Category: Cranky Flier CF

Across the Aisle from American President Rober…

Across the Aisle from American President Robert Isom on Rising Oil Cost, Limits of Segmentation, and Getting Out in the Field (Part 2):

Welcome back for the second part of my interview with Robert Isom, President of American Airlines, while he was in Los Angeles for a town hall with employees. If you missed the first half, you can find it here. Let’s get right back into it.

Brett Snyder, Cranky Flier: We’ve had a prolonged good time for the airline industry and the economy on the whole. The price of oil is a concern. I’ve heard Doug say you’ll think about how capacity goes, but how are you looking at that right now in the near term vs. oil but then also, I know you’re never going to lose money again, Doug says…

Robert Isom, President, American Airlines: …And Robert agrees…

Cranky: …and Robert agrees. How are you fortifying the company to prepare for the bad times?

Robert: Well, we always have to be ready. One of the things you’re very aware of is we keep a higher cash balance than other carriers; that’s there to help during tough times. I guess what I’d say is we’ve seen a massive run up in the price of fuel over, what 7 months, almost a 100 percent increase? That’s a shock to the system. If it remains at the level it is right now, of course there are going to have to be adjustments made, and those adjustments, that which you can’t pass on to your customers, you’re going to have to find a way to adjust and that can take place in trying to make sure your cost structure is appropriate. And at the end of the day it comes to matching supply and demand.

Cranky: When do you decide to make that move? Because you can look at oil today but you don’t know what it will look like in 6 months. And yet if you’re making a capacity decision, it’s 6 months or beyond.

Robert: Brett, I think that’s the key. We can adjust around the edges right now, but largely in the third quarter, the planning you have to do to run an airline, the vast majority of people and expenses are in place. While you may be able to not burn fuel, so much of your expense are there that it’s a cash-negative decision. That being said, we’re conscious of it. And certainly any adds we’re going to make, those have to be profitable.

But the kinds of things that we take a look at… first off, we’re very interested in the pricing environment. And where we can, we try to make sure we’re earning a return on the services we’re providing. We’re pursuing that, we’re taking a look at capacity and route network and if there are areas of the system that are performing in a more marginal fashion. You saw we made adjustments with Chicago-Beijing and more recently Miami-Belo Horizonte. Those are the kinds of things you have to look and make movements. In the longer run, if we’re at elevated fuel prices, we’re going to be taking a look at making sure we’re flying the right amount.

Cranky: And when do you make that decision? You have someone sitting in a cave saying “alright guys, oil’s not coming down again”?

Robert: No, well, the planning process at American is ongoing. It’s not like we make a decision once a year.

Cranky: Right, but you still have to make the decision to say, “we’ll start pulling down capacity now.”

Robert: And those are the kinds of things we’re looking at right now in ’18 and into ’19. We’re taking a look at the inputs, fuel prices being one of them.

Robert: Now, the one thing I will tell you, is we take a look at that, but we’re mindful of strengthening our hubs. One of the questions you may ask is, “hey, you recently gained access to 15 gates in [Dallas/Ft Worth] and 7 gates in Charlotte.” And as we take a look out to the future, those are gates we’re going to want to utilize. Those are gates that I do really think benefit American. We take a look at the flying that we do. The profitability of the 25th percentile of flying in those hubs is largely better than the average profitability of flying in other hubs. So for us, building them is going to be advantageous in the long run.

Cranky: Sure, in the long run, but you still have to be mindful of your shareholders so you need to make those short term adjustments.

Robert: Certainly capacity is a way to address that from a cost perspective. You know about our “Project One Airline,” identifying over the course of the next few years, over a billion dollars in expense savings. We’re making great progress on that and we’ve hit the targets that we wanted to, so a combination of making sure we’re spending wisely and ensuring that we’re flying in a prudent fashion, and again, going back to our strengths. When we do add, you better make sure that it’s going to come at a profitable level.

Cranky: You’ve mentioned the segmentation process a few times. Of course that’s another lever you can pull to try to increase your revenues to deal with the cost side.

Robert: That’s part-and-parcel. You know what we’ve done by putting in a basic economy product, which is not a price cut. It’s really something that anchors all of our pricing structure. From there we’ve got an economy product. We relaunched our Main Cabin Extra product a couple weeks ago, and we’re really pleased with our first class domestic, our business class international, and ultimately our first class international product.

Cranky: But how much further can you go with segmentation? Is there a lot more ground to cover? It seems to me a lot of the ground to cover is just trying to implement what you’ve already done. You have a lot of trouble with distribution, [online travel agents], not being able to sell the product you tried to create. So that’s part of it, but how much more is there you can do with segmentation?

Robert: So, you’re absolutely right. The work ahead of us right now is what we’ve outlined. Getting that in place will lead to the next steps. But my view is that with segmentation, trying to find ways to offer value to people that customers will ultimately compensate for in a profitable fashion, that’s going to be an ongoing exercise forever more.

