Category Archives: Airplanes and Airports

ANALYSIS: Boeing Cuts 747-8 Production Amidst VLA Weakness

by Vinay Bhaskara / Published December 12th, 2014

Lufthansa receives its first 747-8 in a handover ceremony. Image Courtesy of AirwaysNews

Lufthansa receives its first 747-8 in a handover ceremony. Image Courtesy of AirwaysNews

Boeing announced yet another cut in the 747-8′s production earlier this week, with production to drop to 1.3 aircraft per month beginning in September 15. The 747-8 is currently produced at a rate of 1.5 aircraft per month (18 aircraft per year), but has a backlog of just 39 aircraft out of 119 total firm orders. Under program accounting block rules, Boeing will soon be required to take a substantial one-time charge, which would hamper financial results in 2015. Boeing’s announcement mirrored recent commentary from Airbus, which has signaled its own struggles in the very large aircraft (VLA) market.

EXTRA: Boeing’s 747 Celebrates 1,500th Delivery as Future Remains Uncertain

Sales Dry Up

The 747-8′s sales record has been poor and future prospects are grim. Its current backlog of 39 aircraft is composed of 26 passenger 747-8 Intercontinentals (747-8i – including one VIP aircraft), and 13 freighters. Boeing had previously cut production in 2013 from two aircraft per month to 1.75 and then 1.5 aircraft per month, where it settled until the announcement of the latest cut. And despite Boeing’s protestations, its unclear where additional orders will come from, especially on the passenger side.

The original Boeing 747 rollout in 1969. Image courtesy of Boeing

The original Boeing 747 rollout in 1969. Image courtesy of Boeing

EXTRA: Korean Air Lines Orders Five Boeing 747-8i Jumbo Jets, Program Hangs On

Our sources indicate that Boeing has a major sales push in place for six VIP 747-8is in the Middle East, but beyond that, there is nothing on the radar. Many of the intended customers for the 747-8i have already opted for the A380, A350-1000, or Boeing’s own 777X, and the number of airlines that need a VLA or VLA sized aircraft (seating more than 400 passengers) without having already placed such an order is dwindling. There is (hypothetically) a potential order for five-10 VLA frames from Turkish Airlines, but we view Turkish Airlines as most likely to opt for the 777X as its interim VLA solution. Beyond that Boeing can maybe pitch El Al or Saudia amongst 747-400 operators without a direct replacement yet. And of course there is some potential for top-up orders from existing customers Korean Air, Transaero (rumored around the 787 cancellation), Lufthansa and Air China. But overall, Boeing cannot reasonably expect more than 20-30 further orders for the passenger variant without a major shift in airline strategy.

The Boeing 747-8 on the assembly line. Image Courtesy of Boeing

The Boeing 747-8 on the assembly line. Image Courtesy of Boeing

The VLA market is smaller than Airbus (and Boeing’s) projections

In their most recent current market projections for the period between 2014-2033, Airbus projected a VLA market of 1,228 passenger aircraft, whereas Boeing projected a market of 500 aircraft. Both of these numbers appear overly optimistic, given a combined backlog between the two programs of just 210 aircraft (a number which includes close to 50 A380 orders which we view as uncertain [and 30 that are outright doubtful]) extending over the next 10 years. Our view is that the market is smaller than Airbus’ projections and will settle at around 400-450 additional airframes (treating the 777X as outside the VLA sphere). Airbus is likely to soak up the majority of that demand with an A380neo if it chooses to launch the aircraft type, but otherwise it will be captured by the 777X and a hypothetical A350-1100 stretch.

EXTRA: Boeing Delivers 50th Boeing 747-8

Indeed the 777-9 may be the biggest culprit for the 747-8i’s sales weakness. Our economic analysis shows that the 777-9 at 10-abreast seating holds a substantial advantage over the 747-8 in terms of operating costs at today’s fuel prices, let alone at the $80-100 per barrel prices that persisted over much of the last five years. The 747-8 counters with added performance (especially at hot and high airport) and some extra revenue potential, but it’s not enough to compensate for the higher cost of operations.

No Help Is Coming From the Freighter Market

When Boeing launched the 747-8F, a significant portion of the business case rested on the new-build freighter market, which Boeing projected to boom in line with generally bullish projections about the air cargo market as a whole and expectations of high fuel prices. The last five years have instead been extremely choppy for the air freight market, with economic uncertainty and growth slowdowns in several emerging markets pressuring cargo space utilization and yields. Moreover, belly cargo is playing a larger and larger role in the long-haul freight market, as the passenger widebody fleet booms in size.

Photo Courtesy JDL Multimedia

Photo Courtesy JDL Multimedia

EXTRA: Air China Takes Delivery of Its First 747-8 Intercontinental

The 747-8F is the best and only new build freighter in its class. But there’s nobody left that has a true need for it. The shift to belly cargo has tamped down demand for medium and large widebody freighters, and amongst airlines that actually need or could use an aircraft of that size, there are still 263 Boeing 747-400 passenger aircraft available for passenger to freight (P2F) conversions available at a small fraction of the purchase price of new build 747-8Fs. At reasonable fuel prices, those 747-400s may approach similar operating costs (including the cost of capital) to the 747-8F, especially when the larger 747-8F is harder to fill. There may yet be top up orders from a few existing customers, but overall, we see Boeing selling no more than 15-20 additional 747-8 freighters in an optimistic scenario. Between the lack of additional passenger and freighter orders, we think Boeing will be forced to cut production even further, to one aircraft per month in 2016.

Holding Out for Air Force One

Recent rumblings in the defense industry indicate that the US Air Force (USAF) is fast tracking the acquisition of the next generation of Air Force One presidential transport aircraft. According to defense industry newsletter Inside Defense, the USAF has moved forward the timeline to acquire new aircraft in 2018, after previously indicating that a purchase would not occur before 2021. Under the new timeline, a request for proposals (RFP) for new-build aircraft to replace the 747-200 based VC-25s that currently service as presidential transport aircraft would be issued next year, with the purchase decision made in 2016 and delivery occurring two years later.

Air Force One at Miami International Airport. Image Courtesy of AirwaysNews

Air Force One at Miami International Airport. Image Courtesy of AirwaysNews

The Air Force One contract is a prestigious one for Boeing, which also supplied the 707 and 747-200 that made up the base for previous iterations, and Boeing can be expected to compete vigorously for the new contract. And while building Air Force One, with its secretive materials and interior on the same line as the commercially produced 747-8 may prove challenging, other defense aircraft are built on the same production lines as commercial ones, having the production line open is critical to enable Boeing to produce the new Air Force One, a public relations bonanza, at reasonable cost. And for that reason alone, we expect Boeing to try and hold out producing the 747-8 until 2018, when the Queen of the Skies will be allowed to die a dignified death.

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Contact the author at vinay.bhaskara@airwaysnews.com

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This Month in Airways Magazine

An all-new issue of Airways Magazine with an upgraded paper stock and spine is now available on newsstands!

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FEATURES


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PHOTO: CARY LIAO

PEOPLE EXPRESS – FIGHTING FOR A SECOND CHANCE

by MICHAEL MANNING

ON AN AVERAGE DAY in U.S. commercial aviation, there are approximately 23,000 flights, 70% of which are controlled by three carriers: United, Delta and American. Conventional wisdom has it that, if one includes Southwest, JetBlue and Alaska, more than 90% of U.S. scheduled commercial service is in the hands of just six carriers. Against this backdrop, a new upstart has attempted to enter the post-consolidated industry with an iconic name from the 1980s: People Express (PEX).


JETBLUE AIRWAYS MINT FRONT ROW

PHOTO: JETBLUE

THE DESIGN AIR & AIRWAYS MAGAZINE – TOP-10 COOL AIRLINE BRANDS

by JONNY CLARK

In our brand-new monthly section in the larger and improved Airways, we will bring a series of Top-10 lists curated by TheDesignAir. Each month, we will feature a different field, from best liveries to best uniforms or first classes. The best way to get these lists as soon as they are announced is by subscribing to Airways or following our strategic partner at www.thedesignair.net


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PHOTO: ROYAL S. KING

THE BOEING 787-9 ENTERS SERVICE

by SETH MILLER

PERHAPS THE BIGGEST NEWS for Boeing and their 787 production is that the latest “big” news has mostly been seen as a non-event in the industry. In late 2014, the 787-9 variant entered service with deliveries to four different carriers: ANA, Air New Zealand, United Airlines and Virgin Atlantic.


PHOTO: BLOOMBERG

EXLUSIVE AIRWAYS INTERVIEW: TIM CLARK, EMIRATES CEO

by ANDREAS SPAETH

The President of Emirates talked to Airways about the mystery of Malaysian 370 and 17 and his doubts about the facts, and also why it should never have happened.


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PHOTO: MARK WARWICK

AIRWAYS TRAVELER: THAI ROYAL ORCHID: TOKYO-BANGKOK IN ECONOMY

by MARK WARWICK

“I jumped online and looked to schedule a flight from Narita (NRT) to Bangkok (BKK). In the past, I have always flown to international destinations from NRT; however, the flight options out of there were not exactly what I had hoped for; then it hit me in one word — Haneda.”


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PHOTO: SWEDAVIA

AIRPORT REVIEW: STOCKHOLM ARLANDA

by JEFF KRIENDLER

STOCKHOLM-ARLANDA IS THE FLAGSHIP for Swedavia’s country-wide operations and received valuable exposure in the U.S. last summer through the NBC-TV comedy series Welcome to Sweden, a visual showcase of one of the world’s most beautiful cities, Stockholm.


Mohawk DC-3-1 - Copy

MOHAWK AIRLINES, PART ONE

by DAVID H. STRINGER

“America’s Local Service Airlines were created for the purpose of bringing air transportation to small and medium-sized cities. Mohawk was born from one man’s effort to fill that need for his hometown.”


 


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PHOTO: BILL WORD

INSIDE SOUTHWEST AIRLINES

by AUSTIN SPEAKER

“LOCATED ADJACENT TO Dallas Love Field (DAL/KDAL) is the headquarters of the nation’s fourth largest airline, Southwest Airlines (WN/SWA), which employs nearly 45,000 people that transport 133.2 million passengers annually (in 2013) on more than 3,600 daily flights to 96 destinations in 6 countries. It is a massive operation, and it requires the careful choreography of a number of departments to create what should be a seamless travel experience.”


