Browsing Posts published in January, 2012

When American announced it would roll out a slew of new features on its new 777-300ER aircraft in December, I was left with more questions than answers. Now, just a bit more info has been released, and we have some answers but not all. Oh, and we have pictures.

American 777-300ER First Class

A picture of the new First Class cabin shows that it’s not much different than what’s out there today. It’s just cleaned up, new fabric, etc. That’s ok, because much of a change wasn’t necessary. In Business Class, however, it’s a different story.

American 777-300ER Biz Class

As you can see, American is using the same reverse-herringbone style of seat that US Airways has on its airplanes. (Calm down, conspiracy theorists. This has nothing to do with a potential merger between the two.) We can now be sure that the “fully lie flat” seats are going to be flat beds. Whew.

There are also a few things we can glean from the new coach seats.

American 777-300ER Coach Class

The above picture shows coach seating, and American confirms that there will be a premium economy section with the exact same seats but more legroom. It’s like American is bringing back “More Room Throughout Coach,” but not actually throughout coach.

In this picture, there are at least 4 seats uninterrupted by an aisle. That can mean one of two things. It could mean that American is sticking with the 2-5-2 configuration that it has on its 777-200s, but that would be surprising. Most airlines have moved away from 2-5-2 to 3-3-3 instead because it requires fewer video power units and it allows for standardized seat sets. (United has switched to 3-3-3 as it renovates its 777 fleet.)

But this can’t be 3-3-3 because there are four together. That would most likely mean that American is moving to the increasingly popular 3-4-3 layout. I say “increasingly popular,” but I mean that only on the airline side. Passengers hate it because, naturally, it means narrower seats. That hasn’t stopped several airlines from going this route, so it wouldn’t surprise me to see American do the same.

We could try to do some math to figure out the number of seats across if American would release its planned configuration on the airplane, but it won’t. My requests were met with the response that no further information is being given at this time. What’s with all the secrecy? I don’t understand why they want to keep pushing out dribs and drabs of info.

Anything else we know? Yep. American had been saying that London would be the first to get the new 777-300ER, but now that’s not happening. The first market will now be Dallas/Ft Worth to Sao Paulo. This market is apparently doing so well for American that it’s throwing a ton of capacity into it. In June, the market goes from a daily flight to 12 weekly. And then in December, the 777-300ER will go on to the route, bringing even more capacity to the market.

I suppose we shouldn’t be surprised that Latin America gets it first. After all, that’s really where American excels. It’s almost non-existent in Asia, it’s pretty weak in Europe, but it is the king of Latin. Stick to your strengths, right?

It’s been entirely clear for a few months that Republic wants to spin Frontier off into a standalone airline, but the question has been . . . how would they make that work when the airline was losing money? Now it looks like we might know. Frontier is becoming an ultra low cost carrier, but I’m not quite sure yet what exactly that means.

Last week, the airline announced that Dave Siegel would be taking over as the top boss. This is all part of the separation process from Republic. As part of that announcement, we also learned that former Allegiant planning guru Robert Ashcroft would run finance, and Daniel Shurz, currently the strategy and planning mastermind, would be promoted to run the whole commercial side of the business. So the team is falling into place, but what are they going to do now?

Frontier Goes ULCC

The most interesting tidbit from that press release was a quote from Republic chief Bryan Bedford. He talked about the process to “continue [Frontier's] transformation into a profitable ultra-low-cost-carrier.”

Wait, what? I can’t remember them tossing around the ULCC moniker for this airline before in such bold fashion. Maybe it’s been mentioned, but this seems to be the most clear affirmation of the airline’s strategy going forward. I like it.

When you think of a ULCC, you probably think of Ryanair in Europe or Allegiant and Spirit here in the US. These are airlines that work extremely hard to keep their costs very low so that they can also offer incredibly low fares. Those fares tend to exclude just every possible optional service, which allows them to keep the base fares even lower thanks to all the ancillary revenue that comes in the door. You know how this model works.