I take a look at our frequent flier program, the AAdvantage program, and the opportunities that we have there. We recently put in place a new segmented approach with our Platinum Pro level. What you see with the kinds of benefits that you offer really can be tailored in a much more fine and personal perspective. And the relationship we’re trying to create with customers is identifying what it is they want and will value… being able to offer them that and not something that they don’t necessarily find value in. So, Brett, my view is that whether it’s loyalty programs or pricing or creating different opportunities, that’s something that’s going to continue.

Cranky: Do you think you’re going to hit a point with segmentation fatigue? You already see some people who are just confused by the dizzying number of options. Do you think there’s going to be backlash or is it just an adjustment period?

Robert: I think if you take a look at the economy in general and consumers’ desires in general, right? The world is moving toward more personalization. And I think that that is something fortunately technology is going to help keep up with. And it’s something that we’ve gotta be mindful of. We can’t get stagnant in this business. We have to be constantly looking for what customers appreciate, what they want, and find a way to do it so we can deliver it in a profitable fashion.

Cranky: Alright, well, I guess my time is up.

Robert: No, wait, one more though…

Cranky: Ok.

Robert: I’m out here in LA, not to just visit you… good old friend… but really part of what is really American’s most important priority right now which is getting our team to a point where they feel like they’re supported, appreciated, and willing to take on anything. We’ve got 120,000 fantastic team members. We’ve brought on maybe 25,000, my numbers aren’t right, or 30,000 new folks.

Cranky: And a lot here in LA.

Robert: And a lot in LA, right. Really making sure that everybody that joins us has an appreciation for where their careers can go and they can be here forever. Part of the reason I like to get out here to LA and visit stations and operations throughout the country is to really hear what people are saying; where we’re doing well and where we’re not. We’re going to have a town hall later today. I’m sure I’m gonna get a lot of insight as to where we can do better and probably some feedback on where we’re doing well too.

Cranky: And those things make a difference? When you’re getting this feedback, you guys are really taking this back to the team and using it as tool to help?

Robert: Absolutely. The kind of things I pick up on a trip like this… it could be on the flight in where somebody alerts you to a catering issue. That very thing happened to me on a flight back from Lima to DFW the other night. There was something in terms of a catering spec that had gone awry and I was able to see that first-hand. It was something we were able to make actionable. Today, on our taxi ride over with some of our fantastic mechanics [Ed note: Robert excitedly told me that he joined mechanics to tow a 787 over from the maintenance base that morning], they talked to us about some of the struggles you run into in a complex environment like this. I take back from that, how do we simplify it? All of those kind of things feed into what we plan for next year and beyond.

As a reminder, if you missed the first half of the interview, here it is.

June 19, 2018 at 01:45PM Source: http://crankyflier.com

Across the Aisle from American President Rober…

Across the Aisle from American President Robert Isom on His Agenda, Operational Progress, and What It Means to Be the Best (Part 1):

On Friday, I had the chance to spend some time with Robert Isom, President of American Airlines, when he came to Los Angeles for a town hall meeting. I’ve long known Robert as a people person, ever since my first interaction with him more than 15 years ago when he briefly became my VP in Revenue Management at America West. Having seen him work, it seemed entirely genuine when he asked, “You didn’t come up here just for me, did you?” It’s the same type of concern for people I remember from those long-ago days in Tempe.

Naturally, Robert wanted to spend a lot of time talking about people, but of course, I had other things on the mind. Our conversation turned into a 3,000 word transcript, so I’m splitting this up into two days. Today we’ll talk about his agenda when he came in as President two years ago, whether the operation today is where he wants it to be, and what it means to be “the best.” Tomorrow, look for more discussion around how to respond to the increasing price of oil, whether product segmentation has reached a limit, and the value of getting out in the field.

I had joked that I would have liked to do the interview in the lavatory on a 737 MAX, but those aren’t in LA yet. I had to settle for a conference room overlooking the alley between Terminals 4 and 5. Robert did, however, want to make it clear that he’s flown the MAX in coach, he likes a lot of the amenities, and he knows it’s going to be a great airplane for American. Now, on to the discussion.

Brett Snyder, Cranky Flier: I wanna talk about you. We’re coming up on 2 years with you as president, August of ’16. If we go back to that time, how did that unfold for you? You see all the stories in the press, but you’re sitting here, and one day, you’re president. How do you decide what your agenda is going to be? How do you decide where you want to take this airline?

Robert Isom, President, American Airlines: The cool thing is that we’ve always had a really tight team, since the merger. And Doug [Parker, CEO]’s done a great job of making sure everybody understands that there’s one objective, and that is the company’s goals…. At least for me, I bought in 100 percent, and was a major part of the initiatives going on.

We have to look at the big initiatives 2 years ago. They’re still big now because a lot of these things take a long time to implement, but we knew that for American… our strength is in our hubs. And that work we were doing to optimize what we do with our fleet, with our network, and really focusing back on the hubs, that was something that was a continuation [of what was happening previously]. And when you look at what we’re trying to do from a sales and marketing perspective, there’s a lot of effort put into segmentation, trying to identify what customers’ needs are from every end of the spectrum from incredibly price-conscious to those who want every amenity. We’ve pursued that strategy since then, and from what I see, it’s been a gradual but progressive build on the work we laid out before.

