United Slow to Address Public Concern Over Paid Meals on International Flights
United made waves by announcing charges for meals on some international flights last week. Unfortunately, their PR efforts weren’t up to the task.

American Offers Wi-fi as a Differentiator
Last week, American enabled wireless internet access on its 767-200s. United better take note or they stand to lose significant share.

Allegiant’s Unique Reverse Enplanement Costs
In an interesting twist, Allegiant is loaning money to Phoenix-Mesa Gateway airport for expansion purposes. This is a very smart move.

Labor Day Means Fall Flight Cuts are Coming
With Labor Day approaching, that means fall schedules go into effect. This year the cuts are very deep, and airlines need to pay close attention.

US Airways’ Scott Kirby Joins the Board of LodgeNet
US Airways President Scott Kirby is now on the LodgeNet board of directors. Could this mean a new inflight entertainment system is in the works?

DOT Rejects Blanket Dormancy Waiver
The DOT has decided to deny the request by seven airlines to allow them to suspend international routes without losing the rights. This could get interesting.

Ramping Up Alternative Propulsion Systems
With fuel prices climbing, engine manufacturers are looking for new ways to reduce fuel burn. At least one concept is almost ready to fly.

Virgin America Appeals DOT Decision with a Vengeance
Unhappy with the DOT’s decision to require public submission of Virgin America’s data, the airline has decided to appeal with fists flying.

Allegiant Leaves Green Bay for Appleton
Allegiant really does practice what it preaches. Green Bay started charging more, so Allegiant packed up and moved 33 miles down the road to Appleton.

The Airlines Attack Oil Speculators
The ATA has gathered US airlines to fight oil speculation. Will it help or just end up making things worse?

I know I mentioned it before, but I thought it worth mentioning again that I’m now the airline blogger for BNET. My posts on Cranky are primarily focused on the frequent (or not so frequent) flier, but over on BNET, I get into more on airline management. Since I know that the last thing you want is to have to check two different places to see what I’m writing about, I thought I’d do a couple things to make this easier to find my content.

First, I’ve started using Google site search. Now anytime you search for something on Cranky in the upper right hand corner search box, it will also return results from BNET if there’s a better match for what you’re looking for. Cool, huh?

Second, I’m going to start posting every Saturday a summary of the previous week’s posts in BNET. If you’re interested, head on over and check out the full posts. If not, well, no big deal. Since today is the 4th of July, I’m not posting a regular post today. So, I thought I’d kick off my first week of this effort by posting a day early. Usually, you’ll still see my regular number of weekly posts with this bonus summary on Saturdays.

Monday, June 30
Midwest Facing Pay Cuts, Fleet Cuts, Layoffs
Midwest Airlines is facing some massive cuts in flying and employee pay right now. What will the future hold for these little guys?

Tuesday, July 1
Mesa Air Group Releases Delayed Second Quarter Earnings
Mesa announced a profit in its very-delayed 2nd quarter earnings release, but thanks to a settled lawsuit, all is not as rosy as that may sound.

Wednesday, July 2
Frontier Loses $22 Million in May
Bankrupt airlines have to report their finances monthly, and Frontier’s May was a very ugly one.

Thursday, July 3
Allegiant’s Incredible 94% Load Factor
Allegiant posted a fairly amazing 94% load factor in June. How is that even possible?

It’s earning season, and most airlines are doing their best to mask their weak fourth quarters. It’s hilarious to see the headlines talking about what a great year it was. Then they bury their fourth quarter loss down below.

Just today, we saw US Airways and Alaska talking about how fuel prices are choking them. US Airways said, “Our fourth quarter results were materially impacted by increases in fuel prices. Had our fuel price per gallon simply remained at last year’s fourth quarter levels, our 2007 fourth quarter fuel expense would have been approximately $230 million lower.” And Alaska? “The loss was driven primarily by skyrocketing fuel costs combined with fares that have not kept pace.”

Just in case you’re a visual person, let’s take a look at some graphs showing what’s happened to fuel. Once again, I turn to government data for the answers. This time, it’s Schedule P-12A. Oh man, just the name makes me think it’s going to be interesting . . . riiiiiight.

Anyway, I isolated 16 of the airlines and graphed them below. Unfortunately, government data only goes up through September 2007 so far, but you get the point.

As you can see, they all follow the same trend . . . up, up, up. I know some of the colors are light, but with the exception of some early spikes by Hawaiian and a couple other airlines I’ll talk about in a second, they all moved together. Prices hovered below $1 a gallon until early 2004 at which point they took off like an empty 757 in a headwind. (Maybe I should stay away from the analogies.) Prices passed $2 toward the end of 2005 and except for a couple of dips back, they’ve stayed there. Ouch.

Let’s focus in on some of the exceptions. I’ve taken the 16 lines and put them into an average. Then I’ve highlighted Southwest, Allegiant, and Skybus.

