LAX 2240 MIA 0646 Daily
MIA 0745 LAX 0959 Daily

Delta seems to be running this route purely for aircraft utilization purposes, as these flights are perhaps not optimally timed for premium traffic. The red-eye, while painful, does allow for a full day of work in Miami the following day, but the early morning departure from Miami limits the effectiveness on that end. Perhaps an evening departure from Miami would have worked better for premium travelers, but I doubt that there was enough slack in the current Miami fleet to operate such a long (6+ hours) route.

Delta’s quietly been building up their Miami operation for some time now, adding flights to what has now become a small focus city with flights to London Heathrow as well They’ve got a surprisingly large frequent flyer base in South Florida (possibly a holdover from the days of a Fort Lauderdale hub/large focus city), and this route should have a solid foundation to grow from. They will be going up against the American (Airlines) juggernaut of 6-8 daily flights with multiple wide-bodies (including a 777 with lie-flat seats), but Delta’s goal is serving their own frequent flyers. JetBlue announced earlier this month that they would be switching their LA Area flight to Fort Lauderdale from Long Beach to LAX, and that may have had some effect on Delta’s move.

In terms of European Airlines, there aren’t many viable targets for IAG to attack. The majority of full service carriers in Europe have either been snapped up by the Lufthansa juggernaut, or are too small or troubled to provide any real benefit to IAG. With that in mind, I believe that I’ve come upon a pair semi-viable full service options for IAG; Finnair, TAP Portugal, and Aer Lingus. With those names in mind, I’d like to take a look at each airline’s pros and cons for membership from an IAG perspective.

Finnair: The first thing to remember with any airline merger is that a) there needs to be value added, and b) the network of the two carriers need to have a minimal overlap and/or serve different purposes. Finnair fits both of those requirements very well, as a profitable carrier (relatively), with a very diverse route network. As was mentioned in the article, Finnair does a very good business connecting passengers from North America/Europe to Asia and the Middle East, reflected by their network of 10 Asian destinations. (Both Finnair’s short haul and long haul networks are mapped below). From a fleet perspective, the airline is relatively easy to integrate, with a short haul fleet of A320 family aircraft and E190 family aircraft with long haul routes operated by a mixture of A330 and A340. Since Finnair is already a member of OneWorld Alliance, they already have a significant amount of coordination with IAG. The only potential drawback is that Finnair is dependent on connecting traffic as they face the double issues of a weak O&D local market (Helsinki) and a strong LCC in that market (Blue 1).

Merger Potential: 8.5/10

TAP Portugal: If you remember back to when I gave the qualifications of a good merger partner, you’ll understand when I say that TAP doesn’t add much value in terms of profitability; they’re a chronically unprofitable government owned airline. Additionally, as they are a Portuguese carrier, it may be a local political problem (in Portugal) to be merging with Iberia, a Spanish Airline. They’ve got a moderately large traffic base in Portugal, but one that’s heavily reliant on leisure VFR (visiting family and relatives) traffic. Furthermore, they’re members of Star Alliance, meaning that Lufthansa may enter the bidding for TAP and raise the asking price. But TAP does bring a very significant advantage in that it is by far the best carrier to link Europe and Brazil, both in hub location (SW corner of Europe) and local market size (Due to colonial ties and something called the Line of Demarcation and the Treaty of Tordesillas and so forth). They’ve also got a very strong and varied network of flights to and from former Portuguese colonies in Africa which are very high yielding (shown below is TAP’s African and Brazilian networks) routes. Given that Brazil and Africa are two of the fastest growing regions in the world, these routes hold astounding potential for IAG. Fleet wise, the airline is once again easy integration, with an all Airbus fleet of A320/A330/A340, but there is the added cost of TAP leaving Star Alliance.

Merger Potential: 6.5/10

Of the two, Finnair is the more likely partner, but TAP provides more growth potential. It will be interesting to see how this all plays out. The merger bug has moved to the EU!

***** All maps from Great Circle Mapper: Copyright © 1996-2011 Karl L. Swartz

In a fleet plan released earlier this year, United stated that there would be little change in the size of their mainline fleet in 2011. One of their older Boeing 747-400s will be leaving the fleet, dropping the count to 24 models in United’s fleet. This aircraft may be one of the older models from United’s initial order (United bought their 31 747-400s in two groups, 1991-1994 and 1997-2000). That’s the only wide-body fleet change due to the delay in 787 deliveries.

