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	<title>The Cranky Flier &#187; Guest Posts</title>
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		<title>Five US Airports Doing Great Things with Concessions  (Guest Post)</title>
		<link>http://crankyflier.com/2012/02/02/five-us-airports-doing-great-things-with-concessions-guest-post/</link>
		<comments>http://crankyflier.com/2012/02/02/five-us-airports-doing-great-things-with-concessions-guest-post/#comments</comments>
		<pubDate>Thu, 02 Feb 2012 11:45:50 +0000</pubDate>
		<dc:creator>CF</dc:creator>
				<category><![CDATA[Guest Posts]]></category>
		<category><![CDATA[Meals]]></category>

		<guid isPermaLink="false">http://crankyflier.com/?p=8880</guid>
		<description><![CDATA[Getting back to speed with a new baby in the house isn&#8217;t easy, so I&#8217;m posting one more guest post today to help me catch up. (Besides, I need time to read through all the American Airlines changes as well as the FAA reauthorization bill for posts next week.) This one is from a familiar [...]]]></description>
			<content:encoded><![CDATA[<p><em>Getting back to speed with a new baby in the house isn&#8217;t easy, so I&#8217;m posting one more guest post today to help me catch up.  (Besides, I need time to read through all the American Airlines changes as well as the FAA reauthorization bill for posts next week.)  This one is from a familiar face . . .</em></p>
<p>&#8211;<br />
My frenemie Brett &#8220;Cranky Flier&#8221; Snyder begged me (ok, he just asked) to write a guest post for his tiny, insignificant blog. Normally, I would have just ignored Brett&#8217;s email (which I do 98.7% of the time). But he and his lovely wife delivered my baby avgeek niece or nephew, so I relented.</p>
<p>I had one <a href="http://crankyflier.com/wp-content/uploads/2012/01/avqueenlogo.jpg"><img style="margin: 5px 0 5px 5px; float:right;" src="http://crankyflier.com/wp-content/uploads/2012/01/avqueenlogo.jpg" alt="" title="Aviation Queen Logo" width="177" height="173" /></a>of the best jobs in the world &#8211; airports and security editor for <em>Aviation Week</em> magazine. That, along with being a judge the past four years for Airports Council International-North America’s annual concessions contest and my extensive world travels going back to when I was 5, has given me a fine appreciation of what I like to see in airports when it comes to concessions.</p>
<p>I&#8217;m old enough to remember the days when airport concessions consisted of &#8220;Newstand,&#8221; &#8220;Restaurant,&#8221; &#8220;Snack Bar&#8221; and &#8220;Gifts.&#8221; but oh, how times have changed!!  This change has come for two reasons.</p>
<p>One, as airlines have merged and cut routes and frequencies, they are paying airports less in landing fees and rent. Two, because of post-9/11 security changes, travelers are spending more time in airports, and they&#8217;re demanding more sophisticated food/beverage and retail options.  So below are my five picks for airports doing great things with their concessions programs. </p>
<ul>
<li><strong><a href="http://www.portofportland.com/PDX_Home.aspx">Portland International Airport</a></strong> &#8211; This is a rare airport, in that they don&#8217;t contract with a big concession operator like HMS Host or Delaware North to handle their concessions. They use their own in-house team to come up with what I think is a near-perfect mix of local/regional and national brands. On the food side, they including the <a href="http://www.portofportland.com/Rstnts_Home.aspx?business=LaurelwoodBrewing">Laurelwood Brewing Co.</a>, <a href="http://www.portofportland.com/Rstnts_Home.aspx?business=PizzaSchmizza">Pizza Schmizza</a>, Starbucks, and Panda Express. On the concessions side, there’s the iconic <a href="http://www.portofportland.com/Shops_Home.aspx?business=PowellsBooks">Powell’s Books</a>, <a href="http://www.portofportland.com/Shops_Home.aspx?business=ColumbiaSportswear">Columbia Sportswear</a>, and <em><a href="http://www.portofportland.com/Shops_Home.aspx?business=NewsExpressOregonian">The Oregonian</a></em> news stand.</li>
<p></p>
<li><strong><a href="http://www.flysfo.com/web/page/atsfo/">San Francisco International Airport</a></strong> &#8211; I’ve had the chance to see my original hometown airport evolve over the years, and I love the changes.  Among its treasures, this airport has a <a href="http://www.flysfo.com/web/page/atsfo/passenger-serv/med-serv/index.html">full-service medical clinic</a> and a <a href="http://www.flysfo.com/web/page/orphan/events/index.html">world-class art museum</a>. As I write this, I haven’t been to the new Terminal 2, so nothing in there is in this post. But great food options abound: Andale Mexican Restaurant, Boudin’s Bakery and Café, Tomokazu and Peet’s Coffee.  Retail options are U Threads (sells clothing and items from Bay Area universities), Aviator Books, Coach, and Ghiradelli.</li>
<p></p>
<li><strong><a href="http://skyharbor.com/mapsfoodshops/t4ShopsAndRestaurants.html">Phoenix Sky Harbor International Airport</a></strong> &#8211; This has always been one of my favorite airports because of features like free Wi-Fi, two pet parks, and one of the first cell phone lots in the country.  Terminal 4 (home to Southwest Airlines and US Airways) has some great food choices: Blue Burrito Grille (restaurant and carry-out), Paradise Bakery and Café, Einstein Bagels and Quiznos. On the retail side, check out A to Z Kids, In Celebration of Golf, and See’s Candies.</li>
<p></p>
<li><strong><a href="http://www.ohare.com/About/Midway/Default.aspx">Chicago Midway Airport</a></strong> &#8211; I have actually scheduled some of my Southwest Airlines trips to go through Midway because I love the shopping options there. The main concessions area has an actual sense of place.  Food choices include Harry Caray’s, Nuts on Clark (I’d kill for this popcorn), Ben &#038; Jerry’s, and McDonalds. Available retail choices are House of Blues, Discover Chicago, and Kids Works.</li>
<p></p>
<li><strong><a href="http://www.dfwairport.com/">Dallas/Fort Worth International Airport</a></strong> &#8211; I did an insider’s tour of this facility a few years ago and had a grand time. This is a very passenger-focused airport, with concessions including free Samsung lounges (with seats, outlets and Wi-Fi) and the giant Shop 24 vending machine that sells everything from diapers to Caesar salads. I’m also a big fan of the La Bodega Winery, Cereality Breakfast Bar, Dunkin Donuts, and Au Bon Pain. Retail options include my beloved Bijoux Terner (everything is $10!), Natalie’s Candy Jar, Official Dallas Cowboys Pro Shop, and Bose.</li>
<p>
</ul>
<p>&#8211;<br />
<em>I appreciate Brett allowing me to blog on one of my favorite topics.  You can follow my musings over at <a href="http://aviationqueen.wordpress.com/">AviationQueen.com</a> and follow me on Twitter at <a href="http://www.twitter.com/AvQueenBenet">@AvQueenBenet</a>.</em>
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		<title>New and Proposed Regulations Will Hurt Small Communities (Guest Post)</title>
		<link>http://crankyflier.com/2012/01/19/new-and-proposed-regulations-will-hurt-small-communities-guest-post/</link>
		<comments>http://crankyflier.com/2012/01/19/new-and-proposed-regulations-will-hurt-small-communities-guest-post/#comments</comments>
		<pubDate>Thu, 19 Jan 2012 11:45:46 +0000</pubDate>
		<dc:creator>CF</dc:creator>
				<category><![CDATA[Guest Posts]]></category>
		<category><![CDATA[Pinnacle]]></category>
		<category><![CDATA[Republic]]></category>
		<category><![CDATA[SkyWest]]></category>

		<guid isPermaLink="false">http://crankyflier.com/?p=8732</guid>
		<description><![CDATA[I&#8217;m still out on leave, but I&#8217;ll be back soon. Enjoy this post about small communities . . . &#8211; Over 70% of US airports with commercial air service are served exclusively by regional airlines. And almost all of those airports reside in or next to small or midsize communities. Unfortunately, both the communities and [...]]]></description>
			<content:encoded><![CDATA[<p>I&#8217;m still out on leave, but I&#8217;ll be back soon.  Enjoy this post about small communities . . .</p>
<p>&#8211;</p>
<p>Over 70% of US airports with commercial air service are served exclusively by regional airlines.  And almost all of those airports reside in or next to small or midsize communities.  Unfortunately, both the communities and regional airlines face head winds in the coming years.  New regulations coupled with the potential for additional taxes and reductions in subsidies will hamper the regionals&#8217; ability to grow and operate with sustained profitability.  This will have a direct effect on the small communities that regional airlines serve.</p>
<div align="center"><a href="http://www.flickr.com/photos/crankyflier/6625266657/" title="Empty Jet Bridge by brettsnyder, on Flickr"><img src="http://farm8.staticflickr.com/7154/6625266657_5457716dd3.jpg" width="500" height="335" alt="Empty Jet Bridge"></a></div>
<p>Most people have never heard of Pinnacle Airlines, ExpressJet Airlines, or Republic Airlines but have flown on them many times.  An average regional airline flies turboprop aircraft or jet aircraft with less than 100 seats on a contract basis for mainline carriers such as United or Delta.  Although separate companies, the regionals usually fly under the mainline&#8217;s brand such as Delta Connection or United Express.  In most cases, Delta and United take care of scheduling, promoting, and selling tickets for the flights while the regional takes care of providing the primary product.  Now, let’s hop into some of the issues.</p>