As you can see, we’re looking at these airline for different reasons. Starting in 2004 when fuel prices took off, Southwest kept them low. How? They bought a bunch of fuel hedges keeping their future cost of fuel less than they’d have paid normally. Though the prices have continued to climb, they have continued to keep their prices lower than average, and that is pretty much why they’ve continued to be profitable. With average fuel costs, I believe Southwest would have been break-even at best last quarter.

In case you’re wondering, they’ve continued to hedge fuel. It looks brilliant when prices keep rising, but when (if) they fall, Southwest will be stuck paying more than others. Personally, I think that’s fine. It’s worth having some certainty in your fuel costs even if you end up paying a little more.

The other two airlines, on the other hand, are highlighted for paying way above the average. Allegiant seems to be paying through the nose for fuel. Considering that they operate fuel thirsty MD80s, this is really costing them dearly. The fact that they remain profitable is even more impressive with that knowledge.

Then we have Skybus. They seem to be paying the most of all. They like to call themselves an ultra-low cost carrier, but, um, this clearly shows otherwise. I’m not sure why they’re paying so much. It can’t be because they’re new - Virgin America is new and they fall into the pack. Maybe it’s all these small airports they fly where nobody else goes. Come to think of it, they share that characteristic with Allegiant. Hmmm.

Well at least the trends look good, right? Of course not. You see the average fuel cost in that graph was maybe around $2.10 or so. Well just to give you some numbers . . . Alaska paid $2.48 in the fourth quarter. US Airways paid $2.56. And it doesn’t look better elsewhere.

So just remember, if you’re complaining about your ticket price being too expensive . . . pipe down. It should probably cost you even more than that.

Yesterday, the East Valley (that’d be Mesa/Chandler/Gilbert/Tempe - east of Phoenix) was jumping with joy after learning that their long-suffering airport, STBPMGA (that’s Soon-To-Be Phoenix-Mesa Gateway Airport), would become Allegiant’s fourth base after Las Vegas, Orlando/Sanford, and St Petersburg/Tampa. Today, Ft Lauderdale received word that they’ll be base #5.

Phoenix-Mesa Gateway (as I believe Williams Gateway will be renamed soon, probably thanks to the urging of Allegiant) is a former Air Force Base that has been trying to attract flights for a long time with spotty success. Yesterday’s announcement that Allegiant will start flights on October 25 was a big win for the airport. I’m guessing Allegiant is getting a very sweet deal here.

Ft Lauderdale is a different kind of thing. The airline’s last 3 bases have been at secondary airports, so this is a return to a main airport, unless you count Ft Lauderdale as secondary to Miami. Flights here begin November 14, and while I’m sure Allegiant got a good deal (they won’t fly anywhere unless they do), it would surprise me if they could squeeze much out of FLL. The airport already has ample low cost service from JetBlue, Southwest, AirTran, and hometown airline Spirit. They also have somewhat of a crowding problem, but Allegiant’s low frequency service - a couple times a week per destination - likely won’t hurt that much. Besides, Allegiant almost never competes with existing airline service since they fly to much smaller cities.

So where are they going from these new bases? Well they’re turning this into a big guessing game. We do know that Phoenix-Mesa will get flights to 13 cities already in the Allegiant network, none of which have nonstop service from the Phoenix area currently. Ft Lauderdale will see service to 12 cities, one of which will be new to the Allegiant network, and I’m guessing that none of these will have nonstop service currently either.

The airline will slowly start trickling announcements out over the next month, and they’ve got a countdown clock on their website to show you when the next one will be announced.

If I had to take a guess, I’d expect to see a bunch of Snowbird Specials launched here just in time for the peak winter season. For Phoenix, maybe we’ll see places like Duluth and Rochester (Minnesota), Cedar Rapids (Iowa), Rockford and Peoria (Illinois) and Lansing (Michigan). Ft Lauderdale? Maybe a little further east with some overlap. Youngstown or Toledo (Ohio)? Maybe Ft Wayne and South Bend (Indiana)?

My best guess is that they don’t even fully know the list. While they have a pool of cities in the running, those could change depending upon who gives the airline the best deal. Allegiant is known for being a hard bargainer, and if Rockford can outdo Cedar Rapids, that might make the difference.

Having the countdown clock just feeds into that. It’s like watching the lottery balls come up every week, hoping you have a match. Come down on your costs and tick, tick, tick, tick, you could have your name in lights and an old MD80 landing on your runway.

Either way, it’s good news for people in small towns all over the US. They continue to get service, though infrequent and with no frills, to places they’d never have been able to fly nonstop before. I’m just waiting to see how long it takes before another airline stops finding this amusing and starts trying to compete.