On the narrow-body side, United plans to take delivery of 4 new Boeing 737 NGs, while phasing out 1 older Boeing 737-500. Unfortunately, due to the ongoing merger negotiations, no increase in 70 seat regional jet flying will be added to offset the loss of the 122 seat 737-500. The combination of the 737 deliveries/retirements, and 747 retirement will result in a net gain of 2 aircraft for the mainline fleet, taking the count to 712 aircraft in all.

On the regional side, 22 50-seat Embraer ERJ-145 and Bombardier CRJ-100 aircraft will be dropped from the fleet, reflecting the upward pressure on fuel costs for the year. Partially offsetting the loss of these aircraft will be the delivery of 9 78-seat Bombardier Dash 8-Q400 aircraft (6 in Q1 and 3 in Q2). This results in a net drop of 13 regional aircraft to 539 units. The combined fleet sees a net drop of 11 airframes to 1,251 airplanes.

On the orders side, UA currently has firm orders for 125 aircraft; 50 Boeing 737 NGs, 50 Boeing 787s (36 787-8, 14 787-9), and 25 Airbus A350, with another ~75 purchase options for the 787s, ~20 for the 737, 50 for the Airbus A350, and 42 for A319/A320 (these are holdovers from the initial 90s/00s order). One 737-800 was delivered in December of 2010, but it hasn’t been placed in service as of yet. Additionally, United still owns/leases 5 grounded Boeing 747-400s, 49 Boeing 737s (mostly former Continental 737 classics I believe), 30 ERJ 135s (25 grounded, 5 leased out), and oddly enough 3 Airbus A330s (I have no idea whose these are but hey whatever floats their boat).

The airline stated that while, “UAL has not received a revised Boeing 787 aircraft delivery schedule from Boeing, it currently expects the first of its Boeing 787 aircraft to be delivered in the first half of 2012.” I believe that the first 6-7 frames are tied up in previously announced long haul routes (Lagos/Auckland-Houston, and Cairo-Newark) so we’ll have to wait a bit for further 787 international expansion…

Overall interesting stuff from United. They said last week that they’re going to be placing Economy Plus on all former Continental Aircraft, which bodes well for the future (and could have been a response to Delta launching their own “Economy Comfort”).. I’ll be back with some info on Delta’s fleet tomorrow!

So why is Alaska ending this service? My guess is that Southwest’s presence on the flight with two more daily flights was too much for them to handle. Southwest is very strong at both ends of the route, with 3 times the market-share at San Jose, and close to 14 times Alaska’s market share in Austin. So it’s not surprising that Southwest won the head to head battle on the route. Plus, while there certainly are strong business links and decent demand between the two airports (the “Nerd Bird” moniker refers to the fact that both San Jose and Austin are large tech business bases), 4 flights is still a bit overkill for the route. (I’ll take a look at some of the in depth stats a bit later)

A little bit of history on the “Nerd Bird.” The route was first added by American Airlines back in 1992 as they slowly built up their San Jose operation. The route began to flourish in the second half of the 90s after American acquired Reno Air and its San Jose hub to take advantage of the flourishing Silicon Valley market. During the late 90s, the route reached its zenith, seeing 3 daily services on Boeing 757 aircraft. While both San Jose and Austin were hit hard by the tech bubble bursting and 9/11, the route managed to stick around, though it was downgraded to a single MD-80 per day. The route even survived American’s de-hubbing of San Jose. But alas, this fairy tale was not meant to be, as American finally dropped the route in June of 2009. A week later, Alaska announced service on the route, as part of a more general diversification push that included flights to Hawaii from airports besides Seattle/Portland/Anchorage. For a year, Alaska had a monopoly on the route, but Southwest Airlines apparently realized: “Oh wait, there’s an airline flying a popular route between two airports where we dominate the local market. Why the *bleep* aren’t we flying it?”, and in August of 2010 launched their own competing service between Austin and San Jose.

Which brings us to the present, where it’s sad to see Alaska leaving this route. Sad, but not unexpected.

These awards were given based on Airport Service Quality Surveys (ASQs) filled out at participating airports (over 300,000 surveys were collected in total). As per the ACI press release,

The ASQ passenger survey measures customer feedback on a range of service delivery parameters that track the customer experience at an airport from the moment of arrival to the departure gate. Analysis of this “real-time” data, recorded on the day of travel, serves as a guide for aligning service provision with customer expectations. By benchmarking the airport with other similar airports, ASQ enables airports to see where they stand relative to their peers and competitors. This helps airports prioritize improvement projects and validate their investments in new facilities and services.

The group also broke down the awards by region and passenger traffic levels, with a rating of the top 5 airports in each category. Below, I’ve reproduced a copy of the entire rankings.

