Let’s all raise a toast to those who owned a piece of L’Avion. They became the only (extremely lucky) shareholders of an independent all-premium class airline to actually get money back from their investment. That’s right, the new BA subsidiary OpenSkies announced today that they’re buying L’Avion for a mere 35 million euros.

This marks the end of the latest experiment in all-premium airlines. MAXjet is toast, so is Eos, and despite many rumors, Silverjet is officially done as well. Now that last man standing, L’Avion, is part of the BA empire and will be fully integrated into OpenSkies.

If you had a ticket on L’Avion to fly from Newark to Paris, nothing should change . . . for now. OpenSkies says it will “operate up to three daily flights between Paris Orly and the New York area,” it’s that “up to” piece that makes me believe these frequencies won’t last for long. Right now, OpenSkies flies from JFK and L’Avion flies from Newark. It wouldn’t surprise me if they end up consolidating at some point.

I guess we should have seen this coming when OpenSkies announced a codeshare with L’Avion right when they started flying. But that still begs the question . . . why are they doing this? Beats me. It’s not like they need more 757s, and I’m sure they could have driven out L’Avion if they really wanted to. Maybe they really wanted those extra slots at Orly, but that seems like an awful lot to pay for them, no? I guess I don’t know the going rate.

Either way, we’re going to see a quicker ramp up of the airline than previously planned. Keep an eye out for new cities to pop up from OpenSkies sooner rather than later. I would imagine this will continue to be focused on flights from New York to other points in Continental Europe.

You likely won’t be surprised to hear that I had a great time at the bachelor party this weekend, but that means I had very little time to write. So, since every travel blogger on earth has written about the announcement that Continental will be leaving SkyTeam, joining Star Alliance, and instituting a very tight partnership with United, I thought I’d just point to a couple of the more interesting posts I’ve seen.

Make no mistake, this is more than just a codeshare and frequent flier mile deal. Continental will join United, Lufthansa, and Air Canada in a joint venture for all transatlantic flying. Latin and Asia joint ventures will be developed as well. There will be broad systems integration as well.

In terms of routes, the rest of the Star Alliance will be happy to finally have a big international presence in New York. Dan Webb takes a look at route compatibility here.

If you’re a member of United’s Mileage Plus or Continental’s OnePass programs, this will certainly mean changes. Take a look at View From the Wing’s effort to breakdown what this may mean, despite the fact that we have very few details so far. His take? Well, it’ll be a good thing for Continental fliers, but it’s a little less clear for United loyalists.

We don’t know what this will mean for US Airways right now. Is three a crowd when it comes to the Star Alliance in the US? They say they aren’t going anywhere, but they also haven’t had talks with Continental about cooperation either. Could they partner with American now that CO/UA and DL/NW are getting together? Maybe. Or maybe they’ll try a different tactic, as Holly suggests here in PlaneBuzz.

For American fliers, this could be decent news as well. Strange, I know, but it could theoretically mean that getting antitrust immunity with British Airways would become easier, as Terri Maxon discusses on the Airline Biz blog.

There are a lot of different angles to this partnership with a ton of potential ramifications throughout the industry when it develops. I’ll keep you posted as I learn more.

An interesting little merger attempt popped up on Friday that, as Holly Hegeman says, looks like a squeeze play. SkyWest has announced that it wants to buy ExpressJet for $3.50 a share.

The airline was hovering just over the $2 a share mark before the announcement, so this is a nice little premium. ExpressJet, however, thinks it’s worth more than that and has turned the offer down. It got more interesting on Friday afternoon when it came out that Continental is also behind this thing.

Continental hasn’t been happy with the relatively hight costs of the ExpressJet contract, and it has apparently told ExpressJet that it will remove 51 of the aircraft under contract beginning in December 2009. At the same time, it went and cut a deal with SkyWest on a broad new deal that will only go into effect if the takeover occurs. So, SkyWest buys ExpressJet and offers to fly for Continental for less. Continental tells ExpressJet that they either do it or they’re going to start walking. Wow, it sucks to be ExpressJet.

I have to think that if SkyWest wins, the ExpressJet standalone operation will probably be toast. That’s really too bad, since I’ve always thought it was a good idea. But with oil where it is right now, those 50 seat jets (and really, any plane in general) don’t look very good anywhere. And SkyWest probably will want to remain focused on the feeder operation, I’d think.

