With 2016 coming to a close (thankfully, finally), it’s time to go back and review the predictions you made waaaay back at the beginning of the year. This year, I’m combining the review post with your predictions for 2017. So, read through and see how everyone did. Then hit the comments to leave no more than 3 predictions for 2017. (If you leave more than 3, I won’t include them in the year-end review.)
But before we get to 2017, let’s look at 2016. How did you do?
Drones vs Airplanes
*** – There will be a collision between a plane and a drone, there have been a number of close calls and it seems inevitable at some point.
Kilroy – A drone and a commercial plane collide. No fatalities save for the loss of civil liberties and the expansion of another bureaucracy at the FAA.
Ed – Completely agree that a drone and plane will collide. I’d add to that that there will be a lithium battery fire on an aeroplane this year.
Jason – Unfortunately there will be a collision between a drone and an aircraft with people on board.
We’ll start with the biggest non-airline topic brought up last year: drones. Did a drone and an airplane collide? No, but I imagine this is a prediction that many would make again this year. Chances are, it is only a matter of time until this happens. And when it does, let’s hope that the aircraft simply shreds the drone and nobody is hurt. Now, on to the airline predictions.
United’s Management Will Be Amazing or Terrible
Len – United will find stability in the C-suite, although that won’t translate immediately to improved operating performance.
Courtney.Miller – Oscar returns at United and positive changes continue. By December, United widely considered having the best US legacy leadership.
RD – United will continue to do better operationally and the CEO, (Oscar) will become much hated by Wall Street, and much loved by the employees, ultimately to his demise.
austinflyguy – United will stop blindly following Delta and will improve its customer experience and, baring labor disputes, will win over Delta frequent flyers.
Chicago Chris – United’s customer service scores will improve with new leadership, but employee relations will continue to suffer through 2017.
SDFDuck – United makes yet another change at CEO.
Jason – United sees modest gains in operational performance but still has plenty of work to do.
Predictions about United’s management team were all over the map. Certainly the reception has been very positive so far, but is it the best management team in the industry as Courtney predicted? It’s probably too early to say. Things have changed for the better, and there are some who think the team Oscar has assembled is the best out there. But we just haven’t seen tangible results to be able to make that determination just yet. It’s clear that Oscar is well-liked throughout the airline, and Wall St hasn’t sharpened its knives yet either. The operation has improved, but much of that is thanks to additional padding and not to having actually fixed problems. The airline has wrapped up labor agreements with everyone and there is peace in Chicago for now. We may not know if this translates to improved performance until this upcoming year, but so far, all signs are good.
United and the Dehubbing of LAX
Ryan – United drops the act and reliquishes its “hub” @ LAX. It will drop capacity as it focuses it’s Asia operations in SFO. The only services it will reatin are hub connections and pacific service. Some flights to larger non-hubs may also stay.
Well, United hasn’t really dropped more capacity from LAX this year, but it has made it clear that San Francisco is its number one west coast operation by a mile. Is LAX a hub? One day, someone calls it a hub at the airline. The next day it’s not. We haven’t seen new president Scott Kirby sink his claws into the airline’s network yet, but I imagine this year will bring a much better indication of how LA fits into the long term strategy. And I still think it’s a focus city.
Alaska Loses a Partner But Gains a Spouse
Nick – Delta and Alaska will finally separate and begin divorce proceedings
Nick – JetBlue and Alaska will begin a codeshare that leads to a merger, but Delta wants them so bad that they take everyone to court over it.
Richard – AS will end relationship with DL and find a merger partner with HA or B6.
Jonathan – A ME3 carrier takes a small equity interest in one of the following US-based airlines: Alaska, Jetblue, or Virgin America.
Chicago Chris – Rumors will swirl about Alaska and JetBlue flirting, but it goes nowhere.
Eric C – Believing that Delta’s EMB-190s are destined for the west coast, and having already serviced every city a 737 can reasonably service from SEA, Alaska orders a 100-seat class aircraft. Alaska starts seeing losses in revenue per ASM to Delta’s growth, but Delta’s much higher labor costs means Alaska has the better profit margin on competing routes.
Doug Swalen – Delta finally gives up on Love Field…takes it out on Alaska by breaking up with them.
Ted – There will be a US merger outside of the big 4 (WN, AA, DL, UA) as the smaller players try to gain scale.
BJ – Virgin America is aquired by Delta.
Christophe – DL – AS divorce is final.
JhanJensen – Delta and Alaska will go all out war on one another at SEA; partnership done. I am going to say that Alaska will be on the short end of this war and ends up merging with….AA. However a better fit would be jetBlue.
By far the hottest topic last year was what would happen with Alaska. Many thought that the Delta partnership would end. That announcement finally came just this month, so good work, team. Others wondered about the fate of the airline in terms of mergers and acquisitions. Though Jonathan was the only one to mention Alaska and Virgin America in the same sentence, he didn’t think the two would actually merge. Of course, as we know, they did merge and all those Alaska/JetBlue predictions were left out in the cold.
Southwest Labors to Innovate
Nick – Southwest still won’t have a labor deals that get approved and still make incredible profits.
RD – SWA will finally get Union unity with several contracts agreed upon, as well as announce assigned seating and some type of upgraded seating option with actual different seats; the Max 8 seat will trickle down slowly to the entire fleet.
MeanMeosh – Southwest still shuns bag and change fees, but announces the introduction of an extra legroom section available for an additional fee.
Richard – WN will charge for 2nd checked bag and start assigning seats when they start a true business cabin.
