South African Announces Washington – Accra Service

South African Airways (SAA) today announced a new routing for its daily flights between Washington (IAD) and Johannesburg (JNB): Accra’s Kotoka International Airport (ACC) will be the stopover for four times a week. South African will reduce Washington to Dakar, (DKR) flights to three times a week. Currently SAA serves the IAD-JNB route with a stopover at Dakar for all seven days. The new schedule takes effect starting August 3, 2015. South African also flies a daily nonstop service between New York JFK and Johannesburg.

It should be noted that Accra was the original stopover when South African started its service to Washington. But it could not secure the fifth freedom rights to pick up passengers between Washington and Accra and hence shifted its operational base to Dakar, Senegal. The router is now being reinstated with rights to carry passengers between Washington and Accra. Washington, DC area is home to the second largest expatriate African population in the United States. Ethiopian Airlines (ET) serves a daily nonstop between Washington and Addis Ababa (ADD).

Both South African and Ethiopian flights arrive early in the morning at Dulles to take advantage of the connections offered by fellow Star Alliance member United Airlines (UA).

 

Washington Dulles finally gets a break – Frontier Airlines announces new services

Frontier Airlines (F9) has announced plans to start new services from Washington Dulles International (IAD) airport. The ultra low fare carrier will start nonstop flights to fourteen destinations, with the first being planned on August 19, 2014. All destinations, except Orlando (MCO) will be served anywhere between four times a week to six times a week. Orlando will be served daily.

While international passenger traffic has consistently increased every year with the arrival of new carriers, Dulles has been steadily loosing domestic passenger traffic to the close-in Ronald Reagan National Airport (DCA). Airlines have been shifting services from Dulles to Reagan National because of the availability of new slots as well as the sale of existing slots by US Airways (US) and American Airlines (AA) to get their merger approved. United Airlines (UA), which operates a hub at Dulles has trimmed its domestic services as well. The airport authority, which manages both Dulles and Reagan National, has been trying hard to bring in new domestic carrier at the airport. With a mega construction project to bring Metro rail to the airport underway, it is imperative to bring in new carriers to improve traffic volume at the airport.

Frontier sees an opportunity at Dulles as the airport has ranked as one of the most expensive airports in the country every year. Its low fares should bring in enough passengers to sustain the services.

It will be interesting to see how United would respond to this new development. Anyone remember Independence Air (DH)? United’s own contract carrier Atlantic Coast Airlines turned against it by taking a new avatar as Independence Air (DH) with a hub at Dulles. Oh, I remember that period. It was fun times for the travelers and the airport (Dulles became one of the top ten busiest airports in the country and home to the largest low cost operation in 2005). United matched Independence Air’s ultra low fares and made the later to bleed cash and eventually shut down. But, I don’t think, Frontier’s operations at Dulles is a threat to United. United operates a medium sized hub at Dulles with multiple daily flights to most East Coast destinations. Also, Dulles is United’s second biggest transatlantic hub (after Newark Liberty). With lots of corporate contracts and frequent flyers, United would easily hold its court.

Air China Expands its U.S. Network – Services to Washington Starts in June; Houston becomes daily

Air China (CA) has announced firm dates for its Beijing (PEK) – Washington Dulles (IAD) service. The airlines application has been approved by the U.S. Department of Transportation recently. The four-times weekly service will start on June 10, 2014 with Boeing 777-300 ER. In addition to the large O&D market offered by the Washington-Baltimore area, Air China would get ample connection opportunities using the route operated by its Star Alliance partner United Airlines (UA). A mid afternoon arrival at Washington is timed to connect passengers to destinations throughout the East Coast on United’s extensive route network from Dulles. United Airlines already operates a daily IAD-PEK service.

Houston service goes daily

Staring March 30, 2014, Air China will also increase its frequency on the Beijing – Houston (IAH) route from four times a week to daily. The expansion comes within eight months of launching the service to Houston, indicating strong demand.

Covering all bases

With these new and additional flights to Beijing, Air China will serve all Star Alliance hubs in North America, except Denver, either using its own metal or through an alliance partner.

Flights from North America To Beijing By Summer 2014

Destination Weekly Frequencies Operators
Chicago (ORD) 16 United (7); American (7); Hainan (2)
Los Angeles (LAX) 14 Air China
San Francisco (SFO) 14 United (7); Air China (7)
Vancouver (YVR) 14 Air Canada (7); Air China (7)
New York (JFK) 11 Air China
Washington (IAD) 11 United (7); Air China (4)
Seattle (SEA) 11 Delta (7); Hainan (4)
Toronto (YYZ) 10 Air Canada (7); Hainan (3)
New York (EWR) 7 United
Houston (IAH) 7 Air China
Detroit (DTW) 7 Delta
Honolulu (HNL) 6 Hawaiian (3); Air China (3)
Boston (BOS) 4 Hainan

Together, Air China, United Airlines and Air Canada will command a 75% share in the important North America to Beijing market. With extensive route network from their hubs, the alliance can connect any two destinations between China and North America.

Ethiopian Airlines Takes Its First 787 Delivery – Washington Dulles To Be the First Destination

Ethiopian Airlines (ET) became the third airline in the world after ANA and JAL to take delivery of the new Boeing 787 Dreamliner. The gleaming new airplane landed at Washington Dulles (IAD) today on its way to Addis Ababa.

The airline announced Washington Dulles (IAD) as its first destination for the B787. Starting October 20, 2012, the airline will start regularly scheduled flights to Dulles. ET currently operates its daily ADD-IAD service with a B777 – 200. Ethiopian will alternate between B787 and B777 on the route.

Ethiopian attaches great importance to its Washington Dulles flights as it provides important link to one of the largest Ethiopian community outside Ethiopia. The route also provides important opportunity for cargo revenue. Ethiopian, being one of the newest member of Star Alliance, leverages United Airlines’ hub at Dulles for connections.

With 10 B787s in order, Ethiopian announced Guangzhou (CAN), its second destination for the Dreamliner.

United Airlines Orders 150 Boeing 737s including 100 of 737 Max

United Airlines today announced an order for 150 Boeing 737 planes to upgrade its narrowbody fleet. The order includes 100 of Boeing’s new 737 Max planes. According to the press release, United will be the North American launch customer for Boeing 737 Max 9 aircraft. The deliveries will start in 2018.

Boeing 737 Max is the tweaked variant of the companies best selling 737 narrowbody jetliner, offering better fuel economy. Boeing originally planned to replace the aging 737 workhorse with a new design from the ground up (like it did for the 787 dreamliner). Instead, Boeing decided to modify the existing platform to bring an upgraded product to the market sooner, because of the success of a similar strategy employed by its competitor Airbus with its A320 neo.

Going by the orders it is getting for the new 737s, it looks like Boeing made the right call.

Turkish Airlines Announces flights to Houston

Turkish Airlines (THY), one of the fastest growing airlines in the world, yesterday announced flights to Houston George Bush Intercontinental Airport (IAH) from its hub in Istanbul’s Atatürk International Airport (IST). Starting in April 2013, the airline will operate four services per week using Boeing 777 – 300 ER aircraft.

Houston is a logical expansion point for Turkish Airlines. The airlines is a member of Star Alliance and Houston is a major Star hub. Houston, being the energy capital of the United States, has strong business traffic and Turkish can tap that using its excellent connections to oil producing regions of Asia and the Gulf. It will compete head-to-head with other airlines operating in the region: Emirates and Qatar Airways (Turkish bills itself as more of an European carrier than a Middle Eastern one as its main base Istanbul is in Europe though the rest of the country lies in Asia).

Turkish Airlines already operates daily services to New York JFK (JFK), Washington Dulles (IAD), Chicago O’Hare (ORD), Los Angeles International (LAX) and Toronto Pearson International Airport (YYZ), the last four being major star hubs. By operating flights to all major Star hubs, Turkish can provide onward connections to almost all points in North America. By the way, United Airlines (UA) starts its Istanbul flight from Newark (EWR) hub on July 1, 2012. United will use a B767 – 300 on this route.

One thing is clear: US Flyers will have more options to travel to one of the fast growing economies in the world and beyond.

Win for Southwest and a setback for United Airlines – Houston Approves International Flights from Hobby

In a major win for Southwest Airlines (WN) and a setback for United Airlines (UA), Houston City Council today overwhelmingly approved to start international flights from Hobby Airport (HOU). Beginning 2015, Southwest plans to start flights to Mexico, the Caribbean and  South American destinations, pending regulatory approvals.

Southwest welcomed the decision saying that it would bring in additional jobs and millions of dollars in economic impact to the city. United Continental Holdings, the parent of United Airlines said that it is disappointed in the decision.

United contends that allowing international flights from a secondary airport like Hobby would drain passengers from the city’s main international gateway, George Bush Intercontinental Airport (IAH), which is also the biggest hub for the combined entity of United Airlines and Continental Airlines. United already indicated that if international flights are allowed out of Hobby,  it has to retrench 10 percent of the workforce in Houston, drop the proposed Houston – Auckland flight and put the $700 million improvement at IAH on hold.

As always, both airlines brought out studies to bolster their arguments. The Houston Airport System, part of City of Houston, manages both airports and already approved the decision.

There are supporting facts to both United and Southwest. United has invested heavily in IAH over the years, building a respectable route system to Caribbean, Mexico and South America. Southwest would bring down the pricing power in the market, there by reducing United’s operating margins. United maintains its Latin American hub in IAH and does not want to jeopardize its growth (even though much smaller scale than the massive American Airlines (AA) hub in Miami (MIA)).

