David Neeleman on the A330neo and Doubling TAP’s Presence in the US (Across the Aisle)

Across the Aisle Interviews, TAP Air Portugal

I’ve lined up a handful of interviews here on the blog which you’ll see in the next few weeks. Today, I’m starting with David Neeleman. As you know, David has been behind a lot of different airline projects, most famously the founding of JetBlue. But today we’re focusing on TAP Air Portugal. Since David and the team took over TAP a couple years back, the airline has been transformed, but there’s a lot more change coming with a whopping 71 airplanes on order, and I had questions.

Every time I do one of these, there are at least one or two comments asking for information that I didn’t cover. This time, you can go find it yourself. This Friday (June 15), David will be promoting TAP’s stopover program on the ground in Brooklyn at the corner of Bogart and Grattan Streets from 3p to 4p ET with what the airline is calling an “Aviation Geek Meet-Up.” Head on over, get some goodies, and you can ask him all the questions you’d like. It’s an AvGeek dream. Now, on to the interview.

Brett Snyder, Cranky Flier: We are here to talk about TAP, and I’m specifically interested in the A330neo that you’re taking delivery of. Do you have one on the property yet?

David Neeleman, Co-Owner TAP Air Portugal: We haven’t got it yet. We’re gonna get it in September. It’s flying around — it’s got our colors on it — it’s flying around the world on test flights, but it hasn’t been certified yet. I’m actually gonna go next week to fly to Toulouse and then fly it back to Lisbon on a part of its certification journey.

Cranky: You won’t get the keys until September, and when do you expect to have it in service?

David: It’s about a year late so we’re kind of frustrated. There have been issues with the engines like everyone else, but we’re gonna get it and get them pretty quick. We’ll get 18 of them in 15 months with 7 by the end of the year so they’re going to be coming like popcorn.

Cranky: I didn’t realize it was that accelerated. Where are you planning on putting these into service first?

David: Probably North America. Probably JFK and Boston. Brazil’s obviously a great market for us, Sao Paulo and Rio [will follow] closely after. We have 4 A330-300s that are ex-Singapore Airlines that are going away and then 7 old Pratt-powered A330s. We’re gonna have retired 15 airplanes when they come on.

Cranky: So it’s primarily replacement.

David: Yes, primarily with some growth. And we’re getting [14] A321LRs for growth. Because the LR is going to be able to do a lot of the Transatlantic as well, southern and northern. So we’ll have a few units of growth and then we’re gonna have replacement.

Cranky: Are the 330neos that are coming going to have the same seats you have today?

David: It’ll be an upgraded seat. I don’t have exact details, but it’ll have lie flat, big screens, the whole bit. I think it’s going to be 35 [Ed note: actually 34] biz class seats on it and a premium economy section. [The 96-seat Economy Xtra section is an extra legroom section like Economy Plus, not a true premium economy]

Cranky: That’s new for you, right?

David: Yeah.

Cranky: My biggest question about the neo… it hasn’t been the most popular aircraft. It’s taken a few hits lately with Hawaiian going away from it and American choosing the 787. Why is this the right aircraft for TAP when others are coming to different conclusions?

David: I can’t speak for Hawaiian or American but it’s common to our existing fleet, so our pilots can fly the neo and the [A330]-200 so that’s important for transition and all that. And the economics are really good. I don’t know, Boeing’s being pretty aggressive with the 787, and the 787-9 and -10 are good airplanes, so it just depends on the individual airline. [The A330neo] is a great airplane, gonna offer us fuel economy. Our -900[neo] which is equivalent to an [A330]-300 are going to have lower fuel burn than an [A330]-200. So we’re going to have almost 300 [Ed note: actually 298] seats onboard in total and we’ll be burning less fuel than we’re burning today with 274, and our customers are going to love it.

Cranky: You talk about what routes it’s going to go on first, it’s replacement routes, but as you mention you have a few extra shells for growth. What does this open up for you that you can’t do today? Are we going to see you here on the West Coast?

