Disclaimer - I am not trying to breathe doom and gloom into everyone but I was looking for some historical perspective on recessions in the last century. I came across some interesting statistics from the CAA (UK's Civil Aviation Authority - regulator). They have a great statistic set from their library. It showed total passengers (in those days by ship) from UK to US by class of service.
It shows that traffic feel from a peak in 1929 to less than half four years later. Although American gross domestic product recovered to 1929 levels by 1936, the UK-US route did not, and only after the Second World War did passenger numbers recover and exceed those of the late 1920s.Interestingly enough the make up of passengers from the premium classes to the economy classes changed dramatically and stayed changed.
The original image can be seen at their website, the quality is poor for a scan so try and look at its original here:
http://www.caa.co.uk/docs/80/20080623%20Aviation%20Trends%20-%20Q1%202008.pdf
Just a little food for thought.
Cheers
Timothy
20 July 2008
A Travel Agent's Lament - Anon
I was sent this by an an old colleague - thanks Professor Gill - so a little frivolity for today.
A Travel Agent's Lament
Last night as I lay sleeping
I died or so it seemed,
Then I went to heaven
But only in my dream
Up there St Peter met me
Standing at the pearly gates,
He said "I must check your record
Please stand here and wait."
He turned and said "Your record
Is covered with terrible flaws,
On earth I see you rallied
For every losing cause."
I see that you drank alcohol
And smoked and partied too,
Fact is, you've done everything
A good person should never do.
We can't have people like you up here
Your life was full of sin,
Then he read the last of my record
Took my hand and said "Come in."
He led me up to the Big Boss and said
"Take her in and treat her well",
She used to work in Travel
She's done her time in hell."
We cannot attribute it other than I think it comes from a Travel Agent or BA in the UK. If you find the originator - please advise and I will attribute it correctly.
Cheers
Timothy
A Travel Agent's Lament
Last night as I lay sleeping
I died or so it seemed,
Then I went to heaven
But only in my dream
Up there St Peter met me
Standing at the pearly gates,
He said "I must check your record
Please stand here and wait."
He turned and said "Your record
Is covered with terrible flaws,
On earth I see you rallied
For every losing cause."
I see that you drank alcohol
And smoked and partied too,
Fact is, you've done everything
A good person should never do.
We can't have people like you up here
Your life was full of sin,
Then he read the last of my record
Took my hand and said "Come in."
He led me up to the Big Boss and said
"Take her in and treat her well",
She used to work in Travel
She's done her time in hell."
We cannot attribute it other than I think it comes from a Travel Agent or BA in the UK. If you find the originator - please advise and I will attribute it correctly.
Cheers
Timothy
19 July 2008
Beware people bearing gifts - Amadeus new tools
OK - I love the obfuscation of the distribution business. It matches that of the rest of the Travel Industry.
So here is a new little missive from Amadeus that just makes me what to laugh. In fact when I first read this - I really did burst out laughing - my seat mates on Aladia thought I was nuts. Frederic is a nice chap but this is really an abuse of the truth!
I provide the release in its full courtesy of Professor Alex:
Open Quote:
Amadeus launches airline service fee tool - 16 Jul 2008
Amadeus has launched module one of its Airline Service Fees automated ticket pricing and fee collecting solution for multiple channels.
The first module enables carriers automatically to collect ticketing, credit card and miscellaneous fees in their direct sales channels, such as ticket offices, call centres and websites.
The second module, due to be rolled as part of the Amadeus Retailing Platform, will allow airlines to collect fees through travel agencies.
The company claims Amadeus Airline Service Fees will increase airlines’ revenues by eliminating human error, improve airlines’ fee management and make fee collection more transparent, as recommended by the European Union.
Frederic Spagnou, vice president of Amadeus’s Airline Business Group, said: ‘The EU recently highlighted the need for transparency in airline fee calculations.
‘The Amadeus Airline Service Fees solution was developed precisely to solve the issue, quoting a total price including all fees and displaying a complete breakdown of those fees to the final customer/traveller.’
The first module of Amadeus Airline Service Fees solution is now available to all airlines that have adopted the Amadeus Alta Reservation platform.
End Quote.
You be the judge!
So here is a new little missive from Amadeus that just makes me what to laugh. In fact when I first read this - I really did burst out laughing - my seat mates on Aladia thought I was nuts. Frederic is a nice chap but this is really an abuse of the truth!
I provide the release in its full courtesy of Professor Alex:
Open Quote:
Amadeus launches airline service fee tool - 16 Jul 2008
Amadeus has launched module one of its Airline Service Fees automated ticket pricing and fee collecting solution for multiple channels.
The first module enables carriers automatically to collect ticketing, credit card and miscellaneous fees in their direct sales channels, such as ticket offices, call centres and websites.
The second module, due to be rolled as part of the Amadeus Retailing Platform, will allow airlines to collect fees through travel agencies.
The company claims Amadeus Airline Service Fees will increase airlines’ revenues by eliminating human error, improve airlines’ fee management and make fee collection more transparent, as recommended by the European Union.
Frederic Spagnou, vice president of Amadeus’s Airline Business Group, said: ‘The EU recently highlighted the need for transparency in airline fee calculations.
‘The Amadeus Airline Service Fees solution was developed precisely to solve the issue, quoting a total price including all fees and displaying a complete breakdown of those fees to the final customer/traveller.’
The first module of Amadeus Airline Service Fees solution is now available to all airlines that have adopted the Amadeus Alta Reservation platform.
End Quote.
You be the judge!
OZ experiencing pain - The Duopoly are cutting
Both Qantas and Virgin Blue are experiencing a degree of pain in the economic downturn.
Qantas has announced plans to cut a further 1500 staff and ax both routes and ground aircraft. 767-200s are already gone, 18 737-400 Classics, and while that nicely painted Nalanji Dreaming 747-300 has long since gone the remaining 747-300s in the fleet are being grounded. Likely the JetConnect subsidiary in NZ will also get some cuts. Jetstar will see a slowing of growth. It has trimmed its growth to zero from 8% and will shut the US and London Call Centers. A savage cut will occur with 20% cuts in Admin and HQ staff.
For Virgin Blue soon to be Toll free (sic!) routes are being cut, staff laid off and I suspect some deliveries being deferred and aircraft being temporarily grounded. No word on their JV ultra low cost venture.
This is not just a problem for the USA folks
Qantas has announced plans to cut a further 1500 staff and ax both routes and ground aircraft. 767-200s are already gone, 18 737-400 Classics, and while that nicely painted Nalanji Dreaming 747-300 has long since gone the remaining 747-300s in the fleet are being grounded. Likely the JetConnect subsidiary in NZ will also get some cuts. Jetstar will see a slowing of growth. It has trimmed its growth to zero from 8% and will shut the US and London Call Centers. A savage cut will occur with 20% cuts in Admin and HQ staff.
For Virgin Blue soon to be Toll free (sic!) routes are being cut, staff laid off and I suspect some deliveries being deferred and aircraft being temporarily grounded. No word on their JV ultra low cost venture.
This is not just a problem for the USA folks
Fred Ried finds a home at Bombardier
After being dumped for political reasons - he can now have some fun with Flexjet
Farnborough Postscript - How did I get to 500+ orders
Someone has been questioning my math. So I will admit to fudging a little but here is the actual math, note that I have not added options:
Airbus Full orders: 256
Boeing Full Orders: 197
Bombardier C-Series: 30 (plus 30 Options)
Sukhoi Superjet 100: 49
Note I didn't include Turboprops nor the freighter conversions.
The fudging is from Boeing, whose orders for most of their big announcements were previously listed as being no-name customers specifically the Air China order for 45 planes - 737/777s.
Now will you believe me?
Cheers
Timothy
Airbus Full orders: 256
Boeing Full Orders: 197
Bombardier C-Series: 30 (plus 30 Options)
Sukhoi Superjet 100: 49
Note I didn't include Turboprops nor the freighter conversions.
The fudging is from Boeing, whose orders for most of their big announcements were previously listed as being no-name customers specifically the Air China order for 45 planes - 737/777s.
Now will you believe me?
Cheers
Timothy
India - new tools for Cleartrip
Cleartrip is the solid #3 in the Indian market. Sandeep, Stuart, Hrush, Mart and the team in Mumbai have quietly been making the engine better and better over time.
Now they have finally (after nearly 3 years!!!) opened up the international market and perhaps they can start making some good money.
They say that imitation is the sincerest form of flattery - well then ClearTrip's graphs may be a knock off of the Skyscanner displays - but they are useful. I cannot verify the accuracy of the charts but it is a great tool. Why don't others do this sort of thing?
Anyway check it out.
http://www.cleartrip.com/graphs/
Cheers
Timothy
Now they have finally (after nearly 3 years!!!) opened up the international market and perhaps they can start making some good money.
They say that imitation is the sincerest form of flattery - well then ClearTrip's graphs may be a knock off of the Skyscanner displays - but they are useful. I cannot verify the accuracy of the charts but it is a great tool. Why don't others do this sort of thing?
Anyway check it out.
http://www.cleartrip.com/graphs/
Cheers
Timothy
18 July 2008
US Airlines Downgraded by Both Fitch and Moodys
I have just had a chance to read the Fitch Ratings report for the US Airlines. Perhaps I should have read it before I wrote my 500th Blog. It paints a sad picture. As I have previously reported on Moodys downgrade - I am going to concentrate on the Fitch Report issued on July 15th. BTW it is available for download from the Fitch ratings website:
http://www.fitchratings.com/corporate/reports/report_frame.cfm?rpt_id=392972
Note you will have to register before you can reach it.
Essentially we are back at the post 9/11 state and all the efforts at restructuring over the past nearly 7 years have been for nothing - driven by the high price of oil.
For the airlines they track here is their outlook. Only one carrier rises to an A and only two have a stable outlook.
Company IDR Outlook
AMR Corp. B− Stable
Continental Airlines, Inc. B− Stable
Delta Air Lines, Inc. B Negative
JetBlue Airways Corp. B− Negative
Southwest Airlines Co. A− Negative
UAL Corp. B− Negative
US Airways Group, Inc. CCC Negative
However the kicker is the final paragraph of their outlook which I reprint here:
Looking ahead to 2009, Fitch believes that unsustainable cash flow trends and eroding
liquidity positions will significantly raise the probability of a major carrier liquidation. Recent ratings actions reflect heightened industry liquidity concerns, and follow-on downgrades are likely if fuel and revenue trends show no sign of improvement. Prospects for successful restructuring in Chapter 11, already limited by reorganizations completed earlier in the decade, have now been undermined further by the tightness of global credit markets and lenders’ unwillingness to commit more capital to an industry that remains fundamentally flawed both in terms of structure and long-term cash flow generation potential.
Of the list it is clear who they think are the most vulnerable. However for now they are sugar coating it by increasing the pool size of the vulnerable carriers. There is a dire warning on at least one carrier:
"Fitch believes that LCC in particular among the largest carriers faces the greatest risk of a cash crisis in the early part of 2009." LCC is the stock code for US Airways a misnomer if ever there was one.
It should be noted that Fitch is still using traditional metrics. I have argued before that this is actually part of the problem and that the airlines (and correspondingly their trackers and watchers) should be using a new set of metrics to illustrate the health and effectiveness of their model.
Of the carrier group they monitor - only Continental has engaged in shoring up its position over the last few months. Clearly Fitch is going to be compelled to issue a report as soon as possible after Labor Day when they can review the positions of the US airlines and see not just the summer performance but also what other actions the airlines have made to shore up their financial positions.
http://www.fitchratings.com/corporate/reports/report_frame.cfm?rpt_id=392972
Note you will have to register before you can reach it.
Essentially we are back at the post 9/11 state and all the efforts at restructuring over the past nearly 7 years have been for nothing - driven by the high price of oil.
For the airlines they track here is their outlook. Only one carrier rises to an A and only two have a stable outlook.
Company IDR Outlook
AMR Corp. B− Stable
Continental Airlines, Inc. B− Stable
Delta Air Lines, Inc. B Negative
JetBlue Airways Corp. B− Negative
Southwest Airlines Co. A− Negative
UAL Corp. B− Negative
US Airways Group, Inc. CCC Negative
However the kicker is the final paragraph of their outlook which I reprint here:
Looking ahead to 2009, Fitch believes that unsustainable cash flow trends and eroding
liquidity positions will significantly raise the probability of a major carrier liquidation. Recent ratings actions reflect heightened industry liquidity concerns, and follow-on downgrades are likely if fuel and revenue trends show no sign of improvement. Prospects for successful restructuring in Chapter 11, already limited by reorganizations completed earlier in the decade, have now been undermined further by the tightness of global credit markets and lenders’ unwillingness to commit more capital to an industry that remains fundamentally flawed both in terms of structure and long-term cash flow generation potential.
Of the list it is clear who they think are the most vulnerable. However for now they are sugar coating it by increasing the pool size of the vulnerable carriers. There is a dire warning on at least one carrier:
"Fitch believes that LCC in particular among the largest carriers faces the greatest risk of a cash crisis in the early part of 2009." LCC is the stock code for US Airways a misnomer if ever there was one.
It should be noted that Fitch is still using traditional metrics. I have argued before that this is actually part of the problem and that the airlines (and correspondingly their trackers and watchers) should be using a new set of metrics to illustrate the health and effectiveness of their model.
Of the carrier group they monitor - only Continental has engaged in shoring up its position over the last few months. Clearly Fitch is going to be compelled to issue a report as soon as possible after Labor Day when they can review the positions of the US airlines and see not just the summer performance but also what other actions the airlines have made to shore up their financial positions.
Reflections on 500 Blog posts - THE USA Market Editoria
OK so we are celebrating 500 blog posts for The Professor. I was searching for something pithy to dive into. Professor Dingley sent me a suggestion but I will concentrate on one issue that I think affects the general health of the Aviation Travel and Tourism ecosystem in general. The USA market and the legacy airline playerss. So for the celebration of our 500th Blog here is my take.
We are experiencing a fundamental shift in the center of the Universe. The US market has reached a level of maturity where growth is no longer guaranteed. The stunning growth in China. India and the Middle East/North Africa markets coupled with the resurgence of markets such as even in old Europe need to be factored into the success or failure of the market sector and industry as a whole. The more jaded amongst us would say that the US market and its players are finally getting their comeuppance. However an isolationism type attitude will not benefit anyone. We live in a society and its attendant economy that is now inextricably linked. One commentator called it a “continuum” rather than a whole homogenous environment. These are still lessons that are lost on airlines and other businesses based in the USA. Clearly we have seen the fundamentally broken model of the US legacy/network carrier fail to fix itself following 9/11 and the billions in losses and aid that was poured into the market. A chance to right the wrongs under the then lenient terms of the US Chapter 11 rules was clearly – in hindsight – missed. Distribution saw the collapse of the US off-line travel agency model and the attendant fall in value of the GDS. Yet the strive to control the market vs addressing the broken internal model structure of these businesses seems to be the defining characteristic of the US legacy airlines. What makes Ryanair tick so profitably? What makes Southwest the world’s largest airline by passengers? What enables consistent profits at the Asian powerhouses of SQ and CX? Why cannot the US airlines achieve these fundamentally sound commercial bases of their operations? Rather than fundamentally changing the way they do business, the US airlines have shown themselves to be inept and instead only good at copying the characteristics of the successful players. It seems that Lemmings still rule.
If we examine the success of Boeing and Airbus – over 500 aircraft orders in 5 days at the just concluded Farnborough 2008, we can see that there is still a good model at one end of the value chain. Perhaps now they too need to get into the game and address some of the ills of the USA market. Both companies have sources to capital that in the past have been used to stimulate sales. Now perhaps they should go to the well again and find ways to help the US industry to re-equip. Average fleet age for the US legacy carriers is not looking too pretty. With the so called Boeing Lock up commitments made by CO, DL and AA still over 2/3rds of their life to run – perhaps this is a time to open up some competition and get the new planes into the US market. But this is not the only fundamental element that is broken. For example the responsible emissions policies and scarce resource policies are not there in the US market. I am not a fan of the heavy hand of regulation but aviation is by definition a regulated and scarce resource. Perish the thought that I would be supporting Bob Crandall’s re-regulation calls. It is clear that the Bush Administration’s policy on commercial passenger aviation will go down as one of the stunning failures of its tenancy of the recent past. The new administration whoever that maybe needs to rethink the ground rules for commercial aviation policy – and fast. Not least of which is to open up the US Market to international competition starting with full NAFTA unilaterally and a removal of the ownership regulations. Full Open Skies with 5/6/7/8/9 Freedoms would be too radical but for the downtrodden US based consumer – there needs to be better usage of resources and a better mechanism to stimulate competition.
So we are clear – I do not believe that oil is the core problem affecting the US Airlines market sector. Rather the failure of successive managements to address the facts that:
1. That oil is a resource – that it is scarce
2. There needs to be a full accounting for the environmental cost of the services
3. Airways and Airports are a scarce resource
4. Transportation is a critical part of the eco-system of commerce
5. That the structure of the airline pricing has to change to match the reality of the economics of airlines
6. The need to educate the consumer on how to purchase in that environment
7. And yes the ability to manage the complexity is well within the capability of airline managers, they are not victims here
I hope that everyone reading this will use the opportunity to reflect. A wise person once said “Plus Ca Change” lets hope the people who need to deal with this can wise up and provide a way out of here.
Right now I am not optimistic. But I have seen many people be resilient and recover from disastrous situations. There is a crisis in the industry but stop whining and start doing would be the right way to deal with it.
Best of luck to all concerned. I wonder what my 1000th post will be!
Cheers
The Professor.