Southwest argument of additional revenue and passengers to the city also makes sense.

Eventually, United has to bring down its operating costs in line with that of Southwest to make money on those routes. Otherwise, United would end up losing the battle to Southwest as most travelers on these route are price conscious.

DOT approves four more beyond-perimeter routes to DCA – Alaska, Southwest, Virgin America and JetBlue get the nod

The US Department of Transportation today selected four more beyond-perimeter routes to Washington’s Ronald Reagan National Airport (DCA). US DOT selected applications from Alaska Airlines (AS) to serve Portland, OR (PDX); Southwest Airlines (WN) to serve Austin (AUS); Virgin America (VX) to serve San Francisco (SFO) and JetBlue (B6) to serve San Juan, PR (SJU).

New Beyond-Perimeter routes approved for Washington Reagan National Airport

New Route Airline Frequency Existing Service
DCA - PDX Alaska Airlines 1 x Daily None
DCA - SJU JetBlue 1 x Daily None
DCA - AUS Southwest 1 x Daily None
DCA - SFO Virgin America 1 x Daily United (1 x Daily)

The FAA Reauthorization Bill allows eight slot pairs for beyond-perimeter destinations. The network carriers (United, Delta, American and US Airways) were allowed to convert one of their slot-pairs to operate a beyond-perimeter destination. Four new slot-pairs were awarded to carriers that have minimal service at the airport. Alaska is the biggest beneficiary. It already serves to Seattle and Los Angeles from DCA. With Portland, OR added to its kitty, it would operate daily services from Reagan to three of the top five West Coast cities.

I think, Southwest is playing it safe by selecting Austin. It could have applied for Denver, Las Vegas or Phoenix, but the chances of getting approval from DOT are remote.

American Airlines Bows to Pressure from US Airways – Agrees to explore all possible options

AMR Corporation, the parent of American Airlines today agreed to its unsecured creditors to explore all possible options including consolidation. The airline, in Chapter 11 Bankruptcy Protection, since November 2010, in a statement released today, AMR did not mention US Airways by name. But it is suffice to say that it is finally relenting to exploring the possibility of merger with US Airways.

American Airlines B737-800 - Courtesy: American Airlines

The statement said “The purpose of this collaborative joint agreement with the Committee is to reinforce and assure what we have stated before: what’s best for our company, our people and our financial stakeholders will be determined by the facts in a disciplined manner and process. And this includes whether American will choose to pursue any combination down the road. This is the charge of the board of directors and the leadership team to be done in close collaboration with the creditors committee. It is best for all that this process be very clear so that we are not distracted or diverted by anything that does not serve the best interests of all our company’s financial and other stakeholders. To be clear, American has committed to work in collaboration with the Committee to develop only potential consolidation scenarios and this agreement does not in any way suggest that a transaction of any kind or with any particular party will be pursued.”

As always we will continue to watch this developing story and report to our readers with detailed analysis.

A Seminal moment in Space history: Shuttle Discovery makes its final touchdown at Dulles

It is not often you see a post about space in this blog. But, today is a special day! A bitter–sweet moment. Shuttle discovery made its final touchdown at Washington Dulles International airport.

Shuttle Discovery's final touchdown at Dulles International Airport - Courtesy: NASA

Hats off to NASA and the crew for a fantastic ride. To see a great program coming to an end is really a sad moment, but the Shuttle’s final journey is sure to inspire all those young kids watching this seminal moment.

US Airways Pushes for a merger with American Airlines – WSJ

US Airways is pitching a plan to some creditors of American Airlines for a merger, the Wall Street Journal reported online. According to the report, US Airways claims at least $1.5 billion could be gained in terms of revenue and cost savings.

If the story is true, there could be more stringent scrutiny from the anti-trust regulators and it could delay AA emerging from  bankruptcy.

We will follow this story closely and report if more details are available.

Lufthansa Announces first route for 747-8I: Frankfurt – Washington Dulles

The German carrier Lufthansa will fly its first Boeing 747-8I on the Frankfurt (FRA) – Washington Dulles (IAD) route. This was announced today by Christoph Franz, Chairman and CEO of Lufthansa during his speech at the International Aviation Club in Washington, D.C .

The timing is not announced yet. It is just about time for Lufthansa to replace the legacy 747s. Lufthansa has 20 747-8Is in order book. The revamped plane from Boeing is supposed to be more fuel efficient and carry more passengers (386 in LH’s configuration as opposed to 340 on the 747-400s).

It is now Emirates’ turn to announce flights to Washington

Emirates (EK) today announced the starting of daily flights between Dubai (DXB) and Washington’s Dulles International Airport (IAD). The new service to be operated using Boeing 777-300 ER will start on September 12, 2012, just in time for the busy travel season. The flight will feature eight private suites in First Class, 42 lie-flat beds in Business Class and 304 seats in Coach class, according to the press release from Emirates.

It is interesting to note that just in February, Etihad (EY) announced the starting of service between Abu Dhabi (AUH) and Washington Dulles from March 13, 2013.

Greater Washington DC area is the second largest market for travel from the United States to Middle Eastern countries, just behind New York. So, it is not a surprise to see the three major Gulf Carriers (Emirates, Qatar Airways and Etihad) try to get a piece of the market share. Qatar has been flying this route for more than five years.

The announcement of flights to Washington from Emirates was expected for a while. United (UA) already flies the Washington-Dubai route. This would make Washington Dulles the only North American airport to have flights to Dubai operated by two airlines. It would be interesting to see how United would respond to this announcement. I think, there is enough market share for both players to maintain their services. Each would play to its respective strengths. Emirates, known for its legendary service and huge hub in Dubai, can connect passengers from Asia,Indian Subcontinent,  Middle East and Africa to Washington. Emirates will focus on passengers ending travel in Washington as it has minimal onward connections from Dulles (through JetBlue, Virgin America and American). United, with its hub in Washington Dulles, can connect passengers from throughout North America to Dubai. So, United will have better onward connections from Washington to throughout North America.

Passengers traveling to Indian subcontinent will have more options now, as Emirates connects to 17 destinations from its Dubai hub, with multiple daily flights to big markets like Mumbai (BOM), Delhi (DEL), Chennai (MAA), Kolkatta (CCU), Bengaluru (BLR) and Hyderabad (HYD).

US Airways announces flights to Jackson, MS from Reagan but no details yet on the route for its long distance slot

I received few emails from our readers about announcement from US Airways about nonstop flights from Washington Ronald Reagan National Airport to Jackson, MS (JAN). I think they are under the impression that US Airways is utilizing the long distance slot to start service to Jackson. This is not correct. US Airways has not yet announced its plan for the usage of one slot pair permitted by DOT under the FAA Reauthorization Bill to start service to a destination exempted by the perimeter rule. The Jackson flight will be operated using the slots it gained by the slot-swap deal with Delta. I confirmed this with the US Airways Corporate Communications department.

New Long Distance Routes to DCA (US Airways yet to announce its route)

New Route Airline Frequency Start Date Dropped Route Existing Service
DCA - SFO United 1 x Daily May 14, 2012 DCA - ORD None
DCA - SLC Delta 1 x Daily June 7, 2012 DCA - LGA Alaska (DCA - LAX 1 x Daily)
DCA - LAX American 1 x Daily June 14, 2012 DCA - DFW Delta (DCA - SLC 1 x Daily)

Under the FAA Reauthorization Bill, the four network careers (United, Delta, American and US) got exemptions to operate one round trip service to a destination beyond the 1250 statute miles limited by the perimeter rule. The careers did not get new slot pairs, but have to use one of their existing slot pairs to start this service. United, American and Delta already announced their routes for these exemptions.

Considering the fact that US Airways is the dominant career at Reagan National, it would take time to carefully evaluate its route options for the long distance slot. From Reagan National, it already operates three daily flights to Phoenix(PHX) and a one daily to Las Vegas (LAS). It would be very interesting to see how it would use the slot.

United Flies Into A Smooth Switchover

United Continental Holdings’ transition from two computer systems into one appears to be running without major glitches. The cutover occurred on Saturday early morning. Barring some minor incidents, the transition seems to be smooth. Some flights were delayed at United’s hubs in Chicago O’Hare and Washington Dulles.

Under the transition plan, United moved the reservation, frequent flyer and passenger information from United Airlines’ Apollo system to Continental Airlines’ Share system. This is a massive transition because the combined career has about 90 million frequent flyer members.

The combined website seems to function well too. Kudos to United for a job well done.

More long distance flights to Washington Reagan National – American to LAX and Delta to SLC

The effects of the recently passed Federal Aviation Administration Reauthorization bill are already showing some positive signs for Washington’s Ronald Reagan National Airport (DCA). American and Delta announced new flights to the airport.

American Airlines yesterday announced a daily flight between Reagan National and Los Angeles International Airport (LAX) staring June 14, 2012. The flights will be operated by a 757 configured in two classes with 22 seats in First and 166 seats in Main Cabin. The route is already served by another daily non-stop from Alaska Airlines. The Los Angeles to Washington region flights are dominated by United Airlines with up to eight daily frequencies to between its hubs in LAX and Dulles and a daily flight between LAX and BWI. It has no flights between LAX and Reagan National. American operates up to three daily flights between LAX and Dulles. It would be interesting to see how United would respond to American’s new flight between LAX and Reagan National.