<p>One of the bigger impacts to the industry will be felt when new rules regulating pilot duty time kick in. (Cranky did a good job of <a href="http://crankyflier.com/2012/01/02/new-pilot-rest-rules-may-be-good-but-cargo-pilots-and-small-cities-should-be-worried/">breaking down this issue in a previous post</a>.)  These new rules were introduced to address ongoing concerns about pilot fatigue.  Pilots will now work a little less and get more rest.  This makes sense.  Who doesn’t want a well-rested pilot at the controls? </p>
<p>But there is a flip side.  The new rules governing duty and rest periods will force carriers to hire more pilots if they want to run the same schedules they have today.  The savvy regionals will work diligently with their mainline partners to reoptimize schedules.   But they will not be able to totally avoid higher pilot costs.  Regionals will have to pass on the additional costs to their mainline customers to remain at current profitability levels.</p>
<p>Another new upcoming regulation will increase the minimum number of hours of experience a pilot needs to fly for an airline.  Currently, a pilot only needs 250 hours along with a Commercial License to get hired with a regional airline.  In a couple of years, this will increase to 1,500 hours and require an Airline Transport Pilot (ATP) certificate.</p>
<p>On the surface, this seems like a no brainer.  More hours = more experience = safer flying.  But there isn’t research proving that pilots with 1,500 hours consistently fly safer than someone with less experience.   When this steep increase is implemented, it will create an artificial pilot shortage.  Some pilots pay out of pocket or through loans to get to 250 hours.  Getting to 1,500 hours on one&#8217;s own dime will push a bunch of would-be pilots out of the market.   The shortage will push up wages to account for the lower supply and result in additional expenses.</p>
<p>In the fall of 2011, the Obama administration proposed creating a new $100 departure tax for all air carrier departures and general aviation jet departures.  The proposal also increased security taxes on airline tickets and was given to the super committee for consideration.   An impressive coalition of 30 organizations including airline trade groups, general aviation groups, unions, and manufacturers quickly got together to fight the proposal.  The rally cry is that airlines and passengers already pay higher taxes than alcohol, tobacco and guns which are intentionally set high to discourage their use.</p>
<p>It appears that the White House quietly backed off the proposal because of the backlash it received during an election cycle.  If the proposal was revisited and passed, it would have a disproportionate effect on regional airlines that carry fewer passengers each flight than their mainline counterparts.  It’s much cheaper to spread $100 over 200 passengers than over 50.</p>
<p>Another debate in Congress has been the over subsidizing air service to small communities through the Essential Air Service (EAS) program.  This program is designed to help provide small communities with air service that cannot, due to such low demand, support itself.  I expect a haircut or possibly elimination of this program.  Accordingly, many routes would cease to exist.</p>
<p>In isolation, each of these challenges would have a much smaller impact on the industry.  Together, these policies would have significant negative economic effects and force airlines to cut flights on underperforming routes.  And each flight lost in a small community has larger implications due to the community’s relative size.</p>
<p>These changes will burden an industry already struggling with consolidation and high fuel prices.  Pinnacle is flirting with bankruptcy.  SkyWest and Republic’s financials have been limping along since their acquisitions of ExpressJet and Frontier respectively.  American Eagle’s anticipated spinoff from American Airlines will increase competition in an already saturated market.  We&#8217;re seeing a steep decline in small jets which don’t work with today&#8217;s fuel prices.  Turning a good profit in the regional industry is proving difficult even while their mainline counterparts are starting to enjoy being in the black.</p>
<p>Some municipalities and the airlines will come up with creative solutions to mitigate the effects.  They will also need to continue lobbying the government to implement policies that have positive economic effects.  Regardless, it appears that the end result will be fewer options in small communities.</p>
<p>&#8211;<br />
<em>Matt Tregre is an airline enthusiast and has held positions in finance, revenue management, pricing, customer service, and baggage tossing with stints at Southwest, ExpressJet, &#038; Pinnacle.  During school, he developed marketing plans for small airports.  He now works in revenue strategies for a corporate aviation company and greatly misses having flight benefits.</em></p>
<p>[<em><a href="http://commons.wikimedia.org/wiki/File:Jet_bridge_YXU.jpg">Original photo via Wikimedia Commons user Paranomia</a>/<a href="http://creativecommons.org/licenses/by-sa/3.0/deed.en">CC 3.0</a></em>]
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		<title>The Importance of An Airport&#8217;s Name (Guest Post)</title>
		<link>http://crankyflier.com/2012/01/17/the-importance-of-an-airports-name-guest-post/</link>
		<comments>http://crankyflier.com/2012/01/17/the-importance-of-an-airports-name-guest-post/#comments</comments>
		<pubDate>Tue, 17 Jan 2012 11:45:28 +0000</pubDate>
		<dc:creator>CF</dc:creator>
				<category><![CDATA[Airports]]></category>
		<category><![CDATA[Guest Posts]]></category>

		<guid isPermaLink="false">http://crankyflier.com/?p=8710</guid>
		<description><![CDATA[I&#8217;m still hanging out, getting to know my son, so here&#8217;s another guest post for you. This time it&#8217;s an interesting look at airports and their names. &#8212;- The name of an airport: we see it when we book reservations, on billboards as we cruise down the highway, on signs directing us towards the terminals, [...]]]></description>
			<content:encoded><![CDATA[<p><em>I&#8217;m still hanging out, getting to know my son, so here&#8217;s another guest post for you.  This time it&#8217;s an interesting look at airports and their names.</em></p>
<p>&#8212;-</p>
<p>The name of an airport: we see it when we book reservations, on billboards as we cruise down the highway, on signs directing us towards the terminals, and we hear it constantly over the airport’s PA and on the airplane itself. As frequent fliers, we try to tune it out and focus on the three-letter airport code—it’s a daunting task given how often we’re exposed to the actual name.</p>
<p>But there are reasons why air travelers are constantly inundated with the full name of the airport. First, an airport’s name is the largest free advertisement in its attraction toolbox. It’s plastered everywhere, and mostly not at the airport’s expense. Flight search engines use the airport’s full name in search boxes, airlines use the airport’s full name in itineraries, and cities use the airport’s full name on signs on highways and roads. With this much expensive real estate freely displaying the airport’s name, it’s no wonder that this component is integral for attracting passengers. Second, the name happens to tie in nicely with the region’s economic development strategy. Not only is it important for funneling more passengers through an airport’s gates and services, but it also is important for the region the airport serves.</p>
<p>Take the example of what happened recently in Bozeman, Montana, where the name of its airport was recently changed from Gallatin Field Airport to Bozeman Yellowstone International Airport at Gallatin Field. Not only does the new name include “Bozeman,” the largest city the airport serves, and “international,” even though the airport does not yet have a customs facility, but also “Yellowstone” was added. The airport, which is approximately 90 miles from Yellowstone National Park, changed its name to better compete with other airports that serve the park (Yellowstone Airport in West Yellowstone, Montana which is just a couple miles from the park; Jackson Hole Airport in Jackson Hole, Wyoming which is approximately 47 miles from the park; and Yellowstone Regional Airport in Cody, Wyoming which is approximately 52 miles from the park). </p>
<div align="center"><a href="http://www.flickr.com/photos/crankyflier/6644288043/" title="Yellowstone Airports by brettsnyder, on Flickr"><img src="http://farm8.staticflickr.com/7160/6644288043_d6d398581a.jpg" width="481" height="500" alt="Yellowstone Airports"></a></div>
<p>Even though none of these airports are actually located in Yellowstone, their names all work to advertise their proximity to this popular destination. Numerous other airports utilize this strategy of including a nearby destination in part of their names: Fresno Yosemite International Airport, which is located in Fresno, CA, is approximately 60 miles from the park; and the airports that serve Washington, DC (Ronald Reagan Washington National Airport, Washington Dulles International Airport, and Baltimore Washington International Thurgood Marshall Airport) that all use Washington in their name yet none are actually located in the city.</p>
<p>However, not every airport that claims to utilize this strategy actually does so. Last year the airport that serves Budapest, Hungary changed its name from the Budapest Ferihegy International Airport to the Budapest Liszt Ferenc International Airport. With a new terminal opening at the airport and the country taking over the EU presidency, the national government claimed that a name change was necessary to be more descriptive and more attractive to European travelers—after all, who has ever heard of Ferihegy? To further support the government’s cause, they elicited the support of the population, naming the airport after the country’s musical hero, Franz Liszt, who is widely known and celebrated throughout Europe and the world. Throughout the negotiations, the government made the case that changing the airport’s name would better promote the region during such a crucial time and in the future. The problem is that it is hard to imagine that naming an airport after a prominent figure would actually increase passenger traffic—is Washington/National attractive to passengers because it’s now named after Ronald Reagan or is it because it’s mere minutes from the city center? While the name change in Budapest might promote Hungarian culture, it certainly does little to increase growth for the airport or the region.</p>
