oneworld Alliance Surging, Adding Airlines — and Finally Offering Customers Some Perks – BNET Headwinds
oneworld is finally surging after years of being lame and boring. Finally.

Southwest Wages a Battle for Milwaukee in… Oshkosh? – BNET Headwinds
Southwest flew into Oshkosh last weekend. Why? It’s a battle for the hearts and minds of cheeseheads.

Air Berlin’s Alliance Move Signals Big Strategy Ambitions – BNET Headwinds
As a follow up to the oneworld piece, I thought it would be interesting to look at it from the Air Berlin side.

Alaska Airlines Competes For Bellingham via Honolulu – BNET Headwinds
Alaska is trying to beat Allegiant to the punch by starting flights from Bellingham to Hawai’i.

I’m tired. As you know I pump out blog posts five days a week here on Cranky and also over at BNET Headwinds. I don’t take vacation. Or I should say, when I do take vacation, I pre-write posts for the days that I’m gone. The last time I took a real vacation was about a year and a half ago when I went on my honeymoon. (If I didn’t take that time off, it might have been a short-lived marriage.) But now, I’m feeling burnt and I need a week off, so that means it’s time to sharpen your writing skills and get ready for some guest posting.

My birthday is September 4, so I’m just going to start there and take the whole week off. Since Monday the 6th is Labor Day, I really only need to fill the spots on four days. That being said, I’m looking for guest posts on Cranky and on BNET, so there will be a total of 8 that go live. If you’re interested, here is what I’m looking for.

Cranky Posts
The criteria for guest posting on Cranky is relatively broad. Just make it about airlines and make it interesting. (And yes, it has to be well-written.) If you’d like to see guest posts that have made it in the past, check these out:

http://crankyflier.com/category/guest-posts/

The last few guest posts have been pretty thought-heavy, but that’s not a requirement. In fact, some of the ones I like best are just enjoyable reads. If you have expertise working in the industry and want to write about what you do (a la, The Dispatcher), then that’s great. If you’re a traveler and had an interesting experience that would appeal to the masses, go for it. There really aren’t any guidelines except that it should be a good read and it should be grammatically correct. (I’m a stickler.)

The one thing that won’t make the cut? If you’re trying to promote a product or service, it’s not going to happen. That’s what advertising is for, and this isn’t advertising.

BNET Posts
Since BNET is owned by CBS and not by me, the rules for posts are much more strict here than on Cranky. For that reason, I ask that if you’d like to write a guest post for BNET, you’ll need to clear the topic with me first and you can expect revisions, a lot of revisions.

BNET is a site about management, so your post has to be something relevant to managers in the industry. It can be about a business decisions, macro or micro trends, or anything along those lines. Since the post will have to be written in advance, it’ll need to be more of an “evergreen” post, meaning that it can’t be based on the day’s news but rather larger trends so that it will still be relevant when it goes live.

A BNET post has to contain analysis. It cannot just be reporting on the news or situation. It has to break down a topic and give insight on it.

Hopefully some of you will be interested in having your name in lights. If you’re interested, just send me an email at cf@crankyflier.com.

And I’m back for round 3 of my across the aisle interview with JetBlue CEO Dave Barger. The express beverage service is topic number one today, but make sure to stay for the end when talk of LA to Guadalajara surfaces. (See Part 1, Part 2)

Cranky: It’s funny you talked about the beverage service. There was a lot of discussion on the blog about the express beverage service.

Dave Clark, Director of Route Planning: I forwarded your comments to our Director of Product Development [Rachel McCarthy].

Cranky: There were a lot of comments about it. For me, it was a minor thing, but I thought that was an interesting one, because people started getting passionate about it. I was just curious if that’s something that might be revisited.

Dave Clark: Rachel and I discussed this. Is it too limited? I mean, some people on the comment board said “Southwest does a full service from Oakland to Reno, 38 minutes block time. Why does JetBlue have an express service?” Rachel and her team were really enthusiastic to get that input. I think it’s something they’re going to be looking at in more detail. I think they’re worried about consistency where we’re not halfway through the cabin and then because of turbulence, the back half of the cabin gets nothing. One of the concerns is that everyone gets something. The comments, especially in your article, now they’re going to look at it. It created a good debate in our offices.

Cranky: I realize it’s not what’s keeping you up every night Dave, but still, it’s interesting.