But why does SkyWest want a bunch more 50 seaters? No matter what the reason, I’m sure the ExpressJet guys are feeling very, very somber right now.

I know you guys have been champing at the bit, waiting for an update on the latest with Alitalia. I’ve actually been wanting to write about this for a little while, but I figured I’d wait until I went to last night’s launch party at LAX for the new LAX-Rome service. It was a surreal event; like hanging out on the Titanic while half the ship is already under water.

As for the event itself, it was a relatively nice and simple affair over at the always fantastic Flight Path Learning Center. The food and Peroni were good, and they handed out a few freebie tickets on the new LAX nonstop. I think the highlight was when Alitalia’s North America head said that the current situation made it seem like Alitalia should be on Jerry Springer. At least he has a sense of humor about it. I actually felt sorry for some of these guys. So what exactly is the latest?

When we left off last time, Alitalia had accepted the AF/KL bid and even the government had gotten behind it. But, they still needed to get the unions to back the bid. Um, that didn’t happen. And even worse, the Italian government fell apart. Without the approvals they needed, AF/KL walked away, but I’m sure they’d come back if all the other parties decided to stop acting like children.

In the election for the new government, Alitalia, the symbol of national pride (what a horrible symbol), was one of the top campaign issues. Silvio Berlusconi, the man that the Economist called “unfit to lead a modern democracy“, campaigned on the idea that he could prevent Alitalia from falling into non-Italian hands.

Sadly, he won.

So now, not only are the unions against AF/KL, but so is the government. Let’s be clear here. Berlusconi talks a big game. He’s said:

Many businesses, including big ones, have come forward to guarantee the necessary capital for a completely Italian team which, once it knows the accounts of Alitalia, will be able to present a bid.

Um, no. Or, somebody will come forward, but it won’t be even close to being as attractive of a bid as the one from AF/KL. Really, AF/KL is the only true hope for this company to survive, and Berlusconi is beating his chest, acting proud, and sounding like a complete idiot. Of course, he has to cave, but not until he can save some face. Just yesterday, he said:

As concerns the Air France hypothesis, if we went back to the initial project for Alitalia which gave the same weight to Alitalia as the other two airlines as well as being Italian orientated, I would be happy to discuss the possibility and once I take office I will speak about this subject with President Sarkozy.

See, he’s starting to change his tune. You know what’ll happen next. He’ll get a couple of concessions and then he’ll let AF/KL buy the airline. Then he’ll try and look like a hero even though he’s doing nothing good.

I guess I should be happy about this. When AF/KL is allowed to take them over, it’ll probably mean I’ll have to find another “Worst Airline Ever” to pick on. I’m just going to enjoy this for now.

It’s on like Donkey Kong. Yesterday, Northwest and Delta finally announced that they would merge. This of course follows speculation that began back in 1932 when C.E. Woolman and Lewis Brittin first discussed such a possibility. Now, before I go any further, let me just say once that this all completely depends upon receiving antitrust approval from the government. I’d argue that this administration is likely to be friendly to such a merger, but it’s still far from guaranteed. Enough of the disclaimers; let’s get it on.

You can read the bible-length press release issued by both airlines if you’d like to get all the details. If that’s not enough, you can go to the new Delta website found at the ridiculous url of newglobalairline.com. I’ll just focus on what this means to you, the customer. But first, a brief rundown of the deal.

Let’s make no mistake about it; Delta is the lead dog here. The name of the combined airline will remain Delta and it will continue to be headquartered in Atlanta, though oddly there will be “executive offices” in Minneapolis as well. Delta CEO Richard Anderson will be in charge, and his second lieutenant Ed Bastian will continue as President and CFO. So what does Northwest get? Well, the shareholders get 1.25 shares of Delta stock for each share of Northwest stock, and everyone else gets . . . um, screwed.