<p>An airport’s name is clearly an important asset, much like the names of sport stadiums in the U.S. Airports use their names as an advertisement to promote passenger growth as well as the region’s wider development. Sports stadiums lease or sell their names as an additional source of revenue. If airport finances get much worse, maybe we’ll start seeing corporate sponsorship there, as well—who knows, perhaps the GM Detroit International Airport or the Exxon Mobil Dallas International Airport will be on the next billboard you pass?</p>
<p>&#8211;<br />
<em>Jacob Kuipers is an economic policy consultant who has lived in Vermont, Washington, DC, Montana, Boston, Budapest, and Cleveland over the past five years. His current clients include the U.S. government, the Harvard Business School, and economic development organizations. He is a student pilot and an airplane enthusiast.  You can reach him at jacob /dot/ a /dot/ kuipers /at/ gmail /dot/ com.</em>
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		<title>Everything You Wanted to Know About The World of Aircraft Leasing (Guest Post)</title>
		<link>http://crankyflier.com/2012/01/16/everything-you-wanted-to-know-about-the-world-of-aircraft-leasing-guest-post/</link>
		<comments>http://crankyflier.com/2012/01/16/everything-you-wanted-to-know-about-the-world-of-aircraft-leasing-guest-post/#comments</comments>
		<pubDate>Mon, 16 Jan 2012 11:45:20 +0000</pubDate>
		<dc:creator>CF</dc:creator>
				<category><![CDATA[Guest Posts]]></category>
		<category><![CDATA[Mergers/Finance]]></category>

		<guid isPermaLink="false">http://crankyflier.com/?p=8724</guid>
		<description><![CDATA[I&#8217;m still on paternity leave, but today I have an interesting post on the world of leasing from someone on the inside. &#8211; The aircraft leasing business is an integral part of the aviation world, yet the travelling public knows relatively little about it. Currently about 38% of the world&#8217;s commercial fleet is leased. This [...]]]></description>
			<content:encoded><![CDATA[<p><em>I&#8217;m still on paternity leave, but today I have an interesting post on the world of leasing from someone on the inside.</em></p>
<p>&#8211;</p>
<p>The aircraft leasing business is an integral part of the aviation world, yet the travelling public knows relatively little about it.  Currently about 38% of the world&#8217;s commercial fleet is leased.  This figure is expected to grow to over 40% in just the next few years.</p>
<div align="center"><a href="http://www.flickr.com/photos/crankyflier/6622462289/" title="Leased Aircraft by brettsnyder, on Flickr"><img src="http://farm8.staticflickr.com/7142/6622462289_73082ece62.jpg" width="500" height="333" alt="Leased Aircraft"></a></div>
<p>Ireland, you may be surprised to find out, is a bit of a hub for aircraft leasing.  Nine out of the top 10 leasing firms in the world operate here.  This is due to a few factors.  We have favourable corporation tax rates and tax treaties that allow leasing companies to be competitive.  In addition to this, there is a big pool of aviation expertise in our country.  One of the first major players in the aviation leasing industry was Guinness Peat Aviation.  After its dramatic demise, several companies rose from the ashes and ever since, Ireland has been a major player in global leasing.</p>
<p>But first, why do airlines need to lease planes &#8211; can they not just buy them, you might ask?  Well yes they can, but owning your own aircraft can present problems.</p>
<p><strong>Price</strong><br />
Aircraft are not cheap.  You only need to look at the list prices of Airbus and Boeing to see just how pricey they can be.  Therefore some airlines might not be able to afford aircraft, or in a bid to keep their balance sheets looking healthy might not want to have such large outlays.  Leasing allows airlines a relatively cheap way of getting aircraft, as there isn&#8217;t the same extent of expenditure, and it stops their balance sheets from looking too asset heavy, tying up capital.  Also from an operational point of view, it allows airlines access to newer planes and more fuel efficient aircraft.  Cranky Air might be able to buy a 737-200 on the market, but could afford to lease a newer 737-800.</p>
<p><strong>Economic uncertainty</strong><br />
The last few years have been a good example of why leasing planes can be a better alternative than owning them outright.  When demand is unstable, the more flexibility you have in your fleet levels, the better.</p>
<p>Take for example Cranky Air, based in Long Beach.  They buy 5 aircraft from Comac, yet owing to a major corporation opening a plant nearby they now have enough demand to have 8 aircraft in service &#8211; this is where a leasing company can be the airline’s best friend.  They can step in and relatively cheaply (relative to buying an aircraft) provide them with aircraft to cater for the spike in demand.  </p>
<p>Conversely, let&#8217;s say the largest employer in Long Beach were to shut up shop and Cranky Air now only needs 3 aircraft for the next two seasons.  If they own the 5 aircraft they would find themselves in a major problem, trying to fill the aircraft or lease them out.  However if their fleet was composed of a few leased aircraft, they could arrange for the early return of the aircraft, and with some penalty payments, address their capacity issues.</p>
<p>Here&#8217;s the view from the lessor&#8217;s perspective.</p>
<p><strong>Risk</strong><br />
When dealing with a potential new customer, there will always be risk analysis done on the airline.  Do they have a good safety record or have there been any incidents in their past?  What are the chances they might not pay us?  If a customer is risky, there are mechanisms to protect yourself as a lessor.  This would be done by getting guarantees or large deposits that you can access in the event of default by the airline.  If they are too big a gamble as an operator &#8211; don’t put your aircraft in there in the first place.</p>
<p><strong>Maintenance</strong><br />
Long leases are better for the lessor than shorter ones.  The fewer changeovers an aircraft does during its life the better!  When an aircraft comes off lease with Cranky Air, in an all business class configuration (owing to a misplaced opinion that an all business class Long Beach &#8211; Topeka route was a guaranteed success), and we want to place the aircraft with a new operator, Concierge Air, who want it in an all economy lay-out, reconfiguring the aircraft comes at a huge cost to us.  Lessors try to avoid bespoke aircraft lay-outs like this, a colleague of mine refers to them as “Aircraft with a sushi-bar and split galley.”</p>
<p>Other considerations are maximum takeoff weights (MTOWs), repainting the aircraft, and inflight entertainment systems.  So if we can place the aircraft in 2 ten year leases, rather than four 5 year leases &#8211; this is incredibly beneficial to the leasing entity.  Like commercial airlines, our planes don’t make money when they are sitting on the ground, so we also try and keep lead-in times between leases to an absolute minimum. Ideally, we like to have a new customer lined up for an aircraft before it even comes off lease with the previous operator.  In an ideal world you would look to find a customer who wants the aircraft in its current configuration, but that isn’t always possible.</p>
<p><strong>Legal</strong><br />
From a legal perspective an aircraft needs to be placed with airlines that aren’t surrounded by red-tape.  Certain jurisdictions are typically avoided, as the red-tape to get the aircraft on lease and out at the end of the lease is too onerous and costly.  For example, sometimes you see airlines across the world operating aircraft that are on the Irish register (EI-XXX), as their own national registers might be a nightmare to deal with. </p>
<p>The airline industry is unpredictable by its nature and despite all these checks, sometimes leases do not work out. The lessee might not maintain your aircraft as agreed, or simply not pay.  If this happens you could negotiate with the airline for an early return, or if the relationship becomes hostile, you can use national/international authorities to seize the aircraft in a friendly jurisdiction who will be receptive to your plight.  This could be done by an airport authority or someone like Eurocontrol, who may also be owed fees for the use of the same aircraft.  It is typically easier to negotiate a compromise as seizing aircraft can get litigious and can restrict the use of the plane until it is all settled.  A country’s aviation authority might not take kindly to you barging in and taking planes back, hence they could make your life hell trying to get the aircraft off the local register or drag you through the local courts.</p>
<p>In the future, it will become more likely that the planes you fly on will be leased as this area of the aviation world grows.  Next time you fly, consider for a moment that you could potentially be on board a hired aircraft.</p>
<p>&#8211;</p>
<p><em>David Soffe is a self-professed aviation nerd- he blames this on both his parents who worked in the airline industry.  He is a Business and Law graduate from UCD Dublin.  Currently he is working as a legal intern in an international aircraft leasing firm in Dublin.  You can find him on Twitter <a href="http://twitter.com/davidwilliamp">@davidwilliamp</a>.