We are experiencing a fundamental shift in the center of the Universe. The US market has reached a level of maturity where growth is no longer guaranteed. The stunning growth in China. India and the Middle East/North Africa markets coupled with the resurgence of markets such as even in old Europe need to be factored into the success or failure of the market sector and industry as a whole. The more jaded amongst us would say that the US market and its players are finally getting their comeuppance. However an isolationism type attitude will not benefit anyone. We live in a society and its attendant economy that is now inextricably linked. One commentator called it a “continuum” rather than a whole homogenous environment. These are still lessons that are lost on airlines and other businesses based in the USA. Clearly we have seen the fundamentally broken model of the US legacy/network carrier fail to fix itself following 9/11 and the billions in losses and aid that was poured into the market. A chance to right the wrongs under the then lenient terms of the US Chapter 11 rules was clearly – in hindsight – missed. Distribution saw the collapse of the US off-line travel agency model and the attendant fall in value of the GDS. Yet the strive to control the market vs addressing the broken internal model structure of these businesses seems to be the defining characteristic of the US legacy airlines. What makes Ryanair tick so profitably? What makes Southwest the world’s largest airline by passengers? What enables consistent profits at the Asian powerhouses of SQ and CX? Why cannot the US airlines achieve these fundamentally sound commercial bases of their operations? Rather than fundamentally changing the way they do business, the US airlines have shown themselves to be inept and instead only good at copying the characteristics of the successful players. It seems that Lemmings still rule.
If we examine the success of Boeing and Airbus – over 500 aircraft orders in 5 days at the just concluded Farnborough 2008, we can see that there is still a good model at one end of the value chain. Perhaps now they too need to get into the game and address some of the ills of the USA market. Both companies have sources to capital that in the past have been used to stimulate sales. Now perhaps they should go to the well again and find ways to help the US industry to re-equip. Average fleet age for the US legacy carriers is not looking too pretty. With the so called Boeing Lock up commitments made by CO, DL and AA still over 2/3rds of their life to run – perhaps this is a time to open up some competition and get the new planes into the US market. But this is not the only fundamental element that is broken. For example the responsible emissions policies and scarce resource policies are not there in the US market. I am not a fan of the heavy hand of regulation but aviation is by definition a regulated and scarce resource. Perish the thought that I would be supporting Bob Crandall’s re-regulation calls. It is clear that the Bush Administration’s policy on commercial passenger aviation will go down as one of the stunning failures of its tenancy of the recent past. The new administration whoever that maybe needs to rethink the ground rules for commercial aviation policy – and fast. Not least of which is to open up the US Market to international competition starting with full NAFTA unilaterally and a removal of the ownership regulations. Full Open Skies with 5/6/7/8/9 Freedoms would be too radical but for the downtrodden US based consumer – there needs to be better usage of resources and a better mechanism to stimulate competition.
So we are clear – I do not believe that oil is the core problem affecting the US Airlines market sector. Rather the failure of successive managements to address the facts that:
1. That oil is a resource – that it is scarce
2. There needs to be a full accounting for the environmental cost of the services
3. Airways and Airports are a scarce resource
4. Transportation is a critical part of the eco-system of commerce
5. That the structure of the airline pricing has to change to match the reality of the economics of airlines
6. The need to educate the consumer on how to purchase in that environment
7. And yes the ability to manage the complexity is well within the capability of airline managers, they are not victims here
I hope that everyone reading this will use the opportunity to reflect. A wise person once said “Plus Ca Change” lets hope the people who need to deal with this can wise up and provide a way out of here.
Right now I am not optimistic. But I have seen many people be resilient and recover from disastrous situations. There is a crisis in the industry but stop whining and start doing would be the right way to deal with it.
Best of luck to all concerned. I wonder what my 1000th post will be!
Cheers
The Professor.
Day 5 and Farnborough Recap
Best Video…. The Amazing F22 demo on Monday. I really wanted to go but had family obligations.
http://www.aviationweek.com/aw/awhome.jsp
And then look for the F22 Video on the home page.
Recaps of the week.
Boeing has booked firm orders for 197 aircraft worth USD23.1 billion at list prices in the first four days of the Farnborough Airshow. Airbus confirmed it has booked firm orders including 256 orders (247 firm and nine commitments) valued at USD38.7 billion at list prices during the first four days of the Farnborough Airshow.
The mega orders by Etihad and FlyDubai means that there is plenty of good news to go around. But there was a steady stream of orders from others as well.
Launch orders for the C-Series, Non-Russian orders for the Sukhoi Superjet 100s and the emergency of the Chinese and Japanese aviation manufacturers are all part of a signaling of the changing of the guard. The non-US, Non Europe Aviation trends were quite stunning. Russia. China and the Middle East clearly are in the ascendancy.
For the dive into the trends – as the chalets are packed up and put away for another 2 years we can reflect that the air transport raw material business is doing nicely thank you but still the operators just cannot seem to make a go of it. The economic health of the user community should be a big cause for alarm. Clearly Boeing and Airbus are thinking that that is not their problem – but perhaps it should be something that they take a more active role in.
Enjoy!
Cheers
Timothy
http://www.aviationweek.com/aw/awhome.jsp
And then look for the F22 Video on the home page.
Recaps of the week.
Boeing has booked firm orders for 197 aircraft worth USD23.1 billion at list prices in the first four days of the Farnborough Airshow. Airbus confirmed it has booked firm orders including 256 orders (247 firm and nine commitments) valued at USD38.7 billion at list prices during the first four days of the Farnborough Airshow.
The mega orders by Etihad and FlyDubai means that there is plenty of good news to go around. But there was a steady stream of orders from others as well.
Launch orders for the C-Series, Non-Russian orders for the Sukhoi Superjet 100s and the emergency of the Chinese and Japanese aviation manufacturers are all part of a signaling of the changing of the guard. The non-US, Non Europe Aviation trends were quite stunning. Russia. China and the Middle East clearly are in the ascendancy.
For the dive into the trends – as the chalets are packed up and put away for another 2 years we can reflect that the air transport raw material business is doing nicely thank you but still the operators just cannot seem to make a go of it. The economic health of the user community should be a big cause for alarm. Clearly Boeing and Airbus are thinking that that is not their problem – but perhaps it should be something that they take a more active role in.
Enjoy!
Cheers
Timothy
Traffic for US Airlines Down again in June.
Traffic for US Down again in June.
US Airlines are in some cases not waiting for the September day for cutting back. Overall we are seeing pretty significant declines already. Of the big 6 US carriers even Southwest was down and only Northwest actually experienced an increase in traffic
US Airlines in June
Delta Airlines; USA
Latest report shows passengers down by -4.7%
Southwest Airlines; USA
Passenger numbers for the month are down by -0.8%
American Airlines; USA
Just reported: passenger numbers drop by -2.8%
Continental Airlines; USA
Just reported: passenger numbers drop by -0.7%
Northwest Airlines; USA
Just released: a passenger increase of 2%
United Airlines; USA
Latest report shows passengers down by -5%
US Airways; USA
Passenger numbers for the month are down by -5.5%
Of international carriers the big 3 EU based legacy carriers all experienced a collective decline in load factors and BA experienced an absolute decline in traffic:
Airline RPKs ASKs PLF Change (ppts)
Air France/KLM +2.6% +4.1% 81.5% -1.2 ppts
British Airways -3.7% +1.2% 76.7% -3.8 ppts
Lufthansa Passenger Airlines +5.8% +7.2% 81.1% +1.0 ppts
Sources: Airline reports
Correction LH was still up on the month.
US Airlines are in some cases not waiting for the September day for cutting back. Overall we are seeing pretty significant declines already. Of the big 6 US carriers even Southwest was down and only Northwest actually experienced an increase in traffic
US Airlines in June
Delta Airlines; USA
Latest report shows passengers down by -4.7%
Southwest Airlines; USA
Passenger numbers for the month are down by -0.8%
American Airlines; USA
Just reported: passenger numbers drop by -2.8%
Continental Airlines; USA
Just reported: passenger numbers drop by -0.7%
Northwest Airlines; USA
Just released: a passenger increase of 2%
United Airlines; USA
Latest report shows passengers down by -5%
US Airways; USA
Passenger numbers for the month are down by -5.5%
Of international carriers the big 3 EU based legacy carriers all experienced a collective decline in load factors and BA experienced an absolute decline in traffic:
Airline RPKs ASKs PLF Change (ppts)
Air France/KLM +2.6% +4.1% 81.5% -1.2 ppts
British Airways -3.7% +1.2% 76.7% -3.8 ppts
Lufthansa Passenger Airlines +5.8% +7.2% 81.1% +1.0 ppts
Sources: Airline reports
Correction LH was still up on the month.
Day 3 and 4 at Franborough
Sorry I wasn’t able to comment on yesterday’s so I am combining it with today’s news.
Airbus dominates with orders for A320s leading the way. Including the first initial orders for A320 P2F freighters.
Airbus seems to be on track for reaching Mr Leahy’s prediction of a large number of orders. At the same time the opening up of the A320 Freighter program got off to a roaring start with infrastructure deals being signed between Airbus and Russian Aerospace firms. At the same time the first orders came from a Dutch leasing company.
Not to be outdone – the Russians are continuing to make some headway. They have signed a deal to allow license production of the TU204 in Iran. This should give the USA some pause for thought as it will mean that Iran is going to get access to some pretty sophisticated technology. For the TU204 program this gives it a new lease on life.
On the military front the Russian Air Force looks like it will one day have a RAPTOR competitor. The Herc production line now has a lifeline of its own in the form of an order from the USAF for C130Js. Not such lifeline yet for the C17.
The political noise on GREEN continues with the EC receiving a slam from Airbus’s CEO. You have to admit this is all great theatre but I still don’t see the industry making much sense about what it is going to do about a reasonable alternative to reduce carbon emissions. My position is clear. Research, Modify, Reduce and eliminate if at all possible. But that is not very specific. I am still thinking about this issue.
Airbus dominates with orders for A320s leading the way. Including the first initial orders for A320 P2F freighters.
Airbus seems to be on track for reaching Mr Leahy’s prediction of a large number of orders. At the same time the opening up of the A320 Freighter program got off to a roaring start with infrastructure deals being signed between Airbus and Russian Aerospace firms. At the same time the first orders came from a Dutch leasing company.
Not to be outdone – the Russians are continuing to make some headway. They have signed a deal to allow license production of the TU204 in Iran. This should give the USA some pause for thought as it will mean that Iran is going to get access to some pretty sophisticated technology. For the TU204 program this gives it a new lease on life.
On the military front the Russian Air Force looks like it will one day have a RAPTOR competitor. The Herc production line now has a lifeline of its own in the form of an order from the USAF for C130Js. Not such lifeline yet for the C17.
The political noise on GREEN continues with the EC receiving a slam from Airbus’s CEO. You have to admit this is all great theatre but I still don’t see the industry making much sense about what it is going to do about a reasonable alternative to reduce carbon emissions. My position is clear. Research, Modify, Reduce and eliminate if at all possible. But that is not very specific. I am still thinking about this issue.
15 July 2008
Midwest - Unwanted and Unloved
Pity Midwest – the Kleenex airline was the subject of a huge battle last year won by Northwest and TPG. What a difference a few quarters makes. Now they are being forced to cut back 40% using a business plan developed by Seabury. And Unloved? Northwest is far too interested in its relationship to Delta.
Air Tran is probably thanking its lucky stars that they were not the successful party in the bidding war.
In the mean time - Midwest looks like it could become another bit of roadkill.
Cheers
Timothy
Air Tran is probably thanking its lucky stars that they were not the successful party in the bidding war.
In the mean time - Midwest looks like it could become another bit of roadkill.
Cheers
Timothy
So you think you have problems - RyanAir and London Underground issues
On Saturday London Underground fried approximately 250,000 users "Oyster Cards" these are the proximity chip based frequent traveller cards for riding the underground (Metro) in London.
UGH!!!!
But there are not alone. Ryanair seems to be suffering still from the lagging effects of the migration to Navitaire's New Skies product. Shame on the Navitaire guys for still not fixing the system.
This is from the Ryanair.com website:
Please click the select and continue button below, in order to view a breakdown of the inclusive taxes, fees & charges associated with your flights. We regret, due to system performance issues, we have been unable to display the tax inclusive fare box on this page, since 25/06/2008. We are currently working with our suppliers, including Navitaire to resolve these problems and hope to restore the tax, fees & charges inclusive display shortly.
Oh dear.....
T
UGH!!!!
But there are not alone. Ryanair seems to be suffering still from the lagging effects of the migration to Navitaire's New Skies product. Shame on the Navitaire guys for still not fixing the system.
This is from the Ryanair.com website:
Please click the select and continue button below, in order to view a breakdown of the inclusive taxes, fees & charges associated with your flights. We regret, due to system performance issues, we have been unable to display the tax inclusive fare box on this page, since 25/06/2008. We are currently working with our suppliers, including Navitaire to resolve these problems and hope to restore the tax, fees & charges inclusive display shortly.
Oh dear.....
T
The wierd and the wonderful from Farnborough Day 2
Boeing and Airbus may be lulled into thinking that the A320/737 market is sewed up between them. Well chaps waiting till 2015 for delivery of the next gen aircraft may not be such a wise thing.
Boeing says "It is pleased with powerplant progress", Airbus is looking for significant upgrades to the A320 but no new major improvements = translation we are not going to start work on this in earnest until we have some time to think about it.
Others are not waiting. The very anemic looking low end of both manufacturers products (A318 and B737-600) are heavy and not that efficient. As we have seen the long legs of the 737-700 may not be good enough for the type of market it serves where its bigger siblings 737-800 and -900 are really coming on strong. So Bombardier is covering the low end of this market with its new higher end C-Series aircraft. Now comes word of a new entrant today - The Russian MS-21 which will seat 150-210 seats. Designed specifically for the replacement of the TU154, TU204 as well as western types 737 classics and NGs and A320s - this could give the Western types a run for their money.
Moral of the story - dont sit on your hands too long.
Cheers
Timothy
Boeing says "It is pleased with powerplant progress", Airbus is looking for significant upgrades to the A320 but no new major improvements = translation we are not going to start work on this in earnest until we have some time to think about it.
Others are not waiting. The very anemic looking low end of both manufacturers products (A318 and B737-600) are heavy and not that efficient. As we have seen the long legs of the 737-700 may not be good enough for the type of market it serves where its bigger siblings 737-800 and -900 are really coming on strong. So Bombardier is covering the low end of this market with its new higher end C-Series aircraft. Now comes word of a new entrant today - The Russian MS-21 which will seat 150-210 seats. Designed specifically for the replacement of the TU154, TU204 as well as western types 737 classics and NGs and A320s - this could give the Western types a run for their money.
Moral of the story - dont sit on your hands too long.
Cheers
Timothy
The Professor is travelling and may not be able to post for next 3 days
So still some excitement at Farnborough to come. I shall be watching the wires for you so I can comment
Cheers
Timothy
Cheers
Timothy
Update on Farnborough Day 1
Two interesting points of note.
1. The Etihad order including options was over 200 aircraft of which the bulk were wide bodies. The total order using list prices would make the EY order the largest in Aviation history by dollar value. A Bubble? Well you be the judge
2. The FlyDubai order included the option to convert to 737-900ERs. That provides the ability to fly to most of Europe. However we believe that the bulk of the flying will be with in the region and a tilt towards Indian Subcontinent. Thus clearly Air Arabia and Jazeera are now in the cross hairs of the Dubai based airline.
Cheers
Timothy
1. The Etihad order including options was over 200 aircraft of which the bulk were wide bodies. The total order using list prices would make the EY order the largest in Aviation history by dollar value. A Bubble? Well you be the judge
2. The FlyDubai order included the option to convert to 737-900ERs. That provides the ability to fly to most of Europe. However we believe that the bulk of the flying will be with in the region and a tilt towards Indian Subcontinent. Thus clearly Air Arabia and Jazeera are now in the cross hairs of the Dubai based airline.
Cheers
Timothy
Saudi Arabian drifts towards Airbus
SV has been a previous purchaser of Airbus planes with the A300 in the 1980s. However of late it has been sticking true to the US partnership by buying Boeing (777) and Boeing MD (MD90s and MD11s). However today it signaled a new direction by ordering A330-300s 8 of them.
So now they are clearly moving towards an Airbus anchored fleet with a further 32 A320s previously ordered which will no doubt anchor their local and regional destinations replacing the MD90s and the Embraers operation commuter flights.
So now they are clearly moving towards an Airbus anchored fleet with a further 32 A320s previously ordered which will no doubt anchor their local and regional destinations replacing the MD90s and the Embraers operation commuter flights.
Virgin Blue a takeover target as Toll exits?
Virgin Group is now the largest single shareholder in the Australian formerly LCC now major network carrier. Toll Holdings has finally ended it ownership position leaving Branson with a small holding and the rest in institutional and public hands.
But after all the shenanigans over its ownership, Virgin Blue might finally be a target of a takeover. Given the tortuous history of airline ownership in Australia, we can always expect the unexpected.
So lets see who emerges as a potential winner. Perhaps SQ might finally realize its vision of a Tranpac carrier by acquiring the Oz based carrier. But then I am merely speculating. But it would be nice to see Tiger and VB together with Tiger being the Uber LCC brand instead of Air Asia. What do you think?
Cheers
Timothy
But after all the shenanigans over its ownership, Virgin Blue might finally be a target of a takeover. Given the tortuous history of airline ownership in Australia, we can always expect the unexpected.
So lets see who emerges as a potential winner. Perhaps SQ might finally realize its vision of a Tranpac carrier by acquiring the Oz based carrier. But then I am merely speculating. But it would be nice to see Tiger and VB together with Tiger being the Uber LCC brand instead of Air Asia. What do you think?
Cheers
Timothy
14 July 2008
Germany - a Duopoly no longer, but not quite
The long awaited deal between Condor and Air Berlin has finally foundered on the rocks of the German competition authority. But in true German fashion (remember these are the guys who actually fined one company for LOWERING prices), the result is a strengthening of Lufthansa's hand.
A new third force company comprising GermanWings/Eurowings and TUI's air assets will emerge as an independent LCC group. Clearly not totally independent but independent in spirit anyway.
Frankly this still makes me scratch my head and wonder if Germany as a nation would ever pass the US RICO act.
Cheers
Timothy
A new third force company comprising GermanWings/Eurowings and TUI's air assets will emerge as an independent LCC group. Clearly not totally independent but independent in spirit anyway.
Frankly this still makes me scratch my head and wonder if Germany as a nation would ever pass the US RICO act.
