Today’s featured link:
United Airlines to stop flying to Dubai – Reuters
Another one bites the dust. United (again following Delta’s lead) is pulling out of Dubai. But I see a lot more merit in United’s decision that Delta’s. Most importantly, United lost the government contract to JetBlue which bid low and won.
How is JetBlue flying people to Dubai? Thanks to the stupidity of the Fly America Act, government business has to be booked on a US airline regardless of who actually flies the airplane. So JetBlue just slaps its code on an Emirates flight, and voilà, JetBlue flies to Dubai in the eyes of the government. I don’t blame United for leaving if it’s not going to get any of that business. I don’t generally agree with forcing people to fly on US-based airlines, but if you want to have that policy, then it most certainly shouldn’t allow airlines to just codeshare on a foreign carrier.
Two for the road:
Free Snacks are Back: United Airlines to Introduce New Signature Snacks – United Newsroom
It’s apparently a United kind of week. United is bringing back snacks in coach on domestic flights. (Yes, Delta already does it, if you’re keeping score.) In the mornings, it’s a little waffle-y kind of thing. Then later in the day it’s things like Asian snack mix, so no basic pretzels and peanuts here. I think this is great. I believe it was Hawaiian that told me having free meals was important, because it showed how they valued each customer’s presence as a guest. Meals aren’t practical for United, but a small snack like this goes a long way. (Well that, and the new coffee.)
Wild pigs trigger SpiceJet runway excursion – ATW
From the “well you don’t see that everyday” file. Pigs were on a runway, the pilot flying swerved to miss them. Everyone lived. Possibly the most amazing thing about all of this is that SpiceJet is still flying. (And it’s not going to go under anytime soon.)
Regarding the Fly America Act and codesharing:
“City-pair” contracts are awarded competitively, all factors considered (not just price) by GSA. United, offered, they lost. Then UA protested and lost. Too bad, so sad,
The codeshare flights have been around since at least 1998 when I was flying to Europe. I could get a nonstop IAD-ZRH on the code share opposed to a layover in JFK both ways. Certainly better for me as the traveller.
The GSA contract and the Fly America Act are related, but different things.
The Fly America Act is more broadly applicable. It states that anyone flying on US government business (as an employee, a contractor, a grantee, etc.) must fly a US-based airline whenever possible. Throughout the years, this law (and subsequent regulation and interpretation) includes flights on foreign airlines so long is there is a US-based codeshare agreement and the ticket is purchased through the US-based airline.
The GSA contract is different: this is essentially a big corporate contract to fly US government employees around (not contractors). The General Services Administration gets bids from airlines for all sorts of city pairs; and this must comply with the Fly America act.
JetBlue and Emirates have codeshared on flights since 2013, meaning that EK’s IAD-DXB flight has been compliant with Fly America since October, 2013: http://phoenix.corporate-ir.net/phoenix.zhtml?c=131045&p=irol-newsArticle&ID=1861750
However, UA didn’t lose the GSA contract until recently.
There’s certainly something odd about the interpretation of the Fly America act. Whether you agree with the law’s purpose or not, the point is quite clear – spend US government money on US-based airlines. There’s nothing wrong with codeshares per se, but the context of each is different. There’s also the competing demand for the government, which is to spend taxpayer money wisely, and therefore get the best deal they can. So what happens when the best deal (this codeshare) conflicts with the intent of the law?
UA indeed holds the GSA contract for IAD-ADD via a codeshare with Ethiopian – but no other US-based airline flies that route. UA also won the GSA contract for ATL-FRA, operated on Lufthansa – thanks to both the UA-LH codeshare, but also their joint venture – recognized by the government as a more intense level of cooperation. And then in the IAD-DXB case, you have a US-based carrier option to chose from.
I think this is one of those spots where government needs to catch up to the industry. I’d think the ranking would make most sense like this:
1. US based airlines and flights operated under a joint venture with a US based airline. (But still sold on the code.)
2. Flights sold on a US Based airline, with a connection in outside of the US on a US airline code share.
3. Flights sold on international airline, sold with a US Airline code.
4. Flights sold on an international airline with their code.
I don’t think airlines need to disclose how much they make off each of these arrangements, but a ranking like this would most likely keep the economic benefits within the US.
Err 1. Should be:
1. Flights operated by US airlines, and flights operated under a joint venture with a US based airline, but sold on the US airline’s code.
I love how the “unsubsidized” United blames losing a government contract!
Did United publicly complain about losing a government contract? I wasn’t able to find a press release on it.