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PHOTO: CHARLES KENNEDY

AIR KORYO: NORTH KOREA’S CONNECTION TO THE WORLD

by CHARLES KENNEDY

“THE FLAG CARRIER OF THE Democratic People’s Republic of Korea (DPRK), more commonly known as North Korea, is Air Koryo (JS/KOR). Charles Kennedy tells the story of the airline’s history, its present-day operations, and its very unusual aviation tourism niche.”


 

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Airways Literature: BOAC JUNIOR JET CLUB

by PETER SUMMERS

Left Seat Chronicles: THE BIG GIRL AND WHAT YOU DON’T KNOW

by CHRIS MANNO

Airways Photo News

Colorfully illustrated highlights of the major news developments from North America and around the world, including fleet changes, new airlines, and new paint schemes.

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Our global forum for our readers’ opinions, feedback, and contributions.

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Introducing a new readers’ photography gallery.

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American Express Opens Centurion Lounge at San Francisco International Airport

By Benjamin Bearup / Published November 17th, 2014

All photos courtesy of American Express

All photos courtesy of American Express

San Francisco International Airport has become the latest home for a brand new American Express Centurion Lounge. The lounge, located in Terminal 3 near gate 74, becomes the fourth Centurion Lounge in the United States, with a fifth coming in early 2015.

A prime position airside and directly above the premium passenger security check within Terminal 3, home to United Airline’s domestic hub, offers passengers a perfect chance to relax before making connection onward to Asia or to recoup after a long-haul flight. The Centurion Lounge replaces the old Alaska Airlines Board Room at SFO, which closed on June 24, coinciding with the carrier moving from T3 to the International Terminal.

The new San Francisco Centurion Lounge is modeled after the Las Vegas lounge and features a “living wall” (live plants growing on wall) that greets visitors upon entering. For the casual passenger passing through, the Centurion Lounge offers multiple options for entertainment and relaxation.

A large complimentary bar run by mixologist Jim Meehan is sure to please the upbeat crowd, while a wine bar run by Centurion Wine Specialist and author Anthony Giglio will offer customers a sample of California’s famous wine country. The large food buffet, run by Executive Chef Christopher Kostow, will offer passengers a taste of locally inspired cuisine. Other amenities include shower suites and multiple spacious lounge areas throughout. Passengers traveling with family can use the special family room or pass the time watching one of the many flat-screen televisions within the lounge.

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For business passengers, the Centurion Lounge offers spacious workspaces with power outlets and a computer bar with fax, print and copy capabilities. High-speed WiFi is also available.

As with other Centurion Lounges in Dallas, Las Vegas, and New York LaGuardia, dark hardwoods and modern design techniques will be prevalent throughout the complex. The overall design appeals to the upbeat and tech-savvy crowd around the Bay Area and certainly will become to go to lounge within SFO.

American Express recently announced that it will open its fifth Centurion Lounge at Miami International Airport,  due to open in early 2015. It was originally scheduled to open in December 2014. Located in the North Terminal, the Miami Centurion Lounge is in a prime location to serve passengers flying oneworld alliance partners American Airlines, US Airways and Qatar Airways.

Lisa Durocher, senior vice president of benefits at American Express, sees the opportunities that this lounge brings saying “We’re thrilled to bring The Centurion Lounge experience to Miami International Airport, a critical hub for domestic travelers as well as the nation’s largest gateway to Latin America and the Caribbean.”

Access to Centurion Lounges is free for American Express customers with Platinum or Centurion cards and American Express customers with any valid credit or charge card can pay $50  for a one-day pass.

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Contact the editor at benet.wilson@airwaysnews.com

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Flashback Friday: Planespotting International Flights at JFK in 1992

By Luis Linares / Published November 7th, 2014

LOT B763 - JFK - LFL

LOT Polish Airlines Boeing 767-300ER at JFK in 1992

New York’s JFK International Airport has been and continues to be a plane spotter’s dream, given the variety of domestic and international carriers that fly there.  In a previous Friday Flashback, we looked at the changes that were taking place at JFK, such as the construction of a new ATC tower and Delta’s takeover of Pan Am’s operations more than 20 years ago.  Join us for another look at JFK in the early 1990s, this time focusing on international flights and some of their history, in some cases fateful.

Last month, the McDonnell Douglas MD-11 made its last commercial passenger flight on KLM Flight 672 from Montreal to Amsterdam.  When I visited JFK in 1992, the MD-11 was a new aircraft.  Many passenger MD-11s are getting a second lease on life by being converted to freighters.  American Airlines used the MD-11 for trans-Atlantic and South America operations.

AAL MD11 - JFK - LFL SWR MD11 - JFK - LFL
American Airlines and Swissair McDonnell Douglas MD-11s at JFK in 1992

Another carrier starting MD-11 service at the time was Swissair for flights to Geneva and Zurich.  Unfortunately, one of these flights would go down in history as the deadliest MD-11 accident, killing all 229 passengers and crew, when on September 2, 1998, Flight 111 from JFK to Geneva crashed five miles off the coast of Nova Scotia, Canada.  The official investigation concluded that an electrical fire and very flammable insulation material resulted in the crew losing control.  Eventually, Swissair would become a casualty of post 9/11 airline financial difficulties.

What would a good plane spotting experience two decades ago be without seeing some DC-10s?  The MD-11, designed to replace the DC-10, was just starting to roll out of Long Beach in the early 1990s.  Therefore, DC-10s were very common at major airports like JFK. When I visited, I spotted a couple of Lufthansa models, which flew the routes from Frankfurt and Munich.  At the time, they sported a classic blue cheat line in their fuselage.  Another DC-10 operator at JFK was Nigeria Airways, which ceased operations in 2003.  The carrier flew form Lagos at the time, and Nigerian company Arik Air serves this route today.

DLH - DC10 - JFK - LFL SNGA DC10 - JFK - LFL
Lufthansa and Nigeria Airways DC-10s at JFK in 1992

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United Airlines Boeing 747-400 at JFK in 1992

The Boeing 747-400, which started service 25 years ago, is slowly starting its farewell to passengers and is also undergoing conversions for an extended life in the cargo world.  At the time of my visit, this variant of the “Queen of the Skies” was brand new.  Although United Airlines today only flies to its Los Angeles and San Francisco hubs from JFK, in the early 1990s it had a more robust presence, which included trans-Atlantic flights and trans-Pacific flights.  The 747-400, decked in United’s “rainbow/tulip” livery, operated from JFK to Tokyo.

VRG B744 - JFK - LFL

Two generations of the Boeing 747 at JFK in 1992:  Varig 747-200 and Singapore Airlines 747-400

Speaking of the 747, the classic -200 series variant was a very common sight at JFK at the start of the 1990s, especially since its eventual -400 series replacements were still very young.  Some of the -200s I spotted included those flown by Aer Lingus from Dublin and Shannon; Alitalia from Milan and Rome; Pakistani International Airlines from Lahore; the infamous and defunct Tower Air mostly to Europe and Israel; and Brazil’s Varig, another failed but historic carrier, from Rio de Janeiro and São Paulo.

EIN B742 - JFK - LFL AZA B742 - JFK - LFL JPIA B742 - JFK - LFL TOW B742 - JFK - LFLBoeing 747-200s at JFK in 1992:  Aer Lingus, Alitalia, Pakistani International AIrlines, and Tower Air

MSR B763 - JFK - LFL

EgyptAir Boeing 767-300ER at JFK in 1992

EgyptAir operated the Boeing 767-300ER from Cairo to JFK with continuing service to Los Angeles in the early 1990s.  The airline continues JFK-Cairo service to this day using new 777-300ERs.  Like Swissair, EgyptAir also suffered a tragedy on a flight originating from JFK.  On October 31, 1999, Flight 990 crashed into the Atlantic Ocean 60 miles south of Nantucket, and all 203 people onboard perished.  Egypt’s Civil Aviation Authority lacked the resources for a complex accident investigation and thus turned to the NTSB for help.  However, the U.S. and Egypt failed to agree on the findings.  The NTSB determined deliberate intent by the relief first officer, while Egypt concluded elevator failure.

Another aviation icon at JFK was the Concorde.  Air France and British Airways took passengers from JFK to their respective Paris and London hubs in just over three hours.  Concorde service catered to the rich and famous, but that didn’t prevent us regular people from seeing and especially hearing this legendary aircraft.  I captured an image of an Air France Concorde during this visit.

While I do not want to focus too much on tragic accidents, it is important to note that JFK was the destination of the only fatal Concorde accident. On July 25, 2000, charter flight 4590 crashed shortly after takeoff from Paris, killing all 100 passengers and nine crew.  The cause was a metallic strip that fell from a Continental Airlines DC-10 that had just departed.  The fragment made a tire on the left main landing gear explode, which in turn punctured a fuel tank.  The pilots were unable to maintain control after the two left engines failed, while their wing was consumed by fire.

AFR B744 - JFK - LFL AFR Concorde - JFK - LFL
Regular and luxury flying options: Air France Boeing 747-400 and Aérospatiale-BAC Concorde at JFK in 1992

I will end on a more positive note by talking about two Chilean carriers flying to JFK during this time.  Ladeco and Lan Chlie were competing carriers in Chile and operated various domestic and international routes.  Ladeco flew a Boeing 757-200, which meant it could not provide non-stop service from Santiago since the 5,100 mile trip exceeded the 757’s range.  Lan Chile, on the other hand, operated a 767-300ER, which was capable of connecting Santiago and JFK without any stops.  A couple of years after this plane spotting visit, Lan Chile took over Ladeco.  Today, Lan Chile is known as LAN Airlines, featured in this month’s issue of Airways Magazine, and it is part of the larger LATAM Airlines Group.

LCO B752 - JFK - LFL LAN B763 - JFK - LFL
LAN Airlines predecessors:  Ladeco Boeing 757-200 and Lan Chile Boeing 767-300ER at JFK in 1992

EXTRA: AirwaysNews collection of JFK pictures

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Contact the author at luis.linares@airchive.com

Contact the editor at benet.wilson@airwaysnews.com

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Qantas Set to Open New First Class Lounge at LAX

By Benjamin Bearup / Published November 4th, 2014

All photos courtesy of Qantas

All photos courtesy of Qantas

Australian flag carrier Qantas is preparing to open a brand-new first class lounge at Los Angeles International Airport’s Tom Bradley International Terminal in January 2015. The 200-seat lounge, which is set to open around New Years Day 2015, will become Qantas’ flagship international first class lounge.