Starting June 7, 2012, Delta will be adding a second daily frequency between Reagan National and Salt Lake City (SLC). Though I haven’t seen a press release yet from Delta on this, I confirmed the news from its corporate communications office. This shows strong demand for the DCA-SLC route and Delta’s desire to lock in its status as the preferred airline between Salt Lake City and the National Capital Region. Delta already operates services from its Salt Lake City hub to all three airports in the Washington Baltimore Metro area: once daily to both Dulles and Reagan National and twice daily BWI. United operates a single daily frequency between Dulles and Salt Lake City. So does Southwest between BWI and Salt Lake City. With the addition of the second flight to SLC from Reagan National, Delta will reinforce its share between these sectors.

Reagan National Airport’s traffic is mostly O&D. The slots to the close-in, capacity constrained airport are strictly controlled by FAA and command a premium. The airport has set a passenger record for 2011 and this year will be another breakout year for many reasons: the recent slot-swap deal between Delta and US Airways would allow the latter to increase the service at the airport starting March 25; JetBlue announced additional frequencies to Boston Logan (BOS), Fort Lauderdale (FLL), Orlando (MCO) and new service to Tampa (TPA); the FAA reauthorization bill would eight new long distance flights.

Etihad Announces Daily Service to Washington Dulles

Etihad Airways (EY) today announced its plans to launch services to Washington Dulles from its hub in Abu Dhabi (AUH), its fourth North American destination. The service will start from March 31, 2013 using Airbus A340-500, subject to regulatory approval. Etihad will join a growing number of airlines that offer flights to Middle Eastern region from Washington Dulles (IAD).

Etihad’s announcement shows that there is a strong demand from the Washington metropolitan area for services to Middle East. Etihad expects strong O&D traffic between Washington and Abu Dhabi, with less reliance on any connections, because its code share partner American Airlines has minimal carriage from Dulles (mostly to American’s hubs). Washington metropolitan region (which also includes Baltimore metro) has strong political, military and institutional ties with the Middle East and hence the demand for first and business class cabins should be high. The region also has large populations from Indian subcontinent and Middle Eastern countries, which should take care of filling the economy class.

In recent years, United Airlines and its Star Alliance partners have steadily added services to Middle Eastern and African destinations from Washington Dulles, making the airport a primary transit point to these regions. Qatar Airways has been flying the Doha-Washington route since 2007. It is a very popular route with travelers to Middle Eastern countries and the Indian subcontinent. United Airlines already operates daily flights from Dulles to Dubai, Kuwait and Bahrain (extension of Kuwait flight) and Accra. Recently United Airlines announced extension of its Dubai service to Doha. Qatar Airways already has code sharing agreement with United Airlines, with most of its connections to US cities routed through United’s Dulles hub. Ethiopian Airlines has been serving the Washington-Addis Ababa route for a while.Turkish Airlines is flying to Istanbul. And South African Airways is flying to Johannesburg. The only missing link is the Emirates’ service to Dubai. One reason could be to avoid competition with United Airlines which already operates in that route. But it is only a question of time before Emirates announces the Washington service. May be 2013?

An Offbeat Note: James Bennett is the CEO of Abu Dhabi Airport Company (ADAC). Before taking over that position, he was the President and Chairman of Metropolitan Washington Airports Authority (MWAA), which manages both Washington Dulles and Washington Reagan National Airports. May be it is a coincidence that Etihad has announced the AUH-IAD route?

Google Launches Flights Search Tool

Google has quickly put its $700 million acquisition of ITA software into use by launching its own flight search tool. Going head-to-head with other online travel sites, the tool provides customers an additional choice for booking flight tickets online.

Google Flights Search

The tool provides quick listing of flights with options to narrow down the list based on number of stops, price, time of departure, airline and connecting airport. Two cool features include a fare calendar with lowest possible fare and a slider chart that enables the customer to filter out expensive and longer flights.

Customers can select a specific flight and book it through the specific airline’s website. I guess, Google will get a cut for bringing in the customer.

Currently, only flights within the United States are listed. Listing of international flights is not supported yet. Also, I  noticed that not all flights from the list can be booked. I noticed that flights from Southwest, AirTran and Virgin America, though listed, could not be booked.

Google still has some catching up to do with other travel sites especially Kayak. But, if history is of any guide, Google can quickly ramp up its efforts (think what happened to Mapquest) and challenge the online travel booking sites soon. That is the very reason Expedia, Travelocity and the like opposed the ITA deal fearing anti competitive moves from Google. But the Justice Department approved the deal with some conditions: Google should continue to license the ITA products to other companies with reasonable terms; Google should not use the competitively sensitive data collected from ITA’s customers.

Southwest expands Atlanta schedules with Nonstops to Las Vegas and Phoenix

Southwest is slowly building momentum in Atlanta. This was evident with yesterday’s announcement of nonstop flights to two of its important airports missed in the initial bank of Nonstops from Atlanta: Las Vegas and Phoenix. AirTran already flies to these cities.

Southwest Expands Atlanta Schedules

Airport Frequency Fares
Las Vegas (LAS) 1 daily Starting $109 oneway
Phoenix (PHX) 1 daily Starting $109 oneway

When Southwest announced its initial schedule for Atlanta, the omission of Las Vegas and Phoenix was a bit of a surprise. But, everyone expected that these cities will be included in the next round of expansion. Las Vegas is still the biggest airport in Southwest’s system in terms of number of destinations (shared by Chicago Midway, which is the biggest in terms of number of departures). Phoenix is number three in term of destinations and four in terms of departures (BWI being number three). So, it is not really a surprise from the route selection perspective. The new services start on March 10, 2012.

Southwest announces Atlanta flights

Southwest has announced its initial schedule of fifteen daily departures from Atlanta. As expected, Southwest’s hubs in Baltimore/Washington (BWI), Chicago Midway (MDW) and Houston Hobby (HOU) will get the first set of flights. Austin (AUS) and Denver (DEN) are the other two airports to get flights from Atlanta. Fare will start from $79 to $99 each way. The services start from February 12, 2011. This is the first round of flights announced by Southwest for its entry into Atlanta. I guess, Dallas Love Field (DAL) was not included because of the Wright Amendment restrictions (Love Field will get a one stop, single plane service from Atlanta).

Southwest forays into Atlanta

Airport Frequency Fares
Baltimore (BWI) 4 daily Starting $79 oneway
Chicago Midway (MDW) 4 daily Starting $79 oneway
Houston Hobby (HOU) 3 daily Starting $99 oneway
Denver (DEN) 2 daily Starting $99 oneway
Austin (AUS) 2 daily Starting $99 oneway

AirTran already flies from Atlanta to all these airports except Austin. So, expect some good competition at Atlanta once Southwest and AirTran fully combine their routes. It is good news for customers flying to Atlanta, the airport dominated by Delta. It will be interesting to see what would be the next round of expansion cities from Atlanta. And Delta’s response too!

Delta and US Airways get preliminary approval to LaGuardia – Reagan National Slot Swap

The US Department of Transportation on July 21, 2011 gave a preliminary approval to the slot swap proposal submitted by Delta Air Lines and US Airways for New York’s LaGuardia Airport (LGA) and Washington’s Reagan National Airport (DCA).

As expected, DOT approved the proposal with minor changes.

One condition is to divest the slots in a blind sale to airlines that currently have little or no service at these airports. Note the term blind sale. The proposal from the airlines did not mention blind sale, so it is not clear whether this is an additional condition. Originally Delta and US Airways preferred the slots to be divested to airlines of their choice, but Southwest objected it by requesting DOT to divest these slots in an open auction. But, I think,  this should not  be  a  problem because the number of  slots  to be divested by  Delta  and US are minimal (eight slot pairs at Reagan National and 16 slot pairs at LaGuardia) compared to what they gain if  the  proposal is  approved (US Airways would gain 42 slot pairs at Reagan National in exchange  for swapping 132 slot pairs at LaGuardia with Delta).

The other condition for Delta and US Airways is to wait for 90 days before starting their new operations using this slot pairs so that the new services by other airlines can establish in these airports. This too, should not be a problem.

Both Delta and US Airways seem to be happy with these conditions.

Metro Rail to Dulles gets a new life – Airport Authority agrees to aboveground station

The Metropolitan Washington Airports Authority on Wednesday agreed to an aboveground Metro Station for Washington Dulles Airport, infusing fresh lease of life to the second phase of Dulles Metro Rail Project.

Dulles Main Terminal - Courtesy: Metropolitan Washington Airports Authority

Dulles Main Terminal - Courtesy: Metropolitan Washington Airports Authority

The Authority’s original decision to locate the station underground was opposed by all other stakeholders of the project, including the local county and state officials. The opposition was so blunt that Loudoun County even threatened to walk away from the project. Transportation Secretary Ray LaHood intervened and urged all the parties to come to a compromise, indicating that he would prefer an aboveground station to reduce the costs.
Even though everyone would prefer the more convenient underground location, the cost for that would be exorbitant. The contentious battle over the location of the station between the Airports Authority and local governments could have jeopardized the entire second phase of  the project, leaving Dulles Airport the only major airport in the Washington Baltimore area without a rail connection.
The Authority made the right call by agreeing to the aboveground station. This puts the project back on track.

Did Boeing blow the opportunity by not announcing its plans for 737?

Last year Airbus announced its plans to revamp its best selling A320 family of planes by fitting with new engine option (neo). Airbus touted the neo as 15% more fuel efficient over current models with less noise and fewer greenhouse gas emissions. Boeing dismissed the neo by calling it a mere catch-up play by its European rival with is newer versions of 737. Boeing said that it would announce the plans for a replacement/upgrade for the 737 program by end of 2011. Is it too late? Did Boeing blow the chance to win new orders by delaying its plans? Yes and No.

