Inside Alaska Airlines’ New Terminal at LAX – Conde Nast Daily Traveler
I had the chance to take a tour of the new Alaska Airlines terminal 6 at LAX, and it’s a beauty. I’ll actually be covering this further here on Cranky next week.
In the Trenches: Our Money Back Guarantee – Intuit Small Business Blog
It’s a rare occurrence, but every so often we get a client who invokes our moneyback guarantee. In some cases, it makes me want to rethink the proposition completely.
We all know now about JetBlue 191 with the captain who broke down and was restrained on his flight. To me, it seems like the first officer handled this perfectly by getting the captain out of the cockpit and then locking the door. But does this concern anyone out there as a traveler? Something you’ll be thinking about on your next flight or no?
One of the more interesting panels in Phoenix last week was the one that focused on fleet strategy. There’s always a ton of discussion about buying airplanes, and each airline has a different philosophy. On the panel, there were representatives from Air China, Delta, Hawaiian, and Southwest from the airline side. The CEO of Airbus Americas Barry Eccleston was also there.
Today, I want to focus on the the three US airlines there and their different strategies. It’s interesting that all may include the Boeing 717 in one way or another.
Delta the Opportunist
I was most interested in hearing from Delta’s VP of Fleet Strategy and Transactions Nathaniel Pieper. You might remember my post addressing why Delta had bought current generation 737-900ERs instead of waiting for next generation airplanes. Certainly Delta’s fleet strategy has differed from other legacy airlines.
I was particularly interested in the rumor broken by Holly Hegeman at PlaneBusiness that Delta would be acquiring the AirTran 717 fleet from Southwest. We didn’t get any details on that in this panel, but after hearing Nathaniel speak, it seems clear to me that the 717 would work quite nicely for Delta considering its strategy.
Nathaniel described Delta’s fleet strategy as one of opportunism. “We have every fleet type known to man.” That’s because Delta will go into the secondary market and buy airplanes if it makes sense. The MD-90 is a perfect example of that. Delta has been acquiring every MD-90 that’s on the market because they’re cheap to acquire and they’re good airplanes that can fly many of Delta’s medium haul missions.
Nathaniel wasn’t afraid to judge others, noting that you “won’t see us enter into a commitment for 460 firm aircraft with 500 options. We’d rather play the game a bit more conservatively, be in the game a bit more frequently and take smaller bites instead of one big chunk.” Hmm, I wonder why he picked that “460″ number. Oh right, that coincidentally matches a certain recent order from American. Heh.
What about airplanes even smaller than the 717? The news is not good. To the surprise of nobody, Nathaniel explained that the “economics of the [50 seat RJ] is very challenging right now.” As if that wasn’t clear enough, he confirmed that Delta would like to shrink that fleet “substantially lower.” What would replace those airplanes? Either fewer flights on bigger jets or some markets might lose service all together.
Hawaiian Loves Its Fleet
Moving over to airlines that actually operate the 717 today, how does Hawaiian feel about the airplane? Peter Ingram, EVP and Chief Commercial Officer for the airline has nothing but love. “For the unique flying we do of 100 to 200 mile hops in the islands, the 717 is very good…. We like the 717 fleet and expect to be in it for this decade at least.”
The more interesting fleet for Hawaiian is that of the bigger jets. In the last two decades, Hawaiian has gone from the L1011 to the DC-10, then to the 767 and now to the A330-200. Why the A330? The airplane apparently has “great economics” to the west coast while at the same time giving more range to reach more places in Asia. Since that’s where Hawaiian has been expanding, this makes a great deal of sense.
Southwest, the Simple Airline
Let’s go from an airline that loves its 717s to one that wants to see them gone yesterday. Did Southwest tip its hat about the fate of the 717 at the airline? No, but the way Brian Hirsham, SVP of Technical Operations spoke, it sounded like the writing is on the wall to me.
Brian explained that the Southwest fleet strategy has two parts. The first part is simplicity. “We realize tremendous synergies by operating a simple fleet.” The 717 hurts that simplicity argument, of course.
The second piece? Flexibility. “We have the ability to flex up and down in terms of fleet size.” Southwest will be retiring 120 737-300/500 “classic” aircraft over the next couple years and replacing them with current generation 737-700/800 instead. But if demand rises, Southwest can simply keep those classic 737s flying longer. And yes, that could happen if, say, Southwest decided to drop an entire fleet type.