The lounge will be a greatly modernized recreation of Qantas’ Melbourne and Sydney international first class lounges, which underwent major overhauls in 2007. One of the greatest features of the first class lounge will be the first Neil Perry restaurant in the United States. Perry, the famed Australian chef and coordinator of Qantas flight catering, has been tapped to redesign and revolutionize the dining experience in the new first class lounge.

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Perry has given several hints about what to expect, such as a menu heavily centralized around vegetables native to North America. He has also hinted at offering a very diverse menu by introducing flavors from the culturally diverse Los Angeles culinary market.

Chef Neil Perry

Chef Neil Perry

Unlike its Sydney and Melbourne counterparts, the Los Angeles first class lounge will not feature the famous Aurora day spa, due to lack of space within the Bradley terminal.

Passengers flying first class or equivalent aboard Qantas OneWorld partners, Qantas Platinum or Platinum One passengers, or OneWorld Emerald passengers will be eligible to use the new international first lounge.

Business Lounge

In the ribbon-cutting ceremony for the new lounge, Qantas will also unveil a 200-seat extension to its existing business class lounge. The expanded business class lounge will hopefully alleviate peak time overcrowding at the current business class lounge. The expansion comes months after Qantas experienced an embarrassing and public problem regarding their LAX business class lounge where hundreds of passengers were denied access to the lounge due to overcrowding.

The business class lounge, which opened in June 2014, is available to passengers flying business onboard several OneWorld partners, including British Airways and Cathay Pacific along with several frequent flyer levels and OneWorld frequent flyer levels found here.

Qantas currently offers once daily service to Melbourne with the A380, once daily service to Brisbane with the 747, and twice daily service from Sydney with the A380 and 747, once daily 747 service to New York JFK.

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Contact the editor at benet.wilson@airwaysnews.com

 

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Virgin Atlantic Welcomes the 787-9 in Atlanta

Sir Richard Branson addresses the audience at the 787-9 Atlanta event. Photo courtesy of Benjamin Bearup

Virgin Atlantic’s Boeing 787-9 in Atlanta. Photo courtesy of Brian Gore

Virgin Atlantic welcomed the state-of-the-art Boeing 787-9 Dreamliner into its fleet at an event in Atlanta that also commemorated the launch of the carrier’s new London Heathrow-Atlanta route. Founder Sir Richard Branson was on hand to welcome Virgin’s first 787-9 Birthday Girl to the fleet.

Birthday Girl is the first of 21 787-9 aircraft Virgin Atlantic will welcome to the fleet in the coming years. The addition of the 787-9 to the fleet comes at a time when many carriers, including Virgin Atlantic, are retiring older and less fuel-efficient aircraft such as the 747 and the Airbus A340, both which are currently in Virgin Atlantic’s fleet. CEO Craig Kreeger stated that the new 787-9 will be up to “27 percent more fuel efficient compared to the aircraft it will be replacing.”

The Upper Class bar. Photo courtesy of Virgin Atlantic

The Upper Class bar. Photo courtesy of Virgin Atlantic

The new 787-9 will seat 264 passengers (two less that Virgin Atlantic’s A330-300) in a 31 upper class, 35 premium economy, and 198 economy class configuration. When asked if the 787-9 will rotate schedules with the A330-300 similar to how Virgin Atlantic’s 747’s and A340-600’s do, Kreeger stated that “although unintentional, it is very likely that the 787-9 will operate on A330 routes and vice versa.”

Virgin also unveiled an updated Upper Class “Dream Suite” that gives customers more space and access to cutting-edge technology such as personal 24-inch touchscreen monitors at each seat. Virgin Atlantic will fit 31 Dream Suites seats in roughly the same space as 33 fit on the A330.

Onboard the 787-9, Virgin created a dedicated area to serve premium economy passengers called the Wonder Wall. Here passengers can get up and stretch their legs all while getting a drink or snack mid flight. Several other features include a walk-up bar as found on all Virgin Atlantic aircraft, satellite WiFi capable of connecting passengers even over large bodies of water, and ambient mood lighting that Virgin has become famous for.

Sir Richard Branson at the Atlanta event. Photo courtesy of Benjamin Bearup

Sir Richard Branson at the Atlanta event. Photo courtesy of Benjamin Bearup

During this event, Branson got his first taste of what the Dreamliner has to offer. A private tour was offered to him by Virgin Atlantic’s design staff shortly after the event. Branson, who was not able to participate in the inaugural flight due to a schedule conflict, toured the flight deck, all three classes and even took a break from his busy schedule to take in a drink at the luxurious upper class bar.

The 787-9 will replace Virgin Atlantic’s last two A340-300s. Additional 787-9 aircraft will be used for growth primarily in trans-Atlantic markets such as Detroit, San Francisco, and Atlanta. As more new 787-9s arrive, Virgin Atlantic will face an increasingly large problem regarding slots at the already busy London Heathrow Airport.

The 787's Upper Class cabin. Photo courtesy of Virgin Atlantic

The 787′s Upper Class cabin. Photo courtesy of Virgin Atlantic

During a Q and A session, Branson addressed the issue by taking a strong stance favoring the building of a much-needed third runway at Heathrow. Currently with no room to expand at Heathrow, the carrier has had to cut routes in order to start new ones, including the London-Atlanta route. As an alternative, Virgin Atlantic will have to expand at the less-favorable London-Gatwick Airport, where the airline also has a hub. It is also planning to expand service from Manchester as more planes arrive.

Virgin Atlantic flight attendants show off their new uniforms. Photo by Benjamin Bearup

Virgin Atlantic flight attendants show off their new uniforms. Photo courtesy of Benjamin Bearup

At the conclusion of the celebration, showcased the new Virgin Atlantic flight attendant uniforms designed by Vivienne Westwood. Branson also gave news regarding that Virgin Atlantic has converted five 787-9 options to firm orders, bringing the total number of the type in the fleet from 16 to 21.

The celebration of the 787-9 was only half of the days festivities, with the other half reserved to welcoming Virgin Atlantic to Atlanta and the ceremonial beginning of an increased partnership with 49 percent stakeholder Delta Air Lines.

Atlanta Airport General Manager Miguel Southwell, along with Atlanta Mayor Kasim Reed, were on hand to welcome Virgin Atlantic to the city of Atlanta. Shortly after Branson’s grand introduction, featuring a choir singing “London’s Calling” by The Clash along with two flight attendants bearing flags from both the United Kingdom and the United States, Atlanta Mayor Kasim Reed joked that he “hopes his staff was watching” and to “take notes.” The addition of the London Heathrow to Atlanta route was the first of several routes Virgin Atlantic will add in cooperation with partner Delta Air Lines.

A 787 premium economy seat. Photo courtesy of Virgin Atlantic

A 787 premium economy seat. Photo courtesy of Virgin Atlantic

Virgin Atlantic will be taking over the London Heathrow-Atlanta from Delta as both carriers overhaul their trans-Atlantic schedules to better suit existing markets. Growth in the Atlanta market will not end there for Virgin Atlantic. It also plans to take over the Manchester-Atlanta route from Delta using an A330-300 starting March 29, 2015. Additional growth will come this summer, when Virgin Atlantic goes to two daily flights between London Heathrow to Atlanta. Customers flying both carriers will be able to earn frequent flyer points for either carrier through this codeshare.

Virgin Atlantic will be the first carrier to utilize the new incentive based program recently passed by Atlanta’s city council designed to attract foreign carriers to start routes to Atlanta. “The programs overall goal is to make Atlanta a more diversified international destination,” said the airport’s Southwell, while also dismissing rumors that Delta is unhappy about the potential competition this program may bring. As part of the incentive program, Virgin Atlantic will not have to pay landing fees for one year in Atlanta, resulting in savings of up to $600,000. Currently Virgin Atlantic is the only carrier to use this incentive program.

RELATED STORIES

Virgin Atlantic Takes Delivery of First Boeing 787-9 Dreamliner

ANALYSIS: Virgin Atlantic Restructures Network to Focus On Delta Relationship

Analysis: DOT Approves Delta & Virgin Atlantic North Atlantic Joint Venture

Virgin Atlantic To Fly First 787-9 This October

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Contact the editor at benet.wilson@airwaysnews.com

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A 36-hour Odyssey with Qatar Airways

By Luis Linares / Published October 22, 2014 / Photos by author

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Qatar Airways Boeing 777-200LR at Hamad International Airport

Recently, Airways News contributor Luis Linares was one of a handful of guests invited by Qatar Airways to experience a “vacation without a destination,” via a 36-hour luxury roundtrip from the U.S. to Doha’s new Hamad International Airport (HIA). The trip included seven hours on the ground to take in the Al-Mourjan Business Class Lounge, the HIA Hotel, and other highlights at this state-of-the-art facility.

This unique VIP layover did not require customs and immigration formalities or exiting security.  Qatar Airways uses “The World’s Five-Star Airline” as its corporate slogan, and accolades, such as Skytrax’s “World’s Best Business Class” and “Best Business Class Lounge” for the last two years, suggest the airline is worthy of its five-star self-description. Find out if the five-star hype lives up to its name.

New York to Doha

I arrived at New York’s JFK International Airport on an American Airlines evening flight from Miami.  American dominates Terminal 8 in JFK, and this building also serves some of American’s oneworld alliance partners, including Qatar Airways.  A Qatar staff member met me at my arrival gate to escort me to the departure gate, where she issued my boarding pass and quickly walked me to window seat 1K in business class on a Boeing 777-300ER.  The seat is 78 inches long and 22 inches wide and converts to a flat bed.  The 42 business class seats are arranged in a 2-2-2 layout.  We reviewed Qatar’s business class service on a couple of occasions in February and June, so I will spend more time on the experience at HIA.

QR Business Seat - LFL QR Business Bed - LFL
Seat 1K in upright and bed settings

We pushed back at our scheduled departure time of 11:00 p.m.  Doha is seven hours ahead of New York, which meant our 11 hour and 35 minute flight would have us there before 6:00 p.m. local time.  As soon as I sat down, a very friendly flight attendant, Elizabeth, introduced herself and offered me an amenity kit, as well as a set of pajamas.  She also explained the on-demand dining menu, which included multi-course and lighter options, and mentioned it would take up to 20 minutes for a main course to be served.