American Airlines B737-800 - Courtesy: American Airlines

First shock came during the 2011 Paris Air Show, where Airbus raked up 667 orders (not options) for A320 neo planes against just 68 orders for the B737. Since the announcement of the launch of A320 neo last year, Airbus secured more than 1000 orders for this family.

The success of the neo caught Boeing by surprise. The final blow came when reports suggested that American Airlines is seriously considering an all-Airbus order of A320 neo.

With today’s announcement by American Airlines, Boeing was forced accept the market reality, by offering 737 with improved engine than designing an entirely new replacement.

All is not lost for Boeing. Even though Airbus has a leg up in the competition now, the market for narrowbody planes (100-200 seats capacity) is huge, with forecasts suggesting a need for 25000 planes in two decades. Boeing would definitely win enough orders to keep its production lines busy.

In the near future, large aircraft orders are expected from the fast growing Asian carriers. The US carriers are also forced to upgrade their aging fleet. My prediction is that Boeing would win enough orders to keep pace with its European rival.

But what would happen to the idea of developing an entirely new plane for replacing the B737 family? Boeing my put off the decision to build a new plane for the foreseeable future for few reasons: lessons from the big delay in delivering the B787 Dreamliner, the enormous cost ($12 billion by some analysts) of developing a new plane against upgrading it (just $1.5 billion), the airline industry’s preference for getting a better product sooner over a great product that would take years to develop and deliver.

American Airlines Announces Jet Orders – Airbus breaks the Boeing lock on AA

American Airlines today announced an order for 460 aircraft. Claimed as the largest aircraft order ever by any airline, American said the order would include 260 Airbus A320 family planes and 200 Boeing 737NG family planes. Deliveries of both Airbus and Boeing planes would start from 2013. The deal also includes options to buy additional 465 planes through 2025. The deal is worth more than $38 billion.

American Airlines A321- Courtesy: American Airlines

The aviation media was abuzz with reports of American finalizing the plane order for sometime now. With this order, Airbus broke the monopoly Boeing held for years over American’s fleet.

Boeing was forced to react to market realities by agreeing to supply B737s fitted with more fuel efficient engine rather than developing a brand new replacement for the best selling plane in the aviation history.

The order is a major coup for Airbus. My prediction is that US airlines would announce new plane orders structured like the one by American Airlines, giving almost equal share of planes to Boeing and Airbus. That is a significant victory for Airbus’s bet on modifying the A320 family with New Engine Option (neo) rather than designing a brand new plane.

American Airlines reportedly in talks with Airbus and Boeing for a huge plane order

American Airlines is talking to Airbus and Boeing for a huge order of new aircraft, according to a report from the Wall Street Journal. American, one of the two major all-Boeing operators in the US (Southwest being the other), first got a tentative deal hashed out with Airbus and took that to Boeing for counter offer, the report says.

Boeing managed to have a virtual lock on American fleet by offering it a special status in terms of discounts and delivery.

Here are some interesting thoughts: Airbus’ A320 is currently the best-selling plane in the commercial aviation industry (even though B737 retains the title as the best-selling plane in the history of commercial aviation). If anything is evident from the recently concluded Paris Air Show, it is the Airbus’ trouncing performance over Boeing in terms of aircraft orders, especially with the huge popularity of its A320 neo (New Engine Option). This puts more pressure on Boeing to spice up its 737, either by upgrading it or completely redesigning it. Boeing already announced that it would detail the plans for 737 by end of this year. With American now talking to Airbus, it puts additional pressure on Boeing to show something that it can tout as an alternative to the A320 family.

It would be interesting to see how American’s plan would affect the fortunes of the two biggest aircraft makers. Let’s wait and see!

Happy Birthday Reagan National Airport

Reagan National Airport - Courtesy: Metropolitan Washington Airports Authority

Today, the Ronald Reagan Washington National Airport celebrates its 70th anniversary. Even though the official name is long, it is popularly known as Reagan National across the country and simply National in the metro Washington/Baltimore area.

According to the Metropolitan Washington Airport Authority, the airport’s site was selected by President Franklin Roosevelt and the airport opened on June 16, 1941. In its first year of operation, the airport served 344, 000 passengers. Today, the airport serves more than 18 million passengers in a year.

Reagan National has a bright future. It nicely complements the other two airports in the area: Dulles and BWI. It is the closest airport to downtown Washington, which means, a higher proportion of its passengers are business travelers. It is still one of the few slot-controlled airports, with FAA strictly limiting the number of take-offs and landings. Airlines vie for slots to Reagan National. The airport is directly served by the Metro making it convenient for travelers. Even though the air field has virtually no space for expansion (as it sits right on the banks of Potomac River), the terminal facilities are good (especially with the renovation of historic terminal A).

There are some challenges as well. The popular shuttle service from Reagan National to New York and Boston now faces stiff competition from Amtrak’s Acela service. Even though US Airways (to LGA and BOS) and Delta (to LGA) continue to provide a near hourly service, they have reduced the plane sizes and downgraded some equipment. The airport still has the Perimeter Rule with most flights restricted to destinations within 1250 statute miles. Only a handful of long distance flights are offered to cities West of Rocky Mountains. The local population and business/political leaders oppose any increase in long distance flights to the airport.

Security is another major concern because of its close proximity to the White House and Pentagon (remember when the airport was closed for many days after the September 11 terrorist attacks?).

But overall, the airport has a very bright future.

Happy Birthday!!!

An Offbeat Note: As a local resident of Washington, DC area, my personal favorite about Reagan National is the plane spotting from Gravelly Point, especially the “River Visual” approach (one of the most challenging landing assignments for even seasoned pilots). Watching planes taking off and landing just few feet over our heads is an amazing experience!

US Airlines Earned $3.4 Billion in Baggage Fees For 2010

The US Airlines raked in a whopping $3.4 billion in baggage fees for 2010, according to the statistics released by the US Department of Transportation.  Compare this to $1.14 billion for 2008; the revenue from baggage fees has grown almost 300%. Delta claimed the top spot with almost a billion dollars in baggage fees. The four major network carriers (Delta, United, American, US Airways) each earned more than half a billion dollars in baggage fees.

Baggage Fees by US Airlines

Year Delta United/Continental American US Airways Industry Total
2010 952,250 654,792 580,663 513,623 3,395,471
2008 298,662 230,518 277,991 187,082 1,149,408
Growth Up 319% Up 284% Up 209% Up 275% Up 295%

Combine this with $2.3 billion in reservation change/cancel fee – the US passengers paid $5.7 billion in fees. These fees have become a lucrative revenue stream for the airlines in times when the cost of fuel has soared. The industry trade group, Air Transport Association of America (ATA), defends these fees as one way to keep the carriers in black. These fees are here to stay, no matter what happens to the fuel prices.

Some interesting observations:

The big four network carriers account for nearly 80% percent of the baggage fee.

The baggage fees are exempted from the 7.5% excise tax levied on tickets.  So most airlines charge baggage fees as a separate line item to take all the profit generated from this ancillary revenue.

Spirit, not a top-15 airline in the US ranks at number eight in baggage fees. As you know Spirit charges for carry-on bags as well (only the carry-on bags stored in overhead bins, not the ones stowed under the seat!). Most airlines do not charge fee for the first carry-on baggage.

Southwest stands out

While all other airlines collect baggage fees, Southwest does not. Southwest needs to be commended for this. Despite being squeezed by the increasing fuel costs, the airline maintains that it has no plans to impose a baggage fee.

More transparent rules are coming

The Department of Transportation in April announced a new set of rules related to the baggage fees. They include:

The airlines must refund the baggage fee (in addition to the compensation) if the baggage is lost or not delivered in a timely manner. As of now, if the baggage is lost or delayed, most airlines do not pay back the baggage fee. Some offer credit for future travel. DOT has not clarified what it would consider a timely manner of delivery. This rule will be effective from August 23, 2011.

Airlines must clearly disclose all the fees in the ticket. This rule will be effective from October 24, 2011. The ATA has asked the government to delay the implementation of these rules for another six months.

Hopefully, with these new rules, the passengers get a fair deal while paying for baggage fees.

More A380 Services Start – Air France to Washington Dulles and San Francisco; Lufthansa to Miami

Starting June 6, 2011, Air France started its Airbus A380 Super Jumbo services to Washington Dulles and San Francisco International from Paris-Charles de Gaulle. The service to Washington Dulles would operate year around. The SFO service would be a summer only affair (ends in September 4, 2011). Air France already operates A380 services from Paris CDG to New York JFK and Montreal, Canada.

In the meantime, Lufthansa inaugurates its A380 service to Miami on June 10, 2011 (on the Frankfurt route). Lufthansa already operates A380 services from Frankfurt to New York JFK and San Francisco. All Lufthansa services are  operated year around.

Air France A380 - Courtesy: Air France

Air France A380 - Courtesy: Air France

Happy Flying!!!

BTW, don’t expect a 380 service from any US carriers or British Airways. They have no A380 in their order books. Their plan is to have the B787 Dreamliner as an alternative to the Airbus Super Jumbo. The earliest available delivery date for the B787, which Boeing keeps deferring, is fall 2011.

Delta and US Airways announce new slot swap agreement – is it really new?

