PlaneBuzz

Editor's Note: This week I welcome a previous contributor to PlaneBuzz, Frank Arciuolo. Frank has not been seen around these parts in a long time. For reasons he talks about in his latest effort. I figure he felt sorry for me after it took him two hours to read this week's issue of PBB, and thought the environs around here had been much too quiet!

In his previous efforts in PlaneBuzz, we used a "Godzilla" rendering for his ID photo. I figured it's time you get to see the real deal. Mud and all. Enjoy!

Hi there, Godzilla here. I know it’s been a very long time since I’ve contributed to PlaneBuzz but I’ve been preoccupied with some of the more mundane things in life – like trying to find gainful employment. My plan when I left my last job at the beginning of 2008 was to do some part time flight instruction and get a part time job as an FO on a corporate jet – I even got my CE500 type rating.However, like they did so many other people, circumstances conspired against me. Taking flying lessons is well down the list of priorities for most people now, if it makes the list at all. And right seat jobs in corporate aviation are as scarce as, well, the hair on my head.

But, I digress. Anyway, thanks to Holly for letting me fill my idle time and the pages of PlaneBuzz simultaneously.

You know the feeling an ex-airport ticket agent gets when he/she wakes up on the Wednesday before Thanksgiving, looks out the window to see dense fog – then rolls over and goes back to sleep because they are off that day? That’s the feeling I got when reading about recent events at WestJet concerning their reservations system cutover and the system cutover at JetBlue this weekend.

In my previous lives I’ve participated in about 8 reservation system cutovers; one as an airline employee and the others as an interested bystander, AKA a vendor. My advice to any IT person working at an airline that is considering switching reservations systems is to dust off the resume and start networking (the people kind). People in the reservations system business (the “biz”) often refer euphemistically to a reservations system cutover as a migration. That’s a nice word, migration. It gives one the vision of a flock of Canadian geese traveling to MIA for a nice warm winter.

However a reservations system migration, or at least the ones I’ve been involved in, does NOT resemble a migration of birds to South Beach for the winter. Picture a reservations system migration as a flock of 1 million geese leaving Canada on a Friday night. On Saturday morning nobody can find ANY geese ANYWHERE. By Saturday mid afternoon 3 million birds arrive in Tampa, but only 25% of them are actually the geese that left Canada Friday night, the rest are pigeons. By Saturday night trucks have been chartered to take ALL of the birds from TPA to MIA because nobody wants to let them out of their sight. The trucks arrive in MIA Sunday morning and are gone through manually (by IT employees) to determine which are the geese they want to keep and which are the pigeons. Sunday night the airline CEO does the math and realizes that 25% of 3 million does NOT equal the 1 million geese he had Friday night. Where are the rest of the geese? Holy crap, what’d we do with those pigeons? Resumes and bird poo simultaneously hit the mail and the fan Monday morning.

Funny story, yes, but perhaps more real than you think. Airline reservations are literally money in the bank. Moving this valuable asset from one point in cyber space to another is fraught with land mines. There are a host of technical issues that would make your eyes glaze over and I’d be happy to talk about them in detail to any other IT geeks out there, but that’s not today’s point.

Since migrating is such a gut wrenching experience where the BEST result is a zero sum gain (and the worst result is working in bird poo), don’t do it! Some cutovers are unavoidable, like the DL/NW move and whatever will eventually happen with YX/F9 and the boyz in IND. Those cases also represent mergers/acquisitions, where the party on each side of the transaction has an interest in avoiding a train wreck. Migrations that are the riskiest are the ones where an airline is changing reservations systems they may have outgrown, or perhaps for a better deal.

Traditional hosting or multi host systems are very good at high volume transactions and at communicating with Global Distribution Systems (GDS) and other systems. Because they communicate with external systems so well, traditional host systems can greatly expand an airline’s distribution reach. However, since those external systems, by design, withhold certain information from the host system (like fare basis code, form of payment, and other key customer information), the host system has difficulty figuring out of someone booking in an external system has simply reserved a seat or has actually purchased a ticket. Traditional host systems are excellent for generating large volumes of bookings and they can ensure tickets are purchased on booking within its system, but not as good as ensuring the purchase of bookings made outside its system.

The newer reservations systems are much slicker at communicating with customers within their system and with the airline’s web site, but are not very good at communicating with outside GDS and other systems. Like the traditional hosting systems, they are good at forcing the customer to purchase a ticket before ending the reservation. One big advantage they have over traditional hosting systems is that the newer systems create a database of the airline reservations. A real database allows the airline to do detailed analysis of its customers and to effectively execute Customer Relationship Marketing (CRM) to its customers based on their purchases. This type of information makes airline marketing people salivate at the possibilities for the easiest type of marketing there is – to your existing customer.

For a boutique type airline starting out that has made the decision to remain out of the GDS and its evil and expensive booking fees, the selection of a reservations system would lean towards one that allows better CRM. However if the airline grows to a point where expanding the distribution network is necessary, as is agreeing to booking fees and all the rest, they’ve chosen the wrong reservations hosting system.

It makes sense to either add the robust external communication feature to the true reservation database system, or add the relational database feature to the traditional hosting systems. The first system to truly do that will have the golden egg. However, there are immense technical challenges of taking the incredibly dense set of text files (which is really what they are) that are contained in the reservations systems of AA, UA, DL, etc. and indexing them into a relational database. That would seem to argue for a solution that “bolts on” to the big hosting system and allows both systems to do what they do best.  

Until this happens, try to be on vacation the weekend your airline reservations migrate!

Posted by Holly at 12:27 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)

While perusing the local paper here yesterday I came upon a story about the service reductions going on at TUS. As earlier announced airline service reductions begin to appear in the current schedules, the manifestation of those cuts will be reduced passenger counts and service to fewer cities. Tucson Airport passenger numbers for July dipped 3% versus last year, and that's before any real reductions hit. As of of next week the list of cities served from TUS will shrink 41%, down to 18 cities.

The brunt of service reductions will occur at medium and smaller airports, like TUS, but even hub airports will feel a pinch. Phoenix Sky Harbor, long the nemesis of Tucson Airport, will see an 11% reduction in scheduled service during the 4th quarter of 2008. However it will still be a viable alternative to TUS, who will see a reduction of 26% for the upcoming quarter. Complicating matters a bit is the price of driving your own vehicle from TUS to PHX, not to mention the 2 hours out of your life (each way).

It will be interesting to see how airport managers react to the new reality of airline service. Long thought to be a "cost of doing business", in the era of charging for pillows and blankets airport operational costs are squarely on the airline's radar scope. The problem with some (most?) airports is that they are run like a bureaucracy, not a business. I, for one, don't choose an airport because of the cool artsy fartsy statues in the lobby or the facade of the terminal. If then air service is there at a price that makes sense, the restrooms are clean, and the baggage claim area roof doesn't leak, then I am a happy man.

Clearly this is an opportunity for some small and medium sized airports to actually grow, at the expense of those airports who fail to understand that their costs have a direct relationship to the level of air service at their facility. Airlines are parking airplanes and putting employees out on the street. Airports need to participate in the pain by tightening their belts and lowering their costs, or watching their service levels drop.