Dave: Well, the aspect of exceeding expectations is so important, my heritage at New York Air with 146 seats on an MD80 flying from LaGuardia to Boston and DCA with a full service. So it’s not that it can’t be done, it’s can you be consistent? And what the people really want, because people are brining more and more onboard the airplane whether it’s inflight entertainment or food and beverage. But I do think that if someone’s flying from JFK to Syracuse or San Juan to Santo Domingo or Burbank to Las Vegas, the opportunity to say “hey, I’d just like to have a Presidente beer,” I’d like to be able to satisfy that.

Cranky: You talked about IFE there, wireless is something you’re happy to be a follower right now and coming out with something good and exciting soon?

Dave: We want to have a wireless application soon. By design, we were a follower. When you look at today’s offering, for the most part ground-based and the pricing is really something that’s being powered by the supplier and the branding as well. That’s something we do a little bit differently. So I think it’s been prudent for us to first of all validate, which we did through BetaBlue, the ability to use a ground-based network, because it also told us what we couldn’t do. Think about the Caribbean.

I think the ability to be a follower and to partner with some new partners in what their capabilities could be which obviously would be satellite-based, is pretty exciting. And at the same time, if we find that we have to go a traditional path for a couple years until technology is further enhanced, we’ll do that to. I think people think of JetBlue as a leader in inflight entertainment, Brett, which gives us pause too. We have 140 choices today with the TVs, with the premium entertainment, with satellite radio. We’ve had a little bit of a people understanding, but clearly people are looking for wifi especialy on the long haul. Satisfied to be a follower right now because we’d like to leapfrog what’s out there today.

Cranky: It does help when you have LiveTV already on the plane. I’m curious about LiveTV. When I flew down from Sacramento a couple weeks ago, the plane was dark, TVs weren’t working. The captain made it sound like, I don’t know if it’s an increasingly common occurrence or if it’s something that he’s just seen a lot. Have there been reliability issues? Is that something you’re focused on?

Dave: Very much so [as a focus]. Statistically, the system is very reliable. We track a metric called dark aircraft, a metric called number of seats inop by aircraft. We track even the channels if we’re having challenges with individual channels as well. The beauty of the system is that it downloads everything into our LiveTV group so we can track the wellness of the fleet. That being said, a year ago last summer, we were absolutely not pleased with what we were seeing, but we’ve seen huge improvements in the last year. It’s interesting too. What was it? I think a lot of it has to do with new equipment we were putting into the aircraft. I don’t think we’d see JD Power 6 years in a row if we had consistent problems because it’s such a hallmark of the JetBlue brand. We’re really pleased with what we’re seeing today.

Cranky: Sorry I’m kind of digging into the weeds on some of these things, but sometimes I think it’s fun to dig in to get that high level perspective on these things. . . . I think we’re out of time. I could do this all day, of course, but you have other things to do.

Dave: I appreciate the time to talk. As I shared in Phoenix, to come out here to Long Beach and see mounds of dirt and the construction . . . I’m really excited. The airport and the economic impact, and how we can continue to invest, whether it’s commuter slots or whatever it might be, doing it respectfully. Maybe Dave [Clark] can give you some more on that. So are we gonna go to Guadalajara? It’s on tape, come on.

Brett: Guadalajara?!

Dave Clark: There’s an open authority at LAX right now.

Brett: Are you looking at that?

Dave Clark: We’re looking at continuing to accelerate our growth to Latin America, including Mexico, so part of it is knowing where we can fly. It leads to the question of an FIS [customs/immigration facility] in Long Beach. We could fly to Cabo whereas at LAX we can’t.

Brett: Very interesting. Thanks guys.

Mexicana appears to be on life support this week and it’s quickly moved to blaming the unions for its predicament. We’ve seen airlines blame labor time after time here in the US, but I don’t believe I’ve ever seen an airline say that the unions are the only problem it has. I can tell you from first-hand experience that the airline has a lot more problems than that, but why confront those if you can just blame labor? It’s so much easier, right? Yeah, right.

The airline, now owned by conglomerate Grupo Posadas, has come out firing. Mexicana filed for bankruptcy in the US and Mexico after having given the unions an ultimatum and failing. The pilots and flight attendants had two bad choices. If you are booked on Mexicana, good luck. Your flight is likely still going for now, but their customer service is non-existent. And the chance of the airline shutting down goes up each day. If you’re booked on Mexicana, make sure your flight is still there. A good chunk have been permanently canceled going forward, though the airline does continue to operate what’s left.