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		<title>Experiencing TSA&#8217;s PreCheck Expedited Screening Program (Guest Post)</title>
		<link>http://crankyflier.com/2012/01/12/experiencing-tsas-precheck-expedited-screening-program-guest-post/</link>
		<comments>http://crankyflier.com/2012/01/12/experiencing-tsas-precheck-expedited-screening-program-guest-post/#comments</comments>
		<pubDate>Thu, 12 Jan 2012 11:45:38 +0000</pubDate>
		<dc:creator>CF</dc:creator>
				<category><![CDATA[Government Regulation]]></category>
		<category><![CDATA[Guest Posts]]></category>

		<guid isPermaLink="false">http://crankyflier.com/?p=8767</guid>
		<description><![CDATA[One reader has had the chance to experience the TSA&#8217;s PreCheck program. Here&#8217;s an update on things along with his experiences using the program. &#8211; Tired of waiting behind the unwashed masses which never seem to be able to separate themselves from their bottled water, belts, liquids and shoes at security checkpoints? If you’ve put [...]]]></description>
			<content:encoded><![CDATA[<p><em>One reader has had the chance to experience the TSA&#8217;s PreCheck program.  Here&#8217;s an update on things along with his experiences using the program.</em></p>
<p>&#8211;</p>
<p>Tired of waiting behind the unwashed masses which never seem to be able to separate themselves from their bottled water, belts, liquids and shoes at security checkpoints?   If you’ve put off submitting an application for US Customs and Border Protection (CBP) trusted traveler program, you now have another reason to stop procrastinating.</p>
<p>The TSA has opened expedited screening lanes at several major airports around the country.  The “PreCheck” program started with a limited trial at selected locations last October at DFW, Atlanta, Miami, and Detroit.   Originally open only to top-tier American and Delta Air Lines passengers who were already members of one of the CBP’s Trusted Traveler Programs, PreCheck has now been expanded to include any passenger who holds Global Entry, SENTRI, or NEXUS approvals to enter the country.</p>
<p>More than 140,000 travelers have already been screened at the pilot checkpoints.  The program was expanded recently to include passengers traveling on Delta from Minneapolis/St. Paul, American from Los Angeles International, and both carriers from Las Vegas McCarran.   In January, US Airways Passengers will be able participate in the program at McCarran.  United elite travelers will be invited to join in at some point in 2012 – approval is pending merger of Continental and United’s information systems are combined. </p>
<p>I’d been invited to join PreCheck last October as an American Airlines Premier Executive qualifying traveler.  A last minute change of plans recently left me scrambling to catch a flight out of Miami on a stormy and congested Sunday night.  Taking the finally-opened airport people-mover from the centralized car rental facility (a pleasant surprise), I checked in at an American kiosk and proceeded to the elite line at the airport’s D-Gates.   After my boarding pass was scanned, I was directed to a nearly empty security line – another surprise – as I had been approved for expedited security screening. </p>
<p>Once at the screening checkpoint, I was told I did not need to take off my shoes, remove my belt, or my light jacket in order to pass through the screening device.   I did not have to remove my “3-1-1” liquids from my carry-on bag, but I did have to remove my computer from the non-compliant bag.  I was through security in under a minute, and on my way to the gate in time to download email before departure. </p>
<p>Qualifying for the Global Entry program requires applicants go through a fairly rigorous screening process in exchange for the right to bypass long immigration and customs lines at US International Airports.  Anyone who has the correct credentials can now opt in to the PreCheck program by entering their clearance code in their airline’s security profile – as it is no longer necessary to hold top tier status once CBP approval has been attained.</p>
<p>According to US Transportation Security Administrator Joe Pistole, better information about travelers helps the TSA to say “Now, we don’t have to treat each person as a putative terrorist,” according to a report in Bloomberg Businessweek.  </p>
<p>While I usually feel most TSA employees act professionally while doing a very difficult and demanding job, I have to admit to wondering if some screeners DO assume everyone is guilty until proven innocent.   Traveling with my 88 year old father at Newark last fall, for example, pre-warning about his artificial hips and other ailments did little to lessen interrogation procedures which seemed inappropriate at best, and extreme considering his physical condition.  Terrorist, indeed!</p>
<p>Gaining approval in a Trusted Traveler program is not an automatic procedure, even for those who travel abroad frequently.  The process includes capture of fingerprints (done neatly and digitally) as well as an iris scan.  For those concerned about information captured from the microchip contained in today’s US passports, questions of privacy may prove to be enough to discourage registration.  But compared to biometric data collected by other countries, the tradeoff might seem less onerous – I have saved countless hours of standing in line at increasingly congested gateways.  The PreCheck program was an unexpected and welcome surprise.</p>
<p>Applicants should also be aware they will be subjected to an extensive, face-to-face interview at one of the TSA’s International Airport Offices.  I faced a 30-minute interview inquiring into my reasons for travel to over 50 countries in the past ten years.  As a self-employed individual, I also had to supply a copy of my most recent tax return.  An unfortunately, I paid my own registration fee before American Express announced it would reimburse its Platinum Card holders for the cost of the Global Entry program – where approval is valid for a period of five years. </p>
<p>Would I register today knowing how much information was eventually collected?   Certainly!  It should also be noted there is no guarantee any given passenger will not face more extensive random security checks, whether entitle to PreCheck or not.   With as much as I travel, the benefits easily outweigh my concerns – and with PreCheck expanding throughout the country, I’m looking forward to more pleasant surprises.</p>
<p>&#8211;<br />
<em>Rob Lipman is Executive Vice President of <a href="http://www.summitmgt.com/">Summit Management Services</a>, an international meeting planning company specializing in pharmaceutical research and incentive programs.   He logs approximately 200,000 miles a year and visits at least five continents annually.   He is an avid Cranky Flier reader and professes to be in search of “new airline experiences” and the perfect flight.</em>
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		<title>Eight Hour Ground Delay in the Hartford Snow Storm (Trip Report) (Guest Post)</title>
		<link>http://crankyflier.com/2012/01/11/eighty-hour-ground-delay-in-the-hartford-snow-storm-trip-report-guest-post/</link>
		<comments>http://crankyflier.com/2012/01/11/eighty-hour-ground-delay-in-the-hartford-snow-storm-trip-report-guest-post/#comments</comments>
		<pubDate>Wed, 11 Jan 2012 11:45:35 +0000</pubDate>
		<dc:creator>CF</dc:creator>
				<category><![CDATA[American]]></category>
		<category><![CDATA[Guest Posts]]></category>
		<category><![CDATA[Trip Reports]]></category>

		<guid isPermaLink="false">http://crankyflier.com/?p=8760</guid>
		<description><![CDATA[Remember that October snowstorm and the meltdown that followed in Hartford? This woman and her husband were stuck in the thick of it. Here&#8217;s a great read about their experiences along the way. &#8211; In late October, my husband and I enjoyed a fabulous vacation in Europe. We managed to see 4 different countries, caught [...]]]></description>
			<content:encoded><![CDATA[<p><em>Remember that October snowstorm and the meltdown that followed in Hartford?  This woman and her husband were stuck in the thick of it.  Here&#8217;s a great read about their experiences along the way.</em></p>
<p>&#8211;</p>
<p>In late October, my husband and I enjoyed a fabulous vacation in Europe.  We managed to see 4 different countries, caught up with friends, and experienced as much as we could in a short time.  Little did we know what was in store for us on our voyage home.</p>
<div align="center"><a href="http://www.flickr.com/photos/crankyflier/6643963999/" title="Passing the Time in the Hartford Snowstorm by brettsnyder, on Flickr"><img src="http://farm8.staticflickr.com/7006/6643963999_39bf199c3d.jpg" width="500" height="375" alt="Passing the Time in the Hartford Snowstorm"></a></div>
<p>Our flight from Paris to New York was circling in the weather when the pilot informed us we were heading to Hartford, Connecticut.  We&#8217;d been in the air an hour past our arrival time, and the urgency to land was apparent.  We finally landed in Hartford, being told we would get back in the air as soon as possible to get to JFK.</p>
<p>My husband and I turned on our phones and checked AA for our reroute.  We found ourselves booked out of LaGuardia on Monday morning.  It was Saturday.  This COULDN&#8217;T be right.  Angry, I called American and waited on hold for 20 minutes to find out most of the flights at JFK were canceled and Monday was clearly the best they can do for us right now.  I was encouraged to call back.  Irate, I hung up the phone.  My husband and I started to process the information, and to understand the spot we were in.  The snow was piling up on the wings.  The captain gave updates:  </p>
<p><strong>430p</strong>: Pilot tells us we will be here for a little while to get refueled and then de-iced<br />
<strong>5p</strong>: Pilot says we are next in line<br />
<strong>530p</strong>: Pilot tells us they only have one fuel and de-ice truck working so it will be awhile.  He also tells us if we don&#8217;t leave by 550p his flight day is done and we have to stay here in Hartford for the night. &#8220;In my over 20 years of flying planes I can tell you that I cannot take off with slush on the runway.  Folks, I&#8217;m looking at an inch of slush on the runway and there is no equipment working to clear it.&#8221;<br />
<strong>6p</strong>: Pilot tells us that we know we are here for the night and still no news on fuel or de-ice.  The pilot seems more upset, but tells us the airline is working to find hotels for us.</p>