Cheers
Timothy
Etihad splits Giant Order - nod to Airbus
Etihad has split its expected giant order between the leading players.
Airbus gets the nod with 20 A320s, 25 A350s and 10 A380s. Boeing gets hardly the consolation prize with a good order of its own for 35 787s and 10 777s.
Not bad guys... I guess Etihad doesn't have to worry about the cash flow in this picture.
PS sorry for the typos (July 19)
Airbus gets the nod with 20 A320s, 25 A350s and 10 A380s. Boeing gets hardly the consolation prize with a good order of its own for 35 787s and 10 777s.
Not bad guys... I guess Etihad doesn't have to worry about the cash flow in this picture.
PS sorry for the typos (July 19)
Crisis Crisis - what Crisis - Farnborough Day1
So its the end of the first day of Farnborough and courtesy of Airline Business I was able to attend the Airline Business Strategy Awards last night. An illustrious affair and thanks to the Reed Business Folks for the kind invitation.
So firstly a few words on the Awards. Each of the recipients were decidedly worthy.
So congrats to LH, SQ, SK, EY, AK, BE, JQ for their performance which has now been truly recognized. Perhaps the toughest one went to SK for their technology award. SK has a particularly hard row to hoe. Congrats chaps.
So the buzz at the event at Lincoln's Inn was the state of the industry. My esteemed colleagues at Table 24 were all bristling with ideas of what to do as experts. But perhaps the mood overall was more subdued. The industry is in a crisis of that there can be no doubt - or can there?
From today's wires - FlyDubai plumbed for Boeing and the 737-800 with a fat order for 50. I doubt they got quite the deal that Mr O'Leary got in 2001 but still it was a pretty mind boggling order nonetheless. The betting on the FlightGlobal website was a higher order book for Airbus - the respondents voted by about 2:1. Given this order can we still be sure.
The C series from Bombardier finally got off the board and into the order books with a first order from Lufthansa. This makes them a launch customer on 2 aircraft coming up soon - the 747-8 Passenger and the C-Series.
Tomorrow will be another day with a big order expected from both EY and QR. Lets see what they do....
Cheers
Timothy
So firstly a few words on the Awards. Each of the recipients were decidedly worthy.
So congrats to LH, SQ, SK, EY, AK, BE, JQ for their performance which has now been truly recognized. Perhaps the toughest one went to SK for their technology award. SK has a particularly hard row to hoe. Congrats chaps.
So the buzz at the event at Lincoln's Inn was the state of the industry. My esteemed colleagues at Table 24 were all bristling with ideas of what to do as experts. But perhaps the mood overall was more subdued. The industry is in a crisis of that there can be no doubt - or can there?
From today's wires - FlyDubai plumbed for Boeing and the 737-800 with a fat order for 50. I doubt they got quite the deal that Mr O'Leary got in 2001 but still it was a pretty mind boggling order nonetheless. The betting on the FlightGlobal website was a higher order book for Airbus - the respondents voted by about 2:1. Given this order can we still be sure.
The C series from Bombardier finally got off the board and into the order books with a first order from Lufthansa. This makes them a launch customer on 2 aircraft coming up soon - the 747-8 Passenger and the C-Series.
Tomorrow will be another day with a big order expected from both EY and QR. Lets see what they do....
Cheers
Timothy
New international accounting rules to impact FF Programs?
New rules have been instituted by those most imaginative of people (aka Accountants). These new rules from the International Accounting Standards Board, which have just come into effect, mean that the cost of frequent flyer rewards should be valued at ‘the amount for which the award credits could be sold separately’.
I seem to recall that this has been attempted before by the US Accounting standards group and also by the US tax authorities. In both cases it was pushed back for obvious reasons. There are only two ways to deal with this – either at the recipient end or the “pusher” end. In both cases it’s a bad thing to do and stupid.
However lest anyone think that I suffer from a lack of imagination, here is a scenario that gets some bite to it. The airlines decide this is a great opportunity to get rid of FF programs once and for all. With liability sitting out there to the tune of approx 10 trillion miles at a value of between 10 and 20 cents a mile with this in the hands of nearly 200 million people… doesn’t make sense. Accountants are always looking for stuff for them to do, they still mourn the creation of the proletarian spreadsheet software, so if they cant get what they want in direct employment then they will figure out a way to encourage a tax. As a certain Shakespearian character said “ a pox on you!”
I seem to recall that this has been attempted before by the US Accounting standards group and also by the US tax authorities. In both cases it was pushed back for obvious reasons. There are only two ways to deal with this – either at the recipient end or the “pusher” end. In both cases it’s a bad thing to do and stupid.
However lest anyone think that I suffer from a lack of imagination, here is a scenario that gets some bite to it. The airlines decide this is a great opportunity to get rid of FF programs once and for all. With liability sitting out there to the tune of approx 10 trillion miles at a value of between 10 and 20 cents a mile with this in the hands of nearly 200 million people… doesn’t make sense. Accountants are always looking for stuff for them to do, they still mourn the creation of the proletarian spreadsheet software, so if they cant get what they want in direct employment then they will figure out a way to encourage a tax. As a certain Shakespearian character said “ a pox on you!”
Euro MPs target Hidden Airline Costs - perhaps they need to dig deeper.
MEPs (yes those nice people who clock in to claim their allowances of Friday) are at it again.
This time there is something useful in what they are doing. They want to challenge the pricing schemes of the website displays of airlines and travel operators to get them to show ALL the prices and all charges.
To some extent this is a problem that the EC has created. By complicating charges they are indeed creating and exacerbating the problem. The EC should perhaps look inwardly and examine how the charges are created so that Airlines and travel service providers could have a simpler way to calculate taxes and fees that they need to.
When that is done then lets throw the book at them. However if the USA model is anything to go by then the future does not look bright.
Additionally we see inconsistency of charges by the airlines. BA for example is far more aggressive in collecting taxes than say Delta.
if you would like to see that there are discrepancies - look no further a comparison of charges on the US airline shopping sites like Orbitz.
So before the MEPs get the knickers in a twist - perhaps they should look at the causes and address some of them
Cheers
Timothy
This time there is something useful in what they are doing. They want to challenge the pricing schemes of the website displays of airlines and travel operators to get them to show ALL the prices and all charges.
To some extent this is a problem that the EC has created. By complicating charges they are indeed creating and exacerbating the problem. The EC should perhaps look inwardly and examine how the charges are created so that Airlines and travel service providers could have a simpler way to calculate taxes and fees that they need to.
When that is done then lets throw the book at them. However if the USA model is anything to go by then the future does not look bright.
Additionally we see inconsistency of charges by the airlines. BA for example is far more aggressive in collecting taxes than say Delta.
if you would like to see that there are discrepancies - look no further a comparison of charges on the US airline shopping sites like Orbitz.
So before the MEPs get the knickers in a twist - perhaps they should look at the causes and address some of them
Cheers
Timothy
UK Catches Up In Online Searching Profile - with a Twist
A recent study of UK Online Vacation (OK then Holiday) searches shows that the UK has a similar profile to the USA. However much like the USA the dissatisfaction with the process and the lack of trust in the information is showing through.
Firstly some hard numbers from Foolproof the agency who conducted the survey:
Of the respondents, 28% said they would go to Expedia and 20% to lastminute.com (travelocity) for information, compared to 11% for Thomson and 8% for Thomas Cook. So clearly Opodo is not on the UK radar in significant form and Orbitz has no presence. eBookers also failed to make a showing which shows how much the brand has deteriorated. Further the study went on to point out that "When researching holidays or short breaks the most popular sites that shoppers intended to visit were ones that offered information on their intended destination (48%), online only travel agents like Expedia and lastminute.com (48%), low cost airlines (42%), price comparison sites (40%) and sites that offer customer reviews like TripAdvisor (39%)."
The conclusions from the study cannot necessarily be held as true. Foolproof concludes that the High Street brands have a chance to reclaim their position. I disagree. 2 main reasons.
1. The name change from Lunn Poly to Thomson for the retail outlets and the vast reduction in footprint of all 4 major brand groupings (now just 2) has led to a reduced brand footprint to compare. Further the confusion of the TUI vs Thomson brands has diminished their ability to make headway against the 2 leading online brands.
2. The product offerings from the former retail brands do not provide enough differentiation to return to them.
However there should be some hope for either a resurgence of the traditional brands or the emergence of new brands because the product offering of all current players is so poor. This should give some hope to the zero content players such as meta searchers and social/UGC sites such as trip advisor et al.
There is a clearer message from the study. Provide better value as a source for information if you want to sell more. The next stage however will be a return to the product owners - just like there is in the USA. Here the LCCs will continue to power ahead with greater value. Now if Ryanair and Easyjet could only do a better job on their hotels and other products.
Cheers
Timothy
Firstly some hard numbers from Foolproof the agency who conducted the survey:
Of the respondents, 28% said they would go to Expedia and 20% to lastminute.com (travelocity) for information, compared to 11% for Thomson and 8% for Thomas Cook. So clearly Opodo is not on the UK radar in significant form and Orbitz has no presence. eBookers also failed to make a showing which shows how much the brand has deteriorated. Further the study went on to point out that "When researching holidays or short breaks the most popular sites that shoppers intended to visit were ones that offered information on their intended destination (48%), online only travel agents like Expedia and lastminute.com (48%), low cost airlines (42%), price comparison sites (40%) and sites that offer customer reviews like TripAdvisor (39%)."
The conclusions from the study cannot necessarily be held as true. Foolproof concludes that the High Street brands have a chance to reclaim their position. I disagree. 2 main reasons.
1. The name change from Lunn Poly to Thomson for the retail outlets and the vast reduction in footprint of all 4 major brand groupings (now just 2) has led to a reduced brand footprint to compare. Further the confusion of the TUI vs Thomson brands has diminished their ability to make headway against the 2 leading online brands.
2. The product offerings from the former retail brands do not provide enough differentiation to return to them.
However there should be some hope for either a resurgence of the traditional brands or the emergence of new brands because the product offering of all current players is so poor. This should give some hope to the zero content players such as meta searchers and social/UGC sites such as trip advisor et al.
There is a clearer message from the study. Provide better value as a source for information if you want to sell more. The next stage however will be a return to the product owners - just like there is in the USA. Here the LCCs will continue to power ahead with greater value. Now if Ryanair and Easyjet could only do a better job on their hotels and other products.
Cheers
Timothy
11 July 2008
Russia postpones deliveries of Superjet 100 for 12 months
Well at least this is not a story about Boeing for a change.
The Russian Sukhoi Superjet 100 Regional Jetliner that is going to be competing in a very crowded space with entries from CHINA/ARJ Canadair/Bombardier, Embraer, Mitsubishi alongside announced a delay of 12 months to launch customer Aeroflot. The latest delay signifies a delay of 12 months in total so far.
Lets hope things improve for them.
Cheers
Timothy
The Russian Sukhoi Superjet 100 Regional Jetliner that is going to be competing in a very crowded space with entries from CHINA/ARJ Canadair/Bombardier, Embraer, Mitsubishi alongside announced a delay of 12 months to launch customer Aeroflot. The latest delay signifies a delay of 12 months in total so far.
Lets hope things improve for them.
Cheers
Timothy
OK One for the Doom Merchants... a New Indicator - Luggage sales are way off
This one is from Professor Steve Zilinek - He of Flylite.com the Virtual Closet people.
I think he has a point. Luggage sales means people are simply not planning on travelling.
Here is the story and for the chart and full details (courtesy of Merril Lynch) check out the URL at the end:
Luggage sales fall off the carousel
David Rosenberg:
We track luggage sales as a barometer of travel plans – and they have fallen in two of the past three months and are running at a near-record 35% annual rate over the past six months. Either people intend to stay close to home (which requires a 'cocooning' theme) or those who do intend to travel are scaling back their suitcase purchases in response to the advent of these airline per-bag fees.
Why buy a bag that is only going to be another cash-flow drain? Simply wear everything you would have packed (not comfortable but a lot cheaper).
>
Source:
Empty suitcase: No Luggage Sales = No Travel Plans
David Rosenberg
Merrill Lynch, July 7, 2008
http://tinyurl.com/69s6hx
I think he has a point. Luggage sales means people are simply not planning on travelling.
Here is the story and for the chart and full details (courtesy of Merril Lynch) check out the URL at the end:
Luggage sales fall off the carousel
David Rosenberg:
We track luggage sales as a barometer of travel plans – and they have fallen in two of the past three months and are running at a near-record 35% annual rate over the past six months. Either people intend to stay close to home (which requires a 'cocooning' theme) or those who do intend to travel are scaling back their suitcase purchases in response to the advent of these airline per-bag fees.
Why buy a bag that is only going to be another cash-flow drain? Simply wear everything you would have packed (not comfortable but a lot cheaper).
>
Source:
Empty suitcase: No Luggage Sales = No Travel Plans
David Rosenberg
Merrill Lynch, July 7, 2008
http://tinyurl.com/69s6hx
Direct from the BOOT... The US Airlines shoot themselves in the foot
This is the verbatim post from Tim Hughes Blog the BOOT.
Most of the major US airlines sent round an open letter blaming the skyrocketing oil prices and resulting economic consequences on
"Speculators [who] buy up large amounts of oil and then sell it to each other again and again" (here is the letter in full below)
They have even supported a very serious looking website called "Stop Oil Speculation Now (or SOS NOW)". The ludicrous argument by the airlines is that when speculators enter the market they sell the oil to each other with no intention of delivery with the only consequence is driving up the price. This is an absolute lie.
The airlines are the first to tell the markets about their financial genius when they successfully hedge against fuel increases and save $$$$ in fuel costs. Hedging can only occur because there are speculators in the market that are prepared to bet the other way. If you remove speculators, then hedging disappears and the airlines will have no facility at all for planning ahead of time for fuel purchases. They will have to do what you and I do - turn up to the pump and pay the price on the day. There is no one in the airline industry that wants to do this and therefore remove speculators and hedging.
If speculators disappeared then it would dramatically increase the uncertainty for airlines in fuel prices resulting in increases in prices rather than decreases.
This is a blatant and almost pathetic smokescreen to cover up efforts to beg for government support/handouts and set up someone else to blame when the chapter 11 bankruptcy filings start.
So if you support the airlines then go to the website. If not then write your favorite congressman and senator and tell them what you think
Cheers
Timothy
Dear United Airlines passenger....,
Last week, crude oil hit an all-time high of $146, and the skyrocketing cost of fuel is impacting our customers, our employees, the communities we serve, and the economy as a whole. United, and the majority of other major U.S. airlines, are asking our most loyal customers to join us in pushing for legislation to add more transparency and disclosure in the oil markets. Please see the attached open letter from the leaders of the U.S. airline industry.
An Open letter to All Airline Customers:
Our country is facing a possible sharp economic downturn because of skyrocketing oil and fuel prices, but by pulling together, we can all do something to help now.
For airlines, ultra-expensive fuel means thousands of lost jobs and severe reductions in air service to both large and small communities. To the broader economy, oil prices mean slower activity and widespread economic pain. This pain can be alleviated, and that is why we are taking the extraordinary step of writing this joint letter to our customers. Since high oil prices are partly a response to normal market forces, the nation needs to focus on increased energy supplies and conservation. However, there is another side to this story because normal market forces are being dangerously amplified by poorly regulated market speculation.
Twenty years ago, 21 percent of oil contracts were purchased by speculators who trade oil on paper with no intention of ever taking delivery. Today, oil speculators purchase 66 percent of all oil futures contracts, and that reflects just the transactions that are known. Speculators buy up large amounts of oil and then sell it to each other again and again. A barrel of oil may trade 20-plus times before it is delivered and used; the price goes up with each trade and consumers pick up the final tab. Some market experts estimate that current prices reflect as much as $30 to $60 per barrel in unnecessary speculative costs.
Over seventy years ago, Congress established regulations to control excessive, largely unchecked market speculation and manipulation. However, over the past two decades, these regulatory limits have been weakened or removed. We believe that restoring and enforcing these limits, along with several other modest measures, will provide more disclosure, transparency and sound market oversight. Together, these reforms will help cool the over-heated oil market and permit the economy to prosper.
The nation needs to pull together to reform the oil markets and solve this growing problem.
We need your help. Get more information and contact Congress by visiting www.StopOilSpeculationNow.com.
Robert Fornaro
Chairman,
President and CEO
AirTran Airways
Bill Ayer
Chairman,
President and CEO
Alaska Airlines, Inc.
Gerard J. Arpey
Chairman,
President and CEO
American Airlines, Inc.
Lawrence W. Kellner
Chairman and CEO
Continental Airlines, Inc.
Richard Anderson
CEO
Delta Air Lines, Inc.
Mark B. Dunkerley
President and CEO
Hawaiian Airlines, Inc.
Dave Barger
CEO
JetBlue Airways
Corporation
Timothy E. Hoeksema
Chairman,
President and CEO
Midwest Airlines
Douglas M. Steenland
President and CEO
Northwest Airlines, Inc.
Gary Kelly
Chairman and CEO
Southwest Airlines Co.
Glenn F. Tilton
Chairman,
President and CEO
United Airlines, Inc.
Douglas Parker
Chairman and CEO
US Airways Group, Inc.
Most of the major US airlines sent round an open letter blaming the skyrocketing oil prices and resulting economic consequences on
"Speculators [who] buy up large amounts of oil and then sell it to each other again and again" (here is the letter in full below)
They have even supported a very serious looking website called "Stop Oil Speculation Now (or SOS NOW)". The ludicrous argument by the airlines is that when speculators enter the market they sell the oil to each other with no intention of delivery with the only consequence is driving up the price. This is an absolute lie.
The airlines are the first to tell the markets about their financial genius when they successfully hedge against fuel increases and save $$$$ in fuel costs. Hedging can only occur because there are speculators in the market that are prepared to bet the other way. If you remove speculators, then hedging disappears and the airlines will have no facility at all for planning ahead of time for fuel purchases. They will have to do what you and I do - turn up to the pump and pay the price on the day. There is no one in the airline industry that wants to do this and therefore remove speculators and hedging.