Cranky: That’s the broader strategy, and of course you were part of that, and from an operations perspective you were already running that. But you replaced someone as president whose wheelhouse was RM [revenue management], that was how he really made his name. So when you get the keys to that side of the business, what do you look at and say “here’s how I want to leave my mark. Here’s how I want to guide this”?

Robert: It comes down to building a team that is all working together with, again, common purpose, common goals aligning around what we spent a lot of work on… our four strategic perspectives: build a world class product, building a culture that is ultimately a competitive advantage, making sure we’re looking forward, and producing a return, making sure we’re competitive running our business. So, having people from operations and from RM and sales and marketing, getting them all in one room, one staff meeting, was a really big deal. I’m not gonna say we didn’t do that before, but I will say, the biggest effort we put in place is coordination. We’ve got Don Casey [SVP, Revenue Management], and we moved Devon May [SVP Finance], and Kerry Philipovitch [SVP Customer Experience], David Seymour [SVP Integrated Operations]…

Cranky: And you’ve got Alison [Taylor, SVP Global Sales and Distribution] in sales which you didn’t really have…

Robert: Yeah, we brought in Alison in sales, and Joe Mohan in alliances, so we’ve got everybody at the table. The kind of things we’re able to do now, which have been really advantageous to the company, when we sit down and we talk about “hey, how do you create a schedule?” And a game plan that’s not just paper and theoretical. How do you build one that’s operable as well? That’s part of the reason I like to come out and see what are the fruits of the labor.

So where does that end up? It ends up in like, Chicago, which had every single widebody type come through its operation. And you know what? We struggled. So the kind of changes we can make… what’s optimal? What’s best for the airline? So you do things like making Chicago a 787 focus city. And that’s what we’ve done. But those kind of things we really do align around.

Cranky: So is the operation where you want it to be today?

Robert: Oh, no. No, no, but that’s the cool thing. Because for me, in this role, I really think we’re just getting started. There’s a heck of a lot of fun getting everyone aligned…. Getting in and finding the talent we have in the organization and giving them a voice and pushing responsibility down has been one of the things we’ve tried to do over the last couple years.

We have the players and the team aligned. The game plan, in terms of what we need to do, strengthening our hubs and continuing to operate where we have a strategic advantage, going further in terms of segmentation, trying to identify what customers want, and what you can do to serve them in a profitable way has been a huge deal. We’re not where we want, but the backlog of things is really pretty cool.

You know about basic and premium economy. We’ve talked a lot about basic. Basic isn’t rolled out as extensively as we’d like it yet. Premium economy we only have it installed on I think 60 or 70 percent of the fleet now. But next summer we’ll have it on the 787-8s. That will be done. You know the work we’ve done in sales. They’re making really nice progress in attracting corporate clients. With our frequent flier program, the AAdvantage program, and our co-brand relationship, we’re on track to continue to build the best loyalty program and the best co-brand card in the business. And you know the kind of work we’re doing to enhance the product. You know, Flagship lounges which you’ve probably seen here and all lie-flat seating which was in place last year. And the reconfiguration of our narrowbody fleet is on its path. So I take a look at all of that and think, we’ve made great progress, but we have to continue to execute. We have to get more done. And from an operations perspective, I can’t wait to get to an airline that we can really truly operate as one. That’s coming up this year.

Cranky: Is it finally this year?

Robert: Our flight attendant integration will be in place. We have some work to do with our association fleet and maintenance where we have to get them on the same contract, but that’s a little different. That’s really not holding us up from doing the kinds of things we want to do with product and schedule.

Cranky: You talk about building the best. Etihad tried that. They didn’t have to worry about making money. Obviously the best is a relative thing. You have to figure out how to do that while making money. So how do you evaluate that? I know we’ve seen in the past a lot of benchmarking — not just with American — against Delta. How are you looking at this and global carriers and saying, how do we fit?

Robert: Well, we’re starting from a really good spot. We’re the world’s largest carrier, broadest network, and then tie into that with what I think are the best partners. Whether it’s BA in Heathrow or JAL and Cathay and soon a joint business with Qantas, hopefully, and soon with LATAM, and some really nice investment work we’ve made in China Southern. You take American Airlines and you take that network of relationships. We’re starting from a great spot.

When you ask “how do you fit in the world?” We’re an incredibly important part of the domestic and international marketplace and will continue to be so. So trying to be the best is something we can all strive for, but what I take a look at is how do we do as much as we can and improve every day with the assets we have. The kind of things we talked about, improving the product, taking care of the team, those are going to move us in the right direction. No doubt, there are potholes along the road, and the economic conditions today warrant making sure we’re incredibly prudent about how we spend money.

Come back tomorrow for the second half of my interview. We’ll start with how to respond to the recent run-up in oil prices.

June 18, 2018 at 01:45PM Source: http://crankyflier.com

United Quietly Tests Selling Economy Plus as P…

United Quietly Tests Selling Economy Plus as Part of the Fare:

Just this week, United quietly started filing a handful of fares that include Economy Plus seating in the Newark to Ft Lauderdale market. The fares are pretty terrible right now, and they aren’t showing on the website just yet, so this is clearly a very preliminary test. If this does become the norm, United will once again find itself following Delta’s lead.