As I said, Mexicana is putting the blame squarely on labor at this point:

Although the airline’s operating costs excluding crew labor costs are 30% lower than the average of legacy airlines in the United States, these non competitive labor costs are the main reason why the company has continued to suffer losses, to the extent that it is now financially non-viable.

There’s no question that the pilots and flight attendants make a pretty penny at the airline. One local report says the average pilot salary is $228,000 (that’s US Dollars), and that seems crazy. But I also hate the “average salary” measure because it doesn’t give you a true representation of the contract. Still, it seems quite obvious that concessions are going to be necessary. The flight attendants make an average of $53,000. Mexicana is looking to slash everyone’s salary dramatically while also laying off a bunch of people. But we’ll come back to that in a second. First, let’s talk about Mexicana’s structure to get a better understanding of where this is going.

Mexicana is really three airlines these days. The main airline is the one in trouble here, and the owners are trying to play a shell game. Mexicana itself is the international airline that has around 60 airplanes. Mexicana Click is the low cost/domestic carrier that took the old Midwest 717s to fly mostly within Mexico. It has about half the number of planes that the main airline has. Then there’s Mexicana Link which flies 15 regional jets as well. Those two airlines have much lower crew costs, and it’s clear that Mexicana is now trying to use them to replace Mexicana flying.

The company had given the pilots and flight attendants two options. Neither option was good, and the spin in the press release would impress even a Fox News analyst. I’ve received further background on these offers, and I see it as a no-win situation.

The first offer was to slash wages by 39 to 41 percent and lay off 40 percent of the crews. In exchange, Mexicana would offer profit sharing (no percentage is given) when the airline makes at least a 5 percent margin. Those are pretty drastic cuts and were highly unlikely to gain acceptance. Even if some of the crew members agreed to take such drastic cuts, why would 40 percent of them vote to lose their jobs?

The second offer was just shady. Mexicana wants to sell the airline to the flight attendants and pilots for 1 peso. Sounds great, right? Um, no. This sale includes, of course, mountains of debt that Mexicana has added over the years. In general, I like this idea. I say that, because I don’t like Mexicana and the airline will be bankrupt within a year. When labor runs an airline, things don’t work out well. But the plan is so much more diabolical than that.

The press release does note that the union would only be able to use the Mexicana name for six months, at which time it would have to become something else. What the release fails to note is that Mexicana would also require that the pilots union resign from representing pilots at Mexicana Click because of the conflict of interest. Ah, now it becomes clear.

Mexicana spins off the garbage – the old airline and its debt – to labor. Meanwhile, Click goes union-less. In six months, the old Mexicana becomes some other airline until it limps right into the grave. Then Click becomes Mexicana, without unions and with much lower costs.

If you’re a union, what do you do? Turn it down, and that’s what they did. If you lose more than a third of your pay and nearly half your colleagues, would you vote for option #1? Would anyone in their right mind vote for option #2? Maybe this is Mexicana’s way of bargaining, but it seems to be an ultimatum more than anything else. If Mexicana is willing to negotiate, then maybe something can be salvaged. If not, I fully expect to see the airline go under, with Click eventually rising from the ashes to take over the Mexicana name.

Bottom line: If you’re a passenger, I would not book on Mexicana right now because of the volatility. If you work for Mexicana, I’d start sending my resume out right now. Those stellar customer service skills can be put to good use at, oh, say a cell phone company. Or maybe the cable guys need more help angering their customers.

[Original Photo via Flickr user vaticanus]

And now we’re back with Part 2 of my across the aisle interview with JetBlue CEO Dave Barger. Today’s focus is on the airline’s “open architecture” which has pushed them toward the Alaska Airlines of the east – willing to partner with anyone and everyone if it’s beneficial to the airline. And I hit on snack boxes too. Had to do it, right? (See Part 1, Part 3)

Cranky: The open architecture – a lot of people seem to think that you’ll just go naturally into oneworld at some point. Is the open architecture something that prevents you from going into an alliance? Or is it just “we’ll think about it when the opportunity comes up”?