<p>At this point my husband got angry.  The American app on our phone still showed us leaving LaGuardia on Monday morning, so he called American.  We had a new strategy and asked about flights out of Hartford on Sunday.  He was told the first flight we could get on was around 10p.  This seemed absurd to us, he hangs up still angry but feeling better after doing something about it.  This was a lesson we learned: Do something with your anger.  Don&#8217;t sit and stew.</p>
<p><strong>7p</strong>: Pilot tells us that there is only 1 international gate here and that there are no customs officials to deplane us.  Therefore we have to stay on plane<br />
<strong>8p</strong>: Pilot tells us that we will be heading to the gate to deplane.<br />
<strong>820p</strong>: Pilot tells us that he isn&#8217;t sure if we&#8217;ll get to gate, he tells us getting information out of these people is like pulling teeth<br />
<strong>9p</strong>: Pilot says we are going to head to another gate and then we will deplane and be held in the terminal area by that gate since we can&#8217;t go anywhere until we clear customs<br />
<strong>915p</strong>: Pilot tells us that we will wait to get the international gate but we can not get off plane until everyone from the Swiss flight in front of us clears customs.  All 300 of them.</p>
<p>At this point I was on the phone with American.  I booked that flight out at 10p, hoping that when we got on the ground I could make something better happen. </p>
<p>We&#8217;d been given snacks and water regularly while we were sitting on the tarmac for 8 hours.  The bathrooms were functioning.  The mood was patient on the plane, which was surprising.  In the row in front of us, a single mom had been entertaining her year-old daughter.  This mother had worked HARD all trip, and the baby had been none the wiser of our predicament.  We were honestly in awe of her patience and ingenuity to keep that baby happy.  Lesson #2: It could still be worse.  We were trying to get home to our own children, and could fully appreciate how different this experience would have been if our children were trapped there with us.</p>
<p><strong>1020p</strong>: Pilot tells us that we are going to the gate<br />
<strong>1025p</strong>: Pilot tells us the power is out in the terminal so the gate isn&#8217;t working, we will have to exit on tarmac<br />
<strong>1050p</strong>: Doors open and we can deplane<br />
<strong>11p</strong>: We enter customs area<br />
<strong>1130p</strong>: We clear customs &#8212; without our bags. Can we even do that?<br />
<strong>1140p</strong>: We get to baggage area and are told that our bags can&#8217;t be taken off the plane because they don&#8217;t have equipment at this airport for our size plane and shuttles will be coming to bus us to the other terminal<br />
<strong>1150p</strong>: We bus over to other terminal<br />
<strong>midnight</strong>: We arrive at terminal to find a spot to sleep<br />
<strong>1215a</strong>: We are lucky enough to find spot where they are first giving out cots and sheets for sleeping<br />
<strong>1230a</strong>: We settle in to sleep.  Here&#8217;s a video of the sleeping situation in the ticketing area at the Hartford airport:</p>
<div align="center"><iframe width="500" height="254" src="http://www.youtube.com/embed/Kqo9RoZPhBQ" frameborder="0" allowfullscreen></iframe></div>
<p><strong>1a</strong>: 6&#8217;7&#8243; 350 lb Bostonian decides to pull up a cot next to us and shake the windows with his snoring<br />
<strong>2a</strong>: Windows still shaking and many people are awake<br />
<strong>4a</strong>: We wake up for the day<br />
<strong>7a</strong>: We get to American counter.</p>
<p>While in line to speak to the lone American employee, we witnessed some interesting drama.  The Europeans from our flight got angry.  First a few men were angry at the only employee trying to help us.  Then they turned on themselves.  A French lady in the crowd started chastising the lead man who was giving the employee a hard time.  &#8220;It is not her fault!&#8221; she told him.  The French lady brought calm to the crowd, and we resumed our spaces in line.  The man in front of us sat next to my husband on the plane.  We knew he was French and was trying to get to Cleveland.  He gave the American employee a hard time.  </p>
<p>He was put back on our flight, which left for JFK that afternoon, and arrived 45 minutes before his connection to Chicago, where he would then have to figure out his flight to Cleveland.  She told him this was the best she could do.  We also needed to get to Chicago, and when it was our turn we suggested the same itinerary.  She admitted to us that there was no real chance of making that connection and thought our plan to fly from Hartford to O&#8217;Hare directly was a better one.  She printed our boarding passes to Chicago.  Lesson # 3 &#8212; being nice pays.  We again questioned if we could get our luggage.  She confirmed we would be abandoning it to fly home from there.  </p>
<p>We took our tickets and passed through security 15 hours early&#8230;</p>
<p><strong>11a</strong>: See there are 2 spots open on flight to Chicago at 2pm, I call American Airlines and get us booked&#8230;We will be home by 4pm<br />
<strong>130p</strong>: We board the flight<br />
<strong>2p</strong>: We take off for Chicago&#8230;<br />
<strong>4p (Chicago Time)</strong>: We land in Chicago!!!!</p>
<p>After some time had passed, we remembered more of the fabulous experiences on our trip and less about the unfortunate circumstances of our return.  The airline had compensated us with vouchers and miles.  </p>
<p>We will fly again, we have already booked a trip for the whole family.  I will not boycott a single airline, because I saw planes from every airline I could fly stuck in the same predicament.  I vow to fly directly whenever possible.  We love to travel and experience new places, and this bad experience will not keep us from enjoying our hobby.  We will be smart and prepared for our next trip in February.  Wish us luck!</p>
<p>&#8211;<br />
<em>Corry Stanley lives in the Chicago suburbs with her 2 and 4 year old sons, husband of nearly ten years, and two rescue dogs.  She&#8217;s a native Wisconsinite, lifelong Packer fan, and an IT professional.  She tweets infrequently at <a href="http://twitter.com/corry_s">@corry_s</a>.</em>
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		<title>Where Are Airlines Going With Their Loyalty Programs in 2012? (Guest Post)</title>
		<link>http://crankyflier.com/2012/01/10/where-are-airlines-going-with-their-loyalty-programs-in-2012-guest-post/</link>
		<comments>http://crankyflier.com/2012/01/10/where-are-airlines-going-with-their-loyalty-programs-in-2012-guest-post/#comments</comments>
		<pubDate>Tue, 10 Jan 2012 11:45:59 +0000</pubDate>
		<dc:creator>CF</dc:creator>
				<category><![CDATA[Frequent Flier Programs]]></category>
		<category><![CDATA[Guest Posts]]></category>

		<guid isPermaLink="false">http://crankyflier.com/?p=8684</guid>
		<description><![CDATA[If the name down below looks familiar, it&#8217;s because he wrote a guest post here on the future of airline loyalty programs way back in 2008. Now he&#8217;s back to fill in while I&#8217;m on paternity leave. &#8211; Last year, when Southwest Airlines released its new Rapid Rewards program, the whole system seemed very familiar [...]]]></description>
			<content:encoded><![CDATA[<p><em>If the name down below looks familiar, it&#8217;s because he <a href="http://crankyflier.com/2008/12/10/the-future-of-airline-loyalty-programs/">wrote a guest post here on the future of airline loyalty programs</a> way back in 2008.  Now he&#8217;s back to fill in while I&#8217;m on paternity leave.</em><br />
&#8211;<br />
Last year, <a href="http://crankyflier.com/2011/01/06/southwest-rolls-out-new-straightforward-rapid-rewards-program/">when Southwest Airlines released its new Rapid Rewards program</a>, the whole system seemed very familiar to me.  Several years ago, I predicted that there would be a day when airline point systems would become detached from actual flights, and the points would merely represent a fixed value.</p>
<p>This is almost exactly what Southwest has done.  It has gone from offering domestic flight awards with limited availability, to handing out fixed-value points with unlimited redemption options.  Its previous system was incredibly simple, and, sadly, it has thrown that out in favor of a far more <a href="http://www.flickr.com/photos/crankyflier/6582203455/" title="Frustrated Traveler by brettsnyder, on Flickr"><img style="margin: 5px 5px 5px; float:left;" src="http://farm8.staticflickr.com/7034/6582203455_50be74e29f_m.jpg" width="240" height="180" alt="Frustrated Traveler"></a>complex scheme.  A similar system was <a href="http://crankyflier.com/2008/10/13/virgin-america-announces-elevate-redemption-levels-and-more/">announced by Virgin America in 2008</a> and <a href="http://crankyflier.com/2009/08/04/redemption-elite-status-and-partners-in-jetblues-new-trueblue-part-2/">launched by JetBlue in late 2009</a>.</p>
<p>Even with two fewer major domestic airlines than there were in 2008, surviving carriers have not switched to fixed value systems &#8211; at least, not entirely.  Delta continues to offer its <a href="http://www.delta.com/skymiles/use_miles/pay_miles/index.jsp">Pay with Miles program</a>, which allows customers to liquidate their accrued &#8220;miles&#8221; at a rate of one cent per SkyMile toward the purchase of any airfare.  Similarly, United offers its <a href="http://www.united.com/page/article/1,,51667,00.html">Choices program</a>, while American rolled out its <a href="http://www.aa.com/i18n/urls/dynamicair.jsp">Dynamic Air awards</a> for customers to trade miles for airfares at fixed rates.</p>
<p><strong>Signs of Customer Frustration Reach the Top</strong><br />
Imagine Doc Brown from the movie &#8220;Back to the Future&#8221; becoming obsessed with airline miles instead of time travel.  The character might resemble <a href="http://milepoint.com/forums/members/randy-petersen.7/">Randy Peterson</a>, the founder of Flyertalk and milepoint.</p>
<p>Recently, at a frequent flier loyalty program conference, Peterson offered some interesting observations and anecdotes.  Speaking on the basis of anonymity, several airline CEOs and airline loyalty program executives divulged to Peterson that they were intrigued by the trend of fixed point systems, seeing this as an opportunity to avoid customers&#8217; dissatisfaction with limited award seat inventory.</p>
<p>This reality comes as no surprise to members of frequent flier programs, who often dislike airline loyalty programs because they rarely offer awards at lower mileage levels.  Several banks offering rewards programs, such as Capital One, have also responded to this problem, and offer more products with fixed value reward points.</p>
<p><strong>The Problem With Fixed Value Programs</strong><br />