Today, United sells tickets including a regular seat assignment when available, but if you want to buy an extra legroom Economy Plus seat, you have to buy it as an add-on. That can happen during the purchase process or at any time before travel. When you go to United.com, it looks something like this:

Then when you pick your flight, United gives you a bundle option on the next page:

I’d never really examined this upsell before, but it is a terrible value. The price seems to have been set at $1 below the most expensive Economy Plus seat. On this flight, that lousy exit row middle seat is running $89. Every other Economy Plus seat (many of which are better than a middle seat) are cheaper. So you should skip this, and when you do, you’ll go to the seat map where you can choose to add-on an individual seat:

This particular flight was for June 25. I picked that day because United’s new Economy Plus fares appear to be limited to 14 day advance purchase or higher, and it was June 21 when I first tested this. When I price the regular fare in Sabre, I get the same fare as I got on United.com:

But, if I use the new “EP” brand code, it gives me this Economy Plus option:

Of course, this fare is even worse than United’s upsell with a $114 premium. So why would anyone buy this? Well, there may be a reason for a corporate traveler. If a company won’t allow ancillary purchases to be expensed, then this could be a way for a traveler to still get the same seat without going out of pocket. (Then again, with 14 day advance purchase on these fares, it may have more limited appeal to corporates.) But if that’s how United is approaching this, corporates are going to find out quickly and be really mad that they’re getting fleeced. That’s why my thought is that this is really just a test, and those fares were set high on purpose.

The mechanics work similarly to how Basic Economy works. At United, Basic Economy fares book into N class but are also based on the lowest selling regular fare in the market. With Economy Plus, it books into B class but again relies on being a bump above the lowest selling regular fare. (This may be somewhat confusing since American actually uses B class for Basic Economy, but then again, how many people need to know that or even care? Not many.)

This brings up a ton of questions. I asked United for answers, but I unsurprisingly didn’t get any. Airlines don’t talk about future pricing for legal reasons.

  • Does United plan on rolling this out to all markets or just a subset?
  • Will United allow travelers to have the choice of buying Economy Plus in the fare or as an add-on? Or will United move toward the Delta model where it’s all in the fare?
  • What does this mean for elite travelers? Will they now have to upgrade into Economy Plus the way that they upgrade in Business? There are lot of variations on this question.

I like the idea of having an Economy Plus fare because it would allow United to sell premium economy fares internationally — remember, the new true premium economy cabin is coming soon — that would include Economy Plus seats on a domestic leg. But I also like the ability to just pick a seat outside the fare.

Were I a betting man, I’d say that United will end up doing pretty much what Delta has done, but we’ll just have to wait until United decides it’s ready to start talking.

June 14, 2018 at 01:45PM Source: http://crankyflier.com

Cranky Concierge is Hiring for Overnight and W…

Cranky Concierge is Hiring for Overnight and Weekend Concierges:

I haven’t written about it much, but Cranky Concierge has been growing a lot. We’re now up to 14 people on the team, but we need at least one or two more. Specifically, we need more people to help with nights and weekends.

That job has changed since I last posted about it. We now have teams, so instead of having to be available when a specific client is traveling, our concierges now work shifts. It makes it much easier for concierges to plan their lives, and the existing team has been really happy. But we need more help, so, if you’re interested, please keep reading.

You can find the full job description here. Read through the whole thing, and if you are interested in joining the team, you can send over your information as requested in the job description to jobs@crankyconcierge.com.

We’ve built a great group over here, and if you’re looking for a flexible way to earn some money while flexing your AvGeek skills, then this will be right up your alley.

Back to our regularly-scheduled programming tomorrow…

June 13, 2018 at 01:45PM Source: http://crankyflier.com

David Neeleman on the A330neo and Doubling TAP…

David Neeleman on the A330neo and Doubling TAP’s Presence in the US (Across the Aisle):

I’ve lined up a handful of interviews here on the blog which you’ll see in the next few weeks. Today, I’m starting with David Neeleman. As you know, David has been behind a lot of different airline projects, most famously the founding of JetBlue. But today we’re focusing on TAP Air Portugal. Since David and the team took over TAP a couple years back, the airline has been transformed, but there’s a lot more change coming with a whopping 71 airplanes on order, and I had questions.

Every time I do one of these, there are at least one or two comments asking for information that I didn’t cover. This time, you can go find it yourself. This Friday (June 15), David will be promoting TAP’s stopover program on the ground in Brooklyn at the corner of Bogart and Grattan Streets from 3p to 4p ET with what the airline is calling an “Aviation Geek Meet-Up.” Head on over, get some goodies, and you can ask him all the questions you’d like. It’s an AvGeek dream. Now, on to the interview.

Brett Snyder, Cranky Flier: We are here to talk about TAP, and I’m specifically interested in the A330neo that you’re taking delivery of. Do you have one on the property yet?

David Neeleman, Co-Owner TAP Air Portugal: We haven’t got it yet. We’re gonna get it in September. It’s flying around — it’s got our colors on it — it’s flying around the world on test flights, but it hasn’t been certified yet. I’m actually gonna go next week to fly to Toulouse and then fly it back to Lisbon on a part of its certification journey.