Dave: I think a good way to look at it is as the largest airline at Kennedy, largest domestic airline in New York, largest airline in Boston, locations like that. You look at Kennedy as, depending on the time of year, close to 90 airlines operating in and out. Open architecture, whether it’s oneworld, Star, Skyteam, or unaligned, that’s good for JetBlue. Because it’s the power of our network. It’s the affirmation of the brand. It’s the investment we’ve made whether it’s on the ground or in technology. I think we’ll start to understand more about traffic patterns as the result of each partnership, which gives you more data, more pixels to say, what makes sense? To declare a path into an alliance is limiting as well. I think we’re so different because the geography and power of JFK, and we’re in a really nice position to be in.

Cranky: I take that to mean that if American came knocking, saying they’d like to sponsor you into oneworld, similar to what BA has done with Air Berlin in Europe, it’s something you would consider but you don’t have enough data yet knowing how all the flows work to make a decision on something like that?

Dave: I think it’s early. But we have historically been an organization that’s always open to taking a meeting because you want to explore what makes sense, whether it’s oneworld or somebody else. Because it’s the best way to optimize our relationships and our revenues, so we’ll see what plays out. Again, it’s so early. With Sabre, that conversion was January 29, so we’re still in effect still putting in place pieces of Sabre to optimize our abilities electronically, so the next couple of years . . . the traffic patterns and behaviors are important. There’s nothing better than looking at data as a result of these partnerships to help with these decisions.

Cranky: On the American partnership, I think a lot of people were taken by surprise by it. Looking a little further, it seems to make sense. Is that something you guys had focused on or did American reach out to you? As you said, you’re open to taking a meeting.

Dave: Sure, American reached out to us but I look at it, I love the word contrarian. First of all, we’re contrarian because we’re into our second decade. If you look at the airline industry since deregulation, the number of airlines that have flown into their 2nd decade is pretty rare . . . . We’re running the company based on financial metrics, return on invested capital, cash flow. That is different. Product. We’re looking at the JD Power award six years in a row, best in class, highest score. That’s contrarian. Not overbooking, contrarian. Even more legroom, contrarian. Culture, direct relationship with our staff in a heavily organied industry, contrarian.

So you look at American and JetBlue in the interline relationship, the partnership, the slot swap, the frequent flier, why not? Because in the traditional models, I still believe that fundamentally the industry is broken. So you’ve got to do things differently. What got us here in the first 10 years won’t get us there in the next 10 years, so I’m really delighted. I’m excited about what the American partnership could mean for us. They have a very significant presence in New York. So the ability to offer our customers in 18 of our markets, Buenos Aires, Tokyo, London on an itineray and vice versa, it’s pretty significant.

Cranky: And DCA [Washington National]

Dave: That’s right. And access to DCA in exchange for slots that I imagine American can better utilize than we can. And don’t forget the additional flight into White Plains. That’s contrarian, it’s such an important word in this business.

Cranky: Ok, you want to talk contrarian, so I have to bring this up. Snack boxes.

Dave: I was just gonna say, it had to be snack boxes.

Cranky: I’ve been a vocal critic of it. You know, I came over and did the taste test. Some tasted good, but it’s nothing special. It’s similar to stuff youll find somewhere else. So it’s just kind of boring, I guess, and not what I expect form JetBlue. I expect a better experieince and the snack box doesn’t really fit into that. I’m kind of curious where you see that going. Is this something that’s, as I’ve heard others say, it’s a step?

Dave: I look at it as additive. By comparison, other airlines that are selling their snack boxes, that’s basically what the product is. . . . For us, beverage service is what it’s been for 10 years. The ability to participate in the full selection of beverages. You see that at other airlines, but I don’t think you see access to make yourself at home in the galley. I look at the unlimited snack basket. Whether it’s the traditional blue chips or other snacks. The product already is solid, so when you start to look at over 3 hours and 45 minutes enroute, especially on the transcons, I look at this as additive. Again, it’s directional.

There are some pretty interesting names to partner with to create that next iteration of the snack box. I would like people to think, Brett, your readers to think, that JetBlue is kind of a cool airline. Somebody is going to come up with that next generation, you start to talk about cobranding opportunities, that’s just cool. I think XM radio was thought of that way as well as DirecTV. We’ve been selectively a follower when it comes to the wifi brigade as opposed to really what’s happening and we’re working hard on that iteration as well. Look at the snack boxes as additive. Look at it as directional.