From what I’ve seen they didn’t issue a press release on it, they just communicated the reason for the route loss internally to their employees. They lost a big organization’s contract for the route. In this case since GSA procurement is public, they named which organization it was.
I don’t see supporting local vendors in a community as being a subsidy, in this case the locality is the United States.
What do you call the provision of a government benefit, if not a subsidy?
The Fly America Act is a market distorting, protectionist subsidy to US carriers that costs US taxpayers more than they would spend under free market conditions .
In this case the government is exercising its prerogative as a customer to support a company that has its shared interests.
It’s not a subsidy if the government is paying a fair price.
Why doesn’t the US bid out defense industry contracts to the lowest bidder worldwide? There are reasons there to support the local industry.
Could it be that the pigs are finally trying to fly after all these years of scoffing at their lack of skill in this area?!?! If so, definitely a sign of the apocalypse ;-)
But UA do the very same thing; codesharing on ET to ADD, or on SA and/or LH to JNB. UA don’t fly to either but they have the government contract out of IAD: $DIADADD-GOV in Apollo.
The real story of the UA leaving Dubai situation is that JetBlue’s fare is almost $200 less each way. The FY15 UA fare was $979 and FY16 B6 fare is $699 each way for a Y ticket. Most of these fares do not drop almost 30% in a year, which give a little credibility to the arguement that there is something going on. I can’t imagine JetBlue is making much if any money on these tickets, but they don’t really have to since they are not doing the flying and don’t have a joint venture in place.
Does EK have lower labor costs than UA?
I do not know what EK’s costs are, but assuming there are some similar fixed costs (cost of airplanes are about the same regardless of where you are in the world), they would have to have significantly lower labor and overhead costs to beat UA’s price by almost 30% PLUS whatever cut JetBlue gets; because you know they aren’t doing this arrangement for free.
oh yes EK hub labor cost is WAAAAAAAAAAAAAAAYYY lower than UA ‘s hub labor cost!! its so low there is no comparison between the two that is even worth looking at.
I’m surprised that “wild hogs” have not shown up on the runways of some Texas airports. The feral hog population across much of Texas is skyrocketing. The beasts are omnivorous and would have little or no problem digging under/uprooting the types of security fences surrounding airports. One nearby airport leases airport property to a local farmer to raise corn. For feral hogs, corn is “apple pie a la mode”.
Just wait. We’ll catch up to India!
I always thought it was super cheap for United serve no food to a customer. It shows that they don’t care about customers to even spend a few cents to keep them from getting hangry on their flights. I probably still won’t fly them because my last few experiences with them since the Continental merger have not gone well and they have competition.
I think you mean “incursion” not “excursion”.
Cranky, from your knowledge/experience is this a fairly common occurrence where a US carrier is awarded such an agreement for a route they don’t fly? Are there other examples of markets that have large amount of US government traffic yet aren’t served by any of the US 3?
Josh G – I haven’t really played around with it all that much, but you can easily look here if you’d like: https://cpsearch.fas.gsa.gov/cpsearch/search.do?method=enter
Happens frequently. An easy example is that AA has the GSA City Pair contract between IAD and LHR, but does not fly it’s own metal and relies on its code share with BA.
But in that case it’s part of a metal neutral joint venture. AA and BA share profits on flights over the Atlantic.
“it’s a little waffle-y kind of thing”
Good grief, Cranky. You are not a devotee of the stroopwaffel? How? It is awesome, and I am so surprised that United would serve something so awesome. But why only in the morning? I’d love stroopwaffel any time of day. Like Biscoff. I hate it when I take a Delta flight and they don’t have Biscoff.
I usually fly United, but Delta was cheaper at Thanksgiving for the route I most often fly. Delta’s snacks were really great and came in clutch given the time of day I was flying. Glad to see United catching up.
I share your belief that it’s a good idea for the major USA airlines to give snack packets to their domestic economy passengers. It shows they care. Also, it’s always struck me as odd that “low fare carrier” Southwest gave their passengers more stuff in flight than the “full service” carriers. And it costs very, very little: I recall that America West spent just a few pennies on pretzel packs — a cost that apparently became too great to bear!
This begs the question what Doug Parker will now do about snacks at American. AA is now the only cheapskate of the non-sucky airlines. Considering that Parker has not only promised to run a better airline but the BEST airline, I don’t think their current offerings (or lack thereof) are sustainable. AA will have to take UA’s stroopwafel and best it. Let the snack wars begin!