Routes
On paper, this airline looks mighty sexy. You’ve got Delta’s strengths in the South, Northeast, Europe and in the West to a limited extent. Combine that with Northwest’s domination in the Upper Midwest and Asia and you’ve got very little overlap at all. Now, about the hubs. Delta says it “will maintain all hubs at Atlanta, Cincinnati, Detroit, Memphis, Minneapolis/St. Paul, New York-JFK, Salt Lake City, Amsterdam and Tokyo-Narita — each of which will benefit from improved global connectivity.”

The guys who wrote that release were very careful to say that no hubs will be eliminated but notice that they don’t say the same about flights. In fact, they do say in the release, “The transaction is expected to generate more than $1 billion in annual revenue and cost synergies from more effective aircraft utilization, a more comprehensive and diversified route system and cost synergies from reduced overhead and improved operational efficiency.”

Wow, that’s a lot of bullcrap, isn’t it? Anytime I see “synergies” mentioned, I throw up a little. But what this says to me is that they’ve got $1b worth of ideas on how to make this airline more efficient. And that has to involve cutting capacity out of the system. Where are the most likely candidates? I’m looking at you, Memphis and Cincinnati.

Yes, they should keep all their “hubs” if they use that term loosely. By the time they’re done with Memphis and Cincinnati, they might look more like Indianapolis. See, all those small Upper Midwest cities that Delta serves from Cincinnati can now very adequately be served from Detroit and Minneapolis. And all those southern cities that Northwest serves from Memphis can be served from Atlanta. Heck, those two cities themselves are only 400 miles apart. So, I would completely expect to see those hubs shrunk down. Whatever cities they can serve due to strong local demand, they will. But many of those other cities can be better served elsewhere. And Northwest has plenty of old DC-9s that they can just send to the boneyard to easily reduce capacity. And don’t forget, Delta just kicked Mesa’s 50 seaters off the property, so they now won’t need to replace that capacity either.

Internationally, this will probably only result in growth. There aren’t any real overlap issues here. With the recently approved antitrust immunity approval from the US government, they won’t even have to wait until the merger is done to start coordinating with Air France/KLM on routes and fares over the Atlantic. In the Pacific, Delta has just about no presence at all, so this will only create more opportunities.

Onboard Product
Great, so there will be a bunch of flights, but what will it be like onboard? We get one clue from the press release. “The combination will accelerate the upgrading of existing international aircraft with lie-flat seats and personal on-demand entertainment.” Now I’m not sure if they consider Northwest’s angled lie-flat seats to be “lie-flat” but I’d bet those seats will be hanging around for awhile since they’re pretty new. As the Northwest-ordered 787s get delivered, however, I’d expect a true lie-flat product more along the lines of Delta’s new seats.

It will be interesting to see what else Delta plans to do here. It’s probably a safe bet that the current Delta onboard product will become the standard. Northwest currently has no inflight entertainment on their domestic fleet and Delta has been installing personal televisions on a pretty good chunk of their fleet. Will this change their installation plans at all? We’re getting way into the weeds here. This will all come out in time.

Customer Service
Oh no, this isn’t going to be good. If you thought Doug Parker over at US Airways had a tough job integrating labor groups, that’s now going to look like a walk in the park. Originally, Delta and Northwest said that they wouldn’t merge unless they could get the pilots to agree to an integration plan before the deal happened. Um, yeah, that didn’t work out so well and the deal fell apart a couple months ago because of it. Why are they so focused on the pilots? That is the only large employee group at Delta that’s unionized. Ah, now it becomes clear.

So what do they do? Delta goes to its pilots and gets an agreement with them that will go “through the end of 2012. The agreement, which is subject to pilot ratification, facilitates the realization of the revenue synergies of the combined companies once the transaction is completed. It also provides the Delta pilots a 3.5 percent equity stake in the new company and other enhancements to their current contract.”

Again, what the hell does that mean? It “facilitates the realization of the revenue synergies of the combined companies”? Please shut up. No, just stop talking. I can’t take it. What this actually means is that the pilots get good raises every year until the contract is done and they walk away with a stake in the new company. But what about those Northwest pilots? How about . . . nada. In fact, they’ve already said that they’re against this merger.

On the brighter side, “The company also expects no involuntary furloughs of frontline employees as a result of this transaction and the existing pension plans for both companies’ employees will be protected.” Well that’s good, but that’s also dependent upon them getting enough voluntary furloughs to make up for the job cuts they’ll need to make this work. I’d guess that they’ll be successful on that front. Northwest employees will probably run away in droves.