I opted to stay on U.S. time for the entire itinerary by choosing to sleep first, and Elizabeth offered turndown service as soon as the seat belt sign was off.  She covered the seat with a fitted sheet and arranged the pillow and blanket accordingly.

QR J Class - LFL QR IFE Main Menu - LFL QR Arabic Breakfast - LFL QR Moving Map - LFLBusiness class section, IFE main screen, Arabic breakfast, HUD on the moving map

I slept the first eight hours of the trip.  The aircraft has a variety of mood light settings to enhance passenger comfort ranging from bright pink to dark blue, which was used when most of the passengers were sleeping.  When I woke up, I ordered a traditional Arabic breakfast plate.  During breakfast I explored the IFE, called Oryx Entertainment by Qatar.  It offered noise-cancelling headsets, a USB port for personal devices, 554 TV programs, 274 movies, and a wide variety of audio options, including music, talk, and audiobooks.  Other screen options include a moving map, airport information, and duty free shopping.  The remote control is very easy to figure out and navigate.

The Al-Mourjan Business Class Lounge

Upon arrival at HIA, a Qatar ground staff member escorted our small group through transit passenger security, then directly to the Al-Mourjan Business Class Lounge, which is solely dedicated to Qatar’s business and elite customers.  HIA has a business lounge for other oneworld customers, as well as those traveling on the rest of the airlines that fly there.  As Qatar shifts first-class service to its new Airbus A380 fleet, a new lounge will open solely for those clients.  The first thing that struck me about the lounge was its sheer size!  The two-floor facility totals more than 100,000 square feet in space or the size of 10 Olympic-size swimming pools.

QR Business Class Lounge - LFL Fountain at QR Lounge - LFL
The vast expanse of the Al-Mourjan Business Class Lounge and a fountain inside the lounge

We first toured Al-Mourjan’s business center, which features a conference area, Internet computer stations, printers, scanners, 24/7 secretarial services, a media room, and a game room that boasts a Formula One simulator as one of its main attractions.  Throughout the lounge, there is complimentary WiFi, seating that offers a personal flight information display screen, a reading light, and USB or power outlets for personal devices.

Since Qatar is a predominately Muslim country, the lounge offers a prayer room, which is segregated into an area for men and another for women.  Quiet rooms are another service offered at the lounge, and these spaces consist of individual and double occupancy rest areas.  Staff can provide amenities like pajamas and toothbrushes, as well as services like wake-up calls.  There are also various small rooms to relax and watch television.  Male and female shower rooms are also available for customers.

Bar - LFL Hot Options - LFL TV Room - LFL F1 Simulator - LFL Bar, hot eating options, personal TV room, and Formula-One simulator

The lounge is also very family friendly.  It has a dedicated family area that provides a nursery, playrooms with toys and videogames, and a food and beverage station.  In addition, it provides more private areas for nursing mothers, and staff members are readily available to provide assistance.  Upon completion of the structured tour of the lounge, we were allowed to explore and enjoy this elegant area on our own.

Dining options are available 24/7, and they range from light snacks to full hot meals in self-serve and catered buffet stations.  There is also a bar that keeps wine, champagne, and other beverages constantly flowing.  We left the dining area, but not before enjoying a few glasses of champagne, as well as some appetizers.  The entire lounge can handle up to 1,000 customers at a time.  The lounge was very quiet when we arrived at 6:00 p.m., but we were told that the numbers pick up as flights arrive from Europe and the U.S.  Even during that peak period, the complex felt very comfortable and spacious.  All the amenities mentioned are an option to passengers at no extra charge.

The HIA Hotel

Hotel Lobby - LFL

HIA Hotel front desk

At 7:00, one hour into our luxury layover, another member of Qatar’s airport staff took us to the 200-room HIA Hotel.  I was expecting to exit security and to have to go through immigration formalities in order to get to the hotel, but it is actually located inside the security checkpoints.  HIA Hotel transcends a typical hotel by offering stays that start at three hours, considering many customers are on longer layovers, but do not necessarily have to leave the airport or stay an entire day.

Room offerings include standard rooms and executive suites, 32-inch LCD TVs, room service, and complimentary WiFi, tea, coffee and bottled water.  The soundproof rooms offer views of the main terminal’s vast dining and retail spaces.  Hotel clients also have the option on enjoy a swim in an 82-foot long swimming pool or work out at the fitness center, which includes personal instructors, weights, and different exercise machines.  There are two squash courts available too.  For passengers looking to relax and rejuvenate, the hotel offers a sauna, steam room and various spa treatments.

Hotel Executive Suite - LFL Hotel Pool - LFL Hotel Gym - LFL Hotel Squash Court - LFL Executive suite bedroom, swimming pool, gym, and squash court

After providing walkthroughs of the above facilities, our hosts offered each one of us a room to enjoy for the remaining five hours of our layover.  Prior to the trip they also offered a complimentary spa option. I relaxed in my room for about an hour, where I was able to complete some notes on my experience so far, plus enjoy a nice shower.  With a couple of hours still left on the ground, I checked out of my room and proceeded to the terminal building to examine the amenities offered to all customers transiting HIA.

Other Features at HIA

HIA started passenger operations in May of this year.  The airport is currently capable of handling 30 million passengers per year with concourses A, B, and C.  Once concourses D and E are finished, this number will soar to 50 million.  The terminal complex is almost two million square feet in size, with 41 gates.  After the final construction phase, HIA will have 60 gates.  I explored the almost 270,000 square feet of retail and food and beverage spaces.  This area includes 104 retail stores selling goods from famous fashion and electronics labels.  Familiar names include Rolex, Chanel, Gucci, Tag Heuer, Coach and Virgin.  Twenty cafes and restaurants offer various types of local and international cuisine.

HIA Concourse C - LFL HIA Lamp Bear - LFL HIA Retail - LFL HIA Playground - LFL Councourse C, the “Lamp-Bear”, retail space, a sculpture that doubles as a playground

Scattered throughout the concourses are various art exhibits and sculptures, one that serves as a playground for children.  A hard to miss sculpture is the 23-foot Lamp-Bear, designed by Swiss sculptor Urs Fischer, located in the center of the terminal.  In the retail area there is a noisy animatronic dinosaur that seemed to keep the little ones very entertained.  There are also seating spaces to watch TV, computer stations to surf the internet, and spaces to recharge electronic devices.  WiFi is free throughout the entire airport.  Qatar Airways not only uses HIA as its hub, it was also involved in the development of the airport and currently manages the facility.  Qatar claims that it holds HIA’s facilities to its “five-star” standards.

Doha to Philadelphia

Mood lighting - LFL

Mood lighting during dinner

At midnight, I returned to the Al-Mourjan to rendezvous with the other guests.  We enjoyed a round of champagne and toasted to our wonderful experience on the ground.  Our flight back to the U.S. was set for 1:05 a.m., to Philadelphia International Airport.  Given the strong headwinds, flight time clocked at 13 hours and 25 minutes, almost two hours longer than the first segment.  On both legs, the crew followed restrictions by avoiding Iraqi and eastern Ukrainian airspace, which probably added more to the length of the trip.  Our aircraft was a Boeing 777-200LR.  I sat in the last row of business class in seat 7A right next to the engine.  Both the 777-200LR and -300ER have significantly quieter engines than the first generation of 777s, hence it did not really feel like I was sitting by the engine.  When we pushed back, it was past 6:00 p.m. in the U.S. east coast, and I saved my appetite for a multi-course dinner.

Qatar’s “World Culinary Menu” boasts the work of four celebrity chefs – Nobu Matsuhisa, Tom Aikens, Vineet Bhatia, and Ramzi Choueiri.  The flight attendant offered chicken tikka as a “palate pleaser,” and then I ordered a salmon appetizer, lamb loin for the main course, and a very tasty dessert consisting of a biscuit with coconut, white chocolate mousse, and fruit concoction by famous French bakery Ladurée.  Since I was able to stay in my time zone the entire trip, I also opted to watch a movie before going to bed.  I decided to go “old school” and watch the classic western “A fistful of Dollars”.

Lamb Dinner - LFL Salmon and Eggs - LFL
Lamb loin dinner and smoked salmon & scrambled eggs breakfast

I slept eight hours and woke up two and a half hours before landing.  I went with a delicious breakfast consisting of yogurt and fresh fruit, plus a smoked salmon with chive scrambled egg plate, and I had time for one more movie.  During descent, the flight attendant walked up to personally ask about my onboard experience, as well as to thank me for my patronage.  A Qatar staff member greeted us on the ground to escort us to immigration, where we parted ways and proceeded to our domestic connections.

A Five-Star Experience?

Qatar Airways and its main regional competitors, Emirates and Etihad Airways, are commonly referred to as the “Big Three” and have earned reputations for providing top-of-the-line products and services to their customers.  Competitors in the U.S. and Europe are noticing and reactions range from introducing new upgrades and features in their fleets to complaining about how the “Big Three” unfairly benefit from government subsidies while aggressively expanding their networks into their territory.  The “Big Three” are also wooing customers in the U.S. and Europe to connect through one of their lavish hubs.

While I have not flown on Emirates or Etihad, my frequent travel with the oneworld alliance has allowed me to experience first or business class service on American Airlines, British Airways, Cathay Pacific, LAN Airlines, Qantas Airways, and Royal Jordanian Airlines, and I can confidently conclude that the whole Qatar Airways business class experience is in a league of its own and deserving of its five-star moniker.  The very comfortable seat itself is comparable to most international business class seats offered by the major world carriers.  However, Qatar’s level of crew friendliness, attentiveness, and hospitality; the quality of the cuisine; and the experience on the ground eclipse the competition

I expected to fell exhausted after this 36-hour whirlwind, but the 25 total hours aboard Qatar’s business class had to be at the top of the most comfortable and relaxing flights I have ever taken.    I did my part by keeping myself hydrated, but what made the experience so special was having crews fully committed to ensuring I got the maximum, satisfaction from my onboard experience.  Very friendly flight attendants, excellent food, a wide variety of IFE options, and a comfortable sleeper seat give a pretty good sensation of being at a five-star resort.

Dawn in the U.S. - LFL

Our aircraft reflected on the engine during sunrise in the northeastern U.S.

Moreover, the sampling of services I experienced at HIA as a business customer was heavenly. Any business passengers fatigued by a long flight will no doubt get a boost from everything the Al-Mourjan Business Class Lounge has to offer.  Furthermore, all customers willing to pay can take their level of comfort, relaxation, and privacy a step further by booking a stay at the HIA Hotel.  A lengthy layover at HIA, regardless of which of the two facilities a passenger chooses, will feel more like a well-deserved rest, rather than an inconvenience.

