It’s earnings season again, and that means it’s time to gather round and listen to every airline talk about what’s happened and what’s next. After seeing some of the earnings call summaries, it sounds like demand will, as usual, plummet after the summer. But airlines are mostly continuing to keep from adding too many seats, and that means you shouldn’t sit around waiting for any incredible deals.

First, I should say that I can’t stand listening to earnings calls. They take forever and I don’t have the patience. That’s one of the many reasons I subscribe to PlaneBusiness. I can skim the transcripts, get some analysis, and spend a lot less time on it. Since PlaneBusiness is a subscription site, I can’t link directly to any of the info on there, but that’s where I pulled most of this.

One of the more interesting calls for me was Delta’s. These guys were very direct about the state of things. From PlaneBusiness:

[Delta CEO Richard Anderson] then said that where the airline cannot get the “necessary revenue increases to offset the increased cost of operating the flights” the airline is going to remove capacity — particularly in its post-Labor Day schedule.

“We have announced that we are reducing capacity by 4 points from our original plan for the second half of 2011. This will result in our post-Labor Day system capacity being down 4% year-on-year,” he explained.

In other words, things are looking strong enough for this summer that you won’t see much of a cut. But as soon as the summer travel hoardes are gone, the flights will go as well. The worst of it? Trans-Atlantic flying. There’s too much capacity there and it’s going to get hacked after the summer.

In addition, we’ve already been told that Memphis will be losing about 25 percent of its flights as the hub shrinks dramatically. Most of those will be Connection flights to small cities. We just had a Cranky Concierge client fly from Huntsville to Austin via Memphis the other day. I’m guessing that won’t be possible after Labor Day rolls around, but the details haven’t been released yet.

While Delta may have been the most clear about its plans, it’s a safe bet that others will follow along as well. Most other large airlines are following similar strategies of being very careful with having too much capacity out there. I say “most” other large airlines. As Delta made very clear on its call, it doesn’t see American acting the same way.

After a Wall Street analyst asked how Delta would defend its share of the corporate business in the face of American’s 21 percent capacity jump in New York and 8 percent in LA, Delta CEO Richard Anderson came back at him.

We are not going to focus on chasing market share. We are focused on operating margin because operating margin ultimately is what our shareholders want us to produce. And so trying to take market share with very poor operating margin and negative cash flow doesn’t work for Delta.

He ended this by saying, “This isn’t a hobby.”

Some very strong words there, and it shows a discipline that we haven’t often seen in this industry. Smart strategies like this mean that there is less of a chance of having a bunch of empty seats that need to be filled with fare sales. So if you’re waiting for that fall deal, it may not be so easy to find this year.

Republic Airways announced a small first quarter loss the other day, but really, it was a tale of two airlines. Its Frontier subsidiary lost a bunch of money while the “Express” flying it does for other airlines made money. How is Frontier looking to fix things? By shuffling its fleet.

Frontier has long had a preference for smaller airplanes, which seems kind of strange. Larger airplanes allow for lower seat costs, and that helps low cost airlines in particular. The bulk of its fleet was made of adequately-sized A319s with 136 (soon to be 138) seats but it also had an 11-strong fleet of the smaller A318 aircraft. That airplane has been a terrible seller, primarily because there are other airplanes (the Embraer 190/195 comes to mind) that are much more efficient. Airplanes that shrink significantly from a larger model rarely do well.

Over time, Frontier realized this wasn’t the best plan and it started to go bigger. It ordered some A320s and it started retiring the A318s. Those airplanes were so undesirable that at least one has been turned into beer cans. Now, however, it has a different airplane problem, thanks to its owner, Republic.

When Republic bought Frontier (and folded the carcass of Midwest into the Frontier brand), it brought a bunch of small airplanes with it. Somes of these airplanes did not have a home flying “Express” with another airline so they went into the Frontier fleet. The Embraer 190 has become a mainstay of the fleet, but the Embraer 170 and smaller Embraer 135/145s were more awkward fits.

In the first quarter of this year, Republic lost $600,000 before tax. The Frontier operation, however, lost a whopping $55.2 million. You math majors know that the rest of the Republic operation must have been profitable. To be fair, that was an improvement for Frontier, but it’s not good enough. So what’s the plan?

The remaining four A318s will be gone by the end of the summer. Republic is also working hard to get all the Embraer 170s placed with other airlines. Delta has committed to take 14 of them and if there are any others left, they’ll be going out of the Frontier fleet as well.

That move, however, isn’t all great news. There are 50 seat ERJ-145s coming off contract with Continental that will go into the Frontier fleet instead. This will help serve some of the cities that were being served by Embraer 170s, but those aren’t exactly the most cost-effective airplanes around either. Still, if there’s not enough demand to fill a 70 seater, then it’s better to fly it with 50. These will now be flown under the “Frontier Express” moniker. So Republic is now flying as an Express carrier for itself. I believe that may cause a rip in the space-time continuum.

By the way, just playing the shell game with airplanes isn’t all that Frontier is doing. It’s also axing some routes. Milwaukee to San Francisco and LA are gone. These were always low fare markets, but when fuel spiked, it had to have made them really ugly. Longer haul, low fare routes are most at risk when fuel spikes, because they see the biggest impact.