So, you can expect all kinds of customer service hiccups as this thing goes through. Just hold on tight and try not to cry too much.

Summary
Let’s see, what else can I say? This has been a long time coming. Is it as necessary as everyone claims it is? I wouldn’t say that, but I’m not going to say it’s bad either. It all depends upon how well they execute. If the combined airlines can trim Cincinnati and Memphis at the very least, the industry will be better off. Will fares go up? They should. There, I’ve said it. Hate me if you like.

The airline industry has been an unstable roller coaster ride for 30 years. If this allows airlines to better match capacity to a level where they can actually fly profitably, then it’s a good thing. Though low fares are always nice for the customer, it’s better to have a stable airline industry that can actually survive the ups and downs.

Oh, one more thing before I go. A lot of you have written me over the last few months asking why I hadn’t said a word about the rumored merger. The reason? I’ve seen way too many rumors and barely anything actually come to fruition. So, I won’t speculate on the rumored Continental-United merger. For those who don’t know, Northwest holds a “golden share” in Continental. That means they have the ability to block Continental from merging with anyone. This stems from a deal they made years ago, but when Northwest enters a merger agreement, Continental can buy that back for a hundred measly dollars. We know Continental and United have been talking. If it turns into something more, then I’ll be back with another post.

Until then, I’m going to continue to digest this avalanche of info, and I’ll update you when I find something interesting.

It’s been a heck of a week. Nice of Frontier to cap it off with a Chapter 11 filing last night, huh? I’m a little nervous about this one. They say they filed because the credit card processor increased the holdback significantly. It’s no surprise. With all these other airlines going under, the credit card guys are getting nervous that they’ll be left holding the bag again, so they want more of a cushion. Meanwhile, that means Frontier had to throw together a bankruptcy filing and now hope they can find Debtor-in-Possession (DIP). If they can, then they’ll reorganize. If they can’t, well, they’ll join the rest of the guys in the graveyard. For now, nothing changes while they sort things out. We’ll see what happens.

So I say let’s forget this crap for now. I’m ending the week on a lighter note. I’m very sad to report that the Playmobil Security Checkpoint is no longer available on Amazon. This is a bummer, because it provided some pretty impressive inspiration for the 47 customer reviews. These are definitely worth a read.

Some of the highlights . . .

“I was a little disappointed when I first bought this item, because the functionality is limited. My 5 year old son pointed out that the passenger’s shoes cannot be removed. Then, we placed a deadly fingernail file underneath the passenger’s scarf, and neither the detector doorway nor the security wand picked it up.”

“I especially appreciated the enclosed signed photo of Michael Chertoff and his letter explaining how necessary it is to start educating today’s youth early with toys like these, especially as their elders just don’t seem to be taking the whole thing seriously”

“I applaud Playmobile for attempting to provide us with the tools we need to teach our children to unquestioningly obey the commands of the State Security Apparatus, but unfortunately, this product falls short of doing that. There’s no brown figure for little Josh to profile, taser, and detain? Where are all the frightened plastic Heartlanders pointing at the brown figure as they whisper “terrorist?” Where are the hippy couple figures being denied boarding passes? And shouldn’t someone be forcing a mother figure to drink her own breast milk?”

“Unfortunately, this toy comes short in a few areas:
1) It does not show that if you’re rich, you don’t have to wait in line for hours. If you can travel first class, you get your own fast-track screening. Too bad the terr’ists have plenty of Saudi and Pakistani cash and can easily travel first class should they want to. They should have included another screening set in the box.
2) It does not come with the 300 tired-looking playmobils you would need to show the passengers waiting in line behind the screening area. “

“I wish this toy had been around when I was a child so that we might have learned important life lessons rather than the fluffy sugar-coated false utopia of Rainbow Bright and Friends.”

Come to think of it, this may not really be much of a lighter note after all. Ugh. I’m taking the weekend off this week. See you back here on Monday.

It looks like high oil prices may have claimed their first airline victim. Aloha Airlines filed for Chapter 11 bankruptcy protection last week, and unlike their last stint, I’m not so sure they’re going to come out of this one.