David: Yeah, we totally plan on flying to the West Coast. In the Bay Area there are a lot of Portuguese that live there, and a lot of traffic to the Azores in the summer time. There’s a lot of Portuguese, and we think it’s a great market for us. It’s not just the West Coast, but we’d like to do equal the number of cities in North America as we’re doing in Brazil. We have 10 markets in Brazil, and we think North America including Canada can support 10 cities.

Cranky: How many today? You have 4 or 5? I guess it depends how you count Newark and JFK.

David: Toronto, Boston, JFK, Newark, and Miami, so we have 5 today with at least 5 to go.

Cranky: This we should see in the next couple years?

David: Yeah, you’ll see some next summer and the summer afterwards. Between the next few summers, you’ll see us get to 10.

Cranky: TAP obviously is an old-line carrier [that’s] been around for ages, and you stepped in to make a push to reinvent the airline. I know a big part of that is making Lisbon as a gateway to Europe, trying to increase connecting flows. How has it been working? Has it been going as you thought?

David: Yeah. Portugal is having a moment like no place ever has. People are loving that place. It’s unbelievable how much is being written and said. What we’ve done to that place, we brought more service from more places. Our [free] stopover program will bring in an extra 150,000 customers a year. And those people talk to their friends and relatives and associates at work saying “Wow, have you tried going to Portugal? It’s amazing.” The airport’s brimming with people, and we’re working closely with the government and ANA [Ed note: the Portuguese airport operator] to get it expanded as quickly as we can.

Cranky: What’s the split local versus connecting traffic?

David: Depends on where you’re talking. Brazilians go beyond more — more than 50 percent. But North America we’re getting more than 50 percent who stay in Portugal. We fly a lot from Northern Brazil, so we’re the only way to Europe without going back down to the South of Brazil. It’s like if you live in New York and you want to go to London, you have to go via Denver. That’s what people in Brazil have to do. We carry about a third of all traffic between Brazil and Europe because of what we have. The proximity between Brazil and Lisbon and pretty close, 7 hours away.

Cranky: From the US, it’s mostly Portugal destination. Is that something you want to change? Are you really trying to push to grow connecting?

David: Yeah. I’d like to have more.

Cranky: One way I know you do that, you have really low business fares. I guess in coach as well. But that’s part of the strategy, trying to drive [traffic] through price, or is that something that will shift now that you have the new aircraft with a newer, upgraded product?

David: We have more seats to sell. It’s more of a leisure market, so you know, we charge less. No different than JetBlue with Mint, they charge less than American does.

And that’s as far as we got. Again, if you have questions for David, go ask him yourself from 3p to 4p ET on Friday at the corner of Bogart and Grattan Streets in Brooklyn.

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20 comments on “David Neeleman on the A330neo and Doubling TAP’s Presence in the US (Across the Aisle)

  1. TAP is “tapping into” the reality that growing hubs mean more tourism – and that is happening in Portugal.

    Neeleman managed to omit that Air France/Joon and KLM fly to Fortaleza from CDG and AMS.

    1. This was a bright move from Air France/KLM since europeans love the beaches in Ceara state and other atracttions in northeast of Brazil. I suppose europeans should have a big share in these flights since economy in Brazil is not doing so well but remember TAP is still the big presence in North/Northeast Brazil with direct flights from Lisbon to Belem, Fortaleza, Natal, Recife and Salvador.

  2. Interesting interview. The Azores and the Iberian peninsula are definitely on my list of places to visit, though not at the top and I doubt I’ll have the funds any time soon. That said, if sale fares from the US East Coast to Portugal are < ~$700 RT in another year or two, I might jump on it, especially as I'm a big fan of port wine.

    I looked at (and was hoping to be able to make work) a 2-3 day stopover last fall in Lisbon when I had a trip from the US to Naples, Italy, but the prices and connections didn't work at all.

  3. Two thoughts about a larger TAP:
    It´ll be interesting to see in the Northeast (particularly PVD and BOS) what if any effect a larger and more powerful TAP with the A321LR could have upon SATA whose model is predicated on ethnic connections to the Azores (a somewhat large but low yield market from the airports they serve) and low cost connections to the Iberian peninsula.
    Also, what impact over the next few years will Aer Lingus and TAP with A321LR´s have on the ULCC carriers such as WOW, Norwegian and Primera, particularly the model of flying into smaller airports. Will that model be supplanted by the hybrid carriers (i.e. EI or TP) who can price segment for the lower fares while offering a premium cabin and other amenities to be more relevant to business/high end leisure passengers (like B6 mint)?