If speculators disappeared then it would dramatically increase the uncertainty for airlines in fuel prices resulting in increases in prices rather than decreases.
This is a blatant and almost pathetic smokescreen to cover up efforts to beg for government support/handouts and set up someone else to blame when the chapter 11 bankruptcy filings start.
So if you support the airlines then go to the website. If not then write your favorite congressman and senator and tell them what you think
Cheers
Timothy
Dear United Airlines passenger....,
Last week, crude oil hit an all-time high of $146, and the skyrocketing cost of fuel is impacting our customers, our employees, the communities we serve, and the economy as a whole. United, and the majority of other major U.S. airlines, are asking our most loyal customers to join us in pushing for legislation to add more transparency and disclosure in the oil markets. Please see the attached open letter from the leaders of the U.S. airline industry.
An Open letter to All Airline Customers:
Our country is facing a possible sharp economic downturn because of skyrocketing oil and fuel prices, but by pulling together, we can all do something to help now.
For airlines, ultra-expensive fuel means thousands of lost jobs and severe reductions in air service to both large and small communities. To the broader economy, oil prices mean slower activity and widespread economic pain. This pain can be alleviated, and that is why we are taking the extraordinary step of writing this joint letter to our customers. Since high oil prices are partly a response to normal market forces, the nation needs to focus on increased energy supplies and conservation. However, there is another side to this story because normal market forces are being dangerously amplified by poorly regulated market speculation.
Twenty years ago, 21 percent of oil contracts were purchased by speculators who trade oil on paper with no intention of ever taking delivery. Today, oil speculators purchase 66 percent of all oil futures contracts, and that reflects just the transactions that are known. Speculators buy up large amounts of oil and then sell it to each other again and again. A barrel of oil may trade 20-plus times before it is delivered and used; the price goes up with each trade and consumers pick up the final tab. Some market experts estimate that current prices reflect as much as $30 to $60 per barrel in unnecessary speculative costs.
Over seventy years ago, Congress established regulations to control excessive, largely unchecked market speculation and manipulation. However, over the past two decades, these regulatory limits have been weakened or removed. We believe that restoring and enforcing these limits, along with several other modest measures, will provide more disclosure, transparency and sound market oversight. Together, these reforms will help cool the over-heated oil market and permit the economy to prosper.
The nation needs to pull together to reform the oil markets and solve this growing problem.
We need your help. Get more information and contact Congress by visiting www.StopOilSpeculationNow.com.
Robert Fornaro
Chairman,
President and CEO
AirTran Airways
Bill Ayer
Chairman,
President and CEO
Alaska Airlines, Inc.
Gerard J. Arpey
Chairman,
President and CEO
American Airlines, Inc.
Lawrence W. Kellner
Chairman and CEO
Continental Airlines, Inc.
Richard Anderson
CEO
Delta Air Lines, Inc.
Mark B. Dunkerley
President and CEO
Hawaiian Airlines, Inc.
Dave Barger
CEO
JetBlue Airways
Corporation
Timothy E. Hoeksema
Chairman,
President and CEO
Midwest Airlines
Douglas M. Steenland
President and CEO
Northwest Airlines, Inc.
Gary Kelly
Chairman and CEO
Southwest Airlines Co.
Glenn F. Tilton
Chairman,
President and CEO
United Airlines, Inc.
Douglas Parker
Chairman and CEO
US Airways Group, Inc.
10 July 2008
Lufthansa facing troubles
Lufthansa has been doing a lot right lately. They are weathering the storm as a big player, their markets outside of Germany are growing. They purchased a nice cheap chunk of JetBlue... so what's to go wrong?
Actually it looks like labour troubles. Last Week Lufthansa Regional and one of its subsidiaries went on strike. Now the cabin crew and some of the front line staff have voted for a strike.
Things could get ugly.
Lets hope they can work it all out.
Cheers
Timothy
Actually it looks like labour troubles. Last Week Lufthansa Regional and one of its subsidiaries went on strike. Now the cabin crew and some of the front line staff have voted for a strike.
Things could get ugly.
Lets hope they can work it all out.
Cheers
Timothy
Poor Sun Country Airlines.
from Professor John).
The Minnesota based-carrier lost $43 million on operating revenue of $243 million in its most recent four quarters and the company is now asking for $50 million in state aid!
In the meantime, an employee admits to swindling the company out of $200,000. Some of that money was used for casino trips.
Sun Country might want to do a bit more in the way of background checks: according to the authorities, the swindler was convicted of stealing from another employer a few years back.
http://rickseaney.com/2008/07/09/time-are-tough-enough-for-the-airlines-without-this/
ooops.....
The Minnesota based-carrier lost $43 million on operating revenue of $243 million in its most recent four quarters and the company is now asking for $50 million in state aid!
In the meantime, an employee admits to swindling the company out of $200,000. Some of that money was used for casino trips.
Sun Country might want to do a bit more in the way of background checks: according to the authorities, the swindler was convicted of stealing from another employer a few years back.
http://rickseaney.com/2008/07/09/time-are-tough-enough-for-the-airlines-without-this/
ooops.....
Oops Did Someone Drill the Wrong Hole on Fuselage #4
Boeing has announced that there is a slight problem with Prototype #4 of the 787 program. Apparently there is a small issue with them having to "repair" the fuselage at the Alenia factory in South Carolina.
Good practice for someone... but kinda scary that this sort of thing can happen. Shows that Boeing still has some work ahead of it to get the Supply Chain System running right
Cheers
Timothy
Good practice for someone... but kinda scary that this sort of thing can happen. Shows that Boeing still has some work ahead of it to get the Supply Chain System running right
Cheers
Timothy
Tanker Wars Episode V: The Empire Strikes Back
So the USAF has been forced to re-open the bidding on the Tanker contract.
Bravo for the GAO for finding the errors. For those of you who believe in dark conspiracies - consider the following:
The US had to look like they were offering an opening to the international market for US military contracts. Now that they did award one contract (the Tanker to NG and EADS) they can go back to business as usual and give the real contract to Boeing.
No harm done? Not really - NG will be bent out of shape and the European will cry fowl. Too bad about Alabama.
The decision of course wont happen now until 2009 by which time there will be a new guy in the White House and occupying the DoD Secretary's chair.
So who cares?
We shall see.
Bravo for the GAO for finding the errors. For those of you who believe in dark conspiracies - consider the following:
The US had to look like they were offering an opening to the international market for US military contracts. Now that they did award one contract (the Tanker to NG and EADS) they can go back to business as usual and give the real contract to Boeing.
No harm done? Not really - NG will be bent out of shape and the European will cry fowl. Too bad about Alabama.
The decision of course wont happen now until 2009 by which time there will be a new guy in the White House and occupying the DoD Secretary's chair.
So who cares?
We shall see.
BRAVO US DOT! No to holding onto unused authority
The US Dept of Transportation has for once been reading the tea leaves correctly and decided it would be un-catholic to let the holders of unused International Route Authority hold onto that while they tried to recover.
There are several urgent items out there.
US Airways new route authority to China.
United’s Moscow route and the withdrawl of Denver London
Northwest’s suspension of several European routes.
Of course with Open Skies the EU authority is not required but for Latam, Asia based routes this could be an interesting game.
Let’s see what happens next
There are several urgent items out there.
US Airways new route authority to China.
United’s Moscow route and the withdrawl of Denver London
Northwest’s suspension of several European routes.
Of course with Open Skies the EU authority is not required but for Latam, Asia based routes this could be an interesting game.
Let’s see what happens next
Vegas Room Rates Tumble
The lowest in 5 years is how it is being reported. With traffic way off (see my entry from a few weeks ago), the Vegas Market is in trouble. I even say an ad for the Venetian which showed a room available for less than $159. The first time in years that an advertised rate has been that low.
Both major leisure destinations are in trouble, Orlando, and Vegas
This recession is biting hard chaps
Both major leisure destinations are in trouble, Orlando, and Vegas
This recession is biting hard chaps
07 July 2008
It's that old "Truth in Advertising" thing again.
I think everyone would prefer that there is a real price that you can use to compare flights. This doesn't exist. So airlines do all that they can to obfuscate the final price you will pay.
I hate it - you hate it.
I recently looked at Rick Seeney's ancillary charges (see earlier post). I also looked at the way the airlines use fuel surcharges in many cases which while I applaud the use as a way of knowing what is not within the airlines' power - they still manipulate it.
Apparently the EC and various national bodies also think the same way. According to CAPA: Denmark's National Consumer Agency has published the names of six European airlines it stated are still using illegal marketing practices, despite warnings from the European Commission following a review last year (Reuters, 07-Jul-08). Ryanair, Air Berlin, Air Baltic, SkyEurope, Aer Lingus, Brussels Airlines and Internet travel agent, Seat24, were named by the agency. Their crime - hiding the real price.
So SkyEurope is trying to change the model:
“Our customers have told us it’s important to be completely transparent about the final price of their journey with SkyEurope… We have eliminated the complex structure of surcharges and fees and we have implemented one easy to understand price point,” Steven Greenway, CCO.
Let's hope they are successful
Cheers
Timothy
I hate it - you hate it.
I recently looked at Rick Seeney's ancillary charges (see earlier post). I also looked at the way the airlines use fuel surcharges in many cases which while I applaud the use as a way of knowing what is not within the airlines' power - they still manipulate it.
Apparently the EC and various national bodies also think the same way. According to CAPA: Denmark's National Consumer Agency has published the names of six European airlines it stated are still using illegal marketing practices, despite warnings from the European Commission following a review last year (Reuters, 07-Jul-08). Ryanair, Air Berlin, Air Baltic, SkyEurope, Aer Lingus, Brussels Airlines and Internet travel agent, Seat24, were named by the agency. Their crime - hiding the real price.
So SkyEurope is trying to change the model:
“Our customers have told us it’s important to be completely transparent about the final price of their journey with SkyEurope… We have eliminated the complex structure of surcharges and fees and we have implemented one easy to understand price point,” Steven Greenway, CCO.
Let's hope they are successful
Cheers
Timothy
Tripso article
Over the past few weeks I have been reflecting on the contraction of air travel in the USA.
This morning stats from the Hawaiian Visitors Authority were published, they confirm my fears. The market to Vegas is similarly bad. And we believe that the Mouse Kingdom in Orlando will also be way off in the coming months.
There will be a very large contraction.
Please read my article at Tripso
Cheers
Timothy
http://www.tripso.com/today/10-tips-for-surviving-the-coming-air-travel-crash/
This morning stats from the Hawaiian Visitors Authority were published, they confirm my fears. The market to Vegas is similarly bad. And we believe that the Mouse Kingdom in Orlando will also be way off in the coming months.
There will be a very large contraction.
Please read my article at Tripso
Cheers
Timothy
http://www.tripso.com/today/10-tips-for-surviving-the-coming-air-travel-crash/
05 July 2008
Even Moody's says there is a problem with the US Airlines Model
So finally someone else has the balls to come out and say what we have been saying for some time. The US Airlines model is unsustainable. DUH!!!
Here is the Release that came out via Marketwatch quoting The Times (of London)
Moody's: Many US airline business models 'unsustainable'
LONDON (MarketWatch.com) -- Moody's Investors Service, a unit of Moody's Corp., has described the business model of many U.S. airline carriers as "unsustainable," the Times in London reported Saturday, citing a note from the credit ratings agency.
The agency's analysts said U.S. airlines are particularly vulnerable to high oil prices and even large carriers could be forced into bankruptcy, according to the report.
Moody's said with many airlines seeing a more than 30% year-on-year increase in their fuel costs, with nearly 50% of an average ticket consumed by fuel, they are left with inadequate funds to cover other key costs such as labor, equipment rentals, debt service and overhead, the newspaper added.
"Without an ability to cover costs and earn an adequate return, the business model for most airlines cannot be sustained under current fuel price conditions," Moody's said, according to the Times.
The agency said airlines will not be able to cost-cut or capacity-reduce their way back to profitability, and long-term industry viability will depend upon a pricing environment in which airlines can adequately recover the significant costs of fuel, labor and capital investment.
So ...
What does this tell us. That the model is broken and needs to be fixed. Remember how the US and many other economists "fixed" the Cost of Living index? They took out Fuel and other elements from the basket.
So I have proposed several times now that we need to do the same. Fuel should become - at least for the short term a broken out and payable sum of money to the airlines in any ticket you buy. This then allows us to get round to solving the problem of the airlines business models themselves which are decidedly broken.
Thanks JohnS for the coverage of this note.
Chaps - get with the program - neither the government or IATA should get involved in bailing out the airlines at this point. But by regulating how prices are displayed can really help the issue and will force the airlines to address their real costs and their broken business models.
Its how the rest of the world does it - and they can make money - so I have no sympathy for the airlines just because they refuse to address the pachyderm on the table!
Cheers
Timothy
Here is the Release that came out via Marketwatch quoting The Times (of London)
Moody's: Many US airline business models 'unsustainable'
LONDON (MarketWatch.com) -- Moody's Investors Service, a unit of Moody's Corp., has described the business model of many U.S. airline carriers as "unsustainable," the Times in London reported Saturday, citing a note from the credit ratings agency.
The agency's analysts said U.S. airlines are particularly vulnerable to high oil prices and even large carriers could be forced into bankruptcy, according to the report.
Moody's said with many airlines seeing a more than 30% year-on-year increase in their fuel costs, with nearly 50% of an average ticket consumed by fuel, they are left with inadequate funds to cover other key costs such as labor, equipment rentals, debt service and overhead, the newspaper added.
"Without an ability to cover costs and earn an adequate return, the business model for most airlines cannot be sustained under current fuel price conditions," Moody's said, according to the Times.
The agency said airlines will not be able to cost-cut or capacity-reduce their way back to profitability, and long-term industry viability will depend upon a pricing environment in which airlines can adequately recover the significant costs of fuel, labor and capital investment.
So ...
What does this tell us. That the model is broken and needs to be fixed. Remember how the US and many other economists "fixed" the Cost of Living index? They took out Fuel and other elements from the basket.
So I have proposed several times now that we need to do the same. Fuel should become - at least for the short term a broken out and payable sum of money to the airlines in any ticket you buy. This then allows us to get round to solving the problem of the airlines business models themselves which are decidedly broken.
Thanks JohnS for the coverage of this note.
Chaps - get with the program - neither the government or IATA should get involved in bailing out the airlines at this point. But by regulating how prices are displayed can really help the issue and will force the airlines to address their real costs and their broken business models.
Its how the rest of the world does it - and they can make money - so I have no sympathy for the airlines just because they refuse to address the pachyderm on the table!
Cheers
Timothy
04 July 2008
T2 wishes all its US readers a Happy 4th of July
Normally the Brits - me included in this case - go into mourning on this day at the loss of the American Colonies.
However if you look back at the recent history of the US Leaders - perhaps the outcome was not a bad one for the United Kingdom after all ;-)
Happy 4th
Cheers
Timothy
However if you look back at the recent history of the US Leaders - perhaps the outcome was not a bad one for the United Kingdom after all ;-)
Happy 4th
Cheers
Timothy
R-r-r-regulation? A Solution perhaps?
The antidote to civilization is back....
The airlines want us to accept that the solution to their problems is regulation. The calls for this come from as different a quarter as the former acerbic CEO of AMR - Robert Crandall (he must have given up smoking because he has been pretty cranky of late), and the US airlines.
Well just like drugs... JUST SAY NO.
However, I have a proposal which just about everyone might buy into.
The airlines all say their woes are caused by high fuel prices. So lets seperate this out and then have a fee that shows the fuel surcharge. This has been successfully implemented in International airfares across the board. So for the sake of transparency lets impose a requirement for the airlines to use the SAME NUMBER for fuel. We could use a formula which in total approximates the real fuel costs. This would be driven by the following factors:
1. Class of service offered F/C/Y
2. Flight time - based on mileage, zones or actual flight time
3. Number of stops made - connections are more fuel inefficient
4. Airport - some airports are more efficient than others
5. Type of aircraft - probably impractical but simply give each airline a factor based on their fuel efficiency of their fleet.
6. Fuel incrementer - as the price of fuel rises or falls the incrementer is reset every month or every quarter as necessary. Peg the number at the price per barrel of $2.00 per avgas and then raise of lower the index.
7. Green effect - this would be a percentage based on certain green effects (eg use of bio fuel).
The Fuel surcharge would then be levied onto each ticket and clearly showed so the airlines can have the charge universally implemented. So it doesn't matter WHO charges the fee - it will be broken out. More efficient airlines would be able to lower their regular airline prices if they are better at handling say Fuel Hedging.
The benefits are self evident. No more will the airlines have to impose silly fees (unless they want to). All airlines will be treated equally on a point to point basis. Consumers would see which flights are more fuel efficient so their choices will be better and thus the airlines will be financially encouraged to operate more efficiently. Each airline can go back to competing on a common basis. The airlines will go back to raising or lowering their prices without the cost of fuel being an opaque item.
Rick Seaney and his crew at Farecompare have created a table of Fuel surcharges from the USA Transatlantic. This is interesting as it shows that certain airlines are charging more for fuel surcharges than others. This makes my case stronger because the airlines may or may not be more efficient. We need to know which airlines are fuel efficient.
Have a look and see if you can tell which airlines are better at this.
http://rickseaney.com/2008/07/01/flying-to-europe-latest-european-fuel-surcharges/
Clearly this would be a masterful approach to stop the whining by the airlines and the consumer can be better informed to make his decisions.
Of course the chances of this happening are zero because the GDSs wont like the coding they would have to do and the airlines wont like the transparency. They would be much happier to gripe about it than actually DO SOMETHING.
Oh yes and if you think this is bad - look at the taxes which are not being universally charged either!
Cheers
Timothy
The airlines want us to accept that the solution to their problems is regulation. The calls for this come from as different a quarter as the former acerbic CEO of AMR - Robert Crandall (he must have given up smoking because he has been pretty cranky of late), and the US airlines.
Well just like drugs... JUST SAY NO.
However, I have a proposal which just about everyone might buy into.