Posted by Godzilla at 3:43 PM | Permalink | Comments (0)

Hi there, Godzilla here. It's been a while since I've posted (and even longer since I've said anything of real value), but more on that in a minute.

Further to Holly's observation about how the TSA "inspected" 9 airplanes right into the maintenance shop in Chicago, TSA is now rattling its saber about pursuing security violations against the airline.

The mind boggles.

A published report says that the inspector (obviously from the shallow end of the gene pool) was able to gain access to 7 of the 9 airplanes "inspected". Whether or not that is true is immaterial, because once the manner in which the airplanes were entered rendered them unairworthy anyway. The TSA further stated that it was not their intent to "cause delays or potential damage to aircraft as a result of our inspections," and that the agency acted quickly to "re-enforce education about sensitive equipment located on the exterior of a plane."

Yes, the TSA needs to reinforce the meaning of "No Step" when painted on an aircraft; perhaps an English class is in order?

I've been a bit quiet lately because I've been busily trying to secure some type of gainful employment that includes airplanes. It's come down to two choices, one being an FO for a Part 135 operation flying a Citation I, and the other being a pilot for the local Sheriff's department's version of Con Air. It's a tough choice, I must say. Neither of them pay very well, but it's better than working for a living. Either choice will still leave me time to contribute, hopefully more regularly, to Holly's blog.

Was that a sigh of relief or a groan?

Posted by Godzilla at 4:51 PM | Permalink | Comments (0)

Trolling the headlines and news releases today I came upon one of those promotions-disguised-as-a-news-release that I see every day on the newswire. The headline to this one was interesting - Airline Study Shows Brands Struggle in Downturn. Really? In other news, Christmas will be on December 25th this year.

From the sublime to the ridiculous. First we have those who would equate airline to utility companies, and now this not so subtly disguised promotional piece touting a study that purports the solution to the current airline dilemma is better brand management. Airlines as The Electric Company, or yogurt.

The news release provides a link to a "Market Study" on 6 major airlines, which is really simply an analysis of their advertising strategy. In addition to being poorly written, complete with typos and an interesting use of grammar, the content was fairly lame and simplistic. Northwest and Delta were included as separate "studies" with no mention of their merger, nor how the new merged carrier might carry out a new brand management strategy.

Here's an excerpt from an airline industry blog on the site written by the CEO of the company who wrote the study - "The REAL loser here is you and I (Passengers) and the employees. Earth shattering change is needed and cutting out our pretzels, beverages and the other pittance of amentites (sic) currently offered will never make any of the (sic) successful. It is as if thier (sic) problem can be solved by charging me for my carry-on-bag. That is a sure way to encourage me to prefer them!"

It gets worse, both in terms of content and the recommendations. Absolute drivel. Don't get me wrong, in a normal business during normal times, brand management is critical. However, this ain't it.

Trying to rationalize the absolute disparity between article I wrote about a couple of days ago and this one was an interesting exercise. I've resisted the idea that the airline business is a commodity business, but the present set of circumstances are unprecedented. It's survival now, not marketing. It's like a heavy weight prize fight; sometimes winning is just being the only guy standing when the bell rings.

At any airline, everyday there are thousands, perhaps millions, of transactions that take place. The obvious transactions are between the airline and it's customers, but there are also transactions between airline employees. Each of those transactions have a plus or minus effect on the day's results. I think creating an environment where line employees and senior management are on the same team and feel the ups and downs equally with the line worker is part of the answer.

In addition to the self-promoting "news release" about airline brand management I saw today, I also saw a release from Southwest Airlines. I am not sure if there are any airlines out there today who would give a surprise party to a retiring airline president, except Southwest Airlines.

.

Posted by Godzilla at 7:08 PM | Permalink | Comments (0)

Hello there, Godzilla here. I've been enjoying an early monsoon season here in the Ol' Pueblo, and in the spirit of "green", I went to my favorite store last week (Ace is the place!) and bought a 50 gallon rain barrel. You set the barrel up under a down spout to catch water, and then it has a couple of outlets where you can hook up hoses for watering, or hooking up several barrels in series. The night after I set it up we had over an inch of rain and the barrel filled up! I was so happy it was like I had made it rain or something.

So of course the next step was to buy a couple more barrels and hook them up in series. Unfortunately the wifely unit put a stop to that project. Even when I explained all of the money we'd save on water (though the barrels cost $90 each, so, the payoff comes in 126 years), she shut me down. I've attached a picture here for your unbiased opinion. I think it looks kinda neat, no?

Regardless of your opinion on my rain barrel, I need to talk a little about reregulation, and specifically about an article by RSM EquiCo calling for congressional action on airline reregulation. The piece is very well written and goes through the obligatory bullet points listing the reasons that airlines need to be regulated again.

The article correlates the health of the airline industry to the general health of the economy, and although the airlines tanked before the economy did, the weak airline industry is exacerbating the general economic woes. The article quotes liberally from a speech given by Robert Crandall recently, where he drew a parallel between the airline industry and public utilities.

Further the article promotes "a structure in which a commission is established to review airline prices is essential, given the utility-like characteristics of airlines, and that if anything is to come out of possible industry re-regulation, it should be an updated pricing model."

Of course, oil at $150 a barrel will also spawn an updated pricing model, while removing all of the excess capacity that caused the low prices in the first place.

Bad idea, bad, very bad. Airlines are not similar to utilities. Everybody needs lights and heat, not everybody needs to fly for business or pleasure. Setting up commissions and boards, and getting the government process involved in the airline business (in fact, I think getting government involved in any business) will be an absolute disaster for passengers. You can't regulate common sense, and the glut of capacity and resulting pricing madness in the U.S. airline business has been a boon for passengers.

Now, it's time to pay the piper (or the oil man, take your pick). Airlines that have grown because they have good fundamentals and a strong product will weather this current set of unbelievably bad circumstances. Airlines that have skated along with no plan, no strategy, no product, and no business being in this business will fail. We don't need government regulation to limit the airlines that have this business figured out, while simultaneously propping up the ones who don't have a clue.

Posted by Godzilla at 6:56 PM | Permalink | Comments (0)

Every industry has it's own set of language quirks; three letter acronyms (TLAs, if you will) that become part of the language of that business. Traversing the Transportation Security Administration (TSA) web site it's hard to read an article without a decoder ring. They've got TLAs, FLAs, and at least one FILA on their site. I read a story on their web site that announced more random screening at gates this summer. They describe TSOs (Transportation Security Officers) being supervised by STSOs (Supervising Transportation Security Officers) working with BDOs (Behavior Detection Officers) and BAOs (Bomb Appraiser Officers) to detect IEDs (Improvised Explosive Devices), along with VIPRs (Visual Intermodal Prevention and Response teams), to enhance the ADASP (Aviation Direct Access Screening Program). That's right, I SYN.

While the airline industry bathes in red ink and airports are being asked to cut their costs or lose airline service, the Department of Homeland Security is looking for a 6.8% INCREASE in their FY2009 budget to $50.5 billion. Yes, that's billion with a B. You can check out the highlights here, but it includes an increase of $55 million for "deploying the Transportation Security Administration's Travel Document Checking program to airports nationwide". I looked for any reference to automation being developed for this purpose, but could find none. In TSA Administrator Kip Hawley's testimony to the Commerce Committee last May, he referred to "Travel Document Checkers", which sounds like those people who check your ID and boarding pass before you get to security. An extra $55 million for those folks (I guess we can call them TDCs)??