The lounge and the airport have an aesthetically-pleasing modern architecture that provides a great sense of space and comfort.  The only processes I did not get to judge were the check-in and security lines at HIA, but if they live up to the standards Qatar Airways expects from HIA, I have no doubt they would get high marks.  I also look forward to taking in the visual beauty of HIA during daylight hours in the future.

I predict there will be a game of one-upmanship between the “Big Three”, as they continue to attract business customers to their hubs and premium services.  Qatar Airways continues to demonstrate a commitment to improvement by introducing a 1-2-1 business class seating configuration that offers more privacy and direct aisle access aboard its Boeing 787 and Airbus A380 fleets.  In addition, the airline plans to unveil what CEO Ali Al-Baker called a “Super Business Class” berth seating within the next two years.  I would also be curious to see how legacy carriers in the U.S. and Europe try to compete against the overall business product offered by Qatar Airways.  My lavish jaunt with Qatar Airways began on a Wednesday evening and ended on a Friday morning.  I went to work at my Miami office shortly after landing at noon that Friday and did not feel tired.  If anything, I want to partake in a similar experience again!

DISCLAIMER:  Qatar Airways paid for our trip, but opinions are our own

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Contact the author at luis.linares@airchive.com

Contact the editor at benet.wilson@airwaysnews.com

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Flashback Friday: A Look at Continental and Other Airlines at Newark in the 1990s

By Luis Linares / Published October 17, 2014 / Photos by author

COA B722 - EWR - LFL

Continental Boeing 727-200 and Newark’s old ATC tower in 1993

In the early 1990s, the largest tenant at Newark Liberty International Airport (EWR) was Continental Airlines, and it continues to be the largest carrier there today as United Airlines.  EWR is one of the three major airports serving the New York City area and has the distinction of being the first major airport in the U.S., opening 86 years ago.

Travel with us back to March 1993 to spot some aircraft from Continental, which was emerging from a second bankruptcy at the time, and other airlines at EWR.  We will also look at some of the other domestic and foreign carriers serving Newark at the time.  Finally, we will jump six years forward to 1999 to see a very healthy and successful Continental at Newark.

UA DC10 - DEN - LFL

Continental DC-10s at Newark in 1993

The 1980s were a turbulent decade for Continental Airlines.  Texas Air Corporation, under the leadership of Frank Lorenzo, acquired Continental in 1981.  Most of the workforce saw Lorenzo as fiercely anti-union, and he took the airline into bankruptcy protection in September 1983, after failing to negotiate to negotiate lower pay rates with the unions.  This allowed the company to force new labor agreements on employees, which resulted in a more competitive airline, but at the cost of workforce morale.

In June 1986, Continental emerged from bankruptcy, and a year later in 1987, the airline merged with PeoplExpress, which had been a mainstay in Newark since 1981, and New York Air.  This transformed Continental into the third-largest carrier in the U.S.  However, in the late 1980s, Texas Air also bought struggling Eastern Airlines, and Lorenzo dedicated most of his time to labor issues with Eastern.

Continental faced the burden of having acquired two airlines (really three taking into account PeopleExpress bought Frontier Airlines two years before the Continental takeover), plus the surge in fuel prices after the 1991 Gulf War.  Moreover, these acquisitions left Continental with various types of aircraft in its fleet.  Lorenzo retired at the end of 1990, and Continental entered a second bankruptcy.  In early 1991, Continental unveiled the “globe” livery that lives to this day as United and emerged from bankruptcy in 1993, after other companies, including Air Canada, invested $450 million in the carrier.  We will get back to Continental’s story.

During a visit to Newark in 1993, I took some pictures of some of the other airlines that operated there.  Among the foreign carriers, Air France provided non-stop Boeing 747-200 service from Paris-Charles de Gaulle.  Today, this flight is handled by Delta, which has had a very close relationship with Air France since merging with Northwest Airlines in 2010.  Furthermore, Air France and Delta are two of the four founding members of the Sky Team alliance.

Scandinavian Airlines in 1993 served the three Scandinavian capitals (Copenhagen, Oslo, and Stockholm) from Newark using Boeing 767-300s, and today these routes are operated by either Airbus A330s or A340s.  Portugal’s TAP used an Airbus A310 from its Lisbon hub in 1993, and today this flight continues using an A330.  One transatlantic flight I took from Newark as a Virgin Atlantic Boeing 747-200 to London’s Gatwick Airport.  These days, Virgin uses A330s and A340s to serve London’s larger Heathrow Airport from Newark.

AFR B742 - EWR - LFL SAS B763 - EWR - LFL TAP A310 - EWR - LFL VIR B742 - EWR - LFLEuropean airlines at Newark in 1993:  Air France Boeing 747-200, SAS Boeing 767-300s, TAP Airbus A310, and Virgin Atlantic Boeing 747-200

AA A300 - EWR - LFL

American Airbus A300 at Newark in 1993

As I have mentioned in other flashback pieces, U.S. airlines, especially before the September 11 terrorist attacks, had different fleet utilization, such as using widebody jets for relatively short domestic routes. Twenty years ago, jet fuel prices were low and high load factors had less importance, compared to today.

One domestic widebody I photographed at Newark in 1993 was an American Airlines Airbus A300 originating from Miami.  An interesting tidbit about this aircraft was that American was unable to adopt its classic polished metal scheme on the entire aircraft since some its components, especially in the tail and aft section, were made from composite materials, instead of aluminum.  American eventually polished the fuselage, but had to maintain a gray color on the tail and rear fuselage.

Getting back to the Continental story, after emerging from its second bankruptcy in 1993, the carrier experienced a historic revival.  In 1994, former Boeing executive Gordon Bethune became COO, and was elected CEO in 1996.  Five years later, he authored his aptly titled  book “From Worst to First,” which chronicled the company’s stunning turnaround under his leadership.  Continental went from consistent bottom rankings across most airline rating categories to being one of the best.

For example, for six consecutive years, Fortune Magazine named Continental among the “100 Best Companies to Work for in America” and “Number One Most Admired Global Airline” from 2004 to 2008.  Moreover, in the late 1990s, Bethune undertook an aggressive fleet modernization plan, in which the airline became an all-Boeing operator with orders for 737-700/800/900s, 757-200s, 767-200ER/400ERs, and 777-200ERs.

COA B738 - EWR - LFL COA B752 - EWR - LFL COAX ERJs - EWR - LFL COAX ATRs - EWR - LFLContinental rejuvenated and triumphant at Newark in 1999: Boeing 737-800, Boeing 757-200, Embraer ERJ-145s, and ATR-42s

By the early 2000s, Continental had the youngest fleet in the U.S.  In addition, it acquired ExpressJet Airlines, which it held until 2002.  The regional carrier provided jet service as Continental Express using Embraer 135 and 145 aircraft.  Continental also operated ATR-42/72 turboprops, using the Continental Express label, out of Newark to serve smaller regional airports.

I was working in Washington, D.C., in the late 1990s, and had a few opportunities to fly to and from Newark.  I was not only impressed by the new fleet of aircraft, but also by the friendliness and excellent costumer service of the crews.  Memorable flights included brand new 777-200ERs from Newark to Gatwick and to Rome, as well as connecting to Reagan National Airport on new Boeing 737-700s or Embraer 145 regional jets.  I also experienced Continental’s completely revamped international business class, “Business First,” aboard a recently delivered Boeing 757-200 on a flight to Bogota.  I even got to say goodbye to the DC-10, which was being replaced by the new Boeings, from Newark to Madrid on one of its last flights.  As we know, today Continental is part of a much larger United Airlines, but its positive transformation during the 1990s brings back good memories of some very enjoyable flights.

CO 752 TO  EWR 2 - LFL CO 752 TO  EWR 3 - LFL
Taking-off from Newark to Bogota in 1999 aboard a Boeing 757-200

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Contact the author at luis.linares@airchive.com

Contact the editor at benet.wilson@airwaysnews.com

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ANALYSIS: Wright Amendment Expiration Highlights Battle Between American and Southwest – Part 2

by Vinay Bhaskara / Published October 17th, 2014

Editor’s note: In part 1 of our analysis, we offered a history of the Wright Amendment, and took a look at Southwest Airlines’ prospects now that it has been lifted at Dallas Love Field after 43 long years of fighting.  Today we look at competitor American Airlines’ competitive response at Dallas-Fort Worth International Airport.

Competitive Impact on American Will Be Mixed

There is no question that the end of the Wright Amendment will have an adverse impact on American’s O&D market and revenue share in the markets affected. O&D passengers are more profitable than connecting ones, and insofar as American’s absolute O&D figures on these routes is set to decline, this will generate a hit on the profitability of American’s largest hub at DFW. Southwest Airlines is the leader or even with American in terms of O&D market share in the 16 markets it currently serves, and while American generates a fare premium in those markets, for the 14 city pairs where Southwest is adding service, American currently generates 60% O&D market share and 70% O&D revenue share. From here on out, it will trade those figures for something like 45% and 60%.

American Airlines Airbus A319 at DFW

American Airlines Airbus A319 at DFW

American’s stranglehold on business travel in the region should continues, as it will offer superior frequency in every single market save Oakland, which it does not compete directly in (while offering a combined 16 daily flights to San Francisco and San Jose in the Bay Area). Business customers have a well established preference for higher frequency, and when combined with the massive global reach of American’s DFW hub including rapidly growing links to Asia, corporate contracts centered on the region will continue to (heavily) favor American. This is not to say that Southwest will not be able to capture a substantial share of business traffic. It already does so in existing markets from Dallas Love Field, but that market share (driven disproportionately by Austin, Houston, New Orleans, and San Antonio) is generated in part because Southwest is at parity with American in terms of frequency on those routes.

In the near term, the impact of Southwest’s entry will likely be O&D revenue and share declines, and likely a modest hit on margins. However, in the long run, American has a couple of factors weighing in its favor.

Banking on Connectivity

American is counting on its re-banking initiative to boost connectivity at DFW, with a commensurate jump in revenue. The plan is driven by the experience of pre-merger US Airways, who rode banked hubs at Philadelphia and especially Charlotte to high profitability despite limited O&D markets.