Cranky: You won’t get the keys until September, and when do you expect to have it in service?

David: It’s about a year late so we’re kind of frustrated. There have been issues with the engines like everyone else, but we’re gonna get it and get them pretty quick. We’ll get 18 of them in 15 months with 7 by the end of the year so they’re going to be coming like popcorn.

Cranky: I didn’t realize it was that accelerated. Where are you planning on putting these into service first?

David: Probably North America. Probably JFK and Boston. Brazil’s obviously a great market for us, Sao Paulo and Rio [will follow] closely after. We have 4 A330-300s that are ex-Singapore Airlines that are going away and then 7 old Pratt-powered A330s. We’re gonna have retired 15 airplanes when they come on.

Cranky: So it’s primarily replacement.

David: Yes, primarily with some growth. And we’re getting [14] A321LRs for growth. Because the LR is going to be able to do a lot of the Transatlantic as well, southern and northern. So we’ll have a few units of growth and then we’re gonna have replacement.

Cranky: Are the 330neos that are coming going to have the same seats you have today?

David: It’ll be an upgraded seat. I don’t have exact details, but it’ll have lie flat, big screens, the whole bit. I think it’s going to be 35 [Ed note: actually 34] biz class seats on it and a premium economy section. [The 96-seat Economy Xtra section is an extra legroom section like Economy Plus, not a true premium economy]

Cranky: That’s new for you, right?

David: Yeah.

Cranky: My biggest question about the neo… it hasn’t been the most popular aircraft. It’s taken a few hits lately with Hawaiian going away from it and American choosing the 787. Why is this the right aircraft for TAP when others are coming to different conclusions?

David: I can’t speak for Hawaiian or American but it’s common to our existing fleet, so our pilots can fly the neo and the [A330]-200 so that’s important for transition and all that. And the economics are really good. I don’t know, Boeing’s being pretty aggressive with the 787, and the 787-9 and -10 are good airplanes, so it just depends on the individual airline. [The A330neo] is a great airplane, gonna offer us fuel economy. Our -900[neo] which is equivalent to an [A330]-300 are going to have lower fuel burn than an [A330]-200. So we’re going to have almost 300 [Ed note: actually 298] seats onboard in total and we’ll be burning less fuel than we’re burning today with 274, and our customers are going to love it.

Cranky: You talk about what routes it’s going to go on first, it’s replacement routes, but as you mention you have a few extra shells for growth. What does this open up for you that you can’t do today? Are we going to see you here on the West Coast?

David: Yeah, we totally plan on flying to the West Coast. In the Bay Area there are a lot of Portuguese that live there, and a lot of traffic to the Azores in the summer time. There’s a lot of Portuguese, and we think it’s a great market for us. It’s not just the West Coast, but we’d like to do equal the number of cities in North America as we’re doing in Brazil. We have 10 markets in Brazil, and we think North America including Canada can support 10 cities.

Cranky: How many today? You have 4 or 5? I guess it depends how you count Newark and JFK.

David: Toronto, Boston, JFK, Newark, and Miami, so we have 5 today with at least 5 to go.

Cranky: This we should see in the next couple years?

David: Yeah, you’ll see some next summer and the summer afterwards. Between the next few summers, you’ll see us get to 10.

Cranky: TAP obviously is an old-line carrier [that’s] been around for ages, and you stepped in to make a push to reinvent the airline. I know a big part of that is making Lisbon as a gateway to Europe, trying to increase connecting flows. How has it been working? Has it been going as you thought?

David: Yeah. Portugal is having a moment like no place ever has. People are loving that place. It’s unbelievable how much is being written and said. What we’ve done to that place, we brought more service from more places. Our [free] stopover program will bring in an extra 150,000 customers a year. And those people talk to their friends and relatives and associates at work saying “Wow, have you tried going to Portugal? It’s amazing.” The airport’s brimming with people, and we’re working closely with the government and ANA [Ed note: the Portuguese airport operator] to get it expanded as quickly as we can.

Cranky: What’s the split local versus connecting traffic?

David: Depends on where you’re talking. Brazilians go beyond more — more than 50 percent. But North America we’re getting more than 50 percent who stay in Portugal. We fly a lot from Northern Brazil, so we’re the only way to Europe without going back down to the South of Brazil. It’s like if you live in New York and you want to go to London, you have to go via Denver. That’s what people in Brazil have to do. We carry about a third of all traffic between Brazil and Europe because of what we have. The proximity between Brazil and Lisbon and pretty close, 7 hours away.

Cranky: From the US, it’s mostly Portugal destination. Is that something you want to change? Are you really trying to push to grow connecting?

David: Yeah. I’d like to have more.

Cranky: One way I know you do that, you have really low business fares. I guess in coach as well. But that’s part of the strategy, trying to drive [traffic] through price, or is that something that will shift now that you have the new aircraft with a newer, upgraded product?

David: We have more seats to sell. It’s more of a leisure market, so you know, we charge less. No different than JetBlue with Mint, they charge less than American does.