The airlines all say their woes are caused by high fuel prices. So lets seperate this out and then have a fee that shows the fuel surcharge. This has been successfully implemented in International airfares across the board. So for the sake of transparency lets impose a requirement for the airlines to use the SAME NUMBER for fuel. We could use a formula which in total approximates the real fuel costs. This would be driven by the following factors:
1. Class of service offered F/C/Y
2. Flight time - based on mileage, zones or actual flight time
3. Number of stops made - connections are more fuel inefficient
4. Airport - some airports are more efficient than others
5. Type of aircraft - probably impractical but simply give each airline a factor based on their fuel efficiency of their fleet.
6. Fuel incrementer - as the price of fuel rises or falls the incrementer is reset every month or every quarter as necessary. Peg the number at the price per barrel of $2.00 per avgas and then raise of lower the index.
7. Green effect - this would be a percentage based on certain green effects (eg use of bio fuel).
The Fuel surcharge would then be levied onto each ticket and clearly showed so the airlines can have the charge universally implemented. So it doesn't matter WHO charges the fee - it will be broken out. More efficient airlines would be able to lower their regular airline prices if they are better at handling say Fuel Hedging.
The benefits are self evident. No more will the airlines have to impose silly fees (unless they want to). All airlines will be treated equally on a point to point basis. Consumers would see which flights are more fuel efficient so their choices will be better and thus the airlines will be financially encouraged to operate more efficiently. Each airline can go back to competing on a common basis. The airlines will go back to raising or lowering their prices without the cost of fuel being an opaque item.
Rick Seaney and his crew at Farecompare have created a table of Fuel surcharges from the USA Transatlantic. This is interesting as it shows that certain airlines are charging more for fuel surcharges than others. This makes my case stronger because the airlines may or may not be more efficient. We need to know which airlines are fuel efficient.
Have a look and see if you can tell which airlines are better at this.
http://rickseaney.com/2008/07/01/flying-to-europe-latest-european-fuel-surcharges/
Clearly this would be a masterful approach to stop the whining by the airlines and the consumer can be better informed to make his decisions.
Of course the chances of this happening are zero because the GDSs wont like the coding they would have to do and the airlines wont like the transparency. They would be much happier to gripe about it than actually DO SOMETHING.
Oh yes and if you think this is bad - look at the taxes which are not being universally charged either!
Cheers
Timothy
02 July 2008
A Home for all those 50 Seat RJs - Russia?
Russian authorities have thrown down what should be an interesting offer to anyone who owns and/or operates one of those largely surplus 50 Seat RJs. They are offering to forgo the heavy duty that is currently imposed on all external aircraft imports into the Russian Federation.
Why this and why now? Well the bulk of the Russian fleet of these types and sizes of aircraft are VERY OLD WW2 era AN2 biplanes and the outrageously expensive to operate Yak40/42s. There are no plans to build such a size aircraft in the near future but Russia - in the midst of an economic upturn - is keep to expand regional aviation domestically. Hence the offer.
Yevgeny Bachurin also noted that the proposal of Rosaviatsiya is only a temporary measure, until the Russian manufacturers will decide with the production of aircrafts with a capacity of less than 50 seats.
Interesting no?
Cheers
Timothy
Why this and why now? Well the bulk of the Russian fleet of these types and sizes of aircraft are VERY OLD WW2 era AN2 biplanes and the outrageously expensive to operate Yak40/42s. There are no plans to build such a size aircraft in the near future but Russia - in the midst of an economic upturn - is keep to expand regional aviation domestically. Hence the offer.
Yevgeny Bachurin also noted that the proposal of Rosaviatsiya is only a temporary measure, until the Russian manufacturers will decide with the production of aircrafts with a capacity of less than 50 seats.
Interesting no?
Cheers
Timothy
OTAs to get reprieve for another year as Hotels hurt
You would think that with the airlines cutting back on flights that the OTAs will be in a world of hurt. Well apparently not so.Humour me here!
The value of the OTAs to the airlines whether content or zero content based has been diminishing over time. Now with capacity in the Domestic US market headed for a major cutback then the airlines "Don't Need No-BODY!!!!"
So they are not going to play ball on giving deals. This is rumbling in contract negotiations throught the market.
However the hotels are in a completely opposite situation. As the airlines cut back they need to fill the vacant rooms. It is a heck of a lot harder to handle cutting back capacity in a hotel than for an airline.
So the hotels will be desperately seeking new channels of distribution... headed straight for the arms of the willing OTAs.
For sure the period from the days immediately after Labor Day are going to be a lot different for the Hotel market than in prior years. First up - lets see what the rates are for Fashion Week in New York. Sure as heck anyone charging like last years rates will look a little silly. (If you are being asked those astronomical rates than contact me and I will give you some options you may not have thought about.
However what happens when capacity comes back in the airline market?
This is going to be interesting as we enter another phase of the evolution of travel distribution
Cheers
Timothy
The value of the OTAs to the airlines whether content or zero content based has been diminishing over time. Now with capacity in the Domestic US market headed for a major cutback then the airlines "Don't Need No-BODY!!!!"
So they are not going to play ball on giving deals. This is rumbling in contract negotiations throught the market.
However the hotels are in a completely opposite situation. As the airlines cut back they need to fill the vacant rooms. It is a heck of a lot harder to handle cutting back capacity in a hotel than for an airline.
So the hotels will be desperately seeking new channels of distribution... headed straight for the arms of the willing OTAs.
For sure the period from the days immediately after Labor Day are going to be a lot different for the Hotel market than in prior years. First up - lets see what the rates are for Fashion Week in New York. Sure as heck anyone charging like last years rates will look a little silly. (If you are being asked those astronomical rates than contact me and I will give you some options you may not have thought about.
However what happens when capacity comes back in the airline market?
This is going to be interesting as we enter another phase of the evolution of travel distribution
Cheers
Timothy
Expedia and Microsoft finally seperate
And so the trend of separating from your families seems to be alive and well in the Travel Industry.
Not content with anything - Expedia has been kicked out of the UK and US portals of MSN Travel.
This has been coming for some time. First Farecast was purchased by Microsoft and now this.
In truth because the value of Expedia to MSN has been played out - this is understandable. Orbitz will do well with this.
Orbitz has become the preferred provider to MSN/USA and eBookers has become the preferred provider at MSN/UK.
So here is a question for you. If vendors and distributors change partners and show no allegiance to each other... how can we expect consumers to be loyal to brands?
That's my question/thought for the day
Cheers
Timothy
Not content with anything - Expedia has been kicked out of the UK and US portals of MSN Travel.
This has been coming for some time. First Farecast was purchased by Microsoft and now this.
In truth because the value of Expedia to MSN has been played out - this is understandable. Orbitz will do well with this.
Orbitz has become the preferred provider to MSN/USA and eBookers has become the preferred provider at MSN/UK.
So here is a question for you. If vendors and distributors change partners and show no allegiance to each other... how can we expect consumers to be loyal to brands?
That's my question/thought for the day
Cheers
Timothy
Biz Class Airlines Model RIP - L'avion purchased by BA
So the independent Business Class Airline Model has now bitten the dust for good. British Airways announced the purchase of the French Airline L'Avion, the last survivor of the class and will integrate into OpenSkies its new subsidiary.
Technically there are other airlines operating such as Al Khayala (now part of Kingdom Holdings) in Saudi Arabia but the model has clearly bitten the dust.
So over the coming weeks I will be looking at why the model failed and if there are other options to revive such a concept.
Cheers
Timothy
FOLLOW UP - BA to drop lower class services in OpenSkies
BA's future bookings on OpenSkies have ben strong in the front cabin and the Prem+ second cabin has been garnering rave reviews. However the back is - well same old stuff. So BA is looking to cut the back on offer either a full 2 class service or a single ClubWorld type product.
Technically there are other airlines operating such as Al Khayala (now part of Kingdom Holdings) in Saudi Arabia but the model has clearly bitten the dust.
So over the coming weeks I will be looking at why the model failed and if there are other options to revive such a concept.
Cheers
Timothy
FOLLOW UP - BA to drop lower class services in OpenSkies
BA's future bookings on OpenSkies have ben strong in the front cabin and the Prem+ second cabin has been garnering rave reviews. However the back is - well same old stuff. So BA is looking to cut the back on offer either a full 2 class service or a single ClubWorld type product.
27 June 2008
How did I miss this one - I live in a town with a real SLUT
Officially its a Streetcar - but they were calling it Trolley for a long time before it because that was a cooler name than a Streetcar.
So have a look here - nothing needs any explanation. But some folks in the City of Seattle have some red faces.
http://seattlepi.nwsource.com/local/332081_slut18.html
Cheers
Timothy
So have a look here - nothing needs any explanation. But some folks in the City of Seattle have some red faces.
http://seattlepi.nwsource.com/local/332081_slut18.html
Cheers
Timothy
The US Government shows itself to be - well not very energy smart.
So at the risk of sounding like an anti-government person - which I am not - I have to point out ways that the US Government is doing a fine job of screwing up.
Since today I also showed some wonderful examples of EURO-screwed up-ness, I have to look at the US for a counter balance.
Lets consider Solar Power. I think everyone (except the current occupant of 1600 Pennsylvania Avenue NW DC and his neighbour at the U.S. Naval Observatory on Massachusetts Avenue), believe that renewable energy sources are a priority. Well the US BLM - Bureau of Land Management today put on a 2 year moratorium on building new Solar Power plants. DUH!!! Couple this with the removal of the tax credit on solar energy for the home and you have a rather stupid state of affairs.
So kick me if I am wrong but just at the time when America needs to encourage new forms of energy source and preferably renewable - the government comes along and kills it for you. I thought airlines were dumb but this shows they are not alone.
I have just come back from Greece where water and energy are a very scarce commodity. There are a whole host of homes and public buildings that take advantage of solar power to cool, power and heat their users. Units that are low cost AND unsubsidized.
This country - Greece - has power that is not always on in some of the Islands and fresh water is a really scarce resource. If they can do it on the cheap why not the USA?
Inquiring minds want to know.....
Cheers
Timothy
Since today I also showed some wonderful examples of EURO-screwed up-ness, I have to look at the US for a counter balance.
Lets consider Solar Power. I think everyone (except the current occupant of 1600 Pennsylvania Avenue NW DC and his neighbour at the U.S. Naval Observatory on Massachusetts Avenue), believe that renewable energy sources are a priority. Well the US BLM - Bureau of Land Management today put on a 2 year moratorium on building new Solar Power plants. DUH!!! Couple this with the removal of the tax credit on solar energy for the home and you have a rather stupid state of affairs.
So kick me if I am wrong but just at the time when America needs to encourage new forms of energy source and preferably renewable - the government comes along and kills it for you. I thought airlines were dumb but this shows they are not alone.
I have just come back from Greece where water and energy are a very scarce commodity. There are a whole host of homes and public buildings that take advantage of solar power to cool, power and heat their users. Units that are low cost AND unsubsidized.
This country - Greece - has power that is not always on in some of the Islands and fresh water is a really scarce resource. If they can do it on the cheap why not the USA?
Inquiring minds want to know.....
Cheers
Timothy
Confused about fees? Bo so no longer... The T2 Challenge
Rick at the excellent site - FareCompare.com - has done the leg work for you. So here is a challenge for someone to build a solution for the consumer.
With the airlines doing such a great job of confusing everyone with their messages and changes - it is good to know you have a resource to go and help you check the REAL add on price to the basic "Fare" for your flight.
Since an all in price no longer exists - then you need to know what is what. Rick's chart does that for you. With grateful thanks and kudos to Michele McDonald of TTU - the last true newsletter for Reservation System geeks - for pointing this out to me and boos to ASTA net for hiding this behind their firewall.
Here is the link:
http://rickseaney.com/domestic-airline-fee-chart/
Now all we need is some smart alec to put this into an interactive format and then make it available as a mashup and put it into a meta search engine and the airlines will be in serious crapola.
I will award ANYONE who does this a bottle of fine wine or a $25.00 paypal voucher for you to buy - on proof of delivery. If the coder doesn't do it - I will award the bottle to the first person who sends me the link (and of course assuming that it works).
Let me know.... there has to be some bright spark who is already working on it (actually I know because one of my spies told me) BUT this is for the first person who can demonstrate a live version on the web.
Full conditions? Choose any 8 airlines and 2 scenarios from Rick's table that show all the fees. One of the airlines has to be Southwest.
Cheers
Timothy
With the airlines doing such a great job of confusing everyone with their messages and changes - it is good to know you have a resource to go and help you check the REAL add on price to the basic "Fare" for your flight.
Since an all in price no longer exists - then you need to know what is what. Rick's chart does that for you. With grateful thanks and kudos to Michele McDonald of TTU - the last true newsletter for Reservation System geeks - for pointing this out to me and boos to ASTA net for hiding this behind their firewall.
Here is the link:
http://rickseaney.com/domestic-airline-fee-chart/
Now all we need is some smart alec to put this into an interactive format and then make it available as a mashup and put it into a meta search engine and the airlines will be in serious crapola.
I will award ANYONE who does this a bottle of fine wine or a $25.00 paypal voucher for you to buy - on proof of delivery. If the coder doesn't do it - I will award the bottle to the first person who sends me the link (and of course assuming that it works).
Let me know.... there has to be some bright spark who is already working on it (actually I know because one of my spies told me) BUT this is for the first person who can demonstrate a live version on the web.
Full conditions? Choose any 8 airlines and 2 scenarios from Rick's table that show all the fees. One of the airlines has to be Southwest.
Cheers
Timothy
Mr Bill's last day as FTE
Today is a momentous day in anyone's life. It is the last full time day at Microsoft for Chairman Bill Gates. He hands over the corner office to CEO Steve Balmer.
As he probably reflects on his departure - let me add 2 cents as a Microsoft former employee and a stockholder.
Time to split the company.
In the good old days at company meetings it used to be that the devoted throng would yell SPLIT! SPLIT! meaning the stock. Now we need the company to split into parts. It is too big. There is almost no way to see the massive appreciation for stock that employees and investors alike would like to see happen.
Now we need to free the entrepreneurial spirit and the enterprise needs to be smaller, leaner and meaner. Massive companies such as Microsoft do not serve the market and their stakeholders well. I don't buy that argument that scale matters in software.
So Bill - best of luck and please put the beast out of its misery. We don't need a 8 million pound gorilla. We could really use a bunch of smart 800 lb gorillas about now though.
Cheers
Timothy
As he probably reflects on his departure - let me add 2 cents as a Microsoft former employee and a stockholder.
Time to split the company.
In the good old days at company meetings it used to be that the devoted throng would yell SPLIT! SPLIT! meaning the stock. Now we need the company to split into parts. It is too big. There is almost no way to see the massive appreciation for stock that employees and investors alike would like to see happen.
Now we need to free the entrepreneurial spirit and the enterprise needs to be smaller, leaner and meaner. Massive companies such as Microsoft do not serve the market and their stakeholders well. I don't buy that argument that scale matters in software.
So Bill - best of luck and please put the beast out of its misery. We don't need a 8 million pound gorilla. We could really use a bunch of smart 800 lb gorillas about now though.
Cheers
Timothy
The Fed was right to worry about inflation.
The US Federal Reserve Bank monthly meeting minutes reveal that there is a big concern about inflation. They are spot on and need to keep a tight lid on this.
At the current moment the travel industry is experiencing extensive inflationary pressures driven by the dual factors of the declining dollar and of course the high price of oil.
Perhaps no where is this more apparent than in the current wunderkind of the business - the MENA geography. Today Jordan reported inflation soaring to 12.7%. Inflationary pressures throughout the Gulf is coming back to bite everyone.
There is some real pressure ahead and the Fed will be reluctant to hold interest rates down.
At the current moment the travel industry is experiencing extensive inflationary pressures driven by the dual factors of the declining dollar and of course the high price of oil.
Perhaps no where is this more apparent than in the current wunderkind of the business - the MENA geography. Today Jordan reported inflation soaring to 12.7%. Inflationary pressures throughout the Gulf is coming back to bite everyone.
There is some real pressure ahead and the Fed will be reluctant to hold interest rates down.
Friday Frivolity - Euro MP Style
For all of you who think that European Legislators (Members of the European Parliament known more formally as MEPs) are a bunch of wine swilling freeloaders, you just might be right.
Thanks Mike for this one!
So if you want to know why European taxes are high and why there is a strong anti-Federalist movement in certain countries such as the UK, this might be a clue. For the record - I am a strong believer in the European Community but have always felt that the American system of balance (3 instruments - Executive, Judiciary and Legislature) was optimal. However the EC system makes the Commissioners effectively Judge Jury and Executioner. For background, at the present time there is a strong move by the EC to pass a new constitution which further centralizes power. The so called Treaty of Lisbon was voted down by the Irish this month and replaces the previous effort called the Treaty of Mastricht which resulted in a show down and was voted down by the French amongst others. So the EU is suffering from a lack of leadership at the center and the need for a new constitution is evident with the expanded membership of the EC. But not at any price.
The view of the man in the street is that he suspects that there is a giant gravy train in Brussels and Strasbourg which is adding up to higher taxes for the common man. If this video is anything to go by - he may be right.
Watch it yourself and see
Cheers
Timothy
http://www.brusselsjournal.com/node/3369
Thanks Mike for this one!
So if you want to know why European taxes are high and why there is a strong anti-Federalist movement in certain countries such as the UK, this might be a clue. For the record - I am a strong believer in the European Community but have always felt that the American system of balance (3 instruments - Executive, Judiciary and Legislature) was optimal. However the EC system makes the Commissioners effectively Judge Jury and Executioner. For background, at the present time there is a strong move by the EC to pass a new constitution which further centralizes power. The so called Treaty of Lisbon was voted down by the Irish this month and replaces the previous effort called the Treaty of Mastricht which resulted in a show down and was voted down by the French amongst others. So the EU is suffering from a lack of leadership at the center and the need for a new constitution is evident with the expanded membership of the EC. But not at any price.
The view of the man in the street is that he suspects that there is a giant gravy train in Brussels and Strasbourg which is adding up to higher taxes for the common man. If this video is anything to go by - he may be right.