So is that where Frontier is going? Directionally, yes. But that doesn’t mean it will be a clone. Frontier has historically tried to build itself up as a beacon of quality customer service, and that often seems contradictory to the ULCC model. That doesn’t mean it has to be that way. Frontier already charges for TV, it charges for better legroom, and it’s built up a fairly comprehensive chart of additional services that can be bought. It has reduced seat pitch over the years as well, though not to the level you would expect of a ULCC. This isn’t the same Frontier as several years ago, but there’s probably more change to come.

The airline has worked very hard to get costs down, and that’s the most important thing required in order to become an ultra low COST carrier. Having low costs enables the airline to make money on a variety of routes that it might not be able to do otherwise through stimulation via low fares, but its costs are still not in the same league as the those of Allegiant and Spirit. More has to be done, but that’s why they’re building this team. Robert Ashcroft knows how a ULCC needs to operate and he’ll be able to get the financial side of the house in order. Daniel Shurz and his team can deftly continue the commercial shift that they’ve already begun.

The timing for this couldn’t be much better. Frontier has the potential to be able to really benefit from the disappearance of AirTran and others. Take a look at some of the recent route moves, which show the path already being followed.

  • On January 9, Frontier announced it would begin 3x weekly flights between Knoxville and Orlando, a route that AirTran is abandoning thanks to Southwest’s takeover.
  • On December 12, Frontier said it would start flying between Denver and Rockford 3x weekly. This is the kind of subsidized route that AirTran used to jump at, though it would have probably been Atlanta instead of Denver.
  • On December 7, Frontier released its seasonal Florida schedule. That’s nothing new, but it does seem to be a more coordinated effort. This takes a page from Allegiant’s playbook by bringing travelers to Florida during peak season, but it’s not from tiny cities like Allegiant. Instead, flights are from mid-size cities.
  • Last August 29, Frontier revealed that it would begin doing contract charter flying for Apple Vacations. Previously, Apple relied on its own airline, USA3000, but it has decided to wind that airline down. Contract flying like this can be lucrative and is also out of the Allegiant playbook. Allegiant does a fair amount of charter flying for casino groups like Harrah’s.

Does all this make sense? Well, yeah, it does. Frontier has long struggled with where it fits in Denver (and in the US in general). There’s not much growth on the full service side of the industry nor on the high end low cost model either. But as Southwest’s costs have continued to rise, it has become less of a low cost, and more importantly, low fare, carrier every year. The higher Southwest’s costs, the more opportunity for other airlines to come in with much lower costs and win with lower fares. That’s the message Southwest CEO Gary Kelly has put out. AirTran used to be expert at doing that kind of thing, but it will now be brought up to Southwest’s cost levels and its route network will change, creating more opportunity for others to join the likes of Allegiant and Spirit.

It hasn’t been an easy path for Frontier employees, and I’m not sure that it’s about to get much easier for them. But this is where the potential growth is in this industry, and it’s the best chance for Frontier to succeed. I’m not sure what this means for Frontier’s product and its ultimate route network, but hopefully the team will be able to find a way to marry the customer service reputation with a ULCC model to create a very attractive offering for travelers.

New rules make airfare seem higher (even though it isn’t)CNN Out of the Office
This week, I took a look at the new DOT rules going into effect on pricing/fees.

Airline Fee Changes Require Full DisclosureNBC Los Angeles
I met up with the folks at NBC4 here in LA to walk them through some of the changes from this week’s DOT rule change. Here’s the video:

View more videos at: http://nbclosangeles.com.

The topic has been raised here recently a couple of times. After decades of including prayer cards with meal trays, Alaska has decided to discontinue the practice. It had been reduced in scope when free meals disappeared from the coach cabin, but it was still in First Class meals. Do you agree that they should be gone? Read the full text of the decision here.

Earlier this week, I had the chance to tag along on a media tour of the progress being made on the new Bradley Terminal concourse at LAX. It’s a big, impressive terminal, that’s for sure. I just wish they hadn’t wasted quite so much money. (I know, I know, I sound like a broken record.)