And that’s as far as we got. Again, if you have questions for David, go ask him yourself from 3p to 4p ET on Friday at the corner of Bogart and Grattan Streets in Brooklyn.

June 12, 2018 at 01:45PM Source: http://crankyflier.com

Who the F*&@ is Primera?

Who the F*&@ is Primera?:

It’s been awhile since I did one of these posts, but the time has come to take a look at Primera, an airline you may be surprised I’ve ignored for this long. After all, Primera had aggressive plans to use narrowbodies to fly between the US and Europe this summer. While there have been problems, it is actually flying on some routes. So let’s take a look.

Primera started out as an Icelandic company back in 2003. Its original focus was the usual story for an upstart in a cold weather climate: carry leisure passengers in cold places to the sun. It did just that primarily as a charter operator. That changed over time, and while the sun-chasing element is still there, it’s now doing it mostly with scheduled flights. The company relocated to Riga, Latvia with a subsidiary airline operating out of Denmark. You can see its European destinations here:

As you can imagine, Primera’s routes are pretty much taking the dots on the top half of the map and connecting them with the dots on the bottom half. The number of destinations may make you think it’s bigger than it is. The airline has, according to its website, 10 737s buzzing around Europe, and that’s it for now (but MAXs are on order). It seems to have carved out a decent niche, and that would normally be the end of the story. But Primera has decided to dream very big.

The airline made a big splash last year when it decided to take A321neos and fly them across the Pond. This summer, Primera is flying twice daily from Newark (one to Paris/CDG and the other to London/Stansted), once daily from Boston (3 weekly to Paris/CDG and 4 weekly to London/Stansted), once daily from Toronto (3 weekly to London/Stansted and 4 weekly to Paris/CDG), and toward the end of the summer it begins flying 5 weekly flights from Washington/Dulles to London/Stansted. I find this all very confusing, because the best I can tell, it only has two neos flying right now, so the math doesn’t add up. I know it has had to get creative — Newark to Paris is on a 767 right now — but presumably this is all due to not having enough airplanes in the fleet just yet. Eventually this should be all A321neo if it can make it long enough to get all those airplanes in the air.

The neo is configured with 198 seats onboard, which isn’t all that dense. (Hawaiian’s A321neo has 189, but all-coach operators can easily squeeze in over 220.) It does have two cabins, similar to what you’ll find on most longer-haul low-cost airlines, but it’s not an overly-generous premium cabin.

There are 16 seats in the premium economy section. This looks to be a fairly standard premium economy offering. Here’s the photo the airline shares.

Don’t be fooled. That first row does have a nice leg rest, but you can clearly see the rows behind do not. It looks like it’s just a domestic-style First Class seat with a footrest in most rows. You get a meal, a small amenity kit, and a power outlet when you fly. Oh and you get water. If an airline has to point that out as Primera does on its website, I’m not sure how “premium” it really is.

In the back, Primera provides the usual no-frills offering that you’d expect on an airline like this. One article says that the airline has 30-inch seat pitch in the regular seats which isn’t all that tight. But there is also an extra legroom section which apparently has two more inches, not all that roomy. You have to pay for any seat assignment, of course, and any food or drink you might want. The only thing included without charge is a USB power outlet.

The airline has strangely chosen the generic slogan of “Fly better, fly Primera Air.” The point, however, isn’t supposed to be that you’re flying “better” but rather that you’re supposed to be flying CHEAPER. And it IS cheaper at a quick glance. Looking at one way fares, I could get a coach seat the next day for $799 with no frills from Newark to London. I could also get premium economy for only $899 on that same flight. And if you have any kind of advance purchase, rates plunge. On July 7, when I checked on Friday, it was $279 with no frills to London or $749 in premium.

So what do I think of this? I don’t get it. An efficient widebody can get you lower seat costs than even the most efficient narrowbody. So on major Transatlantic routes like the ones Primera is flying, it’s going to be hard to compete. Even Norwegian knows to put 787s on those routes (when it isn’t leasing in some stray aircraft out of necessity). Sure, Primera can be a spill carrier in the summer when fares are high on the other airlines, but the rest of the year will likely be a bloodbath. This isn’t likely a sustainable model.

To me, the more interesting idea is that one that Primera had to scrap this year. It was going to fly from Birmingham in the UK over to North America this summer. A321neo delivery delays, however, killed that plan. That’s not entirely correct. It did start flying from Newark with a leased National 757, but with neo delivery dates slipping, it pulled the plug for all flights from June 21. It says it’ll try again next year.

That kind of market seems far more promising. There isn’t any Transatlantic service to speak of from Birmingham now, and a narrowbody could create a decent niche, especially during the summer. But we won’t know if that’ll work or not since the service is gone.

Primera apparently likes to think of itself as one of the “world’s top low-cost long-haul carriers,” but that distinction appears to be based upon weekly departures, not exactly a helpful metric. Just because you’re getting bigger doesn’t mean you’re doing well. This summer was a big jump for the airline, so we’ll see if the results are positive or not. Chances are, summer may be ok if enough people find that the airline exists, but when demand falls off into the fall, that’s when it will get tough. Personally, I’m hoping Primera makes it until next year. Then we can see if that Birmingham plan might work.