Delta Air Lines and US Airways yesterday announced a new agreement to swap each others slots in New York’s LaGuardia airport and Washington’s Ronald Reagan National airport. This is the third try between the two airlines to strengthen operations in their respective dominant airport – Delta in LaGuardia and US in Reagan National. May be the third time is the charm?

Why LaGuardia and Reagan National are important?

LaGuardia is the closest airport to Manhattan. Reagan National is the closest airport to downtown Washington. So, business and O&D traffic prefer these airports. The two airports have a lot in common:

  • Slot controlled, meaning the number of take-offs and landings are restricted by FAA.
  • Most preferred airport of choice in their markets.
  • Have perimeter rule that restricts long distance flights with few exceptions.
  • Traffic is mostly O&D with a huge proportion of high paying business travelers
  • Virtually no room for expansion and hence making their slots the most sought after commodity in the airline industry.

Why Delta and US Airways keep on trying for the slot swap?

Delta wants to wrest the title of New York’s biggest airline from the new United (which dominates the nearby Newark). Delta is already a dominant player in JFK, where its routes are mostly international with most of the domestic flights timed for feeding these flights. By becoming the leading airline at LaGuardia, it wants to capture the business travel market. Delta’s vision is to gain market share in New York air travel market by dominating both JFK and LaGuardia.

US Airways, though has the highest number of slots at LaGuardia, flies mostly to smaller communities with fuel guzzling turboprops. The exceptions being the mainline flights to its hubs in Charlotte and Philadelphia and the Shuttle service to Reagan National and Boston Logan. US Airways has no incentive in joining the turf battle waged between the big three in New York (United, Delta and American). Instead, it can gain market share in another important business travel airport – Washington Reagan National, where it is already a dominant player. This will perfectly fit in its strategy of focusing on its hubs in Charlotte, Philadelphia and Phoenix and the focus city in Washington.

Agreement Details

Here are the highlights:

  • Delta would acquire 132 slot pairs at LaGuardia from US Airways
  • US Airways would acquire from Delta 42 slot pairs at Reagan National
  • US Airways would acquire from Delta the rights to operate additional daily service to Sao Paulo, Brazil in 2015
  • Delta would pay US Airways $66.5 million in cash.
  • The transaction could result in the divestiture of up to 16 slot pairs at LaGuardia and eight slot pairs at Reagan National to airlines with limited or no service at those airports.

Operational Details

  • At LaGuardia, Delta will take control of Terminal C in addition to Terminal D. It will build a connector to connect the two terminals.
  • Delta will continue to operate its hourly Delta Shuttle from its six gates at the Marine Air Terminal.
  • US Airways’ hourly Shuttle service between LaGuardia, Reagan National and Boston will remain unchanged. US Airways will continue to offer its customers high-frequency schedules from LaGuardia to its Charlotte, N.C. and Philadelphia hubs and Pittsburgh with more than 60 daily weekday flights.
  • All US Airways flights from LaGuardia will continue to arrive and depart from nine gates and parking positions in Terminal C
  • US Airways plans to add at least 15 new destinations from Washington.
  • US Airways will operate approximately 230 peak-day departures at Reagan National, a 20 percent increase over current service levels.
  • The airline anticipates an increase of approximately 20 to 25 percent in passenger enplanements at Reagan National as a result of the new flights and schedule improvements.
  • There will be no increase in congestion at Reagan National due to US Airways’ planned increase in scale and Delta’s reduction in slots.

What are the chances for approval of this agreement?

Even though both airlines prefer to call it a new agreement, it is essentially a tweak of the previous two agreements – both denied by the US Department of Transportation. This time though, they may have a better chance of getting it approved.

The airline industry has changed a lot since the last agreement. In addition to the merger of United and Continental to create a new behemoth, Southwest, through its acquisition of AirTran, has gained access to both Reagan National and LaGuardia. Jet Blue has entered into Reagan National (through the slots it acquired from American).

But some of the original reservations of the US DOT remain: Delta will control more than 50% share in LaGuardia and US Airways will control close to 50% in Reagan National. The low fare competition will still be limited because of the paucity of new slots. The agreement does not specify which airlines would acquire the divested slots. Delta and US have interests in keeping Southwest from gaining these slots (Southwest argued with DOT to do a open auction for the divested slots last time). Despite these reservations, the agreement now has a better chance of getting approved.

Let’s wait and see!!!

SkyTeam/Delta Plans To Reduce Winter Transatlantic Capacity By 15%

Delta Air Lines today announced plans to reduce the transatlantic capacity by 15% during winter. Delta’s President Edward H. Bastian made this announcement during the presentation in Bank of America Merrill Lynch Investor Conference. This is in contrast to the original plans to increase the capacity. Delta itself will reduce the transatlantic capacity by 10–12 % (against the original plan to increase the capacity by 3–4 %). The JV partners will reduce the capacity by 7–9 % (against the original plan to increase it by 7–8 %).

Transatlantic business has been the weakest link during the March quarter and almost entirely contributed to the year-over-year profit decline. Delta is planning to align its revenue, capacity and structure to build a sustainable business model at $3+ per gallon jet fuel. Delta anticipates the jet fuel price to be $3.20 for the June quarter and $3.10 for the September quarter. Because of the additional expenses due to fuel, Delta plans to keep other costs flat by reducing capacity, retiring more aircraft.

Memphis hub reduced: Delta already indicated that it would reduce the departures from Memphis by 25%. Even though Delta claims that the reduction in departures will not significantly reduce the ASM, I do not believe it. Would Memphis be next Cincinnati? Would it cut the daily Memphis – Amsterdam service? It is possible.

New York and Atlanta will have minimal impacts: New York JFK and Atlanta would retain most of its routes as JFK has the best O&D traffic and ATL is the world’s largest connecting airport. But expect frequencies to be trimmed on many sectors, especially from ATL.

American Airlines plans to firm up Qantas ties – A response to Delta’s tie-up with Virgin Australia?

American Airlines and Qantas today announced their intention to form a Joint Business Agreement on their services between the United States and Australia/New Zealand, within these regions and beyond to third countries. The irony is that American Airlines does not operate to Australia/New Zealand. So, this is not a revenue sharing agreement since AA does not generate anything.

Qantas B747 - Courtesy: Qantas

Qantas B747 - Courtesy: Qantas

American and Qantas are part of the Oneworld alliance and already place each others code on their respective schedules. So, what does this agreement bring to the table? The main reason behind this tie-up is the shift of Qantas’ services from San Francisco International Airport, where it has virtually no connection feed, to Dallas/Fort Worth International Airport, where American operates its biggest hub.

The idea makes sense on many fronts: Qantas had virtually no connecting traffic from San Francisco. It had to compete with United, which operates a major trans-pacific hub there with lots of feed from throughout the US and Canada. Shifting the route to DFW makes sense as it opens up the entire US and Canada to Qantas through American’s extensive network. This also gives Qantas a nice way to balance the US flights between a West Coast (Los Angeles) and a Midwest (Dallas/Fort Worth) destination offering better connections. For American, which does not have an aircraft that can stretch the DFW – Australia route nonstop, it offers a nice compromise by placing its code on Qantas’ Australian and New Zealand destinations. Qantas will operate only four services a week and hence it is a decent start. American might consider operating its own metal on this route (or from Chicago?) when it gets B787 dreamliner (expected in 2014).

It is interesting to note that this proposal comes in the wake of Delta Air Lines and Virgin Australia gaining approval from the US Department of Transportation for their alliance. Delta, which is expanding its presence in Los Angeles, already operates the Los Angeles – Sydney route. V Australia, which is the international arm of Virgin Australia, operates flights from Los Angeles to Sydney, Melbourne and Brisbane with connections throughout Australia and New Zealand.

So the competition in the US – Australia air service market is heating up. Qantas and United Airlines are the largest operators in this sector with Delta trying to gain some market share. With the Joint Business Agreement with American Airlines, Qantas, which is the largest player in the sector, is trying to protect its turf. United Airlines, the second biggest player in the sector, has Air New Zealand as the Star Alliance partner. United also has plans to start the Houston – Auckland route when it gets the B787. With Delta, finally getting approval for its alliance with a re-invigorated Virgin Australia, the battle lines are drawn.

Let the games begin!!!

American Airlines Q1 Results – A Snapshot

American Airlines today announced its Q1 results. As expected, the carrier lost money. Last year American outlined turnaround plan that would focus on its five cornerstone markets (New York, Chicago, Los Angeles, Dallas and Miami), implementing joint venture agreements on Trans-Atlantic and Trans-Pacific routes. The results reflect the fact that American’s efforts for a turnaround are hampered by the rising cost of fuel. As the only legacy carrier that did not declare bankruptcy, American continued to be hurt by its huge debt, higher labor costs and pension obligations.