RD was right that there would be labor unity as Southwest signed agreements with several of its workgroups. But he and others believed that Southwest would actually start to innovate and change its product offering. Nope, that didn’t happen. Of course, the migration to a new reservation system is just now happening, so chances are if there will be any innovation, it’ll start coming out later next year. I’ll bet we see some changes in the back half of 2017, if all goes well.
Delta Operational Icarus
RD – Delta’s operational excellence will fall, and Wall Street will notice and begin to ask questions that relate to costs, primarily, why so many different fleet types, leading to a fleet simplification announcement toward the end of the year.
MeanMeosh – DL finally experiences a spate of operational issues. To their credit, they quickly apologize and offer compensation to their customers, minimizing pushback.
Noah – Delta expands basic economy to all routes, frustrating corporate travellers who are forced to take the lowest fare, but still fly Delta.
Noah – Delta’s pilots strike when they dont get insane raises
INDHNL – Delta terminates its CPA with Shuttle America (Republic Airways)
MeanMeosh got it almost right with the “spate of operational issues” point. Granted, it wasn’t a “spate,” and it was due to a tech failure that snarled operations for a few days and not due to anything systematic. But other than that blip, Delta continues to chug on. Basic Economy has expanded, Noah, but those pilots? They got their insane raises so no strike was needed. And INDHNL, good thought on Delta walking away from Republic, but it didn’t happen. Instead, bankruptcy changes kept Delta and Republic together.
American and Its Bounty of Hubs
SDFDuck – AA grows PHX and CLT
Alex – American will significantly marginalize one of its newly acquired USAir hubs. My guess is CLT, but there are reasons to do PHX also
I guess American is at that point in its merger where all the fun speculation has died out. Instead, we had two completely opposing viewpoints on some pre-merger US Airways hubs and that was pretty much the extent of it. American didn’t marginalize any hubs in 2016. Phoenix shrunk, but most of that came from using smaller aircraft (737-800 vs A321) and less night flying, and not any actual killing of the hub. Charlotte still remains as important as ever. Not much to talk about with American this year, and that’s a big change from last year. Is there more to think about in 2017?
Regionals: Pilot Problems and Bankruptcies
Richard – Regional pilot shortage will cause more mainline flights between smaller airports and hubs, upgauge in capacity with less frequency in hub to hub flying and several regional airlines will fail. Congressional action to reduce 1500 hour rule will happen, but it’s too late.
Courtney.Miller – Up to two large regional airline bankruptcies. Regional pilot shortage continues.
Doug Swalen – Republic files for bankruptcy. Congress is unmoved and fails to loosen things up regarding the 1500 hour rule.
Jason – At least one regional folds.
There’s no doubt the regional pilot issues have continued, and airlines have found themselves in trouble because of it. Doug is the winner in predicting that Republic would go bankrupt; that happened in February. But it is coming out of it intact and in a much better position than before. Nothing has happened on the 1500 hour rule (right again, Doug), so that’s something that will need to be dealt with during the next administration.
Low Cost, Long Haul
Tara – At least one low-cost carrier will introduce new routes between the USA & Europe, maybe Southwest or JetBlue. The fares will be less than the cost of YQ surcharges on economy award tickets and this will be advertised to the public causing a mass exodus from loyalty programs.
Len – Southwest across the Atlantic or some other LCC with ambitions taking on “the pond.”
It certainly wasn’t Southwest, but Norwegian is leading the latest charge to try low-cost, Transatlantic flying. The ramp up has begun, though success is far from assured. We’re still a bit early for JetBlue and others to consider this kind of flying, but it’s not that far away. JetBlue has already made it clear that this is on its radar when it gets its new A321LRs.
China Cities You’ve Never Heard Of
Ed – Many more flights from second (and third) tier Chinese cities to the US west coast and Australia
Nailed that one, Ed! I don’t know that anyone outside of China had heard of Changsha, let alone many other cities that are getting nonstop flights from the US. Chinese airlines are ramping up quickly and throwing airplanes anywhere they can find the pavement. This is like an arms race now, and it’s not quitting, even though most of these are likely not profitable.
airberlin’s Impending Death
Bernhard – Air Berlin will die.
Looks like you might have been a year too early, Bernhard. Airberlin is certainly in a death spiral, but so far, it’s still flying. I wouldn’t be surprised to see that name on the Airlines We Lost 2017 post a year from now, especially since Uncle Etihad isn’t going to help any more.
European Merger Potpourri
Lauri – IAG will buy Finnair.
Jonas – One of the European “Big 3” (IAG, LH, AF/KLM) or Etihad will (try to) buy (a part of) LOT.
Neither of these ended up being true, but I give Lauri credit for pitching hers two years in a row. (Same for 2017?) It was relatively quiet on the merger front within Europe. Sure we had Lufthansa Group buy out the rest of Brussels Airlines, but that hardly counts as significant consolidation. This wasn’t a banner year for European mergers, but then again, it never really is.
Jonathan – Baltia goes under and its 747 heads to the scrapyard.
It’s not a party without a Baltia prediction! I had to save this one for last. The 747 is gone, but Baltia isn’t quite dead yet. It now has designs on a 767, but it’s still trying to get itself airborne. It’s not going to happen, but good on them for continuing to try.
And that’s it for 2016. Now, let’s hear your top 3 predictions for 2017 in the comments below. Remember, only leave 3 or fewer predictions. If you leave more, then they’ll be ignored in the review next year.