June 11, 2018 at 01:45PM Source: http://crankyflier.com

Cranky on the Web: Billions of Dollars Pour In…

Cranky on the Web: Billions of Dollars Pour Into LAX, Singapore’s Longest Haul:

Los Angeles’ Massive Airport MakeoverIcons of Infrastructure
I stopped doing freelance writing a long time ago, but Icons of Infrastructure asked me if I’d take a crack of some of the projects being done at LAX, and I was happy to jump back in the game. This piece focuses on just three projects – the northern part of the Midfield Satellite Concourse, the Delta SkyWay, and the Landside Access Modernization Project. Read the article for details.

Is now the right time for SIA’s relaunch of the world’s longest flight?Travel Daily Media
I didn’t write about it here on the blog, but Singapore has its new A350-900ULR aircraft coming in and that means Newark is back (with LA to follow). I was asked about why it failed before, and whether it’ll work this time around.

June 09, 2018 at 01:45PM Source: http://crankyflier.com

3 Links I Love: Airline CEOs Gather in Sydney,…

3 Links I Love: Airline CEOs Gather in Sydney, Heathrow Steps Ahead, Elite Airways:

This week’s featured link:
So Long, Sydney: Take-Aways From IATA’s Meeting of World’s Airline ExecsStuck at the Airport
I’ve still never been to IATA’s annual general meeting (AGM), because there always seems to be some kind of conflict. One day I hope to go since it’s quite the impressive gathering of airline CEOs. I didn’t find all that much newsy coming out of the event this year, but Harriet put together a brief synopsis with some links for those who want to see more about what went on.

Two for the road:
Heathrow Airport: Cabinet approves new runway planBBC
Another step forward for Heathrow’s 3rd runway. Now they say 2026… sure, right. I’ll believe it when I see an airplane landing on it.

John Pearsall of Elite AirwaysBill Green’s Maine
The opening shot of this local program seems to be about the Maine-est thing possible. Frankly, Elite is an airline that’s been around for a long time doing a lot of random things, and I’ve almost completely ignored it. Apparently 757s are now coming? I don’t understand how this airline even exists, but something tells me that the profitable sports charter business allows them to try other strange things (like Bimini, which surprised Bill Green as well) and still survive.

June 08, 2018 at 01:45PM Source: http://crankyflier.com

Why Won’t American Let Me Use Miles on a Conne…

Why Won’t American Let Me Use Miles on a Connecting Flight? (Ask Cranky):

It’s time for another Ask Cranky. This one is a follow-up on a post I wrote last December.

I read your post in December [about American opening up more award space on connecting flights] and I am NOT seeing this space open up. In fact it has gotten worse. I’m trying to fly from Houston to Champaign, IL and despite [a MileSAAver] being available on both Houston to Dallas/Ft Worth and Dallas/Ft Worth to Champaign, I cannot book [a MileSAAver] from Houston to Champaign.

Is there anyone at American you can reach out to and see why the situation has not improved? I have tried calling and speaking to their agents and even supervisors, but they say, “The computer says no.” I am frustrated.
-Jon

Good catch here, and sure enough, this is happening. It’s the exact opposite of what American said it was doing last December, so it had me a bit puzzled initially. But I suppose it does make sense.

You’ll remember back in December I said this:

Thanks to improved revenue management techniques, American has become much more skilled at maximizing its revenues on every flight it operates. So if the airline is going to open up more award availability, it wants to do it in a way that can have the lowest impact on ticket revenue.

In the original example, that meant American was fine selling cheap award tickets from Richmond to LA via Philly but not on the two local markets where it could get a high fare. But this can work in reverse as well. Let’s take a look at what Jon was talking about.

No need to share the dates here, but you can rest assured that these are all on the exact same date. First, here’s the availability from Houston to Dallas/Ft Worth:

Then there’s Dallas/Ft Worth to Champaign:

And finally, here’s the Houston to Champaign display:

We can really dive in and examine why this might or might not make sense on these specific flights, but I can guarantee you that American isn’t doing that manually.

Sure, Houston to Dallas is a big market with competition and cheap fares. So if American can take 7,500 miles instead of the $100 it’s likely to get on a fare, then that’s not bad at all. Might as well open things up and let travelers burn their miles. And on Dallas to Champaign, well, it’s an incredibly tiny market (less than one person a day) so the airline might think keeping seats open could help move people on to that flight instead of going via Chicago. But again, that’s a TINY market, and American can’t really be bothered getting into that type of detail.

Instead, what’s probably happening here is that American is setting up rules and letting the computers decide when to open up availability. Recently, American gained the ability to limit those by true origin and destination (Houston to Champaign) instead of just by individual flight, so that allowed the airline to manage things much more intricately. I have no idea how sophisticated the system is, but certainly the expected ticket price, mileage amount, and demand should come together and allow American to make a decision on whether it makes sense to give mileage seats at the low level or not.

This might be good for travelers, but frankly, we will never know. How so? Well, since American can control availability by full origin and destination and not just by flight leg, that means it may find that it’s worth opening up space more often than it used to.