The TSA is pushing ahead with its CAPPS derivative called Secure Flight, and with an increase of $32 million (who knows how much they've already dumped down this hole), they feel like TSA will be able to take over passenger vetting by the end of 2009. I can't wait.

Earlier this month the Washington Times reported that an independent audit of the TSA produced by KPMG revealed, among other problems, that TSA was unable to provide documentation to back up $585 million listed in its financial documents due to weak accounting practices. Oh, heck, what's half a billion anyway? Besides, they are a security administration; they don't do accounting. But evidently they don't have all the bugs worked out in employee screening either. The same audit found TSA didn't consistently conduct background checks on new employees and contractors who provide IT security to the Coast Guard's financial center. DHS didn't argue with the report and said it is "taking aggressive action to implement the recommendations provided in the report," according to a letter written by David R. Nicholson, assistant administrator and chief financial officer at TSA.

Why on God's Green Earth (GGE) should we provide additional funding to an agency that has problems figuring out where the money goes? An agency that dumped who knows how many millions down a dry hole once called CAPPS II, now called Secure Flight (it needs one more word in the name for an official TLA), got its butt kicked by privacy groups, and now is trying this? They've been found lacking in screening employees who provide IT security and the KPMG report showed TSA has been allowing new employees "too much access to the computer systems immediately after employment". Let's spend $100 million on a passenger vetting system that requires a passenger provide name, address, and date of birth. What can possibly go wrong? GMAFB.

I am all for using airline reservations data to enhance security, but Secure Flight ain't it. It's virtually impossible to verify someone's identity with the information contained in a reservation without impinging on privacy, not to mention the gazillion dollars it will cost for the hardware and throughput required if the system is supposed to be even close to real time. Reservations can be an investigative tool. Time of booking, route, booking source, form of payment, telephone or email contacts, and of course name, are all present in a reservation and can assist intelligence folks tracking bad guys.

The real issue here however is that TSA doesn't seem be reading the news. The cost of travel is going up, there will be significantly fewer seats offered for sale from significantly fewer airports. And it doesn't appear to be a short term blip. What airlines and their passengers do not need is additional upward pressure on fees associated with air travel. Even in the name of "security".

Posted by Godzilla at 5:55 PM | Permalink | Comments (0)

Hello there, Godzilla here. It's been a while since I've posted on PlaneBuzz, and not for a lack of subjects available considering the current state of the airline industry. To be honest, sometimes writing about the gloom and doom out there is physically draining. I think Holly would agree with that.

So here is a little diversion; a little side trip away from tracking the daily increase in the price of a gallon of gas, or the calculation of reduced ASM's from the latest announcement of air service cutbacks. As some of you may know, I am a pilot and a Certified Flight Instructor (FAA code named CFI/A/I/ME) and I own an airplane. Late last year I learned about a group called Veteran's Airlift Command, a group of over 700 volunteer pilots who fly wounded soldiers and their familes to and from treatment facilities, at no charge. Soldiers receiving treatment for their injuries receive first rate care, but that care is often at a facility far from their family. Having family members close by during recovery is an important, some would say the most important, factor in a speedy recovery. The mission of the Veteran's Airlift Command is to "......provide free air transportation to wounded warriors, veterans and their families for medical and other compassionate purposes through a national network of volunteer aircraft owners and pilots."

I flew to San Diego this week and visited the Naval Medical Center San Diego (NMCSD), also known as Balboa Naval Hospital. While visiting several facilities co-located on the hospital grounds I had an opportunity to talk with the most impressive group of people I've ever had the pleasure of meeting. Located in the same area as NMCSD is Fisher House Balboa, an amazing facility that houses families of recovering military personnel free of charge.

Down the street from Fisher House I met with both the Army and Marine staff in charge of their respective programs. The Army program is called the Warrior Transition Company, and the Marines call it the Wounded Warrior Battalion.

The purpose of my visit was to make the staff aware of the service available, and as I said, they were an amazing group of folks.

But that wasn't the really impressive part. The really impressive part, or maybe the most humbling part of the trip was talking to the Soldiers and Marines.

Like Army Specialist Joe who had come in for a haircut. He's only been married for two months and is a bit new at the Husband occupation. Joe selected a couch for their new place without soliciting the approval of his new wife, with the expected result (take it back). I told him I thought red was a great color for a couch (!), and although I am not the person to give advice about either marriage or haircuts, I was pretty sure that anything going into a living room needs wife approval. Joe is a bilateral amputee and because of the severity of his injuries, using prosthetic legs is very painful and he can't use them for long periods of time. But as he walked off the elevator and extended his hand to me you couldn't tell he was feeling any pain at all from the legs. What a tough kid.

As I was waiting in the reception area for the Wounded Warriors Battalion I had the opportunity to observe the interaction between Marines who seem to continually come, go, and wait. These were young people who had some terrible injuries, but they were still wising off and busting chops.

I watched as two Marines walked by each other in the hallway, one raising his hand over his head and saying "Give me four" to the other, who was missing a finger on his right hand. Another Marine walked by his friend who was wearing a new prosthetic leg and said "Dude, that's a F#$%@d up lookin' leg!"

One Marine came in to the waiting area wearing shorts and a T-shirt that said "Please tell your boobs to stop staring at my eyes", which made me laugh out loud. As he hoisted himself from the wheelchair to the couch (he was also a bilateral amputee) with ease I also noticed he was missing a finger on his right hand and his right eye was glass. He struck up a conversation with another Marine waiting there, who was missing his right leg below the knee, his left leg was in a brace, and his right arm was in a type of cast from wrist to shoulder. They talked about stuff guys their age talk about, and I after a while I felt at ease enough to add my opinion on the subject (which was about the ridiculous salaries of Major League Baseball Players).

My point in describing the injuries is not to overshadow who these young people are; on the contrary. Although they have permanent injuries they still have lives to live. They still want to do the things that young people do as they grow up (although I did point out that the Boobs T-shirt was probably not the best way for him to accomplish his current goal). They are alive and they will live (hopefully) long fruitful lives. But as a society we owe these people something. A lot, actually.

It is not my purpose to have a political discussion on the war against terrorism. For the young people I met in San Diego it was a simple matter of doing their duty as they were asked. Now it is our duty to make sure these lives are not wasted. There are a lot of groups who need help providing assistance to wounded warriors and you can certainly donate to the Veteran's Airlift Command and click on "Ground Support....Make a Donation". Also, Fisher House is building another facility at the Balboa Naval Hospital and you can contribute to that endeavor through this link.

We now return to our regularly scheduled airline blogging.

Thanks for reading.

Posted by Godzilla at 3:41 PM | Permalink | Comments (4)

Godzilla here. Perusing the newswires today there were several stories that caught my eye, so here they are in no particular order.

Skydog Recovers

Not on the newswire, but nonetheless of utmost importance (at least to me and MB), Skylar (aka Skydog) has recovered from her rattlesnake bite without the aid of anti-venom. Evidently Mr. Snake slithered through a very small gap between our wrought iron fence and block wall in pursuit of a pack rat. Skydog thankfully came upon the rattler after it had expended some of its venom on the rat, so she didn't get a full dose herself. Since there is a shortage of anti-venom in Tucson and her blood count was low but not critical, the vet didn't give her a shot. After a couple of days of looking like a Shar Pei the swelling went down and she was her old self, which includes running out to the spot where the rattler was every time she goes outside. We're working on that.