ASQ Top Performers 2010

It’s interesting to note that Asia, in addition to sweeping the top 5 in the overall awards; took 14 of the 25 overall awards by passenger size. Given that Asia has spent 75% of the total amount of money spent on airport development in the past 10-12 years (85% if we exclude Dubai), it would make sense that Asia has the best airport service around. As mathematicians would say… The service quality is directly proportional to the amount of money spent.

It’s also interesting to note the breakdown in terms of the size of airports winning quality awards in each region. If you look at Asia, the top 5 airports in the region are all large airports (30 million passengers or more), as the majority of airport funds have gone to the larger airports there. Most of these airports are newly built (within the last 10 years) and feature top of the line amenities combined with wide open spaces and visually pleasing interiors.

By contrast, take a glance at North America’s top 5 are all airports with fewer than 20 million passengers per year, and only one of them (Vancouver) can even remotely be considered a hub. There’s a similar dynamic in Europe as well if you exclude Zurich from that mix. The reasons behind this mismatch is pretty obvious. The majority of North American hub airports are all very old buildings. Due to lack of expansion space, most of the airports suffered from cramped airports, acerbated by a myriad of delays. By contrast most of the small airports feature similar amenities to the larger airports, with much more space and a much more efficient operations. The two US Airports in the group of 5, Austin and Indianapolis are both newer airports (Austin was built in 1999 and Indy was re-built in 2008.), with few operational problems and plenty of  space for their passenger totals (though Austin will have to be rebuilt in the next few years.

Anyway, congratulations to all of the winners of this year’s awards!

Obama’s budget provides funding of approximately $15.8 to the FAA in his fiscal year 2012 budget. The major programs/provisions to be affected are Passenger Facility Charges and General Airport Funding, Next-Gen ATC, and Essential Air Service (the EAS program)…

Of the three, President Obama is cutting by far the most from the “airport grants program”; in 2012 the amount budgeted will drops $1.1 billion to $2.4 billion. As per the official budget document:

In support of the President’s call for spending restraint, the Budget lowers funding for the airport grants program to $2.4 billion, a reduction of $1.1 billion, by eliminating guaranteed funding for large and medium hub airports.  The Budget focuses Federal grants to support smaller commercial and general aviation airports that do not have access to additional revenue or other outside sources of capital.  At the same time, the Budget would allow larger airports to increase non-Federal passenger facility charges, thereby giving larger airports greater flexibility to generate their own revenue.

*Note: The Airport Grants program functions as its name would suggest; providing grants to airports for expansion.

I’ll discuss the PFCs issue in a minute, but first I’d like to point out a very fundamental flaw with the President’s reasoning here. In his little explanation, he states that the budget would focus its grants on small to medium hub airports, while cutting grants to larger hub airports. Here’s the issue with that… its the large hub airports that actually need these proposed improvements. Chicago O’hare is already strained to the core, as are the facilities in NYC (relatedly: read this report on what to do in NYC- it’s gonna cost money folks). Philly just announced an expansion, and LAX mentioned their’s a while back. On the flip side, most medium to small airports aren’t expanding and have no need to as most operate underneath capacity. Indianapolis was probably the last small-ish airport to do any wide-ranging expansion, and they have a terminal that, while gorgeous, is heavily under-utilized. So Obama’s plan calls for cuts in the wrong location for airports.

On a related note, why are we even cutting funding for airports at all? In that very same budget, Obama promises $8 billion in funding for high speed rail. $8 billion!!!! If we can afford to spend that much money on an unproven (in the US- google “troubles with Acela Express” sometime) transportation method with a limited case, I’m sure we could afford to set aside a little more for the primary, proven method of interstate travel.

Obama says in his budget that he plans for large airports to make up the drop in grants by raising the cap on Passenger Facility Charges (PFCs) from $4.50 to $7.00. A Passenger Facility Charge, for those who don’t know, is an airport improvement fee that is usually added on to your ticket as a separate fee.

I don’t like this, for two reasons. First, raising PFCs is very hard to do, so not all airports will be able to recover enough funds to offset the lost funding. The process for hiking PFCs is highly regulated, and as this Southwest chart illustrates, not all airports can reap the full benefit of the higher ceiling.

Secondly, this PFC increase amounts to essentially, an added tax of ~$1 billion on passengers and/or airlines… The PFCs, which are added to every ticketed segment flown by commercial airlines, are the responsibility of the airline, who’re obviously going to pass the cost on to the consumer. And whilst a $2.50 increase may not seem like a very big deal, it can mean a $60 increase in costs for a family of four flying on a round trip ticket. With customers price sensitive as it is, that $60 can be very significant. Furthermore, as I’ve already mentioned, not all airports will be able to raise their PFC to $7.00, meaning that carriers operating from the higher-ceiling airports will be at a competitive disadvantage for connecting passengers.