What does that mean if you have a ticket on Aloha? Nothing right now. Everything is operating as scheduled, thanks to bankruptcy court approval but I wouldn’t expect it to stay that way for long.

It’s long been said that there isn’t room for three airlines in Hawai’i, and many accusations have been made that go! came in with the expectation that they could run Aloha out of the market. They may have succeeded, at least, that’s whom Aloha is blaming. It’s going to be awfully hard to come up with a business plan for Aloha in which someone will be willing to invest. I mean, that’s why the current owner decided to cut off funding now. With oil prices where they are and fares as low as they are within Hawai’i, it’s not looking good for the airline.

I hate to say it, but I personally would be hesitant to book a flight on Aloha for an interisland flight more than a couple weeks out right now. You’re probably better off sticking with Hawaiian. The question now is whether or not any part of the airline will survive in one form or another. Seems to me that breaking the airline up might be the best option available right now.

The long haul flying could be attractive to someone. Might Southwest decide to pick up Aloha’s 737-700s with ETOPS certification? Could be an interesting little operation for them, especially since there’s no way to count on ATA staying in the Hawaiian market right now.

Something tells me this is going to be the first of many bankruptcies this year. If you’re booked on Aloha, you should be fine for now, but you’ll want to keep any eye on any developments that may change that. Probably saddest of all here is that if Aloha does go out of business, it will mark the end of scheduled 737-200 operations in the US. It wasn’t that long ago that America West, Southwest, US Airways, United, Alaska, and Delta were all operating the type.

Ok, as requested (by at least one person), here are the rest of my notes from US Airways Media Day. I could try to make it all nice and pretty, but nah I’ll just try to make them legible and let you do the rest. These were taken in order during all the talks. I’ll only include the things I didn’t write about a couple days ago.

Overview from Doug Parker and Scott Kirby

• As of a couple of weeks ago, fuel was expected to cost $800m more this year. Fuel has now gone much higher, so that number will be worse if it holds.
• They’re going to test a new in-seat inflight entertainment system on one domestic plane this year. That may or may involve internet access, but they aren’t sure.

Schedule Planning/Fleet with Andrew Nocella

• The domestic network will either be flat or shrink a little. All the growth will be internationally.
• This year, there will be 10 767s and 9 A330-300s in the fleet, no change from last year. Next year, they’ll add the first 6 of the smaller and longer range A330-200s followed by 6 in 2010 and 5 in 2011.
• If demand starts going down or fuel gets to be too pricey, they have the flexibility to dump the 767s if they want.
• Between now and 2011, they expect to add 14 new flights to 9 new European cities.
• New destinations will be served from Philly, and they make a note to include the Middle East as being a possibility.
• Phoenix may get flights to Europe and/or Asia, but it probably won’t be until 2010 at the earliest.
• Charlotte flights to London and Frankfurt do well, and they will likely add flights from Charlotte to destinations already served from Philly. They are also looking at South America from Charlotte and have already applied for Bogotá. (my note: They just lost out yesterday and didn’t get awarded Bogotá.)
• They’re still trying to figure out how to serve Beijing. The plan was to use A340s, but they have yet to find any that they can get their hands on (cheaply, I would assume). They can serve the route with A330-200s, but they’d rather not.
• Vegas may get some international flights, but it’s not a focus.
• 737s will be gone by 2011. Only 18 757s will be kept, all for Transatlantic flying. So, you’ll see Airbus narrowbodies and Embraer 190s on domestic flights (plus Express carriers).
• They’d like to get rid of as many 50 seaters as they can

Envoy Enhancements with Kevin Jackson and Sherri Shamblin

• US Airways surveyed 636 Envoy customers who traveled in Feb 2007. 60% of them paid, so these were people they wanted feedback from.
• US Airways ranked slightly above American, Delta, and Northwest and slightly below United. Air France, Continental, Lufthansa, British Airways, and Virgin Atlantic finished higher (unsurprisingly, I’d say).
• The number one most important factor was that “Flight attendants treat you like a valued customer.” Second was “Meal Quality.” That’s where the airline has been focusing.