A Fool For A Client

Delta is being sued for a million bucks by one of its customers, who also happens to be an attorney, for ruining his vacation. Must've been a helluva vacation he had planned.

According to the suit the passenger and his family "spent three days in airports, went days without their luggage, were treated rudely by airline employees and were forced to spend $21,000 on unused hotel rooms in Argentina, replacement clothes, and other costs." Evidently their flight from New York to Atlanta was delayed for 2 hours, and "the family was not allowed to board" their connecting flight in Atlanta. Because there were no Delta flights available for 2 weeks (according to the suit), the passenger re-booked his family on another airline and arrived at their destination three days late, with the luggage arriving five days after that.

Gag me with a habeus corpus.

Their flight was late out of NYC (we know THAT never happens) and although the connecting flight was still on the gate when they got there, it was too late to board. Due to the holiday season there were no Delta flights available, so it required flying on another airline. So far nothing sounds unusual, But $21,000 in unused hotel rooms, clothes, and "other costs" is unusual enough. Filing suit for $1 million is preposterous, and if the guy wasn't an attorney it would be very unlikely another attorney would even take the case.

My hope is that Delta tells him to go pound sand and asks that he not fly them anymore. Especially nowadays, no airline can afford a customer like that.

Fare or Fare?

When I read the headline "American Airlines Debuts Traditional Indian Fare" my initial thought was why AA would be announcing fare initiatives when everybody else was trying to raise fares and fees. But after reading the text I realized it was a promotion for their new inflight meals on the Chicago - Delhi service. I dunno, I'd probably have picked a different headline if I were writing the release.

International Woes

IATA put out a report saying the number of international airline passengers traveling first class and business class in March declined the most since 2003. Just what airlines need - reduced volume from high margin business travelers with $130/barrel oil prices. The global first/business class numbers fell 3.9% in March 2008 compared to March 2007. Within that number there was some slop, mostly the fact that Easter fell earlier this year as compared with 2007. Adjusted for this factor the overall decline was 1 - 2%, but within those numbers the U.S. domestic first/business class market declined 8.5% and intra-Europe was down 17%. Just another day in paradise.

Traditional wisdom (now there's an oxymoron if I ever wrote one) is that business travel has relatively inelastic demand and is less affected by economic cycles than leisure travel. However, business travel is not immune to having their travel budgets reduced, which precludes them riding up front. In addition, the price difference between F/C and Coach on international segments is not insignificant.

A typical Business Class fare from the U.S. to Europe can easily cost $10,000, while a coach ticket on the same airplane, though in the back of the bus, can be had for less than $2,500. Though some corporations have a travel policy that prescribes the conditions under which the employee can fly in F/J, expense budgets were made to be cut. Even if there were work rules precluding it, offering employees an incentive to sit in coach bus might even make sense.

In light of this it is not surprising that MaxJet and EOS foundered, nor that the list of international service being eliminated by major airlines is growing almost daily.

Posted by Godzilla at 6:48 PM | Permalink | Comments (0)

Here snakey snakey, come on snakey snakey, give us a little rattle. Come "say hello to my lil friend", Mr. .22 long rifle. Oh, sorry. In between trips taking Skydog to the vet I've been hunting for a rattler in my back yard. My walled in, sealed up, and supposedly snake-proof back yard, at least until this week. We've had snakes before in the walled in dog run, which is down in the wash behind the house, but never in back of the house. Ms. Skydog isn't feeling that well, but we're hoping to nurse her back to health. Meanwhile Nikko and I have been patrolling the back looking for revenge.

In between sorties to the backyard today I was reading some press releases by several airlines announcing the inevitable fare increases made necessary by you know what. (I am committed to write at least one post without using the "O" word).

United announced a $10 - $60 roundtrip fare increase (I hope it's closer to $60 than $10). Midwest Airlines announced it would begin charging $20 for the second checked bag. I know people in Wisconsin are nice, but that boat already sailed. Airlines are begining to charge for the First checked bag now, if the recent American Airlines initiative sticks.

One announcement that was relatively amusing was that Frontier had raised a whole host of their service fees, including raising the fee to check antlers from $75 to $100. Their baggage fees will obviously have the biggest positive revenue impact, since presumably more passengers check bags than animal parts, but I could be wrong.

Of the three announcements I think the United initiative will generate the most revenue for the least additional cost. A fare increase is the most logical and equitable way to recoup costs that are caused by the rising cost of you-know-what; although baggage (and antlers) do add more weight and consequently incrementally increase the cost of flying the airplane, it's like urinating in the ocean. Not much of a difference to the ocean whether you do, or whether you don't.

However, unless the airline is set up to force those fees into the initial transaction while the customer is buying their ticket, or at least provide the flexibility for the customer to pay the baggage fee while checking in at the kiosk, I think the revenue benefit will be mitigated. Maybe a lot. Down in the FAQ section of the Frontier announcement is a statement that says "You must pay the baggage fees at the ticket counter only." That doesn't sound to me like it is available at a kiosk. This will force lots of additional people to check in with a live person, and those are sometimes at a premium while at an airport. Head count is usually the first cost to eliminate when it is time to cut costs, so implementing a fee that requires a passenger is manually processed by a person is counter-productive, or ticket counter-non-productive, if you will.

Most traditional airlines have traditional distribution systems, meaning they are pretty good at collecting fares and not-so-good at collecting ancillary fees. Airlines like Allegiant or Air Canada, who have gone to great lengths to commodotize their products can more easily charge for each feature. Airlines with more traditional distribution who try and match this flexibility without corresponding flexibility in how they collect the fees, will be increasing their costs to collect the fees.

In addition to the hard costs of personnel, the boarding process becomes more complex. It will be interesting to see how airlines will handle checking those carry-ons that don't fit on the airplane. That there will not be enough room for carry on bags doesn't usually become apparent until towards the end of the boarding process. The usual drill is for the bag to be tagged at the jetway and then put in the baggage compartment - will that be cash or credit card sir?

Just raise the stupid fares.

Posted by Godzilla at 3:00 PM | Permalink | Comments (0)

There was an article in the Memphis Business Journal yesterday quoting Doug Steenland from NW as saying the combined DL/NW mega-carrier may ultimately be a smaller company if fuel prices continue to soar.

The reason? Simple. Fares have to go up to offset the high cost of oil, and rising fares will temper demand and result in fewer flights being offered in the marketplace. Where have I heard that mantra before? Oh yeah, me. I've posted several items about how the continued high price of oil has to be offset by higher fares, blah, blah, blah.

This news shouldn't be a surprise to anyone, except maybe to the people who heard the initial description of the merger as being a "1+1 = 2" transaction. Even with oil at $50 a barrel there would have to be some economies of scale realized from a merger, or else why do one? But with oil over $120 a barrel the economics are pretty clear; no matter how big you are, you can only last as long as your cash holds out.