Relative to the rolling hub structure that American currently uses at DFW with flights spaced (relatively) evenly throughout the day, the new banked hub will feature far more volatility. In a banked hub structure (the most common type around the world), flights depart and arrive in alternating waves, and at a hub of DFW’s size, these waves might number 50 or 60 cities at a time. Banked hubs offer more connectivity than rolling ones, which raises revenue potential, but they also cause challenges in terms of asset utilization and cascading delays at certain airports. However, American is rolling out banking projects at DFW, Chicago O’Hare, and Miami, seeking to boost revenue as the merger changes traffic flows.

Specifically with regards to the Wright Amendment, American will lose some traffic that migrates to Southwest’s new services. Love Field is extremely convenient for Dallas based leisure travelers (though DFW is quite convenient in its own right), and overall, the airline will win passengers away. But American will be able to offset that traffic decline by filling its planes with connections. And thanks to the ever-increasing pricing power of U.S. airlines, American should be able to maintain margins and absolute profitability in the market with high-fare connecting passengers.

Economics and Demographics Favor American

One of American Airlines DFW Hub Terminals seen in the late 1980s.

One of American Airlines DFW Hub Terminals seen in the late 1980s.

The Dallas-Fort Worth metropolitan area is one of the fastest growing in the United States. Cheap housing and a booming economy are drawing residents to the region, while businesses lured by Texas’ business-friendly tax policies and regulatory environment have generated well-paying jobs. These demographic and economic trends have boosted air travel demand, both leisure and business, substantially over the past 25 years and are expected to do so for at least another 15.

Clearly this is beneficial for both carriers, which will see fuller planes and rising demand. But American is better positioned than Southwest to take advantage of the growth of the region, and the reason has to do with the compromise allowing Southwest to begin nationwide service in the first place. Thanks to the 20-gate cap, of which Southwest is unlikely to control more than the 16 it does today, Southwest is effectively stuck at 153 or 155 flights per day as the natural limit for daily utilization of its gates. Now there are ways for it to grow its operation at Love Field as we will outline below, but those methods have drawbacks and once again have a natural limiting factor.

Meanwhile American basically has no restrictions at DFW. It has plenty of terminal space to expand into today, and the airport has ample room for additional terminals as necessary. As O&D demand rises in the Metroplex, American will be able to soak up a larger share of the growth than Southwest (because of both frequency and network – it will always serve more destinations), and it would not be surprising to see American holding 50- to 70-percent O&D splits even in markets where it competes head-to-head with Southwest a decade from now.

Southwest Is Not As Much of A Threat as it Used To Be

Fifteen years ago, the prospect of a Southwest freed from the shackles of the Wright Amendment would have rightly terrified American, who would have been undercut at every turn by a nimble, low-cost carrier and see fares plummet. Today? Southwest isn’t really a low-cost carrier and it needs similar fares to those required by American for profitability. The cost gap between the two airlines has narrowed substantially, and while Southwest remains a formidable competitor, it is a different kind of competitor.

Moreover, American also has an advantage in its new management team, composed primarily of pre-merger US Airways executives. No legacy airline did a better job of fighting off Southwest than US Airways (who had no choice given its revenue shortfalls). While Las Vegas was sacrificed to Southwest and Allegiant, US Airways more than held its own in Phoenix and most notably, drove Southwest out of Philadelphia with its tail between its legs after Southwest attempted to build a secondary Northeast connecting complex with close to 75 daily departures. If you could pick one management team to face off with Southwest in a post-Wright Amendment world, it would be Doug Parker, Scott Kirby, and company.

Southwest’s Growth Opportunities are Limited

Circling back to Southwest for a moment, its growth prospects at Love Field are not great. The natural cap for its daily departures is around 155 unless it can get its hand on more gates. That being said, in terms of pure capacity, Southwest does have some room for growth on the basis of aircraft mix. For the January day in question, Southwest will split its 153 daily departures across all four aircraft types in its fleet, including 24 daily 737-300s, 30 daily 737-500s, 87 daily 737-700s, and 12 daily 737-800s. That works out to 21,633 outbound seats, a substantial increase over pre-repeal capacity. But just 12 of the 153 flights use the 737-800, which seats 175 passengers versus 143 for the 737-300 and 737-700 and 122 for the 737-500. Replacing smaller 737s with the 737-800, of which Southwest has an additional 43 on order, or (later) the 737 MAX 8 or 737 MAX 9, could be its best strategy for capacity.

If Southwest were to convert all of its daily flights (up to 155) to the 737-800 or eventually the 737 MAX 8, it could offer 27,125 daily outbound seats. If it upgauged even further to the 737 MAX 9 as has been heavily rumored, and assuming a 200-seat MAX 9, it could offer up to 31,000 daily outbound seats. Using annualized comparisons (which are imperfect given that this analysis uses peak-day departures), that’s the equivalent of adding more than 4 million or 6.5 million annual seats (bi-directional) respectively.

Compositionally, Southwest does not have a ton of room to grow with additional destinations. That being said, in a scenario where it up-gauges to the 737-800, it could conceivably free up frequencies for new destinations. Consolidating the Houston Hobby service to an hourly shuttle would free up six daily flights, while consolidating Austin and San Antonio to eight daily flights apiece would add four to the tally. Albuquerque, Lubbock, and Midland could be brought down to three daily departures apiece, as could Amarillo and El Paso, adding eight additional frequencies. Finally, Kansas City, New Orleans and St. Louis could each drop down to six daily flights, giving Southwest a total of 22 additional frequencies to work with.

There’s also the chance that Southwest entirely eliminates Wichita and Birmingham from the network – two relatively recent additions with small O&D markets for another five daily flights. And if it has enough profitable opportunities, Southwest could eliminate Amarillo, Lubbock, and Midland entirely, giving it a grand total of roughly 36 additional frequencies to work with. In Southwest’s hands, that could generate anywhere from six to 18 new destinations (likely somewhere in the middle).

Of course paring frequency in existing markets will reduce Southwest’s O&D market and revenue shares in those markets, some of which could conceivably bounce back to American. Yet another reason why the competitive dynamics in the market are hardly dire for American.

Hardly #NonstopLove

With its heady marketing taglines and a well-timed sale launched just a day after the expiration, Southwest has certainly scored points and set the expectation that it will drive down fares. But Dallas consumers should not expect a sudden decline in ticket prices thanks to Southwest’s entry. In fact for many, ticket prices will actually increase. 

As we mentioned before, Southwest Airlines is no longer a purely low-lost carrier, but rather a hybrid network carrier with a complex business model and variegated product offering. The Southwest Effect above and beyond standard new entrant impact is dead, and the days of Southwest offering genuinely cheap fares is gone. In the Metroplex, that role will continue to fall to ultra-low cost carrier Spirit Airlines.

Southwest needs fares at roughly the same level as American to generate profits, and accordingly the pricing in most markets shouldn’t decline more than 5-7%. Moreover, there are many customers, who had previously traveled outside the perimeter from Love Field, for whom fares are actually going to increase.  After 2006, Southwest began selling “through” tickets at Love Field – direct, one-stop flights to beyond perimeter cities via an allowed airport. These one-stop flights helped Southwest fill its planes as traditional demand patterns tailed off, but they also were extremely low yielding. In many of the markets where it is adding nonstop service, Southwest was the lowest fare carrier in Q3 of 2013. Southwest is going to want to charge a premium for new non-stop service and accordingly passengers will have far fewer dirt-cheap one-stop flights from Love Field. Anyone expecting fares in the Metrpolex to drop sharply as a result of repealment is in for a disappointing surprise.

Partying Like its 1996

Southwest’s festive celebration of the passing of the Wright Amendment gave the impression that the market had changed in a monumental manner, but realistically, the Metroplex has simply returned to its status quo for much of the post-deregulation era. For years, American was the dominant player at DFW, but it was held in check by Delta Air Lines, who had a large hub in its own right at DFW (though American still led the market).

Southwest Airlines was the cheap, no-frills carrier who offered limited service to myriad destinations. Today? American is a dominant player at DFW though it is held in check by Southwest, who has a large operation in its own right at Love Field (and bears close resemblance to legacy carriers today). Spirit Airlines is the cheap, no-frills carrier that offers limited service to myriad destinations. Southwest Airlines may be overjoyed at the elimination of the Wright Amendment. But for many customers in the Dallas – Fort Worth metro area, their emotions today might be more aptly described as a muted sense of deja vu.

Related Stories
ANALYSIS: Wright Amendment Expiration Highlights Battle Between American and Southwest – Part 1

Southwest Trumpets End of Wright Amendment Restrictions at Dallas Love Field

Virgin America Makes Move to Dallas Love Field

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Contact the author at vinay.bhaskara@airwaysnews.com

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ANALYSIS: Wright Amendment Expiration Highlights Battle Between American and Southwest – Part 1

by Vinay Bhaskara / Published October 16th, 2014

At 12:01 am Monday, Southwest Airlines’ personal Berlin Wall came down, as the Dallas-based airline was allowed to begin non-stop service from Dallas Love Field to destinations across the contiguous United States, resolving a 43-year fight by the carrier to add service from its home base. The move, along with expansion by other airlines into the newly freed environs of Love Field, has created an unprecedented state of competition for origin and destination (O&D) in the Dallas-Fort Worth metropolitan area, challenging the hegemony of current market leader American Airlines.

A Protracted Battle

Written in 1979, the Wright Amendment was a federal law that governed air traffic at Love Field. Aimed at protecting massive government investment into the new Dallas-Fort Worth International Airport (DFW), the Wright Amendment prevented airlines from using aircraft larger than 56 seats at Love Field to serve destinations outside of the states of Texas, New Mexico, Louisiana, Arkansas, and Oklahoma. Flights between Love Field and airports in those states could be operated by aircraft of any size. While in theory, this law allowed for airlines flying small jets and turboprops to serve the entire nation, in practice (as the case of Legend Airlines illustrated) American Airlines was quick to quash any full-service competition at Love Field. As a low-cost carrier (LCC) with a single type fleet of Boeing 737, Southwest Airlines, one of few tenants who refused to leave Love Field for DFW, couldn’t take advantage of the 56-seat exception and was hemmed in by the restrictions of the Wright Amendment.