It’s interesting to see how low cost carriers developed differently in the US versus Europe. Over here, Southwest was always considered the standard for low-frills and low fares. When compared to what Ryanair has done in Europe, Southwest looks downright pricey and opulent.

Since Ryanair has taken off, plenty of people have made an effort to bring that model over here. Allegiant has fashioned themselves in a similar way but their fares aren’t nearly as low and their route network focuses on small cities that don’t help most of the US. Skybus has announced its intention to bring the model to the US, but they are still in the process of getting started. It appears that Spirit is now going to be the first to give this model a real shot here in the US.

The basic idea is to offer very low fares just to get people on the plane and then charge them extra for every little thing they’d like above and beyond basic transportation. Spirit has definitely been heading this way for some time - you’ve seen fares as low as a nickel popping up for a few months now. Today, they’ve decided to take the next step to becoming what they call an “Ultra Low Cost Carrier.” This all begins today for travel starting June 20.

First off, they’re killing their premium cabin, Spirit Plus. Instead of taking the seats off the plane, they’re just renaming them the “Big Front Seat.” The service will be exactly the same, but you can pay more just to get a bigger seat. Looking at random dates in the middle of July, a one way from Los Angeles to Ft Lauderdale is $124 in what they now call “Deluxe Leather” (also known as “Coach” in non-marketing, normal person language). The Big Front Seat is going for $544. I can’t imagine anyone is going to pay that much more simply for a larger seat, so I imagine they’ll have to reevaluate their pricing soon.

They don’t offer too many details in their press release, but the South Florida Sun-Sentinel seems to have the scoop. They say that you will be allowed one carry on bag for free and that’s it. All checked baggage will now cost you. It’s $10 a bag for the first two and then $100 a bag beyond that. By June, you’ll be able to pay online for your checked bag and then it’ll only cost $5 per bag for the first two.

And yes, even beverages won’t be free anymore. Soft drinks will now cost $1 and snacks will remain $2 to $4. To round things out, there is also a plan to make money from hotels, car rentals, event tickets, airport parking, and all that stuff.

Personally, I don’t mind this model at all as long as I can pay for what I want up front. I hate the idea of having to carry around a bunch of cash to pay for a drink, a checked bag, etc. If they can integrate all of these things into the booking process, it may work, but it’s still a tough adjustment for people used to the Southwest model. Trying this in the Caribbean where it’s a lot of leisure travel might actually pan out for them.

Allegiant issued their first earnings report since going public today, and there were a couple of interesting tidbits in there worth talking about.

First of all, the amount of ancillary revenue per passenger rose from $13.99 in the fourth quarter of 2005 to $18.84 in the fourth quarter of 2006. What is ancillary revenue? Well it’s all the money they make from sources other than airplane tickets. We’ve talked about this before, but getting every passenger to pay just shy of $20 above and beyond the ticket is pretty impressive. What do they sell to convince each person to shell out the extra dollars?

If you go to their website, you’ll see them hawking hotel rooms pretty aggressively. They get a cut each time you book. Want an assigned seat in advance? You’ll pay for that. Need a soda or a snack? Oh yeah, fork over the cash. How about some Vegas or Florida souvenirs? Or a model of an Allegiant plane? Maybe a pillow and blanket? It’s all for sale.

So remember, if you fly Allegiant, you can expect to pay somewhat more than just the price of the ticket.

The second piece of interesting info is that Allegiant may have chosen their newest focus city. At the end of the year, all their flights were from smaller cities into either Las Vegas, Orlando, or St Petersburg/Tampa. Since the beginning of the year, they’ve quietly launched a twice weekly flight between Bellingham (Washington) and Palm Springs. This flight runs through the peak season and ends in April. Could this be the start of more Palm Springs flights?

Who’s ready to get on the Skybus?

If I went up to 100 people in the US asked them about Allegiant Air, my guess is almost all of them would pose the question asked in the title of this post. I’ve mentioned some of their seemingly random route announcements before, and you’ve probably asked the same question. So, who the f*** IS Allegiant Air?

Labor Day weekend must have shaken the cobwebs out of the schedule planning groups, because we continue to see a whole slew of new routes coming out.

• First up is Northwest’s new service between Grand Rapids (Michigan) and New York/LaGuardia airport. That’ll be one lonely daily flight each way on a 50 seat CRJ starting Nov 1.
• Northwest also announced a big bump in flights from Indianapolis. There will now be a fourth daily flight to New York/LaGuardia, a second daily flight to Ft Lauderdale, and a second daily flight to Tampa starting Nov 1. On Oct 1, Orlando gets a second daily flight. And for the winter season (Jan 3 to Apr 30), Ft Myers will get a second daily flight.
• Allegiant continues its string of random cities that sound like they should be somewhere with new three times weekly flights between Orlando/Sanford and Fayettville (North Carolina) starting Nov 7. Yeah, that’s North Carolina, not Arkansas.