Watch it yourself and see
Cheers
Timothy
http://www.brusselsjournal.com/node/3369
26 June 2008
DOJ nabs guilt pleas from 5 more airlines nets $504 million
Nearly doubling the fines it had levied on bad airline behaviour in coluding on cargo rates earlier this decade, the US DOJ announced that 5 more airlines have now copped a plea.
In this latest round AF-KL Group comes out as the bad guys. Of the 5 airlines named and shamed (and fined) they paid the lion's share of the fines $350 Million for Air France, KLM and Martinair. The balance of the fines came from 2 other airlines - Cathay Pacific and SAS.
The airlines also agreed to cooperate with the DoJ which would indicate that there are more guilty parties waiting to be caught and fined. Whether one of them will end up in jail like the Qantas man remains to be seen. For sure there is likely to be some civil suits filed once the criminal cases are all done.
So the US Government was funding part of today's fight in Iraq courtesy of some foreign airlines. I am sure there is a moral in here somewhere.
Cheers
Timothy
In this latest round AF-KL Group comes out as the bad guys. Of the 5 airlines named and shamed (and fined) they paid the lion's share of the fines $350 Million for Air France, KLM and Martinair. The balance of the fines came from 2 other airlines - Cathay Pacific and SAS.
The airlines also agreed to cooperate with the DoJ which would indicate that there are more guilty parties waiting to be caught and fined. Whether one of them will end up in jail like the Qantas man remains to be seen. For sure there is likely to be some civil suits filed once the criminal cases are all done.
So the US Government was funding part of today's fight in Iraq courtesy of some foreign airlines. I am sure there is a moral in here somewhere.
Cheers
Timothy
Should US Airlines be allowed to hold onto Dormant Authority?
The principal of US airline service used to be USE IT OR LOSE IT. Back when there was domestic regulation - this meant that dormant authority had specific rules for use it or lose it abandonment or even failing to take up the authority provided.
Recently the airlines (US Majors) petitioned for a suspension of the current rules so that they can hold onto current route authority and wait out the recession. I believe this is fundamentally wrong.
If a carrier is not able to provide service, delays service or reduces service to a level less than what was bid on their application for international traffic rights then the carrier should be forced to forfeit the service and route authority can go back into a pool for the back up carrier or other carriers to fly the route.
US Airways has announced that it wishes to delay the start of US-China authority. At the same time it has canceled leases on 2 A330s it could have used for the service. So now it is claiming it doesn't have the aircraft to fly the route. OK I am game explain why this is a non-sequetor? United has canceled the DEN-LHR route. - There are many more examples of this. Both airlines are party to the petition to allow dormant authority to rest with the airline until such time as the economic climate improves.
The US airline business needs new blood. Lets stop this feather bedding and coddling of the incumbent and inefficient airlines.
Cheers
Timothy
Recently the airlines (US Majors) petitioned for a suspension of the current rules so that they can hold onto current route authority and wait out the recession. I believe this is fundamentally wrong.
If a carrier is not able to provide service, delays service or reduces service to a level less than what was bid on their application for international traffic rights then the carrier should be forced to forfeit the service and route authority can go back into a pool for the back up carrier or other carriers to fly the route.
US Airways has announced that it wishes to delay the start of US-China authority. At the same time it has canceled leases on 2 A330s it could have used for the service. So now it is claiming it doesn't have the aircraft to fly the route. OK I am game explain why this is a non-sequetor? United has canceled the DEN-LHR route. - There are many more examples of this. Both airlines are party to the petition to allow dormant authority to rest with the airline until such time as the economic climate improves.
The US airline business needs new blood. Lets stop this feather bedding and coddling of the incumbent and inefficient airlines.
Cheers
Timothy
Airlines detail specifics about cuts in service
United released its story to the public. Being the most detailed amongst the airlines that have announced cuts - United today announced that they would cut service at several airports and include at least one international route.
LHR-DEN will be dropped effective the fall season. Despite being only started in March, it leaves BA as the sole incumbent on the route. However LH now operates 2 flights a day MUC and FRA to DEN.
United will further drop service at 2 South Florida airports, FLL and PBI. So far the only increase in service has been announced for Direct Hawaii markets. United is clearly not shifting resources around.
We believe that United will announce even further cuts.
American has announced major cutbacks at its hubs. Having previously announced a significant scale down of service out of Puerto Rico - today it announced at several hubs would be cut back with reductions in both mainline and commuter service. Perhaps one of the hardest hit will be STL where in recent years AA has dropped almost all mainline flights in favor of American Eagle service. Southwest must be sending bottle of bourbon to Mr Arpey in gratitude.
It is not getting better folks
LHR-DEN will be dropped effective the fall season. Despite being only started in March, it leaves BA as the sole incumbent on the route. However LH now operates 2 flights a day MUC and FRA to DEN.
United will further drop service at 2 South Florida airports, FLL and PBI. So far the only increase in service has been announced for Direct Hawaii markets. United is clearly not shifting resources around.
We believe that United will announce even further cuts.
American has announced major cutbacks at its hubs. Having previously announced a significant scale down of service out of Puerto Rico - today it announced at several hubs would be cut back with reductions in both mainline and commuter service. Perhaps one of the hardest hit will be STL where in recent years AA has dropped almost all mainline flights in favor of American Eagle service. Southwest must be sending bottle of bourbon to Mr Arpey in gratitude.
It is not getting better folks
FlyDubai announced today!
The world's newest LCC got its naming rights today and like its surrogate parent Emirates - it promises to change the way we see airline offerings in this case LCCs.
It is expected that FlyDubai will launch its first flights "by mid-2009." FlyDubai will initially focus on regional flights within the GCC area and surrounding countries. Its operations will be completely "separate from Emirates Airline and Group."
Ghaith al Ghaith, the designated Chief Executive of FlyDubai said since the government announced the formation of Dubai's new low cost airline in March, "We are recruiting for key positions, evaluating aircraft options and routes, working out our pricing and distribution strategy, and putting in place the structure and operational resources for the business."
Watch for some key announcements in the coming weeks about the first routes - FlyDubai will potentially cover a market of "2 billion people". Wow that's one heck of a lot. So I am assuming that we are talking a focus on Regional as they stated and this screams India as the prime target. So I am going to suggest that the market is India and the MENA area as the geographic focus. However that is pure speculation on my part so don't read anything else into it! It does tell us who they see as competition, namely it is Air Arabia and Jazeera as key targets.
Best of luck guys. Lets hope you are true to the model! It could really make a huge change in the flows of traffic. If I was sitting in the LCCs of India as well as Air Arabia and Jazeera - I would be pretty nervous.
Cheers
Timothy
It is expected that FlyDubai will launch its first flights "by mid-2009." FlyDubai will initially focus on regional flights within the GCC area and surrounding countries. Its operations will be completely "separate from Emirates Airline and Group."
Ghaith al Ghaith, the designated Chief Executive of FlyDubai said since the government announced the formation of Dubai's new low cost airline in March, "We are recruiting for key positions, evaluating aircraft options and routes, working out our pricing and distribution strategy, and putting in place the structure and operational resources for the business."
Watch for some key announcements in the coming weeks about the first routes - FlyDubai will potentially cover a market of "2 billion people". Wow that's one heck of a lot. So I am assuming that we are talking a focus on Regional as they stated and this screams India as the prime target. So I am going to suggest that the market is India and the MENA area as the geographic focus. However that is pure speculation on my part so don't read anything else into it! It does tell us who they see as competition, namely it is Air Arabia and Jazeera as key targets.
Best of luck guys. Lets hope you are true to the model! It could really make a huge change in the flows of traffic. If I was sitting in the LCCs of India as well as Air Arabia and Jazeera - I would be pretty nervous.
Cheers
Timothy
25 June 2008
Merrill Lynch issues caution on UAE Real Estate
Despite taking in a chunk of money from external sovereign wealth funds, ML is turning bearish on the GCC Property Boom. This has impact on our sector.
According to UK based Oxford Business Group, US financial services giant Merrill Lynch has issued a word of caution against over-supply in the coming years. Predicting that Dubai may switch from under to over supply within the next two years, a recent report on the GCC warns that "oversupply in Dubai may result in relocation away from the Northern Emirates".
As the economy in the GCC is being based on the property value boom itself built on (what used to be called) petro dollars, this is a worrying trend and an indication that the bubble may have a finite time before it deflates. Couple this with rampant inflation (it just topped 10% in Kuwait officially. Unofficially it is higher than that in certain sectors and countries), and this is just not a good situation.
For travel this could occur at an inopportune time. Airlines in the Region represent the only market where significant growth is occurring without concern for the economics. India's growth has already moderated due to rapid rise of crude and despite strong demand the current crop of Indian Airlines are not making money. If we discount China for the moment - the whole Airline market is in recession already. Airbus and Boeing are going to start looking at their order books and production rates nervously if the Middle East market fizzles out.
Food for thought.
Cheers
Timothy
According to UK based Oxford Business Group, US financial services giant Merrill Lynch has issued a word of caution against over-supply in the coming years. Predicting that Dubai may switch from under to over supply within the next two years, a recent report on the GCC warns that "oversupply in Dubai may result in relocation away from the Northern Emirates".
As the economy in the GCC is being based on the property value boom itself built on (what used to be called) petro dollars, this is a worrying trend and an indication that the bubble may have a finite time before it deflates. Couple this with rampant inflation (it just topped 10% in Kuwait officially. Unofficially it is higher than that in certain sectors and countries), and this is just not a good situation.
For travel this could occur at an inopportune time. Airlines in the Region represent the only market where significant growth is occurring without concern for the economics. India's growth has already moderated due to rapid rise of crude and despite strong demand the current crop of Indian Airlines are not making money. If we discount China for the moment - the whole Airline market is in recession already. Airbus and Boeing are going to start looking at their order books and production rates nervously if the Middle East market fizzles out.
Food for thought.
Cheers
Timothy
24 June 2008
Las Vegas drops traffic again
Sin City is not so attractive it would seem in these hard economic times.
Total traffic (visitor count for April was down 1.5%. OK bad enough - but Gaming revenues are down nearly 5%. Gaming taxes collected as Nevada state revenue were down 3.5% in April, marking the seventh month of the past 11 months that gaming tax revenue declined.
Air Traffic is way down at higher than 5%. Why? US Airways has dismantled their late night hub formerly the America West midnight flyer hub. So US airways total traffic was down more than 28%. All the other players (except traditional contrarian Southwest)
So the US market continues its downward spiral. Sad....
Total traffic (visitor count for April was down 1.5%. OK bad enough - but Gaming revenues are down nearly 5%. Gaming taxes collected as Nevada state revenue were down 3.5% in April, marking the seventh month of the past 11 months that gaming tax revenue declined.
Air Traffic is way down at higher than 5%. Why? US Airways has dismantled their late night hub formerly the America West midnight flyer hub. So US airways total traffic was down more than 28%. All the other players (except traditional contrarian Southwest)
So the US market continues its downward spiral. Sad....
Change Partners. Stardate 5302.09
With Stephen Stills ringing in your head - GetThere announced today that they have snagged SAP as a business partner.
Those of you who were still in breeches in 1999 when Amadeus and SAP first delivered their solution. Now it seems that SAP wants to branch out and sleep around with Sabre's GetThere subsidiary as well.
Can Galileo and Worldspan be far behind?
Those of you who were still in breeches in 1999 when Amadeus and SAP first delivered their solution. Now it seems that SAP wants to branch out and sleep around with Sabre's GetThere subsidiary as well.
Can Galileo and Worldspan be far behind?
Southwest introduces "No Surprise Fees"
Southwest is running a great series of newspaper ads showing its pricing vs legacy airlines pricing.
http://www.southwest.com/nofees/
This is the irreverent and fun "poke you in the eye" Southwest we have been missing for a while.
At least finally someone is saying enough. Just get the fares right. It is amazing to me that someone would have to even SAY this sort of thing. Why can't the US Airlines do what the European and Asian carriers have been doing for years - actually publishing a fuel surcharge and being transparent about it. NAH, that's way too hard and smart and.... However the Grand Order of Lemmings - the GOoL Airlines - are marching in lock step to the cliff.
Will anyone else follow WN's lead? I doubt it.
Well guess what - I can almost guarantee that WN will post more passengers (vs declines in traffic on the other airlines) higher load factors and greater profits (vs losses on the other airlines). Thank you GOoL team - you just saved WN's bacon for at least a year.
I wonder how those wunderkinds on Wall Street will feel about that when the Q3 and Q4 numbers come in?
Cheers
Timothy
http://www.southwest.com/nofees/
This is the irreverent and fun "poke you in the eye" Southwest we have been missing for a while.
At least finally someone is saying enough. Just get the fares right. It is amazing to me that someone would have to even SAY this sort of thing. Why can't the US Airlines do what the European and Asian carriers have been doing for years - actually publishing a fuel surcharge and being transparent about it. NAH, that's way too hard and smart and.... However the Grand Order of Lemmings - the GOoL Airlines - are marching in lock step to the cliff.
Will anyone else follow WN's lead? I doubt it.
Well guess what - I can almost guarantee that WN will post more passengers (vs declines in traffic on the other airlines) higher load factors and greater profits (vs losses on the other airlines). Thank you GOoL team - you just saved WN's bacon for at least a year.
I wonder how those wunderkinds on Wall Street will feel about that when the Q3 and Q4 numbers come in?
Cheers
Timothy
Delta's new form of marketing: Non-refundable Refunds
From those nice people who brought you Song (as in Fly for a..) comes there latest way to develop a marketing push without having to pay for it.
The folks at Delta's marketing group have happened on a nice little marketing scheme underway with the latest offer to rebate the $25 fee for a second checked bag that was charged to passengers who bought tickets before April 9th and flew after May 5th when the charge was implemented. (I hope you are following the story so far...) In order to get the rebate, passengers must provide Delta with some information, including a Passenger Receipt Number for the ticket and method of payment for the baggage charge. Does anyone recall or record his Passenger Receipt Number from a flight completed 45 days ago? OK So let's go to the Delta website and see if we can find this information. Hmmm not on the home page..... let's try search - input "Baggage $25". There it is buried at the bottom of the baggage conditions page:
https://www.delta.com/traveling_checkin/baggage/baggage_allowance/index.jsp
And the full conditions are here:
https://www.delta.com/traveling_checkin/baggage/baggage_allowance/second_bag_fee/index.jsp
It would be one thing if you could find out these number from your frequent flyer account, but that's not possible. You wont find it from your credit card statement - oh yes and Delta doesn't store that information beyond the expiry of the PNR which will be midnight the day after you traveled.
Required areas include (but are not limited to) the following:
Passenger Name
Passenger Address
Baggage receipt number
Date fee paid
Departure date
Airport location
Flight number
Form of payment
Email address
Skymiles number
So if you don't have a DL Skymiles number you are screwed. More importantly if you didn't get a baggage receipt number that you remember - then the same situation applies.
So, the folks at Delta have a nice media burst and marketing ploy, whilst the customer is left to scramble and is unlikely to recoup charges added after the ticket was purchased. So for $25 there is unlikely to be a class action suit filed - but since there are a lot of lawyers looking for something to do - then maybe there is. Delta describes the offer to refund the fee as a "business decision".
Perhaps we can put the same people in charge of the Mariners baseball team. They can't do any worse than the current lot.
Cheers
Timothy
The folks at Delta's marketing group have happened on a nice little marketing scheme underway with the latest offer to rebate the $25 fee for a second checked bag that was charged to passengers who bought tickets before April 9th and flew after May 5th when the charge was implemented. (I hope you are following the story so far...) In order to get the rebate, passengers must provide Delta with some information, including a Passenger Receipt Number for the ticket and method of payment for the baggage charge. Does anyone recall or record his Passenger Receipt Number from a flight completed 45 days ago? OK So let's go to the Delta website and see if we can find this information. Hmmm not on the home page..... let's try search - input "Baggage $25". There it is buried at the bottom of the baggage conditions page:
https://www.delta.com/traveling_checkin/baggage/baggage_allowance/index.jsp
And the full conditions are here:
https://www.delta.com/traveling_checkin/baggage/baggage_allowance/second_bag_fee/index.jsp
It would be one thing if you could find out these number from your frequent flyer account, but that's not possible. You wont find it from your credit card statement - oh yes and Delta doesn't store that information beyond the expiry of the PNR which will be midnight the day after you traveled.
Required areas include (but are not limited to) the following:
Passenger Name
Passenger Address
Baggage receipt number
Date fee paid
Departure date
Airport location
Flight number
Form of payment
Email address
Skymiles number
So if you don't have a DL Skymiles number you are screwed. More importantly if you didn't get a baggage receipt number that you remember - then the same situation applies.
So, the folks at Delta have a nice media burst and marketing ploy, whilst the customer is left to scramble and is unlikely to recoup charges added after the ticket was purchased. So for $25 there is unlikely to be a class action suit filed - but since there are a lot of lawyers looking for something to do - then maybe there is. Delta describes the offer to refund the fee as a "business decision".
Perhaps we can put the same people in charge of the Mariners baseball team. They can't do any worse than the current lot.
Cheers
Timothy
23 June 2008
787 Power on - FINALLY
So Boeing managed to turn on the lights. Finally one built (and rebuilt and rebuilt...) 787 actually works with electricity. I wonder if they can turn it off ;-)
This is very good news for Boeing if for no other reason than it is a great morale booster.
There are challenges ahead. The most significant is that all the customers are being told to plan for significant delivery delays. In the case of a small airline - though an early buyer - the date for delivery for Monarch is now 2013. Ouch!
The gap between the projected deliveries and the full on production is a gaping hole. There is a significant capacity gap in the 767/330/787 sector, new builds are scarce and Boeing is being tight-lipped about any 767 production rate ramp up. With the Tanker decision again about 12 months away, Boeing is going to be in no hurry to add capacity to this sector. As Airbus has seen with the recent inability to reach Wave 2 for the A380 - this logistics thing is not easy.
What can be learned from this? Lots of things. Now I guess we all understand why Microsoft is/was always late with its versions of Windows.
Cheers
Timothy
This is very good news for Boeing if for no other reason than it is a great morale booster.