So where does this all leave Frontier? Like every other airline, it’s struggling to adapt to fuel prices, and it’s not winning the battle. But its situation is improving in the big picture, so that’s important. At this point, it’s just a matter of whether or not Republic can right the ship before shareholders start getting angry. At least Frontier is being proactive and not sitting on its hands.

When row 21 is actually row 9: The method behind airline row numbers – CNN Out of the Office
United is doing some row renumbering, so I thought it was a good time to take a look at why that matters.

In the Trenches: Designing A Workspace – Intuit Small Business Blog
I’ve been trying to create a good workspace for myself over the years, and there are a few things I’ve learned in that quest.

When I was working for America West, my favorite press release title had to be the one proclaiming “Mule Promoted to Head Customer Service.” I may have the wording a little off, but the point was that Anthony Mulé had been given the job and there was no accent in the subject line. Yep, good one.

So what am I bringing this up? I saw a great press release from Cathay Pacific yesterday:

Cathay Pacific Offers First Class Service from Chicago to Hong Kong Starting at Just US$10,241 – Roundtrip!

Ah yes, it’s “just” five figures. That may be a good deal, but are we really shouting that from the rooftops with an exclamation point? Apparently so.

Anyone else have any good airline releases they’ve seen over the years?

American announced this week that it would begin testing streaming video with wifi-provider GoGo on a couple of airplanes, and it will expand wifi to the whole domestic fleet. This is an exciting development, but it’s really just the beginning.

It was just a couple weeks ago that I wrote a column for CNN saying that the future of inflight entertainment might very well be a power outlet and a wifi connection. That’s almost exactly what American is angling for here. (At least, I hope the power outlet is part of the equation eventually.)

The way this works is simple. I spoke with Eric Lemond, GoGo’s VP of Product and Platform Management to get the full details. GoGo has a big server on the airplane with a ton of storage. (I’m told they could store 1,000 movies with what they have now.) Travelers will pop open their laptops and connect to the wireless network just as they would to go online. Then, each traveler can open up the browser to decide whether to purchase internet or whether to purchase the content stored on the airplane. American hasn’t announced pricing yet, so we don’t know what that will look like, but I imagine it will be less expensive than going online.

The initial plan is to have a library of movies and television available for people to stream. The streaming is done in your browser via Flash. You need to download a security plugin (that’s stored on the airplane) to prevent theft but that’s quick and then you’re ready to go. As of now, only laptops are supported. Mobile phone support is on the road map, but I wasn’t given a timeline. With the increasing use of mobiles, that needs to speed up quickly.

One of the biggest problems I see is that in order to watch the movie, you have to be connected to the internet for the payment to process. So if you’re on a flight from, say, Honolulu to LA, then you’re out of luck because there’s no internet access, even at the beginning. If, however, you’re going from, oh, Dallas to San Jose, Costa Rica, then you should have enough internet time at the beginning of the flight to buy the movie and watch it. Eric says that there is a roadmap that would allow people to eventually watch movies without that initial internet connection, but that’s down the line. You can, however, continue to watch a movie on the ground for a certain period of time after your flight, if you’re unable to finish it on the airplane. That’s a nice little bonus.

The other concern, of course, is around the quality of the streaming. If I get a “buffering” message every couple minutes, then this will fail. Eric says that GoGo has that under control. Since the streaming is all happening on the airplane and doesn’t require the air-to-ground connection, it’s a lot easier to make it work. Now, if 150 people all decided to watch the same movie within 5 minutes of each other, then performance might be degraded, but Eric says they can use engineering as necessary to increase capacity as demand grows.

Of course, for this to be worthwhile, American needs to commit to wifi instead of half-committing as it’s done so far. That is changing with this announcement. Today, American has wifi on its fleet of 767-200s that fly between the west coast and east coast. Two of those airplanes will be the ones doing the streaming test. American also has wifi on 150 of its MD-80s and will install it on 50 more. (That will leave less than 50 without wifi, but those will be retired sooner rather than later.)

Today, only 43 of the airline’s 737-800s have wifi, and that’s only about a third of the fleet. I asked American when the 737 fleet would be done, and I was given PR-speak: “American continues to install Wi-Fi service on 737-800 aircraft and the entire fleet is expected to be outfitted overtime.” Um, ok. These installs take very little time at all, so I have no clue why this is taking so long and why an estimate on when the fleet will be done is unavailable.

But the biggest issue for American has been the lack of wifi on the 757 fleet. Now, the 93 757s used for domestic flights (the rest do international like east coast to Europe) will get wifi as well. That should be done by the end of 2012.

The end result is that the entire mainline domestic fleet will have wifi. Unlike Delta, American has no plans to install wifi on its large regional jets (or its small regional jets, for that matter). And international, of course, will continue to not have wifi because GoGo is ground-based.

But as I said, this is just the start. GoGo says that there is the ability to have gaming, audio, and other rich media on the server, so it’s just a matter of figuring out what the airlines want to offer. This definitely seems like the smart way forward to me. Of course, this again makes powerports even more important. When are we gonna hear an announcement about full 110V power throughout the airplane, American? Those cigarette lighter ports in some rows just don’t cut it.