In the end, everyone seemed pretty confident with their strategies, and that’s no surprise. A good fleet strategy is key to running an airline. Sometimes, what works for one airline might not for another. And that’s why I’m keeping a close eye on those AirTran 717s…
[Photo via Flickr user redlegsfan21/CCSA 2.0]
It has been a long four months since I last stepped on an airplane. Crazy, I know. But I locked it down before my son was born and then obviously for a little while after as well. This was my first opportunity to get back in the air, and it came courtesy of US Airways, which is always happy to fly people out without charge for the airline’s annual media day.
This was my first chance to see the newly-refurbished US Airways Express aircraft operated by Mesa. It was also the first chance I had to fly a US Airways mainline aircraft into Long Beach in quite some time. Overall, everything was fine but the ground experience in both places left something to be desired.
As usual, I left home an hour before the flight and found myself in a short but barely-moving security line. It was apparently amateur-hour at LGB with every other person 
forgetting to empty pockets, take liquids out, remove shoes etc. Once through, I tried to find a seat in the packed trailer terminal.
It was packed because US Airways, Delta, and Alaska were all pushing out airplanes at the same time, and the little trailer isn’t meant to handle that much at once. I can’t wait until the new concourse opens up.
Even though everything was running on time, it was a tense situation just because of the packed house. When they called boarding for our flight, people rushed up to get on board quickly just to escape the terminal.
The agent who was boarding was aggressive and forced almost everyone to tag their bags for planeside checking for this CRJ-900. The guy in front of me balked and said he had brought his (relatively small) bag on board this exact same aircraft type on the way out, but she wanted to hear nothing of it. She barked back at him that he had to check his bag.
He looked like he wanted to fight, but instead, he just shoved his boarding pass in front of the agent 
and said “fine, just check me in.” That did it. She made him stand to the side, scolding him publicly for his behavior. Soon after, she let him board after his tone softened. I was just happy to be out of there.
The construction is coming along nicely but that means the walk to the airplane is long and confusing. With several aircraft boarding at once, we all merged into one lane for walking and then there was a split to different aircraft at the end. Needless to say, they were pretty loudly announcing where our airplane was going once we boarded, just in case.
This was my first chance to see the new Mesa interiors and they looked good. First Class seats were a nice touch, and even the recovered leather coach seats looked significantly better. Our mostly full flight pushed back just about on time and we took off on a relatively uneventful flight.
I say “relatively” uneventful, because there were some strange characters onboard. The woman next to me stared at a copy of her itinerary for most of the flight. She just held it up in front of her face . . . for maybe 30 minutes. Very weird.
I had my customary ginger ale and that’s when I started to notice that these seats didn’t look as good as I first thought. The seatback looked like stucco that had been painted over one too many times. There were chips in the paint and it just didn’t look great.
More annoyingly, these seats would not stay upright. The flight attendant had asked several of us to push the button to bring our seats up before departure. I had figured that came from the last person in the seat, but I was wrong because when we descended into Phoenix, the same thing happened. Apparently, these seats do their own thing.
Normally after a hard week of work, I like to stay overnight and have a beer with friends. But I couldn’t leave my wife alone with the little guy any longer, so I came back Friday night, taking advantage of a nice mainline flight home.
I got to the airport about an hour in advance and it was surprisingly busy. The A350 model I had won at the conference was suspicious enough that the TSA pulled me aside and searched my bag. Funny.
I went to my gate and found a fair number of people waiting around with our airplane there already. I had thought that tickets provided by US Airways were upgradeable if seats were open so I went to the gate agent to ask. She looked at me funny and asked if this was a mileage ticket. I explained to her what it was and she said I could buy an upgrade like anyone else for $50. Ok. I didn’t take it and just went to wander and remember the good old days when I use to roam these halls.
I’m always surprised when I find someone who I knew from my America West days, but sure enough I ran into a guy who was there back then and we caught up on life. He took at a look at my ticket and said it really did look like it was a travel voucher used to purchase it. Interesting. I should ask the US Airways folks about that one.
I went to board the flight and asked the gate agent if it was full. Without looking up, she said it was very full and hurried me along. It wasn’t full at all. I took my window seat and had an empty middle and aisle next to me. I’m guessing we were three quarters full at most for the short ride home.
The captain was in a good mood. He came on and thanked “junior travelers” James and Bella for stopping by the cockpit on their way on to the airplane. I loved that because I knew the kids probably went nuts hearing their names over the PA. It’s a little thing, but it’s a great way to make kids feel special when they fly.
The airport had gone and uncharacteristically switched the runways on us, so we had a long taxi to the west end of the airport only to take off to the east and then turn right around. It was a mostly clear night so the view was beautiful. I had a ginger ale and soon we were on our way into Long Beach and I was on my way home.