Overall, I’m disappointed in this budget’s treatment of airports. I’ll be back with some thoughts on EAS and Next Gen later this week.

What were some of the reasons for cutting service to Chennai and Hyderabad? AirFrance KLM decided to concentrate their flights to Delhi and Mumbai, which we serve each twice daily. Next to this we service Bangalore five times a week. We ended the Chennai and Hyderabad services for commercial reasons.

Are there any sort of plans to expand in terms of destinations to India; either in terms of resuming the aforementioned destinations, and/or opening new destinations? No concrete plans, but India is a fast growing market and as such we are monitoring the options of new destinations in India continuously.

Nothing too exciting, but still cool to receive a response

Air France-KLM Group Plans Indian Capacity Growth
Pretty straight-forward here… Air France-KLM, Europe’s largest Skyteam airline says that it plans to increase its capacity to India. As per the timetable, Air France operates 5 weekly flights to Bangalore from Paris and daily flights from Paris to Delhi and Mumbai with a mix of Airbus A330 and Airbus A340 aircraft. KLM adds a daily flight to Delhi from Amsterdam on a Boeing 777-300ER aircraft. The airlines previously served Chennai and Hyderabad as well, but those destinations were cut during the global financial crisis. Air France says that it plans to introduce the 777-300ER on the routes from Paris, before considering the A380 to the country in 2012. Pieter de Man, Air France-KLM’s Indian bureau chief had this to say on the A380:

I think we have two airlines that are ahead of us in discussions with the government for A380, Emirates and Lufthansa. They will probably operate an A380 earlier than we will, I foresee that the A380 discussion will not take place in the year 2011, maybe in 2012…. If we were to operate, it would have to be a toss between Paris to Delhi or it could be Mumbai

(Mumbai and Delhi are currently the only two A380 ready airports in India)

Currently, discussions are underway with Jet Airways for that carrier’s potential entry into the SkyTeam alliance. Man however, noted that Jet is not the airline’s only target:

We belong to SkyTeam. And SkyTeam is constantly looking for new partners. We are also looking at India, SkyTeam would not want to restrict itself (to Jet); we are talking to more than one airline in India

My opinion is that SkyTeam’s only real option in India is Jet Airways: despite Man’s words. The other two major Indian airlines; Kingfisher and Air India have already been bequeathed to OneWorld and Star Alliance respectively. And while low cost carriers such as IndiGO and SpiceJet are still on the table, they ultimately provide neither the requisite frequencies to domestic destinations at hubs, nor the important South Asian connectivity (Bangladesh, Sri Lanka, Myanmar, Thailand) that Jet Airways does.

Jet Airways and Air Canada Tie the Knot… Sort of

In slightly related news, Jet Airways recently moved closer to a Star Alliance carrier; signing an interline agreement with Air Canada to connect passengers from Toronto to Mumbai via London-Heathrow. The carriers already cooperate on direct flights between Mumbai and Toronto (Jet Airways via Brussels). The agreement will last three years, and is designed to retain Canada-India passengers (a segment upon which Emirates is the marketshare leader) till Air Canada starts non-stop flights to India in 2014 upon the delivery of their Boeing 787s. Air Canada had previously operated a flight to Delhi via Zurich, but terminated the Zurich-Delhi sector in 2007.

My only question is… Why aren’t Air Canada partnering with Air India on this. AI operates a daily Boeing 777-300ER between Delhi and Toronto and is supposed to be joining Star Alliance in March of this year.

Qatar Airways to Expand in India

Title says it all; Qatar Airways plans to expand its Indian operations, theoretically opening flights to two new destinations. They currently operate to 11 Indian cities – daily flights to Bengaluru, Delhi, Mumbai, Hyderabad, Chennai, Cochin, Trivandrum, Kozhikode, Ahmedabad and Goa, with four services-a-week to Amritsar. Perhaps they plan to resume service to Nagpur, cut during the financial crisis? Pune would seem to be a prime destination to be tapped, as the largest Indian city currently not served. Additional markets could include Trichy, Jaipur, Lucknow, or Coimbatore.

More News:

Air India’s first 787 confirmed for delivery in 3/4Q 2011- 1st aircraft is VT-ANA. Air India has a total of 27 787s on order.

Etihad Expands to India- They are considering Amritsar, Ahmedabad, Goa, Kolkata and Jaipur. Additionally, they may begin services on sectors between Sharjah and India

Air India and Indian Airlines Combine Under AI code- kinda…

Thai Adds Indian Capacity