The thing that bugs me about this is the way management has positioned this as a win-win (I hate that term). On the Delta web site there is a blurb touting the greatly improved pass benefits for employees. The sub header in the piece says "New reciprocal travel program adds to previously announced plans for a substantial equity stake, pay increases, seniority protection and other benefits for Delta, Northwest employees". That article is dated April 29 and the piece in the Memphis Business Journal is dated May 12. Has that much changed in 2 weeks?

To my knowledge the employees of Northwest and Delta are all tax paying adults who have responsibilities to pay their bills, raise their kids, and take care of their families and themselves. They deal with the realities of life every day, which includes dealing with bad news, and they certainly understand the basic tenant of economics that says if you have too much month left at the end of your money then something has to change. Better pass benefits are great, but if you can't afford to put gas in the SUV then a weekend flight to Disney World is just, well.......goofy (sorry, couldn't resist).

My advice (and you know what they say about free advice) to the people running NW and DL is to treat their employees like adults and level with them. Raising expectations about pay increases and seniority protection in the current economic situation is not going to have the desired result. The inevitable backpedaling has already begun, as witnessed in the quotes from Doug Steenland.

Posted by Godzilla at 7:59 AM | Permalink | Comments (0)

Scrolling through the various April traffic reports today and looking at the reported load factors I noted that the lowest reported today was Southwest's 72.%, which is slightly higher than April 2007. Actually, American Eagle reported a lower load factor than Southwest - 70.8% - but typically regional airlines have lower load factors because their aircraft have fewer seats and a no show on a 50 seat aircraft has a statistically more significant impact than one on a 140 seat aircraft. If we had ever achieved a 70% load factor at Business Express while I was there, well, I'd still be there.

United reported 80.5%, USAirways reported 83.2, Delta was at 81.4%, American reported 80.1, and Alaska was at 75.0 for the month of April. Although the load factors for UA and AA were down year-over-year (-3.6 points for UA and -2.0 for AA), others reported load factors that were unchanged or even slightly higher than April 2007.

Excess capacity? I'm not sure how that is defined, but with many carriers running load factors around 80% it sure doesn't seem like there are too many seats out there. Heck, nobody's got any room to accommodate many more passengers. With an average load factor of 80% on all flights, it is safe to say that peak flights are sold out - all the time. Hey - anybody want to start an airline!

Ironically, it is the carrier with that reported the lowest April load factor today, Southwest, that has managed to remain somewhat profitable during these last few months. Hmm......maybe the unprofitable airlines need to fire some of their customers and hire the ones flying on the profitable ones; evidently it takes fewer of them to make a profit.

Of course, I am being facetious, but here's the point. If you can't make money with an 80% load factor I am not sure the problem is too much competition. True, the cost of oil is a big factor, and the economic pressures on the consumer are real. But the size of the U.S. domestic airline market isn't the problem; the problem is finding the profitable customers within that market.

Posted by Godzilla at 6:37 PM | Permalink | Comments (5)

There were an interesting pair of news releases today regarding the settlement of the suit between Mesa and Hawaiian Airlines.

The settlement calls for Hawaiian to receive $52.5 million from a $90 million bond posted (in cash) by Mesa as security for the original judgment. In return Mesa will drop its appeal and get back the remaining $37.5 million of its own money.

The Hawaiian release characterized the original lawsuit as "Mesa's misuse of confidential and proprietary information obtained during Hawaiian's Chapter 11 plan of reorganization in 2004". The Mesa release characterized it as a "long-running lawsuit over Mesa's inter-island flight services operated under the go! brand name."

Tomato, tomahto I guess.

It may see a bit odd that Hawaiian would settle for less than the $80 million awarded, but it is hard to say how long the Mesa appeal would take to run its course. Suffice to say that in today's environment, "cash is king", and Hawaiian is probably happier to get $52.5 million today than it is to get an unknown amount (although probably higher than zero) some time in the future. On the other side, Mesa had to $90 million hanging out in that bond and they surely do need that cash, even if HA got the lion's share.

As for the Aloha suit, if their case is as strong as Hawaiian's then this kind of puts a number on that asset for them.

Posted by Godzilla at 3:50 PM | Permalink | Comments (0)

After my post regarding how fuel costs impact the P&L of a B737 flying a one hour route I received two corrections. The first one was received about 13 seconds after I posted (just kidding) from a reader who pointed out I had calculated correctly, but my explanation was a bit dyslexic. I had mistakenly typed that there are 6.84 gallons per pound of jet fuel, when it is obviously 6.84 pounds per gallon.

Another reader pointed out my flawed logic in using 800 gallons of fuel burned for the first hour of flight:

"In your fuel computation in Buzz, you compute an hourly fuel consumption of 800 gallons/hr for a B-737. This seems to be about right from my recollection of fuel burns on the 300/400 series at altitude. However, you have a small error in the logic of a 1-hour flight. While a 737 will burn 800 gallons per hour at altitude, getting there will cost you a whole lot more than 800 gallons per hour on any jet."

Well actually, my analysis assumed that the B737 would be taken directly to FL350 on the belly of a B52 and then released into cruise flight. OK, fine. My quasi P&L for a B737 on a one hour flight was flawed. Using this information the first hour of flight will cost an additional 33% in fuel burn. So instead of fuel costing $30 per onboard passenger for a one hour flight, it really costs almost $40 when/if a barrel of oil costs $150. Yeah, that's much better, thanks!

He also had an interesting theory about a new, more equitable way to asses a fuel surcharge, taking into consideration the impact of stage length on fuel burn:

"I'm waiting for the fuel surcharge to be a function of actual burn... you know... a meter at the entry door of the airplane where each passenger will slide his AmEx card. At the end of the flight, the flight attendant will give you a little slip like at the rental car return that has your actual fuel surcharge based on actual fuel burn on that flight. That would be more equitable than a per leg fuel surcharge, don't you think?"

I think he may have a future as Director of Ancillary Revenue at an airline near you!

Posted by Godzilla at 4:28 PM | Permalink | Comments (0)

Everybody loves statistics. In an era where we count everything, we can now come up with a baseball player's batting average with men on second and third base during a day game on a weekday when the pitcher's last name begins with the letter "P". I've seen stats that show which airlines can make money at various oil prices, and understandably the list of profitable airlines gets shorter as the price gets higher.

One metric I haven't seen is a graph showing a correlation between the number of U. S. domestic airlines and the price of oil. I don't think it is quite as linear as the comparison of profitability and the price of oil. There are most likely plateaus where the inevitable decrease in capacity boosts the revenue line by allowing the remaining airlines to raise prices to offset the increasing cost. The wild card here is finding the point at which air travel becomes too expensive for the discretionary traveler, and what price the remaining customers are willing to pay.

While poking around the net I found a neat matrix put together by ATA (not the airline) that shows the average price per gallon of jet fuel and the average price per barrel of oil by year. Looking at the 10 year period 1998 - 2007 there is a very consistent correlation between what a barrel of oil costs and what a gallon of jet fuel costs. Plugging the cost per gallon of jet fuel into a simple matrix that calculates the fuel burn of a commercial jet airliner is a simple matter. Then it becomes a exercise of masochism; how bad you want to make yourself feel?