Defenders of the Wright Amendment claimed that it was necessary to protect the metro area’s investment into its green field airport, rightly pointing to examples such as Montreal’s Mirabel International Airport or Osaka’s Kansai International Airport of cities allowing traffic to be split across two different airports and losing traffic and airline hubs accordingly. Meanwhile, opponents of the law claimed that it was anti-competitive and a violation of free market principles, as well as needlessly restrictive. Both arguments held merit. Especially when DFW was opened, it was unclear whether the metropolitan area would have enough air traffic to justify two competing airports. Allowing two airports to fight over a limited pool of traffic often is a mistake, and strategically, the decision was justifiable at the time.

But the new connecting complexes built by American Airlines and Delta Air Lines meant that traffic at DFW boomed beyond anyone’s expectations and by the mid-1990s, DFW was over capacity, and it was clear that Love Field could be opened to new flying without damaging its prospects. While the airport and the city of Fort Worth managed to limit a 1997 repealment push to add Kansas, Alabama, and Mississippi, Missouri was added to the list of approved states with a 2005 amendment, and in 2006, another major push towards repealment that began in 2004 generated the compromise you see today.

The Specifics

Under the terms of the compromise ending the Wright Amendment in 2006, airlines are now free to begin service across the contiguous United States from Love Field, but the number of gates available to airlines will be capped at 20.  Of the 20 gates, Southwest will control 16 while United and Virgin America will control two apiece. Combined, the airlines will use these 20 gates to offer 178 flights per day by Thursday, January 15th, 2015, including 153 by Southwest, 13 by Virgin America, and 12 by United. Additionally, Delta Air Lines operates five flights per day to Atlanta, but those flights are in danger after Delta lost its lease on American’s gates (which were divested to Virgin America as part of the approval process for the American-US Airways merger).

Non Southwest Love Field Service

Delta is currently working with the city and other airlines (temporarily gaining accommodation at one of Southwest’s gates) on a deal to continue service but will otherwise be kicked out of the airport on January 5, 2015. The table to the right summarize peak-day frequency for the three airlines at Love Field (assuming Delta retains service) in January 2015. Virgin America will clearly be the second-largest airline at the airport, but United and Virgin America will operate just 25 daily departures (including 12 ERJ-145s with very quick turnaround times) across four gates for an average of 6.25 departures per gate, against Southwest’s 153 departures from 16 gates (9.6 departures per gate). Unless both airlines plan to expand operations, each could assist and/or be forced (in the case of a lawsuit) to accommodate Delta’s operations.

Southwest’s Operation

Southwest’s new non-stop service from Love Field will roll out in three phases to 17 new destinations, boosting the airline’s service offering at the airport from 116 daily departures to 153 by January 15, 2015, the peak day chosen for this analysis.

 

On Monday October 13, 2014,  Southwest launched service to the following destinations:

  • Denver
  • Chicago (Midway)
  • Baltimore/Washington
  • Washington, D.C. (Reagan National)
  • Las Vegas
  • Los Angeles (LAX)
  • Orlando

The following eight routes will begin November 2, 2014.

  • Phoenix
  • Orange County/Santa Ana
  • San Diego
  • Tampa Bay
  • Ft. Lauderdale
  • New York City (LaGuardia)
  • Atlanta
  • Nashville

And service to the final two destinations in Southwest’s initial round of expansion will begin on January 6, 2015.

  • San Francisco
  • Oakland

Southwest Love Field FrequenciesAll told, Southwest will operate 153 peak-day departures to 33 destinations. Frequencies for the 16 pre-repeal destinations on January 15, 2015 are shown to the right, with total frequency chopped down from 116 daily departures to 100. This reduction in frequency mostly happened to out of state destinations which had seen boosted frequencies due to Southwest’s ability to sell one-stop direct tickets to destinations outside the Wright Amendment “perimeter” via an intermediate stop within the perimeter. Since 2006, this has been the lifeblood of the Love Field operation, according to CEO Gary Kelly.

Meanwhile the chart below displays frequency to the new destinations for Southwest, along with a summary of American’s frequency (daily departures) for the same day of January 15, 2015. The fourth through seventh columns present a summary of key origin and destination (O&D) market data for the third quarter of 2013, representing the peak travel season for the DFW market. PDEW measures the O&D traffic demand for the market per day in each direction, fare and yield are self-explanatory, and the final column states whether American is the leader in O&D passengers or notes which competitor has the O&D lead otherwiseSouthwest vs. American at Love Field

Southwest is flying to 17 new destinations from Love Field, but only 14 new city pairs. The competitive dynamics with American are interesting, but what is key to note is that unlike some of the in-state quasi-shuttle routes, frequency to these new destinations is relatively low, with only New York La Guardia, Washington Reagan, and Chicago Midway surpassing five daily departures.

In part two of this story, Bhaskara covers American Airlines’ competitive response and the future of Southwest Airlines at Dallas Love Field.

Image Courtesy of Jack Harty

Related Stories
Southwest Trumpets End of Wright Amendment Restrictions at Dallas Love Field
Southwest Airlines Unveils New Livery and Brand
Southwest CCO Robert Jordan On Business Traveling, Rising Fares
Has “The Spirit Effect” Replaced ” The Southwest Effect?”

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Contact the author at vinay.bhaskara@airwaysnews.com

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Flashback Friday: Denver Stapleton International Airport in 1994

By Luis Linares / Published October 10, 2014 / Photos by author

Stapleton Tower - LFL

Denver Stapleton International Airport ATC Tower in 1994

Twenty years ago commercial aviation in Denver was in a period of transition, as the city prepared to open a brand new international airport.  The original airport, Stapleton International Airport, opened almost 85 years ago on October 17, 1929, and operated for 65 continuous years.

The last flight left the airport on February 25, 1995, and Denver International Airport opened the next day.  I went to college in Colorado from 1990 to 1994, and this gave me many opportunities to fly in and out of Denver.  Join us for some plane-spotting at Stapleton back in 1994.

UA DC10 - DEN - LFL

United Airlines DC-10-10 at Stapleton in 1994

United Airlines established Denver as a hub city after the signing of the Airline Deregulation Act of 1978.  In 1993, United unveiled a new livery, commonly referred to as “battleship gray”, which replaced the “rainbow & tulip” scheme introduced in 1973.  During this period, airlines used different fleet utilizations, compared to today.  For example, it was very common for United to use DC-10s for the 90-minute flight from Denver to Chicago O’Hare.  This was a time in which airlines were less concerned about planes being full, and jet fuel prices were very cheap, compared to the post 9/11 environment of today.  In fact, United sometimes used the DC-10 for one of its shortest routes that connected Denver to Colorado Springs 60 miles away.

I once flew on a United DC-10 from Fort Lauderdale to Denver, via Chicago.  The one time I had an opportunity to fly the Denver-Colorado Springs segment was on a TWA Boeing 727, originating in St. Louis.  The flight lasted 12 minutes at an altitude of 12,000 feet above sea level, roughly 7,000 feet above ground level, keeping in mind the higher altitudes of Denver and Colorado Springs.  This route was usually operated by a Boeing 737-200 or -300.  Twenty years ago, the subsidiaries and aircraft operating as United Express were also different.  Air Wisconsin flew to smaller cities in Colorado, especially the ski resorts, using the BAe 146-100.  Mesa Airlines also supported United Express, and it used Beechcraft 1900D turboprops.

UA - B7333 - DEN - LFL UA B752 - DEN - LFL ZW BAe146 - DEN - LFL BE1900D - DEN - LFLUnited’s Boeing 737-300 in “rainbow/tulip” colors and  Boeing 757-200 showing off new “battleship gray” scheme, United Express (Air Wisconsin) BAe 146-100 and United Express (Mesa Air) Beechcraft 1900D

Another airline in transition, in more ways than one, was Continental Airlines.  Continental had also established a post-deregulation hub.  However, in October 1994, the airline closed its pilot and flight attendant base at Stapleton, and operations significantly decreased.  Like United, Continental was also changing colors during this time.  It began to shed its “meatball” scheme, which had been around in 1968 and adopted the “globe” that the merged United-Continental retains to this day.

When I traveled home to Florida, I had a couple of flights from Denver on Continental.  As was the case with United, Continental also used widebodies to connect its hubs.  On both flights, I connected in Continental’s Houston hub aboard one of its Airbus A300s. At Stapleton, Continental also had regional operations.  One of the feeder airlines was GP Express Airlines, which operated Beechcraft 1900Cs to smaller cities.   A resurrected version of Frontier Airlines filled the void at Stapleton left by Continental in 1994, and today it still uses Denver as a hub.

GPE BE1900C - DEN - LFL CO - B733- DEN - LFL
The “meatball” becomes the “globe”:  Continental Connection (GP Express) Beechcraft 1900C and Continental Boeing 737-300

Besides United and Continental, I had the opportunity to fly on American, America West, Northwest, and TWA to and from Denver.  On American, I flew on McDonnell Douglas MD-82/83 aircraft to its hubs in Chicago, Dallas-Fort Worth, and Miami.  Furthermore, I got to fly on an America West Boeing 737-200 to its Phoenix hub and on a Northwest Boeing 727-200 to its Detroit hub.  In addition to the TWA flight I mentioned earlier, I also remember a Denver – St. Louis – Orlando – Fort Lauderdale “milkrun” on the same 727.  TWA flew the 727 or the MD-83 to Stapleton from its St. Louis hub.

AA MD80 - DEN - LFL AW B743 - DEN - LFL ZNW B722 - DEN - LFL TW MD80 - DEN - LFLAmerican Airlines McDonnell Douglas MD-83, America West Boeing 737-200, Northwest Boeing 727-200, and TWA McDonnell Douglas MD-83

Other major carriers, like Delta, also operated in Stapleton.  Several factors contributed to the decision to close the airport and open up a much larger facility further east.  First, more separation was necessary between the parallel runways, especially during adverse weather conditions, such as low visibility.  Second, there was no room for expansion, which made it difficult for other airlines to add Stapleton as a destination.  Third, local residents sued the city over aircraft noise.  Last, Adams Country threatened legal action if any of the runways were extended into Rocky Mountain Arsenal lands.  Today, the area once occupied by Stapleton consists of residential neighborhoods, commercial warehouses, and a large shopping mall called the Shops at Northfield Stapleton.

In the spring of 1994, an airshow commemorated the completion of Stapleton’s replacement, Denver International Airport, and it was held at the new airport.  The new Denver International Airport was supposed to start operations that same year.  However, the actual opening faced many delays that pushed the opening to the following year.

UA B733 - DIA - LFL UA DC10 - DIA - LFL
United Boeing 737-300 and McDonnell Douglas DC-10-30 on static display during airshow celebrating completion of new Denver International Airport in 1994

See more historical photos of Stapleton Airport here.