The airlines Randy Peterson met with have seriously considered revising their programs so that each mile represents a fixed amount of airfare.  Peterson, perhaps the world&#8217;s foremost expert on points and miles, offered this observation:  If airlines convert their loyalty programs to a revenue-based model, how will they dispose of unsold seats?</p>
<p>As it stands now, airlines can offer discounts on select flights, while turning their remaining inventory into low mileage award buckets.  If miles come to represent a fixed value towards the purchase of existing airfares, airlines will lose a key distribution channel for their unsold inventory.</p>
<p><strong>The Paradox of Airline Awards</strong><br />
Airlines need their loyalty programs because they give customers a reason to return, as well as the promise of free flights and vacation travel.  In addition, these miles function as a kickback to business travelers who receive reimbursement for their travel from their employer.  This benefit vanishes when customers cannot use awards for trips to Hawai&#8217;i in the winter, or to Europe in the summer.</p>
<p>A revenue-based program fixes the problem of availability, while removing the ability to earn amazing rewards.  People want to redeem miles for fantastic First Class trips, not for pennies towards regular airfare.</p>
<p>Southwest Airlines, which will begin offering service to Atlanta in February of 2012, will have a hard time winning over Delta customers who dream of trips to Milan, not Milwaukee.  To remain competitive, Southwest has created the More Rewards option to allow customers to redeem points on other carriers.  I am skeptical about whether this particular fixed value program can sway devoted Delta fliers. However, only time will tell.</p>
<p><strong>Is There a Middle Ground?</strong><br />
When it comes to award travel, the elephant in the room is fuel prices.  Airlines have to justify each award, as every occupied seat and every bag carried burns fuel.</p>
<p>A distance-based award chart may provide the solution. While some take issue with the haphazard implementation of British Airways&#8217; new Avios system, this type of program may be more beneficial than a revenue-based system. This program, perhaps inspired by fellow oneworld member LAN, offers customers fantastic deals on short-haul flights and some multi-stop itineraries.  With distance-based award charts, airlines can be assured of a correlation between costs per available seat mile and the mileage required for those awards.</p>
<p>At the same time, carriers like British Airways and Air Canada risk alienating their customers further by turning valuable award programs into weak discount programs under the guise of <a href="http://crankyflier.com/2011/11/28/talking-to-british-airways-about-elite-status-avios-and-the-dreaded-fuel-surcharge-across-the-aisle/">suspiciously large &#8220;fuel surcharges.&#8221;</a>  British Airways&#8217; justifications for its enormous surcharges strains credulity, especially when you consider that it imposes these charges on award tickets for infants carried on their parents&#8217; laps.</p>
<p><strong>Final Thoughts</strong><br />
It appears that, over the next few years, carriers around the world will continue to struggle and experiment with zone, revenue, and distance-based award systems.  Airlines need to generate profits from their loyalty programs, but they cannot forget that customer satisfaction is the only path to that goal.</p>
<p>What awards programs do you believe still offer the most benefits to customers?</p>
<p><em>Jason Steele is an avid rewards traveler and shares his best tips &amp; tricks related to scoring great deals on airfare and the <a href="http://www.moneycrashers.com/best-travel-rewards-credit-cards/">best travel rewards credit cards</a> on the <a href="http://www.moneycrashers.com/">Money Crashers</a> personal finance blog.</em>
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		<title>The Financial Mess That Is Kingfisher (Guest Post)</title>
		<link>http://crankyflier.com/2012/01/09/the-financial-mess-that-is-kingfisher-guest-post/</link>
		<comments>http://crankyflier.com/2012/01/09/the-financial-mess-that-is-kingfisher-guest-post/#comments</comments>
		<pubDate>Mon, 09 Jan 2012 11:45:47 +0000</pubDate>
		<dc:creator>CF</dc:creator>
				<category><![CDATA[Guest Posts]]></category>
		<category><![CDATA[Kingfisher]]></category>

		<guid isPermaLink="false">http://crankyflier.com/?p=8688</guid>
		<description><![CDATA[It&#8217;s baby time, and I&#8217;m taking a couple weeks off from blogging to get to know the little guy. This is the first of the guest posts that I&#8217;ll be putting up over the next couple weeks, and it focuses on one mess of an airline. &#8211; Could there ever be an airline as bad [...]]]></description>
			<content:encoded><![CDATA[<p><em>It&#8217;s baby time, and I&#8217;m taking a couple weeks off from blogging to get to know the little guy.  This is the first of the guest posts that I&#8217;ll be putting up over the next couple weeks, and it focuses on one mess of an airline.</em><br />
&#8211;<br />
Could there ever be an airline as bad as Air India, who <a href="http://crankyflier.com/2011/08/30/air-india-is-now-the-worst-airline-ever/">Cranky named the worst airline ever in August of 2011</a>?  Well, at least from a financial perspective Kingfisher Airlines is approaching that level.  Yes, that Kingfisher Airlines; the one with a <a href="http://www.airlinequality.com/Airlines/IT.htm">5 star rating from Skytrax</a>.</p>
<p>Now some of you might be shocked at this statement, and I am engaging in a bit of hyperbole; but since Cranky named Air India the worst airline ever in August of 2011, the fiscal situation at Kingfisher has denigrated to such an extent, that it can be placed in the same ballpark as the mess at Air India.</p>
<div align="center"><a href="http://www.flickr.com/photos/crankyflier/6581897435/" title="Kingfisher Tails by brettsnyder, on Flickr"><img src="http://farm8.staticflickr.com/7032/6581897435_1a7dc2fc0d.jpg" width="500" height="332" alt="Kingfisher Tails"></a></div>
<p>Don’t believe me? Well let’s play a little game. Pull up Cranky’s post from August and read these next few statements and compare them to some of the events in the Air India.</p>
<ul>
<li>On July 18th, 12 Kingfisher flights were cancelled due to non-payment of fuel dues to 3 Indian fuel companies (Air India has had more than 25 flights cancelled for this same reason over the past 4 months.</li>
<p></p>
<li>In August, Kingfisher <a href="http://www.business-standard.com/india/news/after-air-india-kingfisher-delays-salary-payment/445794/">deferred payment of salaries</a> to its employees due to a lack of cash.</li>
<p></p>
<li>Over the summer, Kingfisher had its in-flight entertainment shut off for non-payment</li>
<p></p>
<li>Up to 13 Kingfisher flights were cancelled on September 27th for “Scheduled Maintenance”</li>
<p></p>
<li>In late September a report from Veritas Investment Corp <a href="http://www.moneycontrol.com/news/business/kingfisher-airlines-isbankrupt-company-veritas-investment_591911.html">proclaimed Kingfisher to be bankrupt</a>.</li>
<p></p>
<li>Over the past 3 months, Kingfisher have had 7-15 of their fleet of 27 ATR turboprops grounded due to “maintenance issues” which has prevented Kingfisher from returning these aircraft to lessors.</li>
<p></p>
<li>In late November, lessors <a href="http://www.bangaloreaviation.com/2011/11/lessors-start-taking-back-aircraft-from.html">began to re-possess Kingfisher aircraft</a>, starting with a pair of AerCap owned A320s.</li>
<p></p>
<li><a href="http://www.bangaloreaviation.com/2011/11/kingfisher-airlines-posts-rs-469-cr.html">Kingfisher lost a ton of money</a> during the US 3rd quarter period, paying nearly 22% of its quarterly revenue in interest and finance charges; their debt situation makes American’s look positively appetizing.</li>
<p></p>
<li>In early December, <a href="http://www.bangaloreaviation.com/2011/12/kingfisher-operating-payments-at-mumbai.html">Kingfisher was put on a cash and carry operation</a> at its hub in Mumbai; under which the carrier has to pay for its operations (landing and parking amongst others) at the beginning of the day in cash, or they will not be permitted to operate flights from Mumbai on that day. Airlines typically pay for larger blocks of time (at least a month) using checks, but enough of Kingfisher’s checks bounced that the airport decided that it couldn’t afford to rely on Kingfisher’s shoddy credit.</li>
<p>
</ul>
<p>And just to top it all, in early November, Kingfisher pulled an almost Qantas-esque move, <a href="http://www.bangaloreaviation.com/2011/11/kingfisher-airlines-ending-in.html">announcing plans to cancel more than 30, then 50 daily flights</a>; representing around a 15% capacity cut.  While these types of schedule changes are not unprecedented (see Delta pulling down a ton of trans-Atlantic flights during this fall period), Kingfisher’s management of the whole situation was pretty bad. They gave their passengers no advance notice that the cancellations would hit . . . .  None.  Passengers were literally informed the day of; leaving thousands stranded around India.  Certainly business travelers were alienated by the move; business travel in India does not work exactly the way that it does in the US, but reliability is still hugely important to such passengers.  This sort of surprise move tends to spook most travelers (like Qantas’ fleet grounding did), and could affect Kingfisher’s revenue performance moving forward. Given that Kingfisher was in dire financial straits at the time (and is still looking for an equity partner), the move might not have been so bad had Kingfisher not <a href="http://www.bangaloreaviation.com/2011/10/analysis-kingfishers-lcc-withdrawal-may.html">stated less than a month before that it planned to re-align</a> its strategy to capture a larger share of the business travel market. </p>
<p>In mid October, Kingfisher announced that it would be dropping its low-cost arm Kingfisher Red; and focusing on the full service business. This move was almost universally criticized by aerospace analysts in the region who pointed to the fact that air travel growth in India is mostly occurring in the low cost sector.  However, I believe that it was the correct move.  Kingfisher has such high unit costs (even at their “low cost” subsidiary), that any attempt to match India’s true LCCs on pricing would basically be selling tickets at a loss.  Aiming for high value business travelers to offset higher costs makes sense; but not if you alienate those very passengers with your next move.<br />