Oil at $150 a barrel means jet fuel at ~$3.60 a gallon, and that means a 737 burns up almost $3,000 an hour for fuel alone. At an 80% load factor with 130 coach seats that means almost $30 per onboard passenger goes for fuel on a one hour flight. (Check my math; [5500 LBS/hour for a 737-300 x 6.84 pounds per gallon of jet fuel = ~800 gallons/hour] x $3.60 = $2,880 / 104 passengers). Plug your own numbers in for your favorite aircraft, and adjust the fuel burn numbers for a longer average stage length if you'd like.

Using my simplistic model, outside of fares, a lot of things get smaller when oil gets that expensive; fewer short flights in a 737, fewer passengers (due both to higher fares and less service) flying on even fewer airlines, and the ATC and Airport Security problems diminish (there is a silver lining).

Play it forward - how high can the price of oil go? $150? $200? Higher? The absolute number doesn't really matter. The price of oil will be what the buyer is willing to pay and what speculator thinks it will be worth in the future. Oil price volatility is the new "re-regulation", forcing airlines to remove themselves from markets that don't make economic sense and presenting a significant barrier to entry to the industry for new carriers.

Determining the shape and size of the airline business in the future is more difficult, and probably a fruitless exercise anyway. It's Airline Darwinism, which is to say it is an evolution that requires the industry to adapt to the new world of expensive fuel. Those unable to make a profit on their basic business will burn cash until they either figure it out, run out of cash and things to sell off, or oil prices significantly reduce (in which case they remain exposed to another upturn in prices). Or, they will survive if they do nothing but have the financial stamina to hang on until the industry shrinks enough so that fares can rise to offset the new cost structure.

How much capacity will have to be pruned is a question best left to experts, of which I ain't one. Regardless of how much capacity reduction is 'enough' to generate a positive revenue impact, in my view it will require more than just temporarily parking airplanes. Unfortunately the additional pain of workforce reduction is necessary in order that airlines don't adversely affect their unit costs.

A less important but nonetheless interesting issue is the question of how ancillary revenue plays a part once fares rise. Anyone who read my post entitled "Ancillary Agida" knows my view of that issue. If fuel prices stay high, or volatile, and another 5 or 6 airlines stop flying, will the survivors continue to put lipstick on that pig? Or instead, will they raise fares $50 each way and include checked bags, advanced seat assignment, and bad airline food?

Posted by Godzilla at 6:08 PM | Permalink | Comments (2)

In 1974 my favorite band (Tower of Power) released one of my all-time favorite tunes called "Only So Much Oil In The Ground". Although known more for their unique and hard driving music, Tower was prescient in its message; there isn't an endless supply of oil, so we better find something else. [If you want to see the band doing it at the 2006 Montreux Jazz Festival, check this out]. TOP is STILL my favorite band.

Thirty-four years later we can add to that "There's Only So Much Cash In My Checking Account"; we've still got oil but it is just expensive as hell.

There's a neat chart put out by the California Energy Commission that compares the annual and peak price of gas for the years between 1970 and today, adjusted for 2008 dollars. Using that chart you can see that until sometime in 2006 the average price for a gallon of gas never exceeded the level attained in 1980. At it's peak in 1981, the cost of oil topped out at $87 a barrel (in 2008 dollars).

Oil is now at ~$110 a barrel and last week four U.S. airlines went toes up, with rumors rampant about the imminent demise of a few more.

At some point (some would say we've already reached that point) the effect of high energy costs become ubiquitous, making everything from a loaf of bread to electricity more expensive. But although airfares have inched up, they've obviously not been raised sufficiently to offset the increased fuel costs. There are lots of reasons for this, but I believe there are three primary causes; 1) Demand for air travel is somewhat elastic and therefore raising prices could temper demand, 2) There is a significant amount of excess capacity, and 3) Airlines typically have high fixed costs.

Items 1 and 2 are somewhat related, since a reduction of demand caused by raising fares will exacerbate the capacity problem. I don't totally buy that argument, but I will concede the point. Although four domestic airlines did cease service last week the capacity impact was minimal. Capacity pruning has been announced by several carriers. Whether or not the reductions are sufficient to return the industry to profitability is dependent on whether the price of oil continues to rise or not.

Which brings us to item 3; high fixed costs. Reducing capacity removes the variable costs involved in flying an airplane, but not the fixed costs. For an airline with a fleet of fairly new airplanes, the cost of ownership can be as onerous as putting fuel in the tanks. Airlines with older and less costly airplanes can afford to park those airplanes more readily and ride out the storm, so to speak.

However, even with airplanes temporarily parked there still is the question of what to do with flight and maintenance personnel made superfluous by parking airplanes. Personnel costs can be absorbed more easily than bleeding red ink on losing routes, but there's only so much training and maintenance that can be done before negating the savings of parking the airplane. In an environment where oil prices are volatile, temporarily parking airplanes is a good strategy, as long as the cost of oil comes back down to a level at which those parked airplanes can be flown.

If oil prices stay high however, the capacity reductions need to become permanent. Whether these are done through mergers or more airlines just closing their doors, capacity needs to be significantly reduced so that fares can go up. There, I said it. Fares are too damn low. Consumers who pay $60 a week to put gas in the SUV can not expect to pay $99 one way for a 1,000 mile trip.

To date, higher gasoline prices have not significantly affected the consumer's appetite for driving their personal car, though at $3.50 for a gallon gas we may be at the brink. Most experts agree there is too much airline capacity, so maybe the high oil prices will provide both the opportunity for airlines to cut losing routes as well as the justification to raise fares on those routes still operating.

Perusing the web for some archival fare information I found an old PeoplExpress timetable, which although crude, makes a point about airfares in 1981. On their June 1981 timetable they advertised weekday flights from Newark to Jacksonville for $79, which in 2008 dollars is just shy of $188. Each way. And that was when oil was at $87/barrel, adjusted for inflation.

Thinking any airline can offer $99, $89, or $79 fares, even when charging $50 for checking a bag, is illogical. Ancillary, schmancillary, if an airline can't make money selling air travel I just don't see how it can be a viable business for anybody.

Posted by Godzilla at 10:38 AM | Permalink | Comments (0)

A few days ago CNN.com reported a story about a woman who was forced to remove her nipple rings before being allowed to board a flight from Lubbock to Dallas on February 24th.

Wait, did I just write that?

The TSA Blog, called "Evolution of Security", said that the 4 agents involved (2 male, 2 female) followed the proper procedures, but upon further review those procedures will be modified.

Ya think?

If you want to have a chuckle you should check out the comments, which as of this writing totaled 171. I'd say the sentiment runs pretty strongly against the TSA in this case.

In response to the comments the TSA came out with an official Statement on the incident, which in part says -

"TSA has reviewed the procedures themselves and agrees that they need to be changed. In the future TSA will inform passengers that they have the option to resolve the alarm through a visual inspection of the article in lieu of removing the item in question. TSA acknowledges that our procedures caused difficulty for the passenger involved and regrets the situation in which she found herself. We appreciate her raising awareness on this issue and we are changing the procedures to ensure that this does not happen again."

I recall a story a couple of years ago about a woman who was arrested for taking her top off at an airport security checkpoint after she set off the magnetometer. I guess it's OK now as long as it is done during a "private" security screening. Perhaps that's what the TSA means when it says "The Evolution of Security". Let's just cut to the chase and have all passengers completely disrobe and follow their carry on bags through the x-ray machine.