Q1 highlights

  • Unit Revenue (PRASM) up by 5.2%
  • Passenger yield up by 6.2% (year-over-year)
  • Unit costs down by 1.8% (excluding fuel costs and special items)
  • Mainline capacity up by 2.7%
  • Joint business with British Airways and Iberia implemented on Trans-Atlantic routes
  • Joint business with Japan Airlines implemented on Trans-Pacific routes
  • Enhanced service at Los Angeles LAX (including new LAX – Shanghai route launch)
  • New agreements signed with Expedia (and Hotwire)
  • New agreement signed with Priceline
  • Law suit filed against Orbitz (and Travelport, LLC)

Guidance

  • Planning to reduce the domestic capacity and increase international capacity
  • Planning to retire 25 more MD-80s in 2011
  • Fuel is the biggest concern
  • Cost of fuel expected to be $3.10/gallon for Q2 and $3.07/gallon for 2011
  • For Q2, 49% of fuel hedged at average cap of 2.66/gallon and 39% of fuel hedged at average floor of $2.04/gallon
  • For entire 2011, 41% of fuel hedged at average cap of 2.63/gallon and 35% of fuel hedged at average floor of $2.02/gallon
  • Cost per Available Seat Mile (CASM) is expected to be about flat to 2010, excluding fuel and potential new labor costs
  • Other concerns include Labor Contracts, Facilities and Healthcare costs
 

  • Unit Revenue (PRASM) up by 5.2%
  • Passenger yield up by 6.2% (year-over-year)
  • Unit costs down by 1.8% (excluding fuel costs and special items)
  • Mainline capacity up by 2.7%
  • Joint business with British Airways and Iberia implemented on Trans-Atlantic routes
  • Joint business with Japan Airlines implemented on Trans-Pacific routes
  • Enhanced service at Los Angeles LAX (including new LAX – Shanghai route launch)
  • New agreements signed with Expedia (and Hotwire)
  • New agreement signed with Priceline
  • Law suit filed against Orbitz (and Travelport, LLC)

Lufthansa bringing in its subsidiaries BMI, Austrian and Swiss into Transatlantic Joint Venture

Lufthansa is quietly bringing its European subsidiaries into the Transatlantic Joint Venture (formally called the A++ Joint Venture) it formed with United Airlines and Air Canada. The UK based subsidiary British Midland International (BMI) has joined the JV on April 1, 2011. Two other Lufthansa owned airlines Swiss International Air Lines (Swiss) and Austrian Airlines are set to join on July 1, 2011. Lufthansa is working to bring in Brussels Airlines also, but the date is not finalized because the airline is not yet completely owned by the German carrier.

Lufthansa Passenger Airline Group - Courtesy: Lufthansa

Lufthansa Passenger Airline Group - Courtesy: Lufthansa

Lufthansa wants to consolidate its position as a major force in the transatlantic market because competition is heating up. In addition to competing with other major European airlines, Lufthansa wants to prepare itself for the onslaught from the Middle East carriers, especially from Emirates Airlines, Qatar Airways and Etihad. Even though these airlines cannot directly serve the Europe – North America market, Lufthansa feels it is very important to offer the widest network choices so that it can maximize its revenue potential. According to one of its investor presentations, Lufthansa feels greatest threat from ever expanding Emirates Airlines. Bringing its subsidiaries into the Joint Venture will allow it offer wider choices for the corporate travel market.

US Airways Still not in the JV

Even though a part of the Star Alliance, US Airways is still a member of the Joint Venture. Its president Scott Kirby has indicated many times the willingness to join, but, I guess, United (still integrating the merger with Continental) is still not ready. The sooner US Airways joins the venture, the better for it. The reason is that all other major network carriers in the United States already have JVs – Delta Air Lines with Air France/KLM; American Airlines with British Airways and Iberia. US Airways will lose the revenue sharing opportunity if it takes more time to join the venture.

Washington Dulles to have underground Metro Rail Station

Washington Dulles International Airport (IAD) has been my home airport for the past 15 years. So, when the airport authority made its decision on the location of the Metro Rail station, it prompted me to write down my thoughts on it.

Dulles Main Terminal - Courtesy: Metropolitan Washington Airports Authority

Dulles Main Terminal - Courtesy: Metropolitan Washington Airports Authority

Dulles used to be one of the most derided major airports in the United States. Located 23 miles West of downtown Washington, it was considered as a white elephant when opened in 1962. Most flights to the nation’s capital operated out of the close-in National Airport (since then renamed as Ronald Reagan Washington National Airport). With a signature Main Terminal, designed by the famous Finnish American Architect Eero Saarinen (who also designed the famous Gateway Arch in St. Louis and the futuristic TWA terminal in New York’s JFK airport), Dulles has one more unique feature: the mobile lounges. These odd looking vehicles transport passengers between terminals and planes.

Dulles has come a long way. A Perimeter Rule was put in place by the US Congress prohibiting long distance flights from National. The Washington DC area expanded rapidly and Northern Virginia became a hotbed for technology companies and government contractors. Dulles has become the busiest airport in the region, outpacing National and Baltimore Washington International. It is one of the major international gateways in the country today with United Airlines operating a major hub.

The major renovation programs in Dulles have helped it improve the standing among passengers. The recently launched AeroTrain connects the main terminal with all Concourses except Concourse D. I thoroughly enjoyed it on my recent trip to India. Even though the mobile lounges are still used to transport arriving international passengers, the train covers majority of the departing passengers. The redesigned Concourse B is also an excellent facility where most international airlines operate. But Concourses C and D are a different story. It is a shame that United has to operate its hub out of these outdated facilities. The airport authority and United have indefinitely shelved the plan to replace these facilities. Hopefully, a day will come to sunset these old structures.

The final piece of the puzzle is the metro rail access to the airport. Construction of Phase 1 is in progress. Phase 2 will bring the rail to the airport. The contentious question is the location of the airport station. With soaring costs, the original plan to build the station right under the main terminal was rejected. Two alternative proposals were put forth: an underground station closer to the main terminal and an above ground station farther away from the main terminal. The airport authority was right in selecting the underground station. This is more convenient to passengers with much shorter distance to cover than the above ground station. I know it is going to cost more. But, the long term vision of more user friendly station should be given preference over the short term, cheaper alternative that is not user friendly. I remember that when the Metro opened the station in Reagan National Airport, I avoided using it to the airport because my flights departed from Terminal A, which is a long walk (or take a shuttle bus). When Terminal B/C opened and connected directly to the metro station using the covered walkway, it was more convenient. A longer walk to the Terminal from the station could deter the passenger from using the rail, especially in Dulles with lots of international passengers.

Thoughts on Lufthansa’s selection of Miami as the next A380 destination

Lufthansa today announced that Miami would be the next US destination to be served by Airbus A380. The world’s largest passenger airplane would replace the Boeing 747 currently operated on the Frankfurt – Miami route.

Lufthansa A380 - Courtesy: Lufthansa

Lufthansa A380 - Courtesy: Lufthansa

Lufthansa’s selection of North American destinations for A380 is interesting:

New York JFK is currently served four times a week using A380. The JFK service will become a daily on A380 starting April 10, 2011 (this means LH will delay the resumption of A380 service to Tokyo Narita, suspended due to the recent Tsunami and Earthquake, for a longer period). San Francisco will be served using A380 starting May 10, 2011. Miami will get A380 service starting June 10, 2011.

The JFK service is a no-brainer. The interesting thing to note here is Lufthansa’s preference of Miami and San Francisco over Newark Liberty (EWR), Chicago O’Hare (ORD) and Washington Dulles (IAD), all Star Alliance hubs and major gateways for LH. As more A380’s join the fleet, these gateways would get the service, but right now, they are not included.

There could be several reasons for this. I believe the following reasons played a major role in the selection process.

1. Single daily flight is easy to upgrade: Miami, with just one flight per day, and virtually no connection traffic, gives Lufthansa the flexibility to switch the metal from B747 to A380. San Francisco, though a Star hub, is also served by a single Lufthansa flight. So, it is easy for LH to replace the B747 with A380. Newark, Chicago and Washington need multiple flights from Frankfurt, as Lufthansa connects majority of its US bound traffic from these hubs through Star partner United. From these hubs, Lufthansa needs multiple frequencies a day to provide better connection options to its frequent flyers.

The exceptions to this theory are Toronto (YYZ) and Los Angeles (LAX), both Star hubs with a single Lufthansa flight (though Toronto is served by 2 daily flights from its anchor Air Canada).

2. A380 better than B744 on non-hub cities: Operating an A380 is more cost effective than a B744. Lufthansa’s B744s have poor customer reception. Replacing them with A380 would provide a better chance to protect its turf in hubs dominated by other carriers (MIA is a good case – it could deter American Airlines from starting a competing service).

3. Alliance Partners have a say in equipment upgrade: United and Air Canada have a transatlantic joint venture with Lufthansa and the schedules at Star hubs are coordinated between these carriers for optimal connections. United, being the anchor at EWR, ORD and IAD, has to make sure parity of service quality with Lufthansa in these hubs. So, United may be less receptive to LH upgrading these routes with A380, because its own product would fall behind in quality. The same argument goes for YYZ and Air Canada.

Star Alliance Daily Frequencies for Frankfurt from major North American markets

Airport Frequencies Carriers Equipment
IAD 5 2 LH + 3 UA UA (2 B777 and 1 B767), LH (B744 and A333)
ORD 4 2 LH + 2 UA UA (2 B777), LH (both B744)
EWR 3 2 LH + 1 UA/CO LH (B744 and A343), UA (B777)
SFO 3 1 LH + 2 UA LH (A380 replaced B744), UA (B744 and B777)
PHL 3 1 LH + 2 US LH (A343), US (A333)
YYZ 3 1 LH + 2 AC LH (A343), AC (B777 and A333)
IAH 2 1 LH + 1 UA/CO LH (B744), UA (B767)
JFK 2 LH A380 and B744
YYC 2 1 LH + 1 AC LH (A343), AC (A333)
LAX 1 LH B744
MIA 1 LH A380 replaced B744
BOS 1 LH B744
DEN 1 LH B744
MCO 1 LH A346
DFW 1 LH A343
DTW 1 LH A333
SEA 1 LH A333
ATL 1 LH A343
CLT 1 US A333
YUL 1 AC B777
YVR 1 LH A346

So, my prediction is this: the next Lufthansa destination for A380 will be Los Angeles, followed by Houston and Boston.

