don't agree with it, I understand the need to be politically sensitive to air service issues, especially during a merger. Perhaps if I had been more politically correct my airline career would have been longer, though this is more fun anyway. But DL is better off saying as little as possible about it rather than trying to spin the reduction as a way to "coordinate times between two hubs [DTW and CVG]".

"That way we can offer two medium-sized hubs with better connectivity and efficiency to compete with one mega-hub (for rivals American and United) in Chicago," Hauenstein said. "This is all about connections and making those more plentiful. Now we can offer a traveler in say, Albany, connections through Atlanta, JFK, Detroit, Minneapolis and yes, Cincinnati - you get something nobody has been able to offer you before. And Cincinnati is a part of all of that."

Well it sounds to me like a phased reduction into oblivion, which by the way Is a good decision. The spin doctors should have left this one alone though.

Posted by Godzilla at 4:47 PM | Permalink | Comments (0)

Today we have a new subject to talk about.

Well, I guess the main topic is a familiar one. Pilots who are not happy with things that management is doing for, er, to them.

But in this case, the players on the playing field have changed.

You may have read the news release yesterday in which Southwest Airlines announced a new codeshare agreement with Volaris -- a Mexican airline.

In the release Monday, Southwest said that the airlines will coordinate flight schedules and reservation systems, allowing Southwest customers to book flights to Mexico using both carriers. Volaris currently serves cities including Mexico City, Tijuana, Cancun, Guadalajara, Mexicali and Acapulco.

But wait just a minute.

Who stands to lose potential flying if the airline goes ahead with this codeshare agreement, as well as the agreement already announced with WestJet?

That's right. Southwest Airlines' pilots.

Today the PlaneBusiness email box has received more than a fistful of emails from Southwest pilots who are not happy campers. To say that this is an unusual occurrence would be a hefty understatement.

Here is an excerpt from one of the longer notes:

"In really simple terms, and feel free to use it (just don’t credit me, a bit of a witch hunt going on here), it should not be called Code Sharing, but Outsourcing.

[Southwest CEO] Kelly and SWAPA negotiated a codeshare (outsourcing) agreement in the new contract during the initial current negotiations. This was about a year ago. He stated publicly that even though it had not been voted on, that he would honor that agreement. He has since come back to our negotiators and said he wants to re-negotiate that portion of the new contract. Meanwhile, he is doing all the codesharing (outsourcing) he can while he “slow rolls” our contract negotiations.

WestJet has announced 15% growth after our agreement with them.

Volaris says they will double in size.

Kelly cut 6% of our flying.

Now the rumor is that Republic is negotiating with Kelly to take over our short haul intra-Texas flying.

I am a 20+ year guy and am really disgusted with what is going on here. I spent several years at a Lorenzo airline and am seeing parallels that I thought would never happen here. The line employees realize they are just numbers to Kelly."

Where is the LUV?

Yes it's now been two years and counting and there is still no new contract between the pilots and the company. From the sound and tone of the notes we received this morning, it sounds like maybe the tone from the pilots' side has just taken a little turn towards a more defensive posture.

Posted by Holly at 10:08 AM | Permalink | Comments (3)

PlaneBusiness Banter subscribers can access this week's issue here.

Posted by Holly at 12:34 AM | Permalink | Comments (0)

What a night. It's always a trip to watch history being made right in front of your own eyes.

Congratulations Mr. President.

Now, about this economy......oh, okay. We'll let you actually move into 1600 Pennsylvania Avenue first.

Posted by Holly at 10:07 PM | Permalink | Comments (0)

As ardent followers of the airline stock sector are aware, every month Continental Airlines leads the other airlines in reporting their traffic numbers for the previous month. But the other information the airline issues, along with its traffic numbers, is usually of more interest to us hard core airline fans.

That information, of course, is the RASM estimate the airline issues along with the traffic numbers.

For those of you who are new to this piece of the world, RASM stands for revenue per available seat mile and it is the most widely used "rule of thumb" measure of an airline's revenue performance.

Last night Continental Airlines reported that it now expects mainline domestic revenue per available seat mile for November 2008 to grow only 4 percent to 6 percent, down significantly from previous expectations for growth in the "low-to-mid teens."