    1. Dan – Sorry this comment just got posted. It was buried in spam under a tidal wave of actual spam.

      I think on the latter point, if TAP can find a way to really make this model work, then it can only hurt the ULCCs. Aer Lingus has made it work for sure, but I think the jury is still a bit out on TAP. What’s interesting about Aer Lingus is that IAG hasn’t messed with the airline’s fare structure. It understands that the model works for some airlines better than a traditional model. But how widespread? That’s hard to know. Airlines like Norwegian are going into the biggest markets over the Atlantic, so the dynamics are different. Aer Lingus and TAP serve those markets only via connections.

  4. I wonder how much of the talk about Portugal having its moment because it embraced freedom through drug de-criminalization.

  5. Great interview, Cranky. While this wasn’t really touched on, I think Portugal’s geographic location reduces the relative appeal of the 787. If LIS is already Europe’s best positioned airport to reach South America and much of West Africa and it works well for the US East Coast, the 787’s extra few thousand km or so of range is less important operationally than it would be for other carriers.

    Also, if this is about Neeleman, I can’t not leave a plug for one of my favorite pieces of Neeleman potpourri, specifically about his epic commute:


  6. Another interesting fact, I believe with the exception of 2 airlines (Morris air turned?southwest, and Westjet) all of the airlines Neeleman has run, or started have used airbus aircraft.

  7. David Neeleman, if you read this blog as a follow-up to your conversation (and I hope you do), please consider one of your new A330NEOs for a route to Portland, OR. We have a steadily increasing population (over 2 mil in the PDX metro area), and we need more flights to Europe, and in particular, some warm vacation destinations. All current flights (of which there are only about 4) are to cold, Northern European destinations. Why would most Portlanders want to fly to those, other than to possibly connect to somewhere warm? We spend many cold and grey months every winter wanting sun! A link to Portugal sounds perfect for us!!

    1. PDX is one of those airports that simply defies logic. How does an airport that serves such a substantial catchment area with so many corporate clients (Nike, Adidas, HP, etc.) have such poor air service? For example, the last non-redeye non-stop eastbound to Chicago where I’m based is at 2 PM. I’m sure UA and AA both use it to feed other flights but you would think there would be enough O&D traffic to support a more reasonable departure time for doing business. Love the airport (that carpet), the restaurants, the train, the whole experience and yet those flight times…

      1. With the 1400 trip arriving into CHI after 2000, it is Ok for business travel for a meeting the next day, but not much else.
        Anything later before a redeye is not apealing at all for business traffic.

        Plus it misses 80% of the AA and UA transatlantic connection opportunities in CHI, and many domestic.

        I suspect because of the geography and time zones, DEN and SLC are far better and earlier connecting points for domestic traffic, and any South and Central American traffic is far better going via IAH, DFW, LAX and SFO than going to CHI.

        Lastly, PDX is probably forever stuck between is two much larger neighbors in SEA and SFO.

      2. With the 2pm arriving into Chicago after 8pm it essentially misses 80% of the transatlantic connection opportunities and many domestic opportunities.

        DEN is much better located from a timing perspective

  8. There was a big airline in Brazil called VARIG and when they went bankrupt TAP took over most if not all of their routes to Portugal. VARIG’s former CEO went to TAP and was in charge of this process. TAP did also a good job in adding more cities in Brazil. When the economy was booming they began flights from cities that had no direct connection with Europe and increased their presence in Rio and Sao Paulo area- something similar did American Airlines, which is now moving back due to the economic downturn in Brazil.

  9. ‘so we’re the only way to Europe without going back down to the South of Brazil’

    Sorry David, but that’s not true. KLM is flying to Fortaleza, working with Gol (I think) for further connections. So even though you’re by far the biggest, you’re not the only one.

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