Last week, I was in San Francisco for the Swiss launch of service, and I was given the unique opportunity to sit with Swiss CEO Harry Hohmeister on the ride down from his hotel to SFO. We talked about a broad range of topics and he was very upfront about his thoughts on the airline and the industry. Here’s the first part of our discussion. Part two covering the onboard product, Europe, and labor will come later this week.

Cranky: You’re here for the SFO launch and I know your background is in network planning, right?
Harry: Yes
Cranky: So what does this new route mean for you as an airline? It’s a Star Alliance hub. How important is this?
Harry: It’s a good destination for us. It’s a Star Alliance hub, can connect to bigger destinations in the US, like Las Vegas. That’s a second reason for us. A third reason is San Francisco as a region has a lot of future technology, biomedical engineering, also technology media, which is also very much based in Zurich, Switzerland, so there is common ground.

Cranky: How important is Star Alliance connectivity to your US network? I know you fly to some cities that aren’t big Star Alliance locations like JFK, I think Boston, but then of course you add San Francisco.
Harry: It’s good to have Star Alliance but our network is very much based on local traffic to and from Switzerland. We are not so much dependent on gateway traffic via the hubs. So this is a little add on but it’s not a reason for decision-making to fly somewhere. So we base our itineraries very much on the local market needs for the Swiss market. It’s normally 50% or more.

Cranky: The European network – does that provide a lot of traffic on to the US flights?
Harry: It’s very strong. European business brings roughly 40% of traffic. Mainly it’s France, Italy, Austria, and partly Germany, so we’re offering California destinations to Europe.

Cranky: You now have Austrian as a Star partner, in Italy you have Lufthansa Italia, and of course Munich does a lot of Northern Italy business as well. How do those all fit together when you’re looking at route planning? How closely are you tied with other Lufthansa group partners?
Harry: It fits very well, because from the Austrian market you have no direct service. From the French market, you have no direct service on Star Alliance. From the Italian market you have no direct service on Star Alliance. Our hub competency with our multi-hub system, providing three services to San Francisco with Lufthansa, is giving us wider coverage. Of course, we coordinate schedules so if you look at the timings, you can go all day back to Europe.

Especially for a business traveler, We’re giving more variety of different itineraries. It makes it more attractive than if you have only one hub or one service with a big airport. We have variety of choice throughout the whole day and that gives us a competitive advantage.

Cranky: It seems like Frankfurt goes a little earlier, then Zurich, then Munich.
Harry: Right. This is the kind of coordination we can do there. And of course, the additional capacity has to fit with the market needs. We heard yesterday from John Martin, the Director of San Francisco Airport, they expect this year roughly 10% growth from the intercontinental market. We just want to participate in that growth.

We can say that we see a turnaround in the US economy. The economy is going up again at a good pace. We see that in the early bookings for this route. In the first three months, we’re really well booked. The customer will decide if the product is good enough, and from what I see in the prebookings, I think the customer is deciding that we have a good product.

Cranky: How important is airport cost when you’re looking at routes? I know that San Francisco has done a lot to bring their costs down, they talked about it yesterday. LAX is about to skyrocket with all the projects they’re doing. Is that something that’s a big concern for you?
Harry: Sure. The airport in itself has a monopoloy structure. We don’t have 4 or 5 different airports in a destination that we can go to, but we have a lot of competition on the airline side. There are several airlines that fly to Europe. So on the airport side, it’s very very important. Therefore, I really appreciate what John Martin was saying yesterday about their strong work on costs. I personally wish all airports, especially in Europe where they’re much more expensive, Zurich is quite expensive, if all airports looked at costs that way.

Cranky: I think another airport that’s brought costs down is Denver, another Star Alliance hub. Are you looking to expand to other cities in the US in the near future?
Harry: Oooh
Cranky: I know you’re not going to give me specifics, just a general idea of what you’re looking at.
Harry: No, the problem is we’ve been growing a lot, adding a lot of capacity. Also with the A330-300, adding more seats per flight, which means we have a steady growth on the North Atlantic of roughly 6 to 8% per year. I think now we have to really make it successful and make money out of that. And maybe for 2012, we have several ideas. On the east coast there is still some potential left for us in addition to what we offer today but we learned that risk management, especially in terms of capacity management, has value in itself. Therefore we are not pushing capacity.