Philly Hub with Suzanne Boda

• This year, they’ll be working to improve checkpoint staffing and improve international re-check of bags
• By next summer, they’ll have 3 to 6 new intl gates, bigger checkpoints at B and C, and improved airport signage
• By 2010, the F (Express) terminal will be redesigned and they will have inline baggage screening.
• In the long term they want 16 new gates (inclusive of the previous 3 to 6)
• They’d had 56 straight days without a transatlantic cancellation in Philly - over 1100 flights.

Finance with Derek Kerr

• $300m being spent this year on improving the airline.
• 30% of costs are fuel, 26% labor, and 13% aircraft/airport rents
• Every $1 increase in the price of a barrel of oil, annual costs go up $37m for the airline.
• It costs $31m per day to run the airline (at previously lower fuel levels, I assume).
• Combine $3b in cash with no major debt payments until 2014, and they’re ready to weather a poor economy if need be.

Government Relations with C.A. Howlett (Yes, he’s still there)

• Trying to get government to allow airlines to convert Washington/National flights from inside the 1,250 mile perimeter to outside
• Also trying to convince the government to let them trade 2 slots from inside the perimeter for one outside (as long as the new flight is on an aircraft smaller than a 757). This will help increase the size of aircraft and reduce the number of flights at LaGuardia. To use a 757, they’d need to trade another slot. If that happens, look for long haul flying out of LGA very quickly.
• Very concerned about all the states trying to enact different passenger rights legislations. It will be really hard to comply without a common standard.

When SAS started talking about how they would actually replace those Q400s they’re ditching, I noticed plenty of discussion about wet leases and dry leases. That made me realize it was a great time for the latest installment in the far too infrequent “What the F***” series.

The basic idea of a lease is pretty simple. An airline pays the owner of an aircraft for the ability to use that aircraft in the operation of their flights. Usually, the owner is another airline or an aircraft leasing company that specifically buys airplanes in order to lease them out to others. But there are a bunch of different types of leases, and that’s where it starts to get confusing. Below, you’ll see a handy chart showing what is included in the different types of leases.

So those are the basics. Why am I bothering to write about this? Well, as a passenger, you might find yourself on planes in some of these situations and it may seem kind of strange. Now you’ll know why.

Aircraft on a wet lease (also called an ACMI lease) tend to be the easiest ones to spot. The reason for that is because the crews are actually employees of the aircraft owner instead of the airline you bought your ticket on. There have been a handful of airlines recently in the US that have operated exclusively under a wet lease. Most of you probably haven’t heard of them, but SkyValue and (the last attempt at) Western were really just a brand name being operated by a different airline entirely.

Airlines in general tend to consider wet leases for more short term needs. That’s why SAS is looking to replace their Q400s in the next couple of months with planes operated by another carrier. These types of leases are certainly much more common in Europe than here in the US. Airlines will often lease extra planes during the busy summer season and then send them back in the winter over there. That’s when you see airplanes wearing funky paint schemes because it’s in a hybrid of the owner and the lessee.

Then we have dry and damp leases. For a customer, the difference between a damp lease (which is rare) and a dry lease is virtually indistinguishable, because on both aircraft the crews are from the airline from which you bought your ticket. Most of the time you’ll never know if your plane is leased or owned by the airline unless you bother looking it up. (You can look up US-based aircraft here.) Dry leases tend to be for longer periods of time than wet leases for obvious reasons. You don’t want to hire and invest in training for crews and maintenance personnel if you’re just going to have to let them go in a couple of months.

If you’d like to learn more, I found this page that can get you into even more detail.

Remember how I said there was no reason AirTran couldn’t try to build up Milwaukee on its own even after failing to take over Midwest?

Here it comes.

This morning, the airline announced that they will begin deploying troops, er, bumping up Milwaukee flights just in time for the winter season on December 20. All those snowbirds will now have the option of flying AirTran to Phoenix once a day. Yes, US Airways and Midwest already fly this route, but maybe AirTran will bring down fares enough to help the Brewers actually get more than a few hundred people at their spring training games this year.

Oh, but that’s not all. That same day they bring back daily seasonal flights to Tampa and Ft Myers. I know they had Tampa daily last year, but I think Ft Myers may not have been as frequent if it flew at all.

And I (mis)quote . . . “Heaven has no rage like love to hatred turned / Nor hell a fury like an airline scorned.”