As always, this year’s Phoenix Aviation Symposium was packed with great, thought-provoking discussion. A few of us were constantly posting updates on Twitter under the #PHX2012 hashtag. I’d suggest taking a look if you’re interested. But there were small 
nuggets that came out throughout the conference that I thought deserved a deeper look. First up is the issue of joint ventures and whether they might actually mean trouble for airline alliances.
Andrew Watterson, Vice President, Planning & Revenue Management for Hawaiian Airlines made a comment during the strategy panel that caught my attention. He explained that while Hawaiian is “outside an alliance, we sense the friction between joint venture partners and non-joint venture partners. I can’t imagine what that’s like inside the alliance.” In the end, he suggested that with airlines like JetBlue and Hawaiian (you could throw Alaska in there as well, domestically) offering partnering opportunities without an alliance, some members might start to think twice.
What’s the Difference Between an Alliance and a Joint Venture?
But first, we should back up. Let me explain the difference. Most of us know what airline alliances are. The big three are United-led Star Alliance, American-led oneworld, and Delta-led SkyTeam. These alliances are really focused on providing reciprocal benefits to members of each frequent flier program of the member airlines. You can earn miles (even elite qualifying miles) on all member airlines, and if you’re an elite member, you will get reciprocal benefits like priority boarding, lounge access, etc. There is limited cross-upgrading opportunity between some members but that benefit isn’t a very strong one at this point.
These alliances, are full of independent airlines that still compete with each other, even though they may be partners. When US Airways flies from Philly to Chicago, it is going head to head with United in that market, for example. United and US Airways do codeshare, and that allows them to expand their reach, but it’s not a requirement to codeshare to be an alliance member. In other words, it’s a fairly loose commercial cooperation at its core.
A joint venture, however, is a different story. The idea there is that two or more airlines agree to put all revenues into a big pot for travel in a geographic area. The money is then divided up between the airlines depending upon how much they fly. A good example of a powerful one today is the Atlantic Plus Plus venture led by United and Lufthansa. This also includes Lufthansa-owned Austrian, bmi, and Swiss as well as Air Canada.
The idea is simple. Since governments like that of the US have not been willing to allow mergers across borders, a joint venture is as close as airlines can get to merging under the law. Today, if you fly on a Lufthansa airplane or a United airplane, United shouldn’t care. It works with Lufthansa to coordinate schedules and pricing, and it splits the revenue up. (It’s not as simple of a split in actual terms, because there are adjustments depending upon a variety of factors but let’s not make this too complex.)
Now think about an airline like US Airways. US Airways is a member of Star Alliance, but it is not a member of the joint venture. While US Airways can connect people from all over the US to Europe, Lufthansa now has less incentive to put people on US Airways. Why not connect passengers within the US on United instead where it stands to gain? Lufthansa can keep more of the revenue that way, in all likelihood. It can also work with United to study traffic flows and arrange top connections to be as convenient as possible from a scheduling perspective. US Airways theoretically loses out.
I say theoretically, because in reality US Airways is doing just fine. In fact, I asked President Scott Kirby about this at media day last week. He responded that they are happy to consider joining the joint venture, but their transatlantic flying is doing so well that they would end up having to pay more out because of that. That’s not ideal, but if it starts seeing less benefit from the alliance, you would think it might have second thoughts. Certainly it might think twice about joining today if it weren’t already a member.
Getting Back to the Point . . .
But let’s get back to Hawaiian’s point. There is a feeling of haves and have nots. While US Airways is an incredibly rational airline that looks at numbers above all, not all alliance members will feel that way. There is bound to be a tension that grows when those airlines that feel left out think they deserve to be a part of the “in crowd.”
In the past, even those emotions were too hard to act on since the revenue from cooperation was so good. But if there is an alternative, then does that sway things? The airlines that use this, as JetBlue calls it, “open architecture” which allows for partnerships with any interested airline, have been growing quickly. They provide more schedule options and feed opportunities each day. So at some point, do airlines get fed up with alliances and start going it alone?
It’s incredibly rare for an airline to leave an alliance unless it goes under, but it has been done. Aer Lingus was a member of oneworld but is now independent. It has been aligning itself more closely with JetBlue to the point where there has been discussion about JetBlue buying a stake. There was a discussion last year about Aer Lingus rejoining an alliance, but the costs to join are steep and Aer Lingus didn’t think it could get enough benefit. With more successful niche airlines looking to go it alone, the temptation to stay out of an alliance may very well become a desirable option, especially as core members get closer and closer via joint ventures.