There are challenges ahead. The most significant is that all the customers are being told to plan for significant delivery delays. In the case of a small airline - though an early buyer - the date for delivery for Monarch is now 2013. Ouch!
The gap between the projected deliveries and the full on production is a gaping hole. There is a significant capacity gap in the 767/330/787 sector, new builds are scarce and Boeing is being tight-lipped about any 767 production rate ramp up. With the Tanker decision again about 12 months away, Boeing is going to be in no hurry to add capacity to this sector. As Airbus has seen with the recent inability to reach Wave 2 for the A380 - this logistics thing is not easy.
What can be learned from this? Lots of things. Now I guess we all understand why Microsoft is/was always late with its versions of Windows.
Cheers
Timothy
22 June 2008
Is IATA nuts or just its DG?
The latest missive from IATA's Director General (yes Martha he is Italian), takes aim at the GDS providers.
The International Air Transport Association has called on GDSs to cut their fees – or risk losing air product. IATA director general and chief executive Giovanni Bisignani said its partners in the value chain “must deliver similar efficiencies to airlines”. “Why can China TravelSky charge US$0.50 per segment
while the western GDSs charge over USD$4?,” he said. “The industry is in crisis and they must come to the table with better efficiencies or we will use other ways to distribute products.”
OK - so the theory is Travelsky can do it for 50 cents but the Western GDSs charge too much. Either he is nuts or he is mad or he has another agenda. Frankly this cannot possibly be a good way to start a dialogue with your "partners".
Please note I am not defending GDS costs. Far from it - I believe wholeheartedly that the GDSs need to do something about their cost structures and about their technology and processes. Airlines need to just transform their cost structures - however you have heard me rail against that set of issues before. But he clearly knows nothing about China and Travelsky as to why they charge that fee, nor does he understand the issues facing GDSs.
Where I will agree with him - is that there needs to be a transformation in the cost structure for distribution. This is essential. What he is attacking is the headline number. There are many more costs which are dependent on this number which need addressing. At the same time no one seems to be paying attention to the new cost structure which is even worse than the old one with a certain company's new hosted product that the Lemmings are buying.
So perhaps he has a secret pact to attack the GDS model while preserving the new hosted reservations system model? I for one do not understand why he is taking this tack because to those who understand the economics of distribution - he is barking up the wrong tree at the wrong time.
Perhaps he just knows something more than the rest of us. OK - I will buy that... just share a little please.......... If you know - please help me out from my misery of understanding his position.
Cheers
Timothy
The International Air Transport Association has called on GDSs to cut their fees – or risk losing air product. IATA director general and chief executive Giovanni Bisignani said its partners in the value chain “must deliver similar efficiencies to airlines”. “Why can China TravelSky charge US$0.50 per segment
while the western GDSs charge over USD$4?,” he said. “The industry is in crisis and they must come to the table with better efficiencies or we will use other ways to distribute products.”
OK - so the theory is Travelsky can do it for 50 cents but the Western GDSs charge too much. Either he is nuts or he is mad or he has another agenda. Frankly this cannot possibly be a good way to start a dialogue with your "partners".
Please note I am not defending GDS costs. Far from it - I believe wholeheartedly that the GDSs need to do something about their cost structures and about their technology and processes. Airlines need to just transform their cost structures - however you have heard me rail against that set of issues before. But he clearly knows nothing about China and Travelsky as to why they charge that fee, nor does he understand the issues facing GDSs.
Where I will agree with him - is that there needs to be a transformation in the cost structure for distribution. This is essential. What he is attacking is the headline number. There are many more costs which are dependent on this number which need addressing. At the same time no one seems to be paying attention to the new cost structure which is even worse than the old one with a certain company's new hosted product that the Lemmings are buying.
So perhaps he has a secret pact to attack the GDS model while preserving the new hosted reservations system model? I for one do not understand why he is taking this tack because to those who understand the economics of distribution - he is barking up the wrong tree at the wrong time.
Perhaps he just knows something more than the rest of us. OK - I will buy that... just share a little please.......... If you know - please help me out from my misery of understanding his position.
Cheers
Timothy
21 June 2008
The Digital Sybil - Our multiple personalities
There is a great webinar available at ATWOnline concerning the digital traveler. http://www.atwonline.com/
While of course the webinar is self serving for SITA - it is a good primer on the adoption of mobile technologies.
However I would like to raise two issues which I think will inhibit adoption. I am going to gloss over issues of security and personal information which in themselves are huge issues.
The first issue is the cost of holding the digital personality wallet. There is no way that the mobile companies are going to offer this capability at no charge. So there will be a cost. Who pays? if not free or bundled then you create a digital divide between haves and have nots. This is going to be a large behind the scenes bun fight again between the operators and the application providers. One of the main reasons for the slow adoption of mobile applications has been the guarding of the digital real estate that the mobile operators well the barriers are not insignificant.
The second issue is the assumption that every player thus far has made. IE that we have a single digital personality and a single wallet - AND that we want to have a single personality. We don't, we don't and well we don't.
I encourage you to read the novels of William Gibson. His groundbreaking 1984 book Neuromancer accurately predicted issues that we are now starting to face.
Before you jump into mobile adoption - think and bear in mind the issues of these items I have laid out here. Our Team at T2Impact has DEEP understanding and experience in Mobile apps going back more than 10 years. As the Watsons used to say "THINK" Do that first and you will at least reduce your mistakes.
Cheers
Timothy
While of course the webinar is self serving for SITA - it is a good primer on the adoption of mobile technologies.
However I would like to raise two issues which I think will inhibit adoption. I am going to gloss over issues of security and personal information which in themselves are huge issues.
The first issue is the cost of holding the digital personality wallet. There is no way that the mobile companies are going to offer this capability at no charge. So there will be a cost. Who pays? if not free or bundled then you create a digital divide between haves and have nots. This is going to be a large behind the scenes bun fight again between the operators and the application providers. One of the main reasons for the slow adoption of mobile applications has been the guarding of the digital real estate that the mobile operators well the barriers are not insignificant.
The second issue is the assumption that every player thus far has made. IE that we have a single digital personality and a single wallet - AND that we want to have a single personality. We don't, we don't and well we don't.
I encourage you to read the novels of William Gibson. His groundbreaking 1984 book Neuromancer accurately predicted issues that we are now starting to face.
Before you jump into mobile adoption - think and bear in mind the issues of these items I have laid out here. Our Team at T2Impact has DEEP understanding and experience in Mobile apps going back more than 10 years. As the Watsons used to say "THINK" Do that first and you will at least reduce your mistakes.
Cheers
Timothy
Don't get mad - get even. Join fellow FFs and fight back
From where I sit, service sucks on airlines. Chris Elliot is one guy who comments writes as both an advocate and an industry pundit (sounds like me - Ed). http://www.elliott.org/
For heavy flyers there is always Randy Petersen's sites. Great forums.
www.webflyer.com/interactive/ask_randy/
And then there is the the former US Airways disgruntled crew now much broader in scope:
FFOCUS - Frequent Flyers Organized and Concerned about Unacceptable Service
http://www.ffocus.org/awa/
If you want to stay clued up on what's going on. These are useful resources. Particularly if you are a consumer. As a supplier, (hotelier, airline etc) then you know your service - well politely (in general) sucks. So I hope this will be useful to all sides.
Cheers
Timothy
For heavy flyers there is always Randy Petersen's sites. Great forums.
www.webflyer.com/interactive/ask_randy/
And then there is the the former US Airways disgruntled crew now much broader in scope:
FFOCUS - Frequent Flyers Organized and Concerned about Unacceptable Service
http://www.ffocus.org/awa/
If you want to stay clued up on what's going on. These are useful resources. Particularly if you are a consumer. As a supplier, (hotelier, airline etc) then you know your service - well politely (in general) sucks. So I hope this will be useful to all sides.
Cheers
Timothy
20 June 2008
So you think you know the airline business?
Our sister blog's writer - Professor Sabena - was waxing lyrically (like Mr O'Leary earlier this week) on the possibilities of starting an airline. While this is a bit tongue in cheek actually it is a serious message. Now is a good time to start an airline.
Check it out:
http://professorsabena.blogspot.com/
Check it out:
http://professorsabena.blogspot.com/
US Airlines - Cheap Inventory is being pulled back.
So the game of chicken is being played out by the US Airlines. Who can cut deeper and faster?
We are entering the season when many contracts with the airlines for Tour Operators for Wholesalers are negotiated. These are typically based on a combination of rates and inventory availability.
Word on the street is not good. Rates are skyrocketing and inventory availability is plummeting. This is not just anecdotal. We have looked at discount seats for even the Thanksgiving and Christmas periods and basically conventional cheap seats are non-existent. And you can forget about using your FF miles.
Our advice - if you have Xmas plans - better get a booking now. These prices are going to be higher than even the peaks of last year's holiday season.
From our view we believe that the airlines have not right sized enough. There needs to be either less planes cut or more people cut. Since Wall Street is looking at capacity cuts then there is a further round of people cuts that need to happen. Fundamentally I believe that the capacity cuts are too deep. So far we see Southwest looking to capitalize on the nature of the cuts and reducing their cutbacks. Certain other carriers can take advantage of the situation. We believe that there will be some carriers who will be looking to expand. While we don't see any evidence yet, there are some prime markets where the cuts have been too deep.
Is this a good time to start an airline... maybe........
Cheers
Timothy
We are entering the season when many contracts with the airlines for Tour Operators for Wholesalers are negotiated. These are typically based on a combination of rates and inventory availability.
Word on the street is not good. Rates are skyrocketing and inventory availability is plummeting. This is not just anecdotal. We have looked at discount seats for even the Thanksgiving and Christmas periods and basically conventional cheap seats are non-existent. And you can forget about using your FF miles.
Our advice - if you have Xmas plans - better get a booking now. These prices are going to be higher than even the peaks of last year's holiday season.
From our view we believe that the airlines have not right sized enough. There needs to be either less planes cut or more people cut. Since Wall Street is looking at capacity cuts then there is a further round of people cuts that need to happen. Fundamentally I believe that the capacity cuts are too deep. So far we see Southwest looking to capitalize on the nature of the cuts and reducing their cutbacks. Certain other carriers can take advantage of the situation. We believe that there will be some carriers who will be looking to expand. While we don't see any evidence yet, there are some prime markets where the cuts have been too deep.
Is this a good time to start an airline... maybe........
Cheers
Timothy
Bravo Sita - Sure IT can help save money but why stop there?
Research by SITA and trumpeted by their top brass at the recent SITA event in BRU (the past week) shows that the airline industry could save a lot of money.
The report distributed this week at SITA’s Air Transport IT Summit in Brussels, includes research from Cambridge University which demonstrates that technology such as location sensing via mobile devices could save airlines up to $600 million by tracking passengers, sending messages and moving them to gates more efficiently; improving turnaround times and reducing delays.
At current growth rates, there will be five billion mobile customers by 2011 and functionality on mobile devices will be increasingly sophisticated. For the air transport industry this opens the door to a new way of doing business as mobile phones are currently used by 90% of airline passengers. Bear in mind that this would mean about north of 80% of all the world's population will have Mobile phones. No other technology in the history of the world has been so universally distributed.
Jim Peters, Chief Technology Officer, SITA said, “These ‘digital travellers’, will have on-demand access to a range of mobile-enabled services such as real time flight updates; self-service booking, check-in and boarding; and mobile payments.”
OK so here is a challenge. Why not be really smart about it and start re-thinking the process of travel and eliminating now obsolete and useless technology components - like for example e-tickets.
Just our small direct research on an 8 million passenger airline showed savings of between $2-20 per ticket. That would return savings far in excess of the numbers mentioned here. This was conservative and didn't include the savings from removing hardware and even organizations like IATA's BSP from the stage.
Will the airlines do it? Nah - not in yours and my life time. Or will they?
Let me know what you think.
Send me a comment or private note!
Cheers
Timothy
The report distributed this week at SITA’s Air Transport IT Summit in Brussels, includes research from Cambridge University which demonstrates that technology such as location sensing via mobile devices could save airlines up to $600 million by tracking passengers, sending messages and moving them to gates more efficiently; improving turnaround times and reducing delays.
At current growth rates, there will be five billion mobile customers by 2011 and functionality on mobile devices will be increasingly sophisticated. For the air transport industry this opens the door to a new way of doing business as mobile phones are currently used by 90% of airline passengers. Bear in mind that this would mean about north of 80% of all the world's population will have Mobile phones. No other technology in the history of the world has been so universally distributed.
Jim Peters, Chief Technology Officer, SITA said, “These ‘digital travellers’, will have on-demand access to a range of mobile-enabled services such as real time flight updates; self-service booking, check-in and boarding; and mobile payments.”
OK so here is a challenge. Why not be really smart about it and start re-thinking the process of travel and eliminating now obsolete and useless technology components - like for example e-tickets.
Just our small direct research on an 8 million passenger airline showed savings of between $2-20 per ticket. That would return savings far in excess of the numbers mentioned here. This was conservative and didn't include the savings from removing hardware and even organizations like IATA's BSP from the stage.
Will the airlines do it? Nah - not in yours and my life time. Or will they?
Let me know what you think.
Send me a comment or private note!
Cheers
Timothy
Is she really going out with him? CO dates the old broad UA
I just don't know - maybe I am feeling nostalgic. Continental the "new" young Turk has agreed to date the Old Girl United.
Driven from the arms of Northwest by the wiles of Delta - Continental has been invited to join Star and is getting the Royal Family Treatment. However joining is not going to be allowed for quite some time.
So now we see the Alliance map being re-drawn. Non-US Airlines and Star (in particular LH and SQ) have been coveting a domestic base in New York the largest metro in the USA. Clearly the pull back by United from JFK left a void in the Star Alliance route structure. (Heck it shows how much UA cared - they even sold the JFK-LHR route and slots to DL).
The sickest airline of all in the Star Alliance (now that Varig is long gone from there) is now US Airways. So you can just hear Mr Parker singing that song.
But I have a hunch that this is not going to be smooth sailing. Remember that LH bought a large chunk of the now Neelemanless JetBlue.
I suspect that there is a lot of conflict and soul searching going on in route planners spreadsheets right now. And if for no other reason than there is now some really heavy duty anti-competitive influences at work - I think Mr Oberstar and Mr Minetta might want to think about opening an investigation into concentration in the airline marketplace.
For sure this is a story that is going to run for a long time. And it ain't over till the fat lady sings. So if the smooth headed Mr Joe Jackson would get up to the Mike and start singing... he may be there a while.
Cheers
Timothy
Driven from the arms of Northwest by the wiles of Delta - Continental has been invited to join Star and is getting the Royal Family Treatment. However joining is not going to be allowed for quite some time.
So now we see the Alliance map being re-drawn. Non-US Airlines and Star (in particular LH and SQ) have been coveting a domestic base in New York the largest metro in the USA. Clearly the pull back by United from JFK left a void in the Star Alliance route structure. (Heck it shows how much UA cared - they even sold the JFK-LHR route and slots to DL).
The sickest airline of all in the Star Alliance (now that Varig is long gone from there) is now US Airways. So you can just hear Mr Parker singing that song.
But I have a hunch that this is not going to be smooth sailing. Remember that LH bought a large chunk of the now Neelemanless JetBlue.
I suspect that there is a lot of conflict and soul searching going on in route planners spreadsheets right now. And if for no other reason than there is now some really heavy duty anti-competitive influences at work - I think Mr Oberstar and Mr Minetta might want to think about opening an investigation into concentration in the airline marketplace.
For sure this is a story that is going to run for a long time. And it ain't over till the fat lady sings. So if the smooth headed Mr Joe Jackson would get up to the Mike and start singing... he may be there a while.
Cheers
Timothy
19 June 2008
MyEgoAir.com Premium Service To offer "Free Blowjobs"
Michael O'Leary was waxing lyrically in Germany yesterday at a press conference. When asked about the proposed transatlantic airline (that we have dubbed MyEgoAir.com) - he was quite specific about some of the amenities and a two class operation.
In economy it will be a chargeable service but free in Biz Class.
Go here to see the video...
http://www.youtube.com/watch?v=UfIY24BErBE
Way to go Michael!
In economy it will be a chargeable service but free in Biz Class.
Go here to see the video...
http://www.youtube.com/watch?v=UfIY24BErBE
Way to go Michael!
18 June 2008
Spirit withdraws from ARC. Is this another nail in the coffin?
ARC is no longer the holistic nutral ticketing solution it once thought it was.
With non-code share interline traffic for domestic down to sub levels of a single percentage point - you have to ask yourself what useful function does ARC provide these days.
Frankly - I am very hard pressed to come up with any justification for either ARC or BSP in most markets.
Disagree? Send me a note or post a comment
Cheers
Timothy
With non-code share interline traffic for domestic down to sub levels of a single percentage point - you have to ask yourself what useful function does ARC provide these days.
Frankly - I am very hard pressed to come up with any justification for either ARC or BSP in most markets.
Disagree? Send me a note or post a comment
Cheers
Timothy
Latest - GAO sides with Boeing in Tanker Contract
In a big blow to EADS - the GAO (whose decision is not binding on the Air Force) has confirmed that the complaints filed by Boeing in the contract award are indeed valid.
While much of the noise will be focused on the protagonists - the real loser here is the US Defence Department procurement process which once again shows itself as being less than competent.
While much of the noise will be focused on the protagonists - the real loser here is the US Defence Department procurement process which once again shows itself as being less than competent.
New EC Commissioner Confirmed - Tajani now in the hot seat
The Italian Antonio Tajani has now been confirmed as the replacement for Jacques Barrot who moves over the Justice Commissioner.
This move has been welcomed by fellow Italian and head of IATA Giovanni Bisignani. (What's with all these Italians!!!).
Levity aside below you will find the PR release from IATA. However not one mention of the critical issue of Alitalia which remains the number one urgent practical issue in front of the new Commissioner.
Mr Tajani will have his hands full. We wish him the best of luck and hope that he displays wisdom in his handling of these critical issues.
PR Release follows
IATA Welcomes EC VP Tajani’s Single European Sky Priority
Geneva – The International Air Transport Association (IATA) congratulated Antonio Tajani on his confirmation as Vice President of the European Commission and Commissioner for Transport.