Cranky: As far as capacity goes, what is the fleet plan? You have A330s, A340s on the widebody side. You’re still operating some Avros on the very shorthaul, right? And Airbuses So what’s the plan?
Harry: The longer fleet plan is that we will roll over the Avros from 2014. So for that we have the C series on order. We have 30, and we are the launch customer. That will save us more than 20% in fuel costs.

Cranky: Do you know if they’re meeting the fuel saving goals?
Harry: Yes it seems so, but you never know until the engines are on the wing. Also, for the Airbuses in our case or the 737s if you’re a Boeing operator, there’s not much development, which is a pity. They have to become more efficient. The industry was relying on technology progress in the last years that let’s say, is something like 20% per decade, but now we see that the maximum we can receive is 5% per decade which I believe we cannot survive with, because airport and energy costs are increasing. This is what the manufacturers have to learn.

On the long haul, I think they are focusing on that. The 787 seems to be a good aircraft for the future and I hope also that the A350 will be so that we have some competition. We’ll have a look at both aircraft. By the end of the day, the best aircraft will win for us. We are not in a hurry. The A340 still is a good aircraft. We have quite new aircraft, one of the youngest fleets in Europe.

Come on back later this week for part two.

As the Regional Flight Market Shrinks, Airlines Need New Strategies to Survive – BNET
Regionals have had a rough few years, and now they need to plot their strategies for survival. Some are more creative than others.

Summer air travel’s up, and so are fares – Marketplace
It’s summer, so it’s time for the obligatory “summer travel woes” stories. When Marketplace calls (or anything else I hear on NPR), then I know it’ll be a more interesting piece. Of course, it was.

cranky flier + anti-bride toast swiss international inaugural sfo flight – AntiBride
I went up to SFO for the inaugural Swiss flight and met up with AntiBride.

Atlantic Southeast Rebrands Despite the Fact that It’s Rarely Seen in Public – BNET
Atlantic Southeast has just finished a massive rebrand. Even though you’ll rarely see them in public, this is a good idea.

American Flees Washington-Boston Routes As JetBlue Comes In – BNET
You knew that slot swap would make American reduce flights in Washington, but did you think they’d basically hand over Boston to JetBlue?

Can you charm your way into upgrade? – CNN.com
It’s the age-old question – how can you get upgraded? It’s not easy, but it does happen on rare occasion.

Frontier vs. Expedia and Orbitz: How It Hopes to Lure Travelers Back to Direct Booking – BNET
It’s really more about Frontier setting expectations better and trying to get people to book direct.

Greetings from San Francisco. I came up this week for a couple of reasons, but most interesting was the launch of SWISS service to Zurich. I don’t usually travel for route launches, but this had several interesting aspects that made it worth the trip, including my first look at the new seat (see the video below).

So what was so special about this? Well, I was offered the chance to interview SWISS CEO Harry Hohmeister (I’ll have the Across the Aisle interview next week), but there was more than that. They painted an airplane in a special San Francisco livery just for this launch and they introduced their new business class seat on the A340 on this route. Why was it getting so much attention? I had to find out.

When the flight arrived, SWISS had a viewing set up in the reflection room at SFO. The airplane was specifically parked at gate 91 so that people in the room would have a perfect view of the airplane. Then the reception continued in the excellent SFO museum on the other side of the terminal.

It was there that I found out a lot of the rationale behind this route. Apparently, the ties between Zurich and San Francisco are big, but not necessarily big enough to support a flight historically. That being said, companies like Google and Novartis have large travel needs between the two and expressed a strong desire for the flight.

Ultimately, however, it was Roche that made it happen. Roche, the pharmaceutical giant, purchased Bay Area-based Genentech. They wanted a flight to connect the two cities, and in fact, they signed a guarantee with the airline on one condition: they wanted the new business class seats.

I think Chris McGinnis got this one right when he dubbed the flight, the “Roche Coach.”