I'm joking of course, because treating physical security like this is a joke, but it's not funny to those of us who must endure it when we travel. It isn't the hard metal objects that are a danger to our safety on airplanes, it is those who would use these objects to harm us or others. Richard Reid tries to light a fuse on his Nike's and we subsequently all take our shoes off for screening. The London crew decides to use liquid explosives in their failed endeavor, and subsequently all liquids must be a certain size and fit into a small baggie. This isn't evolution; this is reactive, not proactive.

In the wrong hands a pencil is a lethal weapon, and it's not even metal. Cell phones can be used to set off explosive devices. Following the premise that physical security must keep all dangerous objects off of commercial airplanes to it's illogical conclusion, it becomes apparent that the safest alternative is to just ban all objects.

It isn't necessary to invade privacy in order for the TSA to know the airline passengers a little better. The information provided to the airline in their reservation is sufficient. But until we get over the aversion to mingling airline reservations together and utilizing the simple information contained in the airline reservation to help focus the physical security more effectively, we will continue to read stories like the nipple ring incident.

Posted by Godzilla at 9:08 AM | Permalink | Comments (1)

Besides an acquisition-from-hell, an unhappy workforce, and a giant rat outside of their Phoenix headquarters, USAirways has found another way to make negative news. This past Saturday one of their pilots accidentally discharged his weapon in the cockpit of a scheduled flight between Denver and Charlotte.

Understandably there was a flurry of opinion pieces chastising the airline, TSA, the pilot, and Charleton Heston, for allowing its pilots to legally carry a weapon onboard. I don't want to get into a Second Amendment discussion here, but I was particularly amused by an airline pundit who wondered why the pilot had a bullet in the chamber to protect against the gun accidentally firing. If the weapon was a revolver then there really isn't any choice but to have a bullet in the chamber, and a semi-automatic weapon without a bullet in the chamber is just a paperweight anyway, but I digress.

I've no idea what the Federal Flight Deck Officer (FFDO) training program teaches, but I'd guess that they teach the weapon is to be loaded with a round in the chamber and the safety on while in the cockpit. If the weapon isn't ready to use quickly then you might as well leave it home anyway. It is highly unlikely that a gun would go off without being handled by someone, so it's safe to assume that on a routine flight, on a routine day, you might want to break up the routine by showing off your new gun. Add some PIO (Pilot Induced Oscillation), and there you have it. I'd love to read the transcript of the cockpit voice recorder:

"Watch out for the.........[boom!!]"

"[Expletive Deleted]!!!"

"Think anybody heard that?"

The TSA doesn't allow just any pilot to carry a weapon in the FFDO program; there is a psychological evaluation that must be passed by the pilot before beginning the training. I only know this because a friend of mine who works for a large air freight company flunked the psych evaluation; evidently he has "difficulty dealing with authority", and was not allowed to participate in the FFDO program. I guess that doesn't say much for my choice of friends, but that's probably another story.

Personally I don't have strong feelings one way or another about pilots carrying weapons on commercial flights. I guess if anyone has a gun onboard an airplane I'd rather it be a good guy than a bad guy; and it's not like airport security is so perfect that they occasionally might miss a weapon in someone's carry on bag. A gun on an airplane isn't inherently dangerous unless the person who controls it has evil intentions, or, as in this case, becomes careless.

As a pilot myself I've always thought that having the airplane yoke in my hands would be far more effective a deterrent than a loaded gun. A couple of negative G pushovers that send the bad guy flying into top of the cabin would probably be pretty effective.

Posted by Godzilla at 10:11 AM | Permalink | Comments (3) | TrackBacks (1)

When I first started blogging I promised to only write about things I knew about. Perhaps that explains the paucity of my posts to date.

Over the past few weeks it's been a bonanza for bad stuff. How much will a barrel of oil eventually cost? How low will the dollar really go? Is it better to work for an airline or an investment bank?

So I've been reading the news and talking to people who know a whole lot more than I do about the financial markets, and it's pretty clear this is uncharted territory and nobody really know what the heck is going to happen. It sure is easier to predict things "will get worse before they get better". It's like saying the Cubs won't win the series in 2008; you've got a lot more chance to be right than wrong and nobody will remember if you were wrong anyway.

Try as I may, I have never been able to figure out the game of craps as played in Las Vegas. Seemingly you can bet on anything, and if you are lucky you can win a lot of money. No value is created, no service is provided, and minimal skill is involved. A bet is made and won, or lost.

Sounds like Wall St. to me; but then again, I am not a financial wunderkind.

OK, that's not fair. In part, the financial markets provide capital with which those so inclined can wager bets. Some safe, some not so safe. Some backed by logic, some backed by emotion.

It's the emotion part that is the most difficult for me to understand. If I believed everything I heard about the state of the world everyday I'd be suicidal. Pass me the ammunition honey, the 6 o'clock news is coming on.

My personal opinion is that the bad news we are hearing about the financial markets now is just payback for the multi-million dollar bonuses that have been earned by Wall St. financial types over the past few years. I believe the system itself is basically sound and it is proving its soundness now.

Posted by Godzilla at 8:11 PM | Permalink | Comments (0)

There was a story in the LA Times yesterday about an elite level frequent flyer on American Airlines who experienced some truly horrendous treatment on a couple of AA flights. Although the story relates several of his experiences on AA, the most notable was a flight from LA to London that was diverted to JFK due to a flight attendant who'd mistakenly thought she'd seen this gentleman on the employee bus. Thinking the passenger had circumvented security, she advised the cockpit crew and the decision was made to divert to JFK. This incident was widely reported at the time.

It's easy to read this story and decide that the flight crew involved overreacted and that this is racial profiling, plane and simple. It is also easy to forget that about 6 and 1/2 years ago ~2,800 people went to work not expecting or deserving to die, but they did.

It is frustrating when I read stories about this misplaced suspicion that causes flights to divert, or when someone runs through a security screening checkpoint and a concourse is shut down for 4 hours. Relying on physical security alone isn't going to cut it. We regularly read about airport security failures; just Google "Airport Security Failures" and check it out.

Airline flight crews deal with airport security every day and know well its absurdity; perhaps that explains (though doesn't justify) the American Airlines flight attendant's actions on the L.A - London flight. It's virtually impossible to keep all sharp objects and liquids in containers larger than 4 oz. of of commercial airplanes 100% of the time.

I recall a flight I took to Reagan National Airport in November 2001 that illustrated this fact. At the time passengers weren't allowed to leave their seats for the last 30 minutes of the arrival and flights to Washington received a second security screening at the boarding gate. On this particular flight they also had a bomb sniffing dog do a once through the airplane before we boarded. However the dog wasn't trained to detect hand tools.

Upon arrival in D.C. and as the aircraft rolled out on the runway I felt something roll into my foot. I looked down and there laying next to my foot was a 6 " long screwdriver, evidently left onboard by a mechanic during some previous maintenance work. I thought about telling the flight attendant but then realized I'd be spending the next 4-5 hours talking to the D.C. police, so I discreetly put it in my briefcase.

When I departed DCA for the return trip I forgot the screwdriver was still in my briefcase until I laid it on the x-ray machine belt during the security screening process. No big deal, they can just confiscate it and I'll be on my way. Except they didn't detect it. The offending screwdriver now hangs on my garage wall next to my other hand tools.