Let’s zero in on that Dallas/Ft Worth – Champaign flight. Before, American had the binary option of leaving mileage availability open or closed for anyone who wanted to take that flight regardless of actual origin and destination. American might have made the decision in that scenario to not open it up. But now that it can open it just for the few people traveling on the local route, it may feel safe opening up availability that never would have existed before.

It’s also possible that before, American just would have left this open for anyone, and now it’s shutting down availability on connections because it has the ability to do so. That baseline is what we don’t know, and it’s why we can’t tell if this in particular is good for bad for travelers.

What I do know is that American has shown interest in giving people more opportunities to burn miles. That means that overall this is going to make more seats available. That doesn’t mean that in every situation there will be more availability, but more broadly, it does.

This does add complexity, and it’s already created an issue that’s fairly annoying. Jon can buy two tickets from Houston to Champaign for 20,000 miles if he’s willing to split them. Of course, if he’s checking a bag that’s likely to be problematic for him. But his other option is to spend a whopping 50,000 miles which would just be crazy. It would be nice if American had the ability to allow end-to-end redemptions, but I doubt that’s something we’ll see anytime soon.

In summary, this is frustrating for travelers who used to know you could just piece itineraries together flight by flight. But it should result in greater availability overall, so it’s not necessarily bad. What we do know is that this is reality, and it’s not going to change regardless.

June 07, 2018 at 01:45PM Source: http://crankyflier.com

Air New Zealand Starts Dating Its Former Best …

Air New Zealand Starts Dating Its Former Best Friend’s Worst Enemy:

There have certainly been some dramatic airline spats over the years, but down in Australia and New Zealand, quite the doozy is developing. Here’s a short synopsis for you to consider.

V and Q had a falling out years ago, and they don’t get along. N shows up on the scene, and V ends up befriending N. They start hanging out and bonding over a mutual dislike of Q. V and N hatch a plan to try and bring down Q once and for all. While this is happening, N and Q actually become friends, and N hurts V’s feelings along the way causing a rift that seems like it can’t be repaired.

If that sounds like the first half of the movie Mean Girls, it’s because it pretty much IS the first half of Mean Girls. (And, if you have a problem with Mean Girls, shame on you. Tina Fey is a national treasure.) But it could also very well double as a mostly-accurate representation of what’s been going down with Qantas, Air New Zealand, and Virgin Australia.

I wrote about the unwinding of the relationship between Virgin Australia and Air New Zealand just about a month ago. The two airlines came together to allow them both to better compete against Qantas in the Australia/New Zealand market. Though Qantas and Virgin Australia were always competitors in some fashion, things intensified when John Borghetti arrived as CEO of Virgin Australia. John used to be at Qantas and was spurned for the top job years ago. There was bad blood there, and Borghetti decided to build his vision at Virgin Australia instead.

Combining forces made sense previously, but Virgin Australia strayed. It took on a bunch of new investors to keep pumping money into the company when it couldn’t generate the cash itself, and Air New Zealand didn’t like the direction that the airline was taking. So the relationship frayed and Air New Zealand went its own way. It was all understandable. But now Air New Zealand is turning to Qantas and that is quite the surprise.

This new relationship doesn’t go as deep as what Air New Zealand had with Virgin Australia. That included a joint venture across the Tasman Sea. This one will, at least for now, simply be a codeshare with a few extra perks.

The idea is simple. Air Zealand will put its code on up to 85 routes Qantas flies within Australia. That means Air New Zealand can sell tickets to passengers on Air New Zealand aircraft to Australia and then beyond the gateway to a variety of Australian cities the airline either doesn’t serve today or will stop serving when the Virgin Australia deal ends in October. Qantas will put in turn put its code on up to 30 routes Air New Zealand flies within New Zealand, so it can fly people to the main New Zealand airports and then connect them on to smaller cities. This should all be new connectivity for Qantas since it doesn’t have a partner in New Zealand today except for its own handful of Jetstar routes that are flown between big cities. (That, for the record, isn’t changing.)

Beyond the codeshare, the two airlines will “coordinate check-in and handling” on the ground, and there will be reciprocal lounge access. Further, they’ll look at trying to cooperate on “biofuels, freight and ground-handling opportunities” in the future. In short, each airline had a need to better penetrate the other airline’s home market, so they found a way to put something together that benefits everyone. If there’s some gravy on top of this with things like biofuels, then that’ll be welcomed as well. But outside of this, they’ll remain competitors as always.

Virgin Australia must be livid. Not only has it lost its feed into New Zealand and Air New Zealand’s feed on its own domestic flights, now it has to watch those travelers be provided with a new option that makes for an easy replacement. And since that new option is with John Borghetti’s former employer and nemesis, it must sting.

Of course, there could be more to this story. Maybe it’s all a ruse. Imagine that V and N have planned to have N become best friends with Q, so it could infiltrate the inner circle and do some intelligence gathering. Then things will spiral out of control, and the regulators will gather everyone in the hangar and make them all talk through their issues. Sure, Q may get hit by a bus, but she’ll recover and everyone else will live happily ever after. But wait, that’s just a movie. It couldn’t happen in real life….

June 05, 2018 at 01:45PM Source: http://crankyflier.com