It all makes sense, right? The new business class is excellent and this is the first A340 refitted with it. I had the chance to go onboard yesterday after they cleaned the airplane and took this video tour.

 
Pretty cool. For what it’s worth, I did lie down on the seat and used the controls to feel the cushion getting firmer and softer. It’s fairly remarkable what a difference that makes. The massage function was nice as well. I can see why a company would want this.

Right now, all the A330-300 airplanes have the new seats and they fly to New York and I believe, Dubai. The A330-200s are being phased out and will be gone by January. The A340s will be refitted by next June, so at that point, all long haul will have these new seats.

So, those of you in the Bay Area have a new, rock star option if you’re flying in business to Europe. Coach ain’t too shabby either, but it’s effectively the same as what you’ll find on other airlines with in-seat video.

Even though it’s a new route, don’t expect to see any amazing deals right now. The summer is booking very well, and I was told that in some months it’s already outperforming the long-established Los Angeles route. That’s music to their ears, I’m sure.

Round two of the Department of Transportation’s proposed “Enhancing Airline Passenger Protections” rule is out, and you probably assume that I’m going to say this is an awful thing, right? Wrong. There’s actually not much in there that makes for a big change (though there is one thing that I hate, no matter how minor), and in fact, there are a couple of things that I rather like.

I thought it might be helpful to go through a step-by-step look at exactly what’s being proposed here, and what this actually means for you as a customer.

1. Ground Delay Rules
   They did actually address the ground delay rules, but instead of making them more flexible, they’ve gone ahead and widened the net.
   • The rule now applies to foreign carriers as well as domestic carriers. It’s far less of a problem on long haul flights anyway, though it’s also harder to get a new flight if things cancel. They are asking “interested persons to comment on whether any final rule . . . should include a uniform standard for the time interval” for international flights. We’ll see what happens there.
   • The rule will now apply to smaller airports as well as larger ones and the airline has to coordinate with the airport. Again, that’s not an issue. The big airports are the problems anyway, so airlines are already putting things into place systemwide.
   • Lastly, airlines are required to keep customers informed within 30 minutes of knowing information about a delay. Good.

2. Ramp Delay Data
   Right now, only the big domestic carriers have to report long ramp delays. This would extend it to any airline with more airplanes that have more than 30 seats. Sounds good to me. Why shouldn’t everyone have to report? I’d love to see them all have to report on time performance, complaints, etc as well.
3. Customer Service Plans
   Right now, US carriers have to create customer service plans on how to deal with delays, bumping, etc. This would extend it to foreign carriers. Fair enough.
4. Contracts of Carriage
   One of my pet peeves is finally being addressed. This would require foreign airlines to post their contracts of carriage on their websites. It’s incredibly frustrating when that information isn’t accessible. In addition, customer service plans now would have to be included in the contract of carriage. It should be, so that customers don’t have to go all over the place to find their rights.
5. Response to Consumer Problems
   Domestic carriers now have to post their contact information and respond to complaints in a timely manner. This would extend the provision to foreign carriers. It’s funny, because it’s the first time I’ve seen Twitter or Facebook in a ruling. They’re asking if that should be included in the rule or not. I would say no. While airlines should respond to people on Twitter and Facebook, the sheer avalanche of information for some airlines makes that difficult and unnecessary.
6. Oversales
   There are a few issues addressed here and none of them huge. They are proposing to raise the cap on reimbursement and have that cap track inflation. That’s fine – it’s just a cap so if people are on more expensive tickets, they should be compensated. It may get airlines to bump cheap fares more often than they already do, I suppose, and it could reduce overbooking a bit, but I doubt it will have a big impact.

   Also, people on free tickets (frequent flier awards, etc) would be entitled to denied boarding compensation. I didn’t realize they weren’t already. There are a couple other things in there that are really procedural and just don’t matter much to you as a traveler.