Looking Northeast Toward the New Bradley Terminal Concourse

Let’s start with a brief history. If you’ve never been to the Bradley Terminal at the western end of the horseshoe of terminals at LAX, you know that once you get past security, the concourse are very small with limited seating and almost non-existent amenities. It really is a poor experience, and I think few would argue that something new was needed. LA World Airports (LAWA) spent over $700 million fixing up the pre-security area (ticket counters, etc), but the concourse needed to go, so they came up with a plan to knock down the existing concourse and build an all new one immediately behind it.

When I wrote about this in 2008, it was expected to open with 14 gates beginning this month. The entire project was around $2 billion, which included a new taxiway, fire station, etc. The price hasn’t changed much (the terminal will now be $1.7 billion on its own without the other improvements) but one more gate was added (plus 3 existing gates that are staying for a total of 18) and it has slipped a year. The first phase will open in March 2013.

For those who prefer visuals, take a look at this 2:49 video walkthrough of the project. Then stick around for the explanation.

Travelers will enter as they do today, into the main ticketing area. But instead of going either to the left or to the right to get into one of the two security lines, there will be a new central security area that feeds into the new concourse. Once you go through security, you’ll come out into the Great Hall.

Looking North

This is where all the big shops, restaurants, and lounges will be. They kept talking about it being a town square, or something like that. To the north, there will be a short concourse with a larger one to the south. You can see this area under the shorter ceilings.

From North to South

Travelers will all board through the same gate entrance, but some will walk immediately upstairs to board on the upper deck if on an A380 while other stay downstairs. That might be a bottleneck. Arriving passengers will get off the airplane and then promptly go UPstairs. There will be a glassed-in sterile corridor that goes above the departure gates for arriving passengers. They’ll walk to the middle of the terminal where they’ll have to then go all the way back down to the basement for customs. It’s a lot of up and down.

When it first opens, the 10 gates on the west side of the building will be operational. The east gates will have to wait until they demolish the old concourse, which they will do one side at a time so that they can keep enough gates operating.

On the very northern end, three gates from the old concourse will actually remain and will be attached via a walkway at that end. Why? Because the LAX master plan has a line north of which no building will occur. That’s for future plans to separate the runways further for safety purposes. Even though new construction can’t occur, old construction is grandfathered in. So they’re keeping those three gates, as awkward as it might seem.

Eventually, there will also be connectors between the Bradley Terminal to Terminals 3 and 4 behind security to make for better connections. If they could only open up that Terminal 4-5 connector, the entire airport would be connected behind security except for Terminals 1 and 2.

Bradley Terminal Model Overview
Photo courtesy of LAWA

So is it worth the $1.7 billion (part of a larger $4 billion+ renovation at the airport)? No. I mean, the new terminal was needed, but did they really need to spend so much money on this crazy roof? I’m sure they could have gotten something just as light and airy but without looking like a copy of Mexico City’s Terminal 1 for a lot less.

The airport CEO, Gina Marie Lindsey, keeps hammering on how this takes no money from the LA general fund so it costs taxpayers nothing. Yeah, right. That money ends up coming from higher operating costs. According to Gina Marie, the cost per enplanement at the airport will rise from $12 today to “only” $17 somewhere around 2016. I’d be amazed if that held true considering the $4 billion being spent, but even if it does, that $5 per head will be problematic, especially for domestic flights.

Gina Marie was quick to say that they were working to spread the cost of these projects around the entire airport. That means that Southwest, sitting alone in Terminal 1, will still have to pay for some of this even though it gets none of the benefit. Oh, I’m sorry, airport officials kept dismissing my questioning along those lines with “everyone benefits from a better airport.” I’d like to see what the airlines say about that.

While international carriers will grin and bear it, the domestic guys, especially those flying shorter haul flights, could see real pressure on some flights. I don’t dispute that much of this work needed to be done; I just wish there was more concern about cost control in order to keep as many flights viable as possible.

But hey, what’s done is done at this point. We’ll see how things look next March when the concourse opens for business.

[See more of my photos on Flickr]


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