08 September 2007

Sabre and Amadeus head for full investigation of proposed JV

The EU has just announced that it has deemed that the competition issue between these two behemoths deserves full investigation:

Origial Case Number 2007/c 190.

However in typical EC style you still have only until the 12th September to comment.

Any concentration of GDS type power even at this JV level is in our view likely to result in reduced competition. While we applaud the need for the market to have a better way of processing hotel transactions - we remain skeptical on the value of these two players providing it.

04 September 2007

Airlines adjust after Summer of discontent

Great piece in the (still) independent WSJ. http://online.wsj.com/article/the_middle_seat.html?mod=djemseat

The airlines opine that they have been hit by a triple whammy: High Load factors (duh!!!) ATC delays (if all else fails blame the government), The weather (act of God). They can apparently handle 2 out of 3 but not all 3. Apparently Airlines cannot make bad decisions that contribute to the problem…

As a result they are going to operate differently and hold back seats (read this as still overbook just not as badly), use spare aircraft and add flex into the timing.

OK Chaps (Mr. and Mrs. Airline) - I have a suggestion for you. How about using less SMALLER aircraft and bite the bullet on capacity constraints. The overuse of RJs is the fundamental root cause of the increase in aircraft system resources without a corresponding increase in passenger capability or a pricing model that accommodates this significant upsurge in traffic without necessarily increasing the system capacity for passengers.

I have a further suggestion for the FAA. Guys is this a wakeup call for VLJs? If you were to reprice the usage of the scarce airport tarmac, and flight pathways - then this problem can be ameliorated BEFORE it hits us.

But perhaps its just better to blame the Government and the weather than actually doing the right thing.

One day Congress will wake up to the problem and boot in a quick fix.

03 September 2007

Jim leaves DL - A job well done + NW/DL

The quiet half of the Jim and Gerry show at DL has finally announced his exit with a generous severance package. Entirely deserved in our opinion. While Gerry was very much the public face, Jim slaved away at the detail. Incoming CEO Richard Anderson has big shoes to fill. But its a clean break and whether or not the oft quoted NW/DL merger of champions comes about, at least it will be based on a clear and open state of play.

From our perspective we believe that a merger of DL and NW will not serve the 2 companies shareholders nor the market in general well. Both players are still reeling from several years in protection and have a difficult enough road to follow without the distraction of such a merger. CVG and MEM would be the immediate victims but while the stockmarket in general may applaud fortress hubs in MSP, DTW and SLC all of them including JFK and ATL are under attack from smaller more nimble players.

Hey Mr Anderson - just say no

Brace yourselves - 787 delay story coming

Boeing is playing down rumours (now fact in our opinion) that the 787 program is running behind schedule.

With May delivery dates looking increasingly shaky, the Boeing spin machine is in full force. On Wednesday the scheduled 787 quarterly briefing should be an interesting affair.

While we doubt we shall see 787s parked in Everett with concrete blocks instead of engines (like the 747 early stage program) there is a now a clear likelihood that the first customers will not be getting their full complement of planes on time.

The culprit(s) the process of reinstalling fasteners for the prototype and yes our old friend software integration are probably the candidates for the delay. We personally believe that the 787 will fly in 2007 Q4 with deliveries coming in before the start of the second half of 2008. Even so that is a very aggressive schedule.

Boeing is not infallible and this goes on to just show that launching a new aircraft is no trivial exercise. Airbus is probably not going to be able to take advantage of this situation. But at least they can take some comfort that they are not the only player to suffer. (No comments please on Embraer's recent melt down of its supply chain).

Coming up - likely that Boeing will shortly formally announce the 787-10 to compete with the higher end A350XWB. Boeing is not shy in letting the new aircraft cannibalize the market for the older model 777-200s.

Stay tuned people. Spin at its finest coming your way.

Back from Holiday... lots to chat about

Sorry we have been quiet during August but the team decided to take some tme off. We will be back in full production later this week as we review the current trends and provide some of our usual milquetoast intensive analysis.