Given the picture I painted above, one might question whether Kingfisher will be in business for very long, and if OneWorld really wants Kingfisher in its alliance.  Neither question is much of a concern.  See [Kingfisher CEO] Vijay Mallya is a bit like Richard Branson in that Kingfisher is his pet dream project, not the core business.  As with Richard Branson’s various Virgin media brands, the true source of funding behind Kingfisher is Mallya’s United Breweries conglomerate, which makes some of India’s most popular alcoholic beverages among other things.  But the UB Group has tired of paying for Kingfisher’s sustained losses and accumulated debt, so Mallya is looking for an outside investor.  However, Vijay Mallya is a very well connected businessman both in financial and political circles.  There is no doubt that Kingfisher will get the funds it needs to stay in business for the immediate future.</p>
<p>His connections in politics have also paid dividends; already the Indian government is re-considering its stand on Foreign Direct Investment (FDI) in Indian airlines of up to 26%.  He has also managed to at least start discussion about the burdensome regulations and taxes levied on the Indian aviation sector.  In fact, there is plenty of noise around a potential joint OneWorld equity investment in Kingfisher.  Which brings me to my second point, OneWorld needs an Indian partner too much (after going 0 for China) to simply give up on Kingfisher.  Moreover, Kingfisher is still a superb service airline.  Their flight crew is top notch, and the IFE on their domestic flights is as good as, if not better than that of most US carriers.  In fact, Kingfisher’s service will remind you of the 80s and 90s in the US, when checked bags were free, and in-flight meals plentiful.  Thus you shouldn’t regard my discussion of their finances above as an admonishment not to fly Kingfisher.  They are in no danger of going out of business any time soon, and financial relief is forthcoming (hopefully) from the Indian government.  Kingfisher is currently <a href="http://www.bangaloreaviation.com/2011/12/kingfisher-airlines-to-join-oneworld.html">scheduled to enter the oneworld Alliance</a> on February 10th, 2012, and unlike Air India I’m almost certain that Kingfisher will seal the deal. </p>
<p>&#8211;<br />
<em>Vinay Bhaskara is an up-and-coming aviation analyst and history buff based in the United States.  He covers the global aviation industry with <a href="http://www.bangaloreaviation.com/">Bangalore Aviation</a> and <a href="http://www.aspireaviation.com/">Aspire Aviation</a>. You can follow him on Twitter at <a href="http://twitter.com/TheABVinay">@TheABVinay</a>.</em>
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		<title>Stuck in a Box: Why American Won&#8217;t Merge Anytime Soon (Guest Post)</title>
		<link>http://crankyflier.com/2010/09/30/stuck-in-a-box-why-american-wont-merge-anytime-soon-guest-post/</link>
		<comments>http://crankyflier.com/2010/09/30/stuck-in-a-box-why-american-wont-merge-anytime-soon-guest-post/#comments</comments>
		<pubDate>Thu, 30 Sep 2010 10:45:32 +0000</pubDate>
		<dc:creator>CF</dc:creator>
				<category><![CDATA[American]]></category>
		<category><![CDATA[Cardinal]]></category>
		<category><![CDATA[Guest Posts]]></category>

		<guid isPermaLink="false">http://crankyflier.com/?p=6059</guid>
		<description><![CDATA[It&#8217;s been quite some time since the Cardinal graced us with his presence, but today he&#8217;s back to fight the &#8220;American will merge&#8221; rumors. I agree with what he says here completely. &#8211; A lot of silly things are being said in the wake of the announced takeover of AirTran by Southwest. For instance, there&#8217;s [...]]]></description>
			<content:encoded><![CDATA[<p><em>It&#8217;s been quite some time since the Cardinal graced us with his presence, but today he&#8217;s back to fight the &#8220;American will merge&#8221; rumors.  I agree with what he says here completely.</em><br />
&#8211;</p>
<p>A lot of silly things are being said in the wake of the announced takeover of AirTran by Southwest. For <a href="http://www.flickr.com/photos/crankyflier/5034364271/" title="AA in a Box by brettsnyder, on Flickr"><img style="margin: 5px 5px 5px; float:left;" src="http://farm5.static.flickr.com/4107/5034364271_b1f429da0c_m.jpg" width="240" height="180" alt="AA in a Box" /></a>instance, there&#8217;s renewed speculation about what American needs to do. Here&#8217;s a <a href="http://www.reuters.com/article/idUSN2815519320100928">Reuter&#8217;s article as an example</a>.</p>
<p>The article mentions potential merger partners for American: Alaska, JetBlue and US Airways.</p>
<p>This speculation is almost certainly useless. So long as American&#8217;s management remains remotely sane and rational, American won&#8217;t be merging with anyone anytime soon.</p>
<p>The reasons are simple: (1) American&#8217;s stock is too beaten down and (2), American&#8217;s costs are too high.</p>
<p><strong>Market Caps</strong><br />
Let&#8217;s look at some market capitalizations. A company&#8217;s market cap is the value of its outstanding equity (the price of its stock times the number of shares outstanding). It&#8217;s the theoretical amount you would need to pay to buy 100% of the company. It&#8217;s theoretical because, in fact, to actually acquire the company generally requires paying a takeover premium (otherwise the company&#8217;s management is likely to make it hard for its company to be taken over).</p>
<p>The following amounts are in $ billions.</p>
<p>2.1   American (<a href="http://finance.yahoo.com/q?s=amr">AMR</a>)<br />
1.8   Alaska (<a href="http://finance.yahoo.com/q?s=alk">ALK</a>)<br />
1.9   JetBlue (<a href="http://finance.yahoo.com/q?s=jblu">JBLU</a>)<br />
1.5   US Airways (<a href="http://finance.yahoo.com/q?s=lcc">LCC</a>)</p>
<p>It&#8217;s readily apparent that factoring in a takeover premium on any of Alaska, JetBlue or US Airways would mean that AMR would have to fork over around 50% (or maybe even more) of its equity to any acquire any of these airlines.</p>
<p>American, of course, is vastly larger than any of these three potential partners. So why is American&#8217;s market cap only marginally larger?</p>
<p><strong>Good Guys Finish Last</strong><br />
The issue is that American is not making much, if any money. It&#8217;s a huge enterprise, but it&#8217;s basically breakeven at best at the moment. Ironically, this is because American and Continental were the only two legacy major airlines not to completely screw over their shareholders after 9/11 by going bankrupt. Delta, Northwest, United and US Airways (twice!) went through the bankruptcy carwash after 9/11, which enabled them to crush costs, including labor and aircraft finance costs, at the cost of destroying all shareholder value. American did the right thing by its shareholders and, by the skin of its teeth, avoided bankruptcy. This preserved value for shareholders, but it meant American has had a much tougher time reducing costs. While Continental did not go bankrupt post 9/11, it was the beneficiary of two prior bankruptcies in the 1980s and 1990s. American stands alone as the only legacy major to never screw its shareholders in this fashion, but it has left it in a very poor cost position. Ironically, because the other legacy majors did destroy all shareholder value in the past, they are now in a much better position today. In this regard, at least, good guys finish last.</p>
<p>In fact, American&#8217;s cost position handicaps its merger prospects twice over. First, its market cap is beaten down, so its stock is a weak currency with which to purchase another company. But secondly, because American is so big relative to any of its potential targets, were American to take over another airline, American&#8217;s costs would be more-or-less instantly imposed on the operations of the other airline. So, for instance, if American were to take over US Airways (which has significantly lower costs) American&#8217;s labor scales would essentially immediately apply to US Airways employees (this is actually more or less a direct consequence of US government labor law, so essentially just a fact of life). Blam! US Airways&#8217; routes would instantly become less profitable.</p>
<p>In other words, the minute that American took over one of these carriers, its higher costs would instantly destroy a lot of the value for which American just paid. That 50% that American just paid would be buying much less that you might initially think.</p>
<p>(This discussion has implicitly assumed American uses stock to purchase a target. If it used cash, that would be even worse, because American would pay hard dollars for value that would then be destroyed &#8212; if it used stock, at least it wouldn&#8217;t have increased its net debt uselessly, &#8220;only&#8221; destroyed shareholder value).</p>
<p>For this reason, unless AMR management completely loses its senses, AMR will not do a merger for the foreseeable future. As far as Mergers and Acquisitions are concerned, American is in a box. It can&#8217;t do a merger without throwing away a lot of shareholder value.</p>
<p>This is why you see American doing things like <a href="http://investor.jetblue.com/phoenix.zhtml?c=131045&#038;p=irol-newsArticle&#038;ID=1408141">entering into partnership agreements with JetBlue</a>. It&#8217;s not necessarily American&#8217;s usual mode, but it&#8217;s one of the few things they can do these days. They need to make nice because they have few reasonable alternatives.</p>
<p><strong>Stuck In A Box, For Now</strong><br />
So can American get out of this box? In some ways, it&#8217;s not up to them. Except in times of distress, airline costs tend to increase, especially at the legacy majors. So, if American can hold the line on costs, the other legacy major airline costs are likely to get relatively worse than those of American. It&#8217;s not a real great place to be in, waiting for your competitors to suck more so that you relatively suck less. And there&#8217;s a serious snag: American&#8217;s employees are furious about their lack of wage increases and desperately want to force American into paying them more. <a href="http://aviationblog.dallasnews.com/archives/2010/07/new-apa-officers-talk-about-co.html">Pilots</a>, <a href="http://blogs.star-telegram.com/sky_talk/2010/09/labor-day-apfa-president-laura-glading.html">flight attendants</a> and <a href="http://www.bloomberg.com/news/2010-08-25/american-airlines-mechanics-reject-contract-support-possible-strike.html">mechanics</a> all want a pound of flesh (and then some) from American. They&#8217;re each willing to strike American to get what they want &#8212; and like other legacy major airlines, American can&#8217;t long tolerate a strike without going into bankruptcy.</p>