Newark, Chicago, Washington and Toronto will have to wait get their turns.

Moral of this analysis: sometimes, being a hub with multiple daily flights to a destination can be a drawback to get better service!!!!

American Airlines and British Airways optimize their schedule on New York – London route

American Airlines and British Airways have finally managed to optimize their schedules in the New York JFK – London Heathrow sector. It is the most lucrative transatlantic air travel market. Thanks to the joint venture between AA, BA and Iberia, the service dubbed as London Express, ups the ante against other major players in the market: Delta Air Lines (from JFK), Virgin Atlantic (from JFK and EWR) and Continental (EWR), part of the new United.

AA, BA and Iberia - Part of Oneworld - Courtesy: Oneworld

AA, BA and Iberia - Part of Oneworld - Courtesy: Oneworld

New York – London air travel market is one of the most competitive in the world.  The Oneworld alliance is already the most dominant player in the market. With this schedule alignment, it is trying to protect its market share against increased competition from Delta and the new United. From March 27, AA/BA will have near hourly departure from New York JFK in the evening. With BA’s multiple departures from Newark to Heathrow and from JFK to London City, Oneworld covers the entire geography of London and New York. Continental recently announced increasing its services from EWR to LHR.

Competition is heating up on many US – London routes. Oneworld has optimized its schedules on Chicago – London, Miami – London and Boston – London routes. This comes around the same time Delta announced its Miami – London and Boston – London services (ironically from the slots it got from Oneworld as a part of the Anti Trust Immunity approval from US DOT/EU competition commission).

It would be interesting to see how the landscape unfolds! Let’s wait and see!

Some thoughts on the World Airports Traffic Data

The Airports Council International released its preliminary results of world airports traffic data for 2010. ACI reports the traffic data under three categories: passenger traffic, cargo and aircraft movements.

As usual, Atlanta (ATL) retained the top spot on passenger traffic. But, Beijing (PEK) dislodged London Heathrow (LHR) to become number two. Beijing grew 13% to take the clear number two spot. Heathrow slipped to number four.

Hong Kong (HKG) overtook Memphis (MEM) as the top cargo airport, which is not a surprise.

US airports continue to dominate in the aircraft movements category, reflecting the fact that smaller regional aircrafts make up a significant part of the carriers fleets.

Do these numbers show any clear trend?

Yes, they do.

  • The passenger and cargo traffic are definitely growing to reach the pre-recession levels.
  • Asia, especially China, will set the trends in future with North America and Europe slowing down.
  • London Heathrow is slowly losing its position as the largest international airport. Dubai (DXB) already claims this title. The other super hubs of Europe, Paris (CDG), Frankfurt (FRA) and Amsterdam (AMS) too will grow slower.
  • China’s export machine will propel continued cargo growth at Hong Kong and Shanghai (PVG).
  • The US airline industry uses a disproportionate number of smaller aircrafts to transport passengers, making it difficult to drive up efficiency. One example is Charlotte (CLT). The airports ranks number 25 in total passengers, but lands at number 7 in aircraft movements.

Some interesting questions

How would the on going crisis in the Middle East affect Dubai’s astonishing growth curve?

Would the soaring oil price slow down the world economy, especially the US economy, resulting in difficult periods for the US airline industry?

What would be the trend lines in another 10 years? Most airlines would have B787 and A350 type aircrafts in their fleets. Would the Hub-and-Spoke system survive, especially in Europe?

Let’s wait and see!

Jet Airways talking to Delta, Air France and KLM – A gain for SkyTeam?

Jet Airways is reportedly in talks with Delta Air Lines, Air France, KLM and Alitalia to form a transatlantic joint venture with SkyTeam. As India’s largest and most respected airline, currently Jet does not belong to any of the major alliances. It has code sharing pacts with many airlines from different alliances.

Jet Airways Boeing 777 - Courtesy: Jet Airways

Jet Airways Boeing 777 - Courtesy: Jet Airways

Why considering a Joint Venture with SkyTeam now?

Ideally, Jet would like to join Star Alliance. It has strong relationship with Star through its code share pacts with Brussels Airlines, United, US Airways, Air Canada, and ANA. Majority of Jet’s European traffic is routed through Brussels Airlines. Jet uses Brussels Airport as a transfer point for connecting passengers between India and North America. It also has strong ties with Oneworld carriers through code share pacts with American Airlines and Qantas. Jet has no code share partner from SkyTeam, except with Alitalia through its recently launched Delhi – Milan Malpensa route.

SkyTeam Partners - Courtesy: SkyTeam

SkyTeam Partners - Courtesy: SkyTeam

So, why Jet would consider the option of joining SkyTeam or a JV? With Air India joining Star and Kingfisher Airlines joining Oneworld, Jet is running out of options. It has been reported that the Indian government was against Jet joining Star as it might dislodge Air India as a second tier partner. SkyTeam does not have any major airline from India in its kitty. So, the deal could be mutually attractive.

Is it good for Jet?

Jet Airways has built a nice little operation at Brussels Airport. It is an efficient operation with all flights arriving and departing within the same short window of time. This makes transfers easy. Brussels Airport, being small compared to other European hubs and a one-terminal facility, also helps (but, I have heard few complaints about passport control and security scrambling to handle high passenger volumes in short window of time). Code share partner Brussels Airlines (now part of the Lufthansa group) provides decent connections throughout Western Europe and Africa. Jet Airways can keep the revenue from lucrative North American traffic to itself as the later does not have flights across the Atlantic.

Joining an alliance with SkyTeam would involve Jet transferring its hub from Brussels to Amsterdam’s Schiphol airport, where KLM operates a mega hub. KLM offers much better connections throughout Europe, Africa and North America than Brussels Airlines. Delta Air Lines also has significant operations at Schiphol. This greatly expands Jet’s ability to offer connections. If Jet starts a flight to Atlanta, it would virtually put the entire North America under its map through Delta’s network.

But, the downside is that Schiphol has a much better transatlantic connectivity and competition than Brussels and how much control would Jet get on the transatlantic routes from there. Media reports suggest that SkyTeam is willing to allow Jet to takeover only one route from Amsterdam. Currently Jet Airways operates its own metal on Chennai – New York JFK, Mumbai – Newark, and Delhi – Toronto sectors, all routed through Brussels. It has plans to add more North American destinations in future. If Jet has to shift the hub to Amsterdam, would it be able to offer these routes? KLM serves to Delhi and Delta servers to Mumbai currently. From Schiphol, KLM and Delta pretty much cover the entire North and South American continents. Under these circumstances, what could Jet offer using its own metal? How the revenue would be shared? What would happen to Jet’s existing code share agreement with American Airlines? All these questions need to be answered.

A win for SkyTeam and a loss for Star Alliance

If this happens, it would be a major win for SkyTeam.  It was scrambling to find a partner in India. It could not ask for a better one than Jet Airways. Jet connects the length and breadth of India. SkyTeam instantly gains access to the second fastest growing economy in the world.

It would be a major loss for the Star Alliance. Star would be better served with the inclusion of Jet than the current proposed partner in Air India. The government owned Air India is in survival mode and it’s joining the alliance has been delayed due to several operational reasons. Air India is also financially bleeding, with massive debt and labor issues and it is steadily losing market share in both domestic and international routes. I don’t know why Star, especially Lufthansa, preferred Air India over Jet. One reason could be that, Lufthansa has a major presence in India and did not want a stronger carrier that could compete with it.

Virgin Atlantic at the Crossroads: Good Opportunity for Delta and the SkyTeam?

Virgin Atlantic Airways is in a peculiar situation. The airline, promoted by Sir Richard Branson, does not belong to one of the three major alliances (Star, OneWorld, Sky Team). The airline’s viability is now threatened by the industry consolidation, the Open Skies agreement between the European Union and the United States and Anti Trust Immunity (ATI) granted to the airline alliances for the transatlantic services. The ATI for OneWorld partners British Airways, Iberia and American Airlines especially threatens Virgin’s long term ability to compete in the important UK-US aviation market.

Virgin Atlantic A340-600: Courtesy - Virgin Atlantic Airways

Virgin Atlantic A340-600: Courtesy - Virgin Atlantic Airways

Virgin Atlantic has been a long time opponent of any alliance between AA and BA (no wonder its tagline was “No Way BA/AA”). Rumors have been that Virgin is finally evaluating its options and the SkyTeam is trying to come up with a bid to acquire Virgin.

Virgin Atlantic’s strengths

Virgin Atlantic’s important strength is its slots at London’s Heathrow Airport (LHR).  LHR is the biggest international airport in the world and London is the most important transatlantic business market along with New York. Virgin is an important player in that market.

Virgin Atlantic has an excellent product which is consistently ranked as one of the best in the world, well above that of the mainline European and North American airlines. Only carriers like Singapore Airlines and Emirates can challenge Virgin’s product. Virgin’s lounges and airport clubs have been top notch and it has a stellar brand loyalty.

Virgin through its subsidiaries Virgin Blue and V Australia, has a decent footprint in Australia.

Virgin Atlantic’s weaknesses

Virgin’s route network is mostly long haul, point-to-point. Passenger traffic is mostly to O&D. It was setup that way by the management. In this world of alliances and frequent flyer loyalties, it is difficult for Virgin to develop new markets.