7. Full Fare Advertising
   I love this one. It would require displayed prices to be “all-in” and taxes and certain fees that are currently allowed to be excluded will no longer receive that benefit. Good. Also, one way fares can only be called that if they are one way and not “one way based on roundtrip purchase.” Lastly, fees that are “opt-out” (in other words, they’re already checked and you have to uncheck to remove) would be prohibited. Huzzah.
8. Baggage and Other Fees
   Call this one the Southwest rule. It would require airlines to not only disclose the all-in price but also the price including bags separately. I think that’s kind of goofy, but whatever. The alternate proposal is what I want to see. It would require airlines to allow customers to check and uncheck what they want and then show the full fare including everything.
9. Post-Purchase Price Increases
   I can’t say I’ve ever seen this happen, but it would prevent airlines from increasing the price after someone purchased a ticket. It may not be banned right now, but has anyone ever seen this? Maybe it happens with shady travel agencies or tour operators.
10. Flight Status Changes
    This would require large airlines that fly domestically to immediately keep people updated about delays and cancellations. Uh yeah. Information is good.
11. Choice of Forum
    The DOT would allow customers who are looking to sue an airline to do it in any competent court. Right now, apparently the airline can determine where that might be in their contracts of carriage, and it could be thousands of miles away. Sure, fine.
12. Peanut Allergies
    This is the one I hate. I suppose we can call it the anti-Southwest rule. The DOT is considering banning peanuts. Dude, that sucks. But it’s only one of the proposals. Others might just have peanut-free rows, as airlines do today.

The reality is that these are all up for debate and the DOT goes out of its way asking for comment on a large number of issues. You can read the entire 84 page report yourself and if you feel so bold, throw some comments out there for the DOT to digest.

As you can see, there’s nothing particularly bad in here. It’s mostly clean-up, but I like some of the rules, including the pricing display one, a lot.

Jetstar, the low fare unit of Qantas, has announced that it will roll out iPads to provide inflight entertainment. This may sound like a great idea to you Apple-lovers, but there are a couple of flaws with this plan.

The idea makes sense theoretically. You have a device with 10 hours of battery life that can play all kinds of content from movies to tv and games. It doesn’t have any of the hassles of a built-in inflight entertainment system, and since it’s one of the hottest devices on the planet, a lot of people are likely to shell out the $10 it’ll cost to rent. But there are problems, and they all boil down to one issue – this isn’t likely to be cheap for the airline.

Yes, an iPad is going to be cheaper than installing something in the seat, but that’s hardly the only option. A DigEPlayer, for example, has built-in content and can be rented just as the iPad can. It’s not nearly as versatile as an iPad, but do people really care that much? Both provide hours of good entertainment.

But the iPad is soooo cool, right? That’s the problem. People are really going to steal this every chance they get. Seriously. Wouldn’t you? It’s not going to be tied down because not everyone will want one. So it needs to be able to roam to the person who decides to rent it. The company that put this together, BlueBox, says that it has a “proprietary bluebox security solution.” Unless it’s a solution that tasers someone for trying to sneak it off the plane, it’s unlikely to stop them.

Sure, you can add security that makes it worthless on the ground, but that won’t stop people. When I was at United, the airline started handing out personal DVD players to people traveling in First and Business class on the new p.s. flights from New York to LA and San Francisco. Those DVD players only played the mysterious “region 8″ DVDs, a region that is really just for airplanes, cruise ships, etc. In other words, you couldn’t play any regular DVD on it so it was no good.

That didn’t stop anyone. They disappeared faster than an airline employee’s pension.

Now, United uses a system that has a built-in drive with pre-programmed content. I don’t know if people still steal these things, but the fact that it’s pretty clear that there’s no external application for the device keeps people from taking it.

You don’t think that the second the iPad takes to the skies, someone will have a webpage up on how to disable the security system so that you can use it? You know they will.

Sure, it can be policed. If they find one missing that you rented, they can charge you for it, unlike at United where the players were given complimentary. But you know people are pretty savvy about getting around those things as well. And what happens when the flight attendants start trying to get in the game and make a little money for themselves?

There are ways around all of this, but it requires complexity that may not be warranted. If airlines need to provide inflight entertainment (and Jetstar does, because it needs something to make people forget that their knees are smashed in their chests) go for something simpler, cheaper, and less likely to be stolen. Or just skip this phase entirely. Simply provide content people can access from their own devices. Then you don’t have to worry about the device disappearing at all.