Not surprisingly, the airline said that this was a result of lower yields. Translation: Lower ticket prices.

This news comes after most airlines over the last month insisted during their earnings call presentations that they were not seeing significant drops in demand.

We have a bit of what we might call an "inconjunct" here.

Jamie Baker, analyst with JP Morgan wrote this morning that while the news was not a complete surprise -- it was still enough to push him to sharply reduce his fourth quarter forecast for the airline.

Baker now expects the company to report a loss of $0.56 per share, compared with prior expectations for profit of $0.40.

As Baker said in his note, it wasn't a question of if -- just a question of when the economic meltdown would catch up with airline demand. He expected the industry might have at least a month or so before the full effect hit.

The other problem today? Oil prices.

And here it gets a bit more complicated.

Is the price of oil rising because of a supply and demand issue?

No.

The reason the price of oil is up today is because the dollar is falling.

Remember that oil is priced in dollars. As a result, investors see commodities such as oil as a hedge against inflation and a weak dollar and pour money into the crude futures market when the greenback falls.

A weak dollar also makes oil less expensive to buyers dealing in other currencies.

There you go. There's your commodity pricing/falling dollar lesson for the day. Unfortunately the end result -- higher oil prices -- then affects this sector negatively.

As of this posting oil has soared more than $7 today, and is now trading around $71.50.

Posted by Holly at 2:14 PM | Permalink | Comments (0)

Hello everyone. Okay, I promise. I'm going to try and get back in the groove here this week with PlaneBuzz. My apologies again for being rather absent of late. But as I explained the other day, I'm in the middle of trying to set up a new office/home in Dallas, and well -- I hate to offend you folks but --- PlaneBusiness Banter subscribers will always get first dibs on my constricted time. And energy.

Speaking of -- what's that? Energy... that is.

Energy is what all of you need today as you go to vote, as it might take some time. But it is important. So go do it. Whatever it takes, however long it takes.

As for me, I voted early last week, before I left the Worldwide Headquarters.

Just do it.

Posted by Holly at 12:20 PM | Permalink | Comments (0)

I know. I know. I promised pictures.

Okay, tomorrow. I promise. Really.

Long weekend for yours truly. Another one of our longish earnings issues and it came on top of two days filled with moving activity, topped off by an all-day sojourn over at Southwest on Friday.

Boom. It's then Saturday. Arrrrrgh.

Anyway, forgive me. LIfe just took over this last week.

However, there is good news for PlaneBusiness Banter subscribers. This week's issue is now posted and you can read it here.

Posted by Holly at 12:33 PM | Permalink | Comments (0)

Okay, okay. I know. Some of you have sent me emails this week wondering if I am sick or something.

No -- just trying to get settled into the new not-yet-too-comfy confines of the new PlaneBusiness Branch Office in beautiful Las Colinas, Texas. (For those of you who don't live in the DFW Metroplex, Las Colinas is just the fancy name for "North Irving.")

But you know how it goes. There is the matter of insurance. The matter of internet connectivity. Then there is the phone. And we can't forget the basics -- like a place to sleep until something better arrives. So that means an air mattress. And then there are the things you forget about. Trash cans. Coffee maker. Trash bags. A knife and a fork. Not to mention a spoon. (Yep, fingers can do in most cases, but it just gets so messy.) Which reminds me. Paper towels.

My thanks to Kroger, TJ Maxx, Target and other fine establishments. They helped me to make my own contribution to jumpstarting the now dead economy a rousing success on Thursday.

Then -- there was the matter of Halloween. More on that later today. Meanwhile I have to go get some work started on this week's PlaneBusiness Banter. This year Holly was a celebrity judge at the Southwest Airlines' Halloween Event. So.....that means I got no work done yesterday. None. Zilch. (Which, I would say, is about the same amount of work anyone who works at the Southwest headquarters got done as well.)

While I've heard stories about Halloween at Southwest for years, I had never experienced it.

It defies a simple one sentence explanation. Much less two.

Like I say, more on that later.

And......I'll also tell you the story of the great unintended consequence of my Halloween attire that now has me sporting some rather colorful hair.

Talk to you later. Go watch some football in the meantime.

Posted by Holly at 2:09 PM | Permalink | Comments (0)