“Vice President Tajani has picked the right priorities, starting with delivering a Single European Sky (SES),” said Giovanni Bisignani, IATA’s Director General and CEO. “We’ve been talking about a SES for decades. Now is the time to make it a reality. An effective SES would help alleviate two critical issues related to fuel burn. First, with oil in the US$135 a barrel (Brent) range, the industry fuel bill will balloon to over US$176 billion this year. Already we have seen 24 airlines go bust and thousands of layoffs. An effective SES would shave EUR5.5 billion off the fuel bill with more efficient air traffic management. And it would reduce carbon emissions from airlines by as much as 12 million tonnes. I am confident that Vice President Tajani will deliver the political will to turn the technical solutions into reality,” said Bisignani.
Bisignani also encouraged Vice President Tajani to weigh-in on Europe’s misguided debate on bringing aviation into the Emissions Trading Scheme (ETS). “First, the timing is wrong. Bringing aviation into Europe’s ETS was conceived when oil was at US$60 a barrel. Today, with the price more than double that, it’s a completely different world. If oil stays at the current price level for the next 12 months, airlines will face US$99 billion in extra fuel costs. Airlines have the biggest incentive of any industry to improve environmental performance. With jobs disappearing from the industry already, I hope that Vice President Tajani will bring a strong message that this is not the time for reckless decisions that could put more jobs at risk,” said Bisignani.
Bisignani emphasised the illegal nature of Europe’s unilateral approach. “All this effort at a time of crisis for something that is illegal makes no sense. Countries in the developed and developing world are opposed to Europe’s unilateral approach - and rightly so. What right does Europe have to charge non-European carriers for emissions outside European territory? I encourage Vice President Tajani to bring a strong reality check to his Commission colleagues: the best thing that Europe can do to tackle the important issue of aviation and the environment is to facilitate a global solution through the International Civil Aviation Organization - a UN body with a proven track record of promoting global standards,” said Bisignani.
Bisignani noted that the aviation industry takes responsibility for its 2% of global carbon emissions seriously. “Our vision to achieve carbon neutral growth sets the benchmark for other industries to follow. And our four-pillar strategy based on technology, operations, infrastructure and positive economic measures is delivering results. Last year IATA’s efforts delivered 10.5 million tonnes of CO2 savings. If Vice President Tajani is successful with SES, we will deliver much more,” said Bisignani.
This move has been welcomed by fellow Italian and head of IATA Giovanni Bisignani. (What's with all these Italians!!!).
Levity aside below you will find the PR release from IATA. However not one mention of the critical issue of Alitalia which remains the number one urgent practical issue in front of the new Commissioner.
Mr Tajani will have his hands full. We wish him the best of luck and hope that he displays wisdom in his handling of these critical issues.
PR Release follows
IATA Welcomes EC VP Tajani’s Single European Sky Priority
Geneva – The International Air Transport Association (IATA) congratulated Antonio Tajani on his confirmation as Vice President of the European Commission and Commissioner for Transport.
“Vice President Tajani has picked the right priorities, starting with delivering a Single European Sky (SES),” said Giovanni Bisignani, IATA’s Director General and CEO. “We’ve been talking about a SES for decades. Now is the time to make it a reality. An effective SES would help alleviate two critical issues related to fuel burn. First, with oil in the US$135 a barrel (Brent) range, the industry fuel bill will balloon to over US$176 billion this year. Already we have seen 24 airlines go bust and thousands of layoffs. An effective SES would shave EUR5.5 billion off the fuel bill with more efficient air traffic management. And it would reduce carbon emissions from airlines by as much as 12 million tonnes. I am confident that Vice President Tajani will deliver the political will to turn the technical solutions into reality,” said Bisignani.
Bisignani also encouraged Vice President Tajani to weigh-in on Europe’s misguided debate on bringing aviation into the Emissions Trading Scheme (ETS). “First, the timing is wrong. Bringing aviation into Europe’s ETS was conceived when oil was at US$60 a barrel. Today, with the price more than double that, it’s a completely different world. If oil stays at the current price level for the next 12 months, airlines will face US$99 billion in extra fuel costs. Airlines have the biggest incentive of any industry to improve environmental performance. With jobs disappearing from the industry already, I hope that Vice President Tajani will bring a strong message that this is not the time for reckless decisions that could put more jobs at risk,” said Bisignani.
Bisignani emphasised the illegal nature of Europe’s unilateral approach. “All this effort at a time of crisis for something that is illegal makes no sense. Countries in the developed and developing world are opposed to Europe’s unilateral approach - and rightly so. What right does Europe have to charge non-European carriers for emissions outside European territory? I encourage Vice President Tajani to bring a strong reality check to his Commission colleagues: the best thing that Europe can do to tackle the important issue of aviation and the environment is to facilitate a global solution through the International Civil Aviation Organization - a UN body with a proven track record of promoting global standards,” said Bisignani.
Bisignani noted that the aviation industry takes responsibility for its 2% of global carbon emissions seriously. “Our vision to achieve carbon neutral growth sets the benchmark for other industries to follow. And our four-pillar strategy based on technology, operations, infrastructure and positive economic measures is delivering results. Last year IATA’s efforts delivered 10.5 million tonnes of CO2 savings. If Vice President Tajani is successful with SES, we will deliver much more,” said Bisignani.
Got Startup Pitch? Here's a chance to make yourself heard
Web in Travel Asia 2008, aka WIT the Premier Asian Travel Conference, is taking a leaf out of partner's PhocusWright's playbook and will offer an opportunity to get a pitch in front of investors.
So if you think you have what it takes - Read on...
Be part of WIT’s "The Start-Up Pitch" and get your ideas heard by investors
Always wanted to run your own start-up? Got a great idea? An idea that you think is unique and differentiated in the online travel space? An idea that will make potential investors sit up and take notice?
If so, this could be your chance to be heard.
What: WIT-Web In Travel 2008 (Oct 21-22, 2008) is organising “The Start-Up Pitch” as part of its conference programme this year. Three finalists will be given a chance to pitch their ideas in 5 minutes each to a panel of investor judges.
Vote: The audience will also get a chance to pose questions of the finalists, after which they will vote for the winning idea via SMS.
Win! The winner of WIT's Start-Up Pitch will win a Professional Development Program (PDP) voucher from the Cornell-Nanyang Institute of Hospitality Management (CNI) worth US$2,500 (valid for 2009) as well as the opportunity to take their winning idea to the next level with the investor judges.
For more details go here:
http://wit.verve.com.sg/fliers/start-up-pitch.html
Cheers
Timothy
So if you think you have what it takes - Read on...
Be part of WIT’s "The Start-Up Pitch" and get your ideas heard by investors
Always wanted to run your own start-up? Got a great idea? An idea that you think is unique and differentiated in the online travel space? An idea that will make potential investors sit up and take notice?
If so, this could be your chance to be heard.
What: WIT-Web In Travel 2008 (Oct 21-22, 2008) is organising “The Start-Up Pitch” as part of its conference programme this year. Three finalists will be given a chance to pitch their ideas in 5 minutes each to a panel of investor judges.
Vote: The audience will also get a chance to pose questions of the finalists, after which they will vote for the winning idea via SMS.
Win! The winner of WIT's Start-Up Pitch will win a Professional Development Program (PDP) voucher from the Cornell-Nanyang Institute of Hospitality Management (CNI) worth US$2,500 (valid for 2009) as well as the opportunity to take their winning idea to the next level with the investor judges.
For more details go here:
http://wit.verve.com.sg/fliers/start-up-pitch.html
Cheers
Timothy
Singapore Airlines signs for ALTEA/CITP
SQ signs for ALTEA/CITP. Another expected result as the Singapore based carrier had signed for exclusive negotiation status. SQ joins a very long list of carriers ditching their current own internal systems for Amadeus’s current Airline portfolio of products. This is not a good situation for the industry. Setting aside the questions of Amadeus and its ability to meet the market’s needs, I firmly believe that the commercial model for these airlines outsource contracts will come back to bite significantly. There will be blood. Not this year, probably not even next – but in future years.
Interestingly the early PR waffle did not specifically state CITP.
One of the issues I believe will come back to haunt Amadeus is the variants of the system that they will have to support. When the product is finally released there will be a lot of disappointed airlines who will lose functionality in the early time periods until their custom code is delivered.
Still you have to hand it to Amadeus for gaining this momentum. It will look good when they come to IPO. However it will be a huge rod to beat up the client base. The airlines will now come to realize they have replaced one cost monster (aka the GDS companies) for an even more voracious and controlling one. The airline lemming model is alive and well.
Interestingly the early PR waffle did not specifically state CITP.
One of the issues I believe will come back to haunt Amadeus is the variants of the system that they will have to support. When the product is finally released there will be a lot of disappointed airlines who will lose functionality in the early time periods until their custom code is delivered.
Still you have to hand it to Amadeus for gaining this momentum. It will look good when they come to IPO. However it will be a huge rod to beat up the client base. The airlines will now come to realize they have replaced one cost monster (aka the GDS companies) for an even more voracious and controlling one. The airline lemming model is alive and well.
Expressjet dodges the Bullet, Other ACMI carriers not so good
Expressjet. Well done chaps. Finally resolution to their current dispute with former parent CO. I believe that this marks the turning point in the ACMI type contracts. Other airlines from Skywest to Mesa need to read the fine print of these new contracts which work for both parent airline and contract carrier.
So who is next for the heat? Probably Pinnacle. However all the airlines who have size able numbers of 35-50 seater RJs are vulnerable now.
So who is next for the heat? Probably Pinnacle. However all the airlines who have size able numbers of 35-50 seater RJs are vulnerable now.
TUI rebrands airlines (again)
So now Thomsonfly Ne Britania is now to be called Thomson Airways. And First Choice Airways (ne Air 2000) is to be also called the same. PHEW! I thought we would be lumbered with that really silly ThomsonFly common branding thingie name.
So lets wait before we take pictures until they start re-naming their ships such as the SS Lunn Poly ;-)
So lets wait before we take pictures until they start re-naming their ships such as the SS Lunn Poly ;-)
17 June 2008
Strangely liberating with 10 days of no web access.
I can report that you can cruise round the Greek Islands and use your crackberry everywhere from Crete to Thessoloniki to Corfu . Being totally out of sight of land – yet still getting a decent signal was really good!
So many things going on….I am hoping to catch up with all my posts during the next few days
Cheers
The Professor
So many things going on….I am hoping to catch up with all my posts during the next few days
Cheers
The Professor
Amadeus announces distribution deal with Arab Carriers
Bad news for Travelport. Amadeus gets to be the AACO’s new Distribution company. I believe that Galileo let this one drop. Their recent actions of going it alone do not sound like they will make much impact in the significant deficit in segments that will occur from January 1 2009.
Now Amadeus has another scalp on its bedpost. A nice swansong for Jose Tazon as he prepares to ride off into the Sunset.
Ouch!
Now Amadeus has another scalp on its bedpost. A nice swansong for Jose Tazon as he prepares to ride off into the Sunset.
Ouch!
European Sick Carriers Parts 1 and 2
I was originally going to do this as a 2 part post.
Nah - lets combine it...
Sick Carriers 1
The EC is finally confronting the overwhelming evidence of abuse by the Italian government over its handling of the AZ bail out. The new Commissioner will have to confront the problem. If anyone is interested we have a very innovative solution to the problem. But since the politics of this are just too hard to contemplate - AZ may still survive and emerge Phoenix-like (only to fail yet again).
Sick Carriers 2
Right next to one of the most fashionable suburbs in Athens is the now abandoned airport of Athens. While the new Attica facility built and implemented in time for the 2004 Olympic games, the previous facility lies abandoned. The Olympic Airways (not Airlines) signs are still very much in evidence. A sad reminder that this national airline should be allowed to quietly die. Olympic is so hopeless that there is no answer or bailout that can be viable other than a miracle. Clearly no one is interested in this relic. Nor is one such event likely in the next few years. Positively speaking however. Aegean is now of sufficient size to accommodate the final collapse of the Greek national airline. Let it die.
Nah - lets combine it...
Sick Carriers 1
The EC is finally confronting the overwhelming evidence of abuse by the Italian government over its handling of the AZ bail out. The new Commissioner will have to confront the problem. If anyone is interested we have a very innovative solution to the problem. But since the politics of this are just too hard to contemplate - AZ may still survive and emerge Phoenix-like (only to fail yet again).
Sick Carriers 2
Right next to one of the most fashionable suburbs in Athens is the now abandoned airport of Athens. While the new Attica facility built and implemented in time for the 2004 Olympic games, the previous facility lies abandoned. The Olympic Airways (not Airlines) signs are still very much in evidence. A sad reminder that this national airline should be allowed to quietly die. Olympic is so hopeless that there is no answer or bailout that can be viable other than a miracle. Clearly no one is interested in this relic. Nor is one such event likely in the next few years. Positively speaking however. Aegean is now of sufficient size to accommodate the final collapse of the Greek national airline. Let it die.
Delta joins the list of Paypal Carriers. Where is Google?
Accepting the inevitable DL has joined the airlines who are now accepting Paypal. This will really help globalize the financial fulfillment of Airline tickets. US/UA/AA – pay attention this is important. So Google seems to have taken its eye of the ball here too….
EU Traffic powers ahead driven by LCCs and mega carriers
While BA's traffic continues to show declines – albeit at a lesser pace – the big 3 LCCs are powering ahead. So too are the other strong legacy carriers in particular LH and AF+KL. All 3 big LCCs report strong traffic gains – FR +22%, Easyjet +16%, Air Berlin +28%. The model still works. But Air Berlin should be looking for better solutions. It has essentially dumped the long haul scheduled business and is now looking to cut elsewhere.
Even those carriers who are most vulnerable in the second Tier EU legacy carriers (SK, IB etc) are appearing quite strong. But this is going to be short term. We believe that the top tier big 3 EU carriers have the ability to easily weather the economic climate. Similarly the 2 British Isles based LCCs. Everyone else without exception is vulnerable.
Even those carriers who are most vulnerable in the second Tier EU legacy carriers (SK, IB etc) are appearing quite strong. But this is going to be short term. We believe that the top tier big 3 EU carriers have the ability to easily weather the economic climate. Similarly the 2 British Isles based LCCs. Everyone else without exception is vulnerable.
US airline Traffic suffers – May demonstrates the extent of the Stagnation
You knew it was coming. Despite the drop in capacity due to the failure of several US airlines. The current carriers are now reporting being way off. Of the US majors only Southwest has positive news. The rest of the legacy carriers are just off. With the announced capacity (not factored in yet) we are getting increasingly concerned that the total capacity cuts will be too severe. Our opinion is that the cutting of the fabric of the US transportation system is ill advised and will impact the US economy significantly. The current Administration should be paying considerable attention to this issue.
The response from the Industry and echoed by Wall Street analysts is that the cuts are good. This is where they are wrong. Cutting back on capacity is not the catch all panacea.
Here we agree wholeheartedly with the BTC's intent but perhaps not quite the detail of their scary report that has been widely reported.
Further we do not believe that the solution proposed by TIA is a good one. Adding a "tax" to the current visa waiver program to fund a $200 million advertising effort is plain stupid. It will - in my humble opinion drive away inbound visitors. All this at the very time when the USA needs foreign tourists more than ever before.
In conclusion, we believe that the US Travel and Tourism Industry is headed for a decline of epic proportions. We already know the airline industry is headed for a disastrous time - but the fall out will affect the overall US GDP far greater than anyone has calculated so far. The combination of the economic slowdown, failed Bush Administration policies and ill advised responses is creating a multiplier effect that will cause significant damage to the Aviation, Travel and Tourism industries in the USA. The ability to recover will also be seriously affected. Emergence at the other side will be a chastened but not necessarily more healthy sector. For sure there will be significant job losses. Time to polish the resumes.
The response from the Industry and echoed by Wall Street analysts is that the cuts are good. This is where they are wrong. Cutting back on capacity is not the catch all panacea.
Here we agree wholeheartedly with the BTC's intent but perhaps not quite the detail of their scary report that has been widely reported.
Further we do not believe that the solution proposed by TIA is a good one. Adding a "tax" to the current visa waiver program to fund a $200 million advertising effort is plain stupid. It will - in my humble opinion drive away inbound visitors. All this at the very time when the USA needs foreign tourists more than ever before.
In conclusion, we believe that the US Travel and Tourism Industry is headed for a decline of epic proportions. We already know the airline industry is headed for a disastrous time - but the fall out will affect the overall US GDP far greater than anyone has calculated so far. The combination of the economic slowdown, failed Bush Administration policies and ill advised responses is creating a multiplier effect that will cause significant damage to the Aviation, Travel and Tourism industries in the USA. The ability to recover will also be seriously affected. Emergence at the other side will be a chastened but not necessarily more healthy sector. For sure there will be significant job losses. Time to polish the resumes.
16 June 2008
Silverjet's Final Thank You Letter
Today Lawrence Hunt finally threw in the towel on Silverjet and sent out a farewell letter to prospective and actual Silverjet users.
So the excuse for the demise was the high bonding requirement set by the CAA. However this requirement is standard and given the first failure and cessation of services it was a wise move by the regulator.
The only value left is in the AOC and perhaps the name. The former now comes with a high bond requirement and the latter probably is not worth anything.
The staff were a fine group and clearly provided an above average service. Finding jobs in this current climate with a huge number of axed and soon to be axed Airline staff, their job prospects will be low. Although the Middle East Carriers are anxiously looking for qualified customer facing staff.
Best of luck to them
Cheers
Timothy
So the excuse for the demise was the high bonding requirement set by the CAA. However this requirement is standard and given the first failure and cessation of services it was a wise move by the regulator.
The only value left is in the AOC and perhaps the name. The former now comes with a high bond requirement and the latter probably is not worth anything.
The staff were a fine group and clearly provided an above average service. Finding jobs in this current climate with a huge number of axed and soon to be axed Airline staff, their job prospects will be low. Although the Middle East Carriers are anxiously looking for qualified customer facing staff.
Best of luck to them
Cheers
Timothy
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