The moral of the story is that it isn't the sharp object from which we need protection; it is the person that would use the object to cause us harm on the airplane. And I am not talking about CAPPS II or whatever iteration is currently being contemplated. We don't need a mega database with everyone's credit information and other personal data so the government can spy on us.

In a previous life I worked for a company that proposed to the TSA a method to utilize the data that is present in airline reservations to provide real time responses to queries about the data. Things like - show me all of the reservations booked between W and X dates for travel out of Y airport on or after Z date. Designed to be used by security or law enforcement agencies, it would be a tool to confirm intelligence from the field. So if information was that bad guys were planning to do bad things to flights leaving London and bound for the USA next month, this tool could help find those reservations made by the bad guys. No credit checks, no social security numbers, no data enhancement, no billion dollar capitol cost to set it up. Just use whatever is in the reservation and don't bloat it (and make it slower) with useless personal data.

Instead of looking for weapons that have been tried in the past - shoe bombs, liquid explosives, or box cutters, let's just look for the bad guys. One thing every bad guy needs to accomplish their dastardly deed is a reservation.

Unfortunately what happened with CAPPS II was that the big government contractors smelled cash and lined up at the trough for their fair share. Ultimately there was a lot of money spent with no beneficial result, and the companies involved had the added bonus of defending themselves in various class action cases brought by privacy advocates. Although it supposedly was killed by TSA, it has been reported that they will continue to develop an "automated passenger pre-screening system". Oh goodie.

Fast forward 6 years and we are still looking for sharp objects and liquids at security checkpoints, taking off our shoes and belts, and diverting flights because we are not sure whether someone is a threat, or just a really good customer who happens to fly a lot.

Posted by Godzilla at 5:36 PM | Permalink | Comments (0)

It's me again. Sorry It's been a while since you've heard from me, but that wasn't by choice. It certainly wasn't for a lack of things on which to comment, that's for sure.

One recent trend in the airline business that, although is a logical result of too much capacity and $100/barrel oil, bugs me is ancillary revenue. There was even an "Ancillary Revenue Airline Conference" held recently. Heck, it must be here to stay if it is an acronym.

Call me a purist, but I think it is a sad day in Whoville if airlines can't make enough money from selling airline tickets to make a profit, so they have to resort to selling display ads on their tray tables and charging most customer for checking more than one bag. To be sure, the current conditions have created some strange bedfellows, including an alliance between Allegiant Air and The Blue Man Group, which still baffles me. However, people a lot smarter than I have determined that "it is good".

It may be helpful in the short term, but if an airline can't make enough money selling its services to support itself taking people to and from where they want to go, I don't think you can sell enough sandwiches, check enough second bags, or sell enough hotel rooms or show tickets to have any long term success. You might make it in the short term, perhaps make a few bucks in an IPO and get out before the house of cards falls in; but eventually the business plan needs to be sound.

Well that's all from Godzilla this evening. If, due to my absence, you have forgotten who I am you can check out Holly's introduction of me here. I would certainly be happy to read your comments; posted here or sent directly to Godzillaspeaks@gmail.com.

Posted by Godzilla at 5:36 PM | Permalink | Comments (2)

I downloaded the DOT application for Family Airlines yesterday and although it is a 355 page document, beyond the pro forma stuff required for the application and the numerous resumes, I don't see the case being made as to why the world (or at least Las Vegas) would be better off with Family Airlines. The concept isn't new, the strategy isn't real clear, and there doesn't seem to be a compelling reason to locate in Las Vegas except that some of the principals live there.

One of the confusing things about the application was that the facts listed on their website don't always jive with what is listed in the DOT application. In the first paragraph of the Company Information page they list the seating configuration of their 747-400 aircraft as 539 in Coach and 42 in their version of business class (called Office Class) in the upper deck. In the DOT application the configuration is listed as 482 in Coach and 42 in the upper deck business class. The web site also lists the pitch in Coach as 31-32 inches. Not being an expert in the 747-400 I will defer to those who are, but I'd be interested to learn if it is possible for a 31" pitch with 539 seats.

Another interesting feature is that Family Airlines forecasts that 50% of its revenue will come from things like selling food, entertainment, and internet access onboard. They will also take every opportunity to sell consumer ads on, in, and around their airplanes. The CEO Barry Michaels is quoted on the web site "I'm a believer that everything you see or touch should be paid for by advertisers."

Family Airlines says it will start with two airplanes flying JFK-LAX-MIA (reminiscent of another and defunct 747 operator - Tower Air) with fares ranging from $19 to $69. Apparently the inflight personnel will also be entertainers, at least according to their promotional information.

Where do I start.

First, the airplane. Four engines. Four HUNGRY engines. Second, the "hub". Remember National Airlines? They flew 2 engine B757's and they got killed on the short legs from LAS (LAS-PHX, LAS-LAX, etc.), and that was at $50/barrel oil. I have no idea of the operating efficiencies of a B747-400 but I would guess that on anything less than 1,000 miles it is pretty ugly.

Third - multiple profit centers. At $19 per passenger on the (proposed) LAS-LAX leg you better be selling dinner at $50 a plate and rowing a banner begind the airplane if you want to make a profit on that sector.

There is more, but it's like clubbing a baby seal. This is just a bad idea and nobody I have talked to thinks it is a good idea. I understand the excitement of building a new airline and trying to do something different. But this ain't it. There is nothing here that hasn't already failed before.

You need more than low fares to be successful in this business.

Posted by Godzilla at 7:53 PM | Permalink | Comments (2)

Actually it isn't my first blog, but I don't think it is official blogging if nobody reads what you write, which I am pretty sure is what happened to my first effort at this some time ago. It's kind of like that tree falling in the forest with nobody around to hear it; if nobody reads your blog, did you really blog at all?

Blog. The word itself is pretty interesting; it can be both a noun and verb, and perhaps even an adjective (e.g. 'That guy is a real bloghole'). Perhaps it's just me (it usually is), but it sounds like something your dog might do in the back of your car on the way to the vet. "Nikko blogged all over the back seat and I had to clean it up." Apparently anyone who can type can be a blogger. Kinda like karaoke; give a drunk a microphone, some background music, an audience, and viola (a stringed instrument similar to the violin) - a singer is born.

However, as those who watch American Idol can confirm, there are good singers and bad singers. And as those who read blogs can confirm, there are good bloggers and bad bloggers. Holly has done quite a job of building a great reputation and providing good content. Being a novice at this I will endeavor to be a good blogger by sticking to two simple rules:

1) Only talk about stuff I know something about.

2) Provide the reader with a good ROI for the time spent reading the blog.

I will also eventually figure out how to use this blogging software as time goes on and be able to put in pictures and links and stuff. For now I am just trying to make sure the paragraphs line up and I can get spell check to run.

I encourage comments and emails from people who agree with my opinions, and you can send them to Godzillaspeaks@gmail.com. Just kidding. People who disagree can also send email, I just won't read them.

I'll come back at this soon when I have something perhaps more substantive to offer; perhaps after I have a chance to dig into the JetBlue decision to make like a legacy carrier and [gasp] begin offering refundable fares.

Posted by Godzilla at 6:43 PM | Permalink | Comments (0)