Virgin has no flights within the UK except at London (LHR and Gatwick), Manchester and Glasgow. Virgin has no flights to the rest of the Europe as well. This makes Virgin a niche player, making it difficult to expand its market share.

Virgin’s fleet primarily consists of B747s and A340s. Most competitors utilize more efficient B777s and A330s (which are slowly showing up in Virgin’s fleet now). This means Virgin’s operating cost will be higher than its competitors.

Sir Richard has his footprint all over the airline. Even though this is a good thing in general, the industry may view it the other way. He might not be open for outright acquisition and liquidation of Virgin brand.

Opportunity for Delta and SkyTeam

Rumors are on the rounds that Delta, along with its SkyTeam partners Air France-KLM, is preparing a bid to acquire Virgin. This is a great opportunity for Delta and SkyTeam. They can acquire the 49% stake currently held by Singapore Airlines. There are immediate benefits.

Delta and SkyTeam resolve their biggest missing link – a strong foothold in London and UK in general.

Delta gains the new additional slots at LHR. This greatly enhances its ability to serve the busiest transatlantic market: London – New York. Combining Delta’s and Virgin’s flights would give the BA/AA combo a better competition (still BA/AA would be the strongest player in this market for the foreseeable future). It will move Delta to the second place in this market ahead of Continental. Delta will have flights to the top five US-UK air travel markets: New York, Chicago, Los Angeles, Washington, San Francisco. Except New York, Delta does not operate in any of these markets. Combine this with Delta’s growing London – Boston and London – Miami routes, and its dominance at Atlanta and Detroit, the SkyTeam becomes the second biggest players in the US-UK market ahead of Star.

Delta gains a mini hub at San Francisco, thanks to the growing Virgin America operations.

Delta’s fledgling transpacific operation could get a boost from a partnership with V Australia and Virgin Blue.

Upside for Virgin too

Virgin Atlantic has some upsides as well.

It can retain the Virgin brand and its unique product.

Joining the SkyTeam means, it has better chances to gain the connecting traffic in US. Virgin can start services to Atlanta and Detroit using its own metal, paving the way for its UK passengers to connect through these fortress hubs operated by Delta.

Better Pan European connectivity through  Air France and KLM.

Delta SkyMiles – Never Expire – A new friendly shift in an unfriendly airline world

Delta today announced that miles accumulated through its popular SkyMiles frequent flyer program will never expire! This is great news. Hopefully, all other major carriers would follow suit.

Delta Boeing 777 landing - Courtesy: Delta Airlines

Delta Boeing 777 landing - Courtesy: Delta Airlines

Frequent Flyer Miles – Not that useful to most travelers

The frequent flyer programs are useful to only business travelers who make multiple trips in a calendar year. They accumulate miles by strictly traveling in the same airline (even if the travel requires multiple hops to their destination) and by using the airline sponsored credit card for their travel needs. Even after earning thousands of miles, they may be eligible for one free ticket or upgrade a year, depending on where they go and when they are going. The only tangible benefit for the business traveler is the access to the clubs at the airports.

For a leisure traveler, who makes an average of one or two trips a year, this is of no big value. Their miles would expire anyway in 18 or 24 months (depending on the program). So, the average casual traveler is better off by not adhering to one loyalty program as it takes away the flexibility.

Would Delta’s change make any difference?

Yes, it makes a huge difference for the business travelers. They can now accumulate miles forever. They can accumulate enough miles to make a decent trip on business or first class.

For the ordinary traveler, it is good news too. At least their miles do not expire. But, it would still take a lot of flying to get a free ticket.

How does Delta benefit?

It gives a huge goodwill for Delta. It does not cost much Delta to make miles forever as most SkyMiles users would not allow it to expire anyway. So, Delta brand gets a better respect from the customers and the change doesn’t cost much. It is a smart move!

Would other airlines follow?

Most major North American carriers are likely to follow this. It is about time they get rid off these artificial restrictions. It would be really nice if major international carriers follow it too.

Reagan National Airport And Long Distance Flights

The FAA Re-Authorization bill is stuck in the United States Senate because of a battle over allowing more long distance flights to Ronald Reagan Washington National Airport (commonly called just National Airport in the Washington/Baltimore metro area).

Ronald Reagan Washington National Airport - Courtesy: Metropolitan Washington Airports Authority

What is the Perimeter Rule?

Reagan National Airport has a Perimeter Rule that prevents flights longer than 1250 miles. It is also a slot-controlled airport, which means the number of take-offs and landings are strictly controlled by the FAA. Any increase to the number slots has to be approved by the FAA/DOT. This means the slots are one of the most valuable commodities. Airlines scramble to get slots at Reagan National. The traffic is mostly business travelers and O&D.

Why Perimeter Rule was put in place first?

  1. The initial objective of the Perimeter Rule was to drive traffic to the newly built, once thought as a white-elephant, distant Dulles International Airport.
  2. With the advent of Jet age, the rule was cited as a preventive measure to control noise around the densely populated Northern Virginia suburbs of Arlington and Alexandria.
  3. With the terrorist attacks on September 2001, the security angle also came into play, because of the airport’s proximity to downtown Washington and Pentagon.

Why the Rule is still in place?

The real reasons for not relaxing the rules are the following:

  1. The local population living around the area vehemently opposes any relaxation of these rules fearing increased air and noise pollution. This means the local politicians have no incentive to support this measure.
  2. Both Reagan National and Dulles are run by the same agency – Metropolitan Washington Airports Authority, which sees no big reason to change the status quo.
  3. The local population is used to drive to Dulles, as it is the main international gateway to the region. People on the Maryland side of the beltway have easy access to Baltimore Washington Thurgood Marshal Airport (commonly referred here as BWI). BWI offers excellent low fare choices as it is the hub for Southwest Airlines.
  4. All the three airports thrive because of their unique advantages (National – preferred by the business traveler, mostly O&D traffic; Dulles – primary international gateway with wealthy population living around; BWI – excellent low fare choices).
  5. And finally, the local law makers and airport administrators have some concern of loosing traffic to Reagan National if more flights and destinations are added (which is not true as I explain it later).

These reasons make sense as it is a local transportation issue and hence the local people and leaders should make decision.

Why Perimeter Rule is a problem?

  1. The restrictions are against the free competitive market spirit of America.
  2. Also, the Western US markets such as California, Oregon, Washington, Arizona, Colorado and Utah want direct non-stop access to Reagan National Airport. Their argument cannot be dismissed either – they want to have access to the closest airport to downtown Washington.

What is the problem in adding more services to Western markets?

  1. The issue gets complicated as there are no free slots available to add more flights.
  2. Adding new slots will be opposed by the local population living around the airport.
  3. Exiting slots cannot be used to start services to these new markets because of the fear that the smaller markets in the Midwest will loose their existing service. The law makers and business leaders in Midwest would not agree to that.

So, what should the Congress do?

Should it repeal the Perimeter Rule? No.

Should it keep the rule as is? No.

Congress should strike a compromise.

  1. Allow very limited number of new slots to Reagan National in order to serve San Francisco, San Jose, San Deigo and Portland, OR markets of the Western states. These markets lack non-stop service to Reagan National airport.
  2. These slots should not be used for expanding existing services to markets such as Los Angeles, Las Vegas, Phoenix, Denver and Salt Lake City, because they already have non-stop services to Reagan National.

What are the implications of adding few new slots?

Local Population Living Around National Airport – With modern jetliners, the noise and air pollution is much less than what we think. So, this should not affect their quality of life.

Markets that already have services to National Airport – New slots are used for these services and hence it should not be a problem.

Dulles Airport – There are some concerns with the local law makers and airport administrators that Dulles might loose some traffic. But, the impact on Dulles would be minimal. Dulles thrives and it is the largest airport in the region. It serves two of the wealthiest counties in country (Loudoun and Fairfax). It also serves the economic engine of Northern Virginia, namely the Tysons Corner and Dulles Technology corridor. With United operating its transatlantic hub, there should be plenty of connecting traffic in addition to the O&D.

BWI Airport – BWI would do fine too, as it caters to the Baltimore market in addition to the Washington market. It also has the low fare juggernaut in Southwest.

US Airways – Ideally US Airways would prefer to use its existing slots because new slots would be very difficult to justify as it is the dominant carrier at National. But, it could argue with DOT that as a dominant carrier, it should get some new slots so that it can offer connections to West Coast for smaller Eastern communities through National. I am not sure how this argument will fly with DOT. So, if new slots are allowed, it would mostly be negative to US Airways as other airlines would compete to get them. If few of the existing slots are allowed to start these services, US Airways would be the major beneficiary.

United Airlines – United also has something to gain and loose in this arrangement. As a dominant airline at Dulles, it might loose some business traffic to National Airport because San Francisco is one of the top destinations in Washington/Baltimore area. On the same token, as a dominant airline in SFO, United could win new slots to serve SFO from National (Virgin America would compete to get these slots too).

Other Airlines – If Portland, OR is allowed to have direct service, Alaska airline may benefit.

US domestic airfares rose 10.7% in 3rd quarter of 2010: Newark had the highest and Atlantic City the lowest

The US Bureau of Transportation Statistics has released its quarterly survey of domestic airfares for the top 100 US airports. According to the study, nationally, the airfares have risen 10.7%. Newark,NJ (EWR) had the highest airfare in the country at at $469 and Atlantic City, NJ has the lowest at $153. Checkout the BTS’s press release at http://www.bts.gov/press_releases/2011/bts007_11/html/bts007_11.html to see how your favorite airport fared.