<p>That&#8217;s the other way American could get out of its box &#8212; declare bankruptcy. But that would almost certainly completely destroy shareholder value, and since the airline is, at least ostensibly, run in the interests of the shareholders, American can&#8217;t do that while reasonable alternatives remain. So American can&#8217;t exactly choose bankruptcy either.</p>
<p>So, for now, it&#8217;s highly unlikely that American can do anything to get itself out of it&#8217;s mergers and acquisitions box, and any speculation about that is, at best, ill-informed.</p>
<p><strong>But Not Dead</strong><br />
Don&#8217;t misunderstand &#8212; American&#8217;s situation is hardly desperate, it&#8217;s just not good. It&#8217;s not in danger of bankruptcy any time soon (unless its unions do something stupid, and that cannot be ruled out, unfortunately). It&#8217;s still a powerful competitor, the third largest airline in the US. It still &#8220;owns&#8221; Dallas and Miami and has a big chunk of Chicago and New York. It&#8217;s finally got approval for anti-trust immunity with British Airways, which will help on the margin. American&#8217;s just stuck for now on the M&#038;A front. Moreover, so long as its profits remain largely ephemeral, there&#8217;s no good case for organic growth either.</p>
<p>So, for now, unless something big changes in the environment (or American&#8217;s management loses its sanity), expect American to be largely stuck for the foreseeable future. For now, all they can do is try to improve their cost position relative to the industry. Tough sledding, but no one said this was an easy business.</p>
<p>&#8211;<br />
<em>The Cardinal is a long-time industry observer, who is currently [redacted]. He was previously a [redacted] at [redacted]. Prior to this he worked at [redacted], [redacted] and [redacted]. To his sorrow, he lives in [redacted] and in his spare time enjoys [redacted with extreme prejudice].</em>
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		<title>Just Key the Mic and Start Talking &#8211; You’ll Figure It Out (Guest Post)</title>
		<link>http://crankyflier.com/2010/09/10/just-key-the-mic-and-start-talking-you%e2%80%99ll-figure-it-out-guest-post/</link>
		<comments>http://crankyflier.com/2010/09/10/just-key-the-mic-and-start-talking-you%e2%80%99ll-figure-it-out-guest-post/#comments</comments>
		<pubDate>Fri, 10 Sep 2010 10:45:47 +0000</pubDate>
		<dc:creator>CF</dc:creator>
				<category><![CDATA[Guest Posts]]></category>

		<guid isPermaLink="false">http://crankyflier.com/?p=5816</guid>
		<description><![CDATA[Cranky is on a much-needed vacation and won&#8217;t be responding to emails this week. Fortunately, before I started drinking too heavily, I put some posts live. Today, Court Miller takes us through the terrifying world of P.A. announcements. (Seriously.) &#8212; &#8220;Just key the mic and start talking. You’ll figure it out.&#8221; That’s probably the single [...]]]></description>
			<content:encoded><![CDATA[<p><em>Cranky is on a much-needed vacation and won&#8217;t be responding to emails this week.  Fortunately, before I started drinking too heavily, I put some posts live.  Today, Court Miller takes us through the terrifying world of P.A. announcements.  (Seriously.)</em><br />
&#8212;</p>
<blockquote><p>&#8220;Just key the mic and start talking.  You’ll figure it out.&#8221;</p></blockquote>
<p>That’s probably the single worst advice I’ve ever been given as a pilot.  Public announcements (P.A.’s) from the cockpit can be utterly terrifying as I was finding out at 30,000 feet over western New York.  It was my first flight with passengers in the back and to my surprise, things were going pretty well. That changed about 80% of the way between Cincinnati and Rochester, NY when my training captain noticed Niagara Falls.</p>
<blockquote><p>&#8220;Why don’t you make a P.A. and point out the Falls?&#8221;<br />&nbsp;&nbsp;&#8221;And say what?&#8221;  I asked.<br />&#8220;Just key the mic and start talking.  You’ll figure it out.&#8221;</p></blockquote>
<p>Again, not the reassuring words you expect to hear the first time you address 50 passengers relying on you to bring them from 500 mph and five miles high to a stop on a mile long strip of <a href="http://lh6.ggpht.com/_qVW7Tu0PLHY/R5Idtge5D6I/AAAAAAAAAK4/VEZo7IhPfTQ/s640/IMG_0356.jpg"><img style="margin: 5px 0 5px 5px; float:right;"  width="320px" height= "240px" src="http://lh6.ggpht.com/_qVW7Tu0PLHY/R5Idtge5D6I/AAAAAAAAAK4/VEZo7IhPfTQ/s640/IMG_0356.jpg" title="Cockpit Switches" class="alignnone" width="640" height="480" /></a>concrete.  </p>
<p>Flash back to my training, which was one week of indoctrination, four weeks of detailed aircraft systems, three weeks of intense simulator sessions, and only 20 minutes worth of P.A. guidelines. You get my point.  (It’s worth nothing that the 20 minutes of P.A. guidelines consisted entirely of an unfortunate story of a pilot who gave a P.A. in the voice of Ross Perot to a plane full of Ross Perot’s campaign staff.  My notes on the subject filled all of one line: &#8220;Don’t talk like Ross Perot during a P.A.&#8221;)</p>
<p>I’m not afraid of public speaking, heck I quite enjoy it, but for some reason I kept seeing the image of 50 Ross Perot&#8217;s sitting behind me waiting for a reason to call the Chief Pilot’s office to have me fired.  So what did I do?  The only thing I could do, really.  I picked up the mic and started talking.</p>
<blockquote><p>&#8220;Folks, from the flight deck, good morning.  We’re about 100 miles southwest of Rochester and will be beginning our decent soon.  For those of you on the left side of the aircraft, if you’ll look left you’ll see Niagara Falls.  For those of you on the right side of the aircraft&#8230;&#8221;</p></blockquote>
<p>Crap.</p>
<p>There’s nothing out there.  I have 25 people waiting on bated breath for that sight to the south of us spectacular enough to rival Niagara Falls.  My two-hour-old career flashed before my eyes as I keyed the mic once more.</p>
<blockquote><p>&#8220;For those of you on the right side of the aircraft, if you look left, you’ll see the people looking at Niagara Falls.&#8221;</p></blockquote>
<p>I distinctly remember breaking a sweat when I lied to the training captain saying it went well.  It took me 3 weeks to finally garner the courage to check my mailbox in fear of finding that &#8220;see me&#8221; letter from the Chief Pilot.  It never came, and eventually I started making P.A.’s at audible levels again.</p>
<p>Delivering the perfect P.A. is an art.  Some choose to script everything out, others choose to simply not do any, and yet others ramble on for ages.  My goal was to master the art of the perfect P.A.  Spoiler alert:  I never did.  </p>
<p>There’s something about hearing that magic voice from the cockpit that seems to assuage the airline passenger.  Such was the case on a stormy summer day in 2002 when our flight attendant asked us to make a P.A. to remind the passengers to keep their cell phones turned off.  We had been first in line for takeoff with a line of 20 aircraft behind us and a wall of black clouds in front when the flight attendant made the request.  I obliged:</p>
<blockquote><p>&#8220;Ladies and Gentlemen, from the Flight Deck, we understand you’re anxious to tell those waiting on you in Appleton that your flight may be late, but safety is our number one priority.  With the storms and with our reliance on our radar, it is extremely important that you keep your cell phones off.&#8221;</p></blockquote>
<p>In itself, a fine P.A.  The only problem was that while I was saying the words &#8220;keep your cell phones off,&#8221; my cell phone rang.  Being the traditionalist I am, I like to have the loudest, simplest, &#8216;no mistaking Courtney’s cell phone from 30 yards&#8217; ring.  The good news is that half of the passengers had forgotten about it by the time we landed in Appleton.  The bad news is the other half did not.</p>
<p>All told, I probably said something undeniably stupid over the P.A. at least once a month.  Some were inadvertent, like the time I was excited to tell the people on a flight to Detroit that they were lucky enough to be on the first revenue flight for that aircraft.  Turns out, some passengers took that to mean the plane had never flown before and a few asked to get off.</p>
<p>At other times, the stupid remarks were intentional.  In 2005 it was difficult to find an airline that was not in bankruptcy.  So I mentioned it: </p>
<blockquote><p>&#8220;We’d like to thank you for flying with us today.  We know that you have a choice when it comes to bankrupt airlines, and we’re glad you chose this one.&#8221;</p></blockquote>
<p>As my career progressed and I realized that I wasn’t going to be fired for my P.A.’s, I became more bold.</p>
<blockquote><p>&#8220;Unfortunately it looks like Atlanta has instituted a ground-stop program and it could be a two-hour delay.  We do have some good news, though.  The Captain and I just saved a bunch of money by switching our car insurance to Geico.&#8221;</p></blockquote>
<p>You’d be surprised how well that worked.</p>
<blockquote><p>&#8220;Folks, from the flight deck, we’ve stopped short of our gate to allow for some traffic, however we do have an indication up here that some of you have already unbuckled your seat belts.  We’ll need that indication to go out before we can proceed.&#8221;</p></blockquote>
<p>We could hear the clicks of the seat belts from the cockpit.  That one was a flight attendant favorite.</p>
<p>Finally the time came for me to step out of the cockpit and into a different career.  For those who have made the switch, you know what an internal struggle it can be.  I spent a month saying good-bye to my window office, and reflected back on the times we took the aircraft out and how she always brought us back.  It was during this time of introspection that I was able to chat with a new pilot just starting his career.  He was nervous about the job ahead of him, but nothing worried him more than the public announcements.  </p>
<p>As I packed my flight bag and stepped out of the cockpit, I could think of only one piece of advice to give him:  </p>
<blockquote><p>&#8220;Just key the mic and start talking.  You’ll figure it out.&#8221;</p></blockquote>
<p>&#8211;<br />
<em>Courtney is the co-creator of the Airplane Geeks Podcast, founder of <a href="http://airlineempires.net">AirlineEmpires.net</a>, currently works for a commercial aircraft OEM, and is a self-proclaimed stud muffin. You can find him on <a href="http://ca.linkedin.com/pub/courtney-miller/4/a03/463">LinkedIn</a> or Twitter <a href="http://twitter/miller22">@miller22</a>.</em>
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