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Contact the author at luis.linares@airchive.com

Contact the editor at benet.wilson@airwaysnews.com

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TAM, LAN Move into Guarulhos Airport Terminal 3

By Benét J. Wilson / Published October 9th, 2014

The interior of GRU Airport's Terminal 3. Image courtesy of Portal da Copa/Creative Commons.

The interior of GRU Airport’s Terminal 3. Image courtesy of Portal da Copa/Creative Commons.

TAM Airlines and LAN Airlines have begun consolidating their operations at Sao Paulo, Brazil’s, Guarulhos International Airport to the new Terminal 3. The carriers, part  of LATAM Airlines Group will be leaving Terminals 1 and 2.

Long-haul flights to and from North America and Europe have already moved from Terminal 1 to Terminal 3. On October 9, short-haul flights from and to Brazil and countries in South America will be transferred. And on October 10, TAM’s domestic flight operations will be transferred from Terminal 1 to Terminal 2, Wing D, with the recheck-in area be located in Terminal 3 (lower level) and also in Terminal 2.

The new terminal will include a parking garage, 40 check-in counters near boarding areas, a new automated baggage check-in system and new stores, cafés and restaurants, all done to improve the passenger experience.

The two carriers have also announced plans to open the first unified VIP Lounge, which is slated to be the largest at Guarulhos Airport. The new 1,835-square-meter lounge will be the first to feature the visual identity of LATAM Airlines Group.  The lounge can accommodate 450 people and will be available to all oneworld alliance carriers.

Construction of the $785 million Terminal 3, modeled after airports in Asia and Europe, was originally announced in August 2009 by the airport’s concession holders, Invepar S/A, Airports Company South Africa, and Infraero, in anticipation of increased traffic during the 2016 Olympic Games in Brazil. The facility has 192,000 square feet of space and was designed to handle 12 million passengers a year. It opened for business on May 11.

With the transfer of TAM and LAN to Terminal 3, 20 airlines will be located in the facility: Air Canada, Air China, Air France, Alitalia, American Airlines, British, Emirates, Etihad, Iberia, KLM, Korean, Lufthansa, Qatar, Airways, Singapore Airlines, Swiss, TAP Portugal, Turkish Airlines and United Airlines. The transfers will be completed by the end of October, when 25 companies will be operating from the new terminal, representing 80 percent of the international flight flow at Guarulhos Airport.

Image Courtesy of Andre Manoel/Creative Commons

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Contact the editor at benet.wilson@airwaysnews.com

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Virgin Atlantic Pulls the Plug on Little Red Service

By Benét J. Wilson / Published Monday October 6th, 2014

Image Courtesy of Virgin Atlantic

Image Courtesy of Virgin Atlantic

Flights on Little Red, Virgin Atlantic’s experiment to offer short-haul service, will end in 2015, the carrier has announced. The service, launched in March 2013, was created to offer competition to British Airways on key regional routes.

Virgin Atlantic saw an opportunity to offer passengers an alternative to BA’s short-haul flights with Little Red after the former was required to give up slots as part of its deal to acquire bmi back in October 2012. Using those slots, Little Red operated 12 daily flights from London Heathrow to Manchester, along with Aberdeen and Edinburgh, Scotland, using four Airbus A320s. In comparison, British Airways has 33 Airbus A319s and 41 A320-200s that it runs on UK domestic and European routes.

At its peak, Little Red served more than one million passengers. And that growth continued in 2014, but only for point-to-point flights — not the more lucrative traffic connecting to Virgin’s long-haul flights.

On September 3, Virgin Atlantic announced plans to grow to record levels of sustained profitability by 2018 through a combination of more service to the U.S. and cuts in other cities around the globe, including Tokyo-Narita, Mumbai, Vancouver and Cape Town. In a statement then, Virgin Atlantic Chief Executive Craig Kreeger emphasized the carrier’s plan to be profitable in the long term and fly on the routes passengers want to fly most.  “Transatlantic flying has always been at the heart of our network and our most financially successful region,” he said at the time.

In today’s announcement, Kreeger noted that Little Red has not been able to add to Virgin Atlantic’s bottom line. “It was always a huge challenge on behalf of the consumer, as the totally inadequate number of slots made available by the European Commission did not deliver close to BA’s network position, even when supplemented by our own slots to fly between Heathrow and Manchester,” he said. “The time lag between the takeover of bmi and our entering the market also meant Little Red initially faced an uphill battle to win recognition and convert customers to its services.”

But Virgin Atlantic said it remains committed to its flights out of Manchester and Scotland, with services from  Manchester to Orlando, Barbados and Las Vegas will continuing, along with a new daily flight to Atlanta. And the carrier will add eight extra seasonal flights from Glasgow to Orlando next summer, along with will continue with eight extra return flights just announced for summer 2015, alongside a new five rotation operation between Glasgow and Las Vegas.

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Contact the author at benet.wilson@airwaysnews.com

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Flashback Friday – 95 Years of KLM

By Luis Linares / Published October 3, 2014

AA - 763 - MIA - LFL

KLM Airbus A330-200:  Photo by Luis Linares / Airways News

As KLM prepares to celebrate its 95th anniversary on October 7, join us as we look back at some of the highlights from the carrier’s rich history.  KLM, whose initials represent the Dutch name Koninklijke Luchtvaart Maatschappij voor Nederland en Koloniën (Dutch Royal Airlines for the Netherlands and its colonies) was founded on October 7, 1919.  The airline’s first flight took place on May 17, 1920 using a De Havilland DH-16 from London to Amsterdam.  Today, as a subsidiary of the Air France – KLM Group holding company and a member of the SkyTeam alliance, KLM flies to over 90 destinations worldwide from its hub at Amsterdam’s Schipol International Airport.

Early Years

KLM officially started scheduled service on April 4, 1921 using Dutch-made Fokker F-II and F-III aircraft.  On October 1, 1924, the airline’s first intercontinental flight took place from Amsterdam to Batavia in modern-day Indonesia,  a Dutch colony at the time, using a Fokker F-VII.  This became a regular route in September 1929 and was the world’s longest scheduled route until the outbreak of World War II in 1939.  In December 1933, KLM flew this service in record time (just over four days) in a Fokker-XVIII “Pelikaan” in order to get Christmas and New Year cards delivered in time by December 25.

KLM DC-2 - Air Race KLM DC-2 - Air Race
KLM Douglas DC-2 during MacRobertson Air Race in 1934:  Photos courtesy of KLM

In October 1934, a KLM Douglas DC-2, carrying passengers and cargo, won on handicap the MacRobertson Air Race from London to Melbourne, while coming in second to a single-seat DH 88 Comet.  Its first transatlantic flight took place soon after in December 1934, when a Fokker F-XVIII “Snip” flew from Amsterdam to Curacao.  KLM received the popular DC-3 in 1936 and was the only airline to fly the least known of the Douglas family – the DC-5.

World War II

On May 10, 1940, the German invasion of the Netherlands during World War II resulted in an interruption of service.  Some of the KLM aircraft that were covering service to Australia and Indonesia at the time of the invasion were eventually used to evacuate people fleeing from Japanese aggression.  Others were taken to England, where they flew for British Airways predecessor BOAC (British Overseas Airways Corporation) during the war.  In September 1945, one month after the end of the war, KLM resumed service, beginning with commercial flights in Europe.  Scheduled service between Amsterdam and New York operated by a DC-4 commenced on May 21, 1946.  By end of the decade, KLM flew two long-range, pressurized types (the DC-6 and the Lockheed Constellation) for routes to Africa, North America, South America, and the Caribbean.  Its first short-range pressurized airplane was the Convair 240, which was used for European flights.

KLM Connie - SFO Aviation Museum

KLM Lockheed Constellation Model at San Francisco Aviation Museum:  Photo by Chris Sloan / Airways News

1950s

On December 31, 1953, founder and owner Albert Plesman died.  This was also a period of economic difficulty for KLM and other airlines.  As a result, the Dutch government increased its ownership stake to two-thirds, thereby nationalizing the carrier.  However, the board of directors remained under the control of private shareholders.  KLM flew its first polar route when it opened Amsterdam to Tokyo service on November 1, 1958 using a DC-7, which would become the last piston engine aircraft flown by the company.

The Jet Age

KLM 1966 Timetable

KLM timetable from 1966 – Image from Airways News collection

The Jet Age began for KLM with the delivery of the DC-8 in March 1960 but continued financial difficulties resulted in several leadership changes.  In 1963 KLM president Horatius Albarda initiated a restructuring effort, which resulted in the reduction of staff and service.  His successor sealed an agreement with the government to reinstate private ownership of the airline.  By 1966, the government became a minority owner of KLM with a 49.5% stake, and that same year, the Douglas DC-9 joined the fleet to cover European and Middle Eastern routes.

KLM became a widebody operator in February 1971 with the introduction of the Boeing 747-200B.  One year later, the DC-10 joined the fleet.  The economic problems stemming from the 1973 oil embargo led to another government intervention that would eventually result in 78% state ownership by the end of the 1970s, while KLM still retained a private board. In 1975, the 747-200M “Combi”, which carried passengers in its front half, and freight in the rear was introduced.  The company considers this an important milestone for its cargo operations.  The addition of the “Combi” was also in response to a period of overcapacity.

KLM 747 Model - Phil Montejano

KLM Boeing 747-200B cutaway model from Phil Montejano’s collection:  Photo by Chris Sloan / Airways News

1980s

The 1980s saw the introduction of additional 747 variants.  In 1983, KLM and Boeing reached an agreement to convert some 747-200 aircraft into a new stretched upper deck (SUD) configuration. The process started in 1984 and finished in 1986, resulting in the 747-200SUD.  The airline also took delivery of the 747-300, which already came with a SUD.  And Airbus joined KLM’s widebody fleet with the introduction of the A310 in 1983.  By 1986, the Dutch government still had majority ownership, but the stake was down to 54.8%.  In 1989, future partner Northwest Airlines took delivery of the most advanced variant of the 747, the -400.  KLM became a customer in June of that year and also acquired a 20% interest in Northwest, which it considered an important step toward the creation of a worldwide route network.

1990s

KLM MD-11 - YYZ - JDL

KLM McDonnell-Douglas MD-11:  Photo by Jeremy Dwyer-Lindgren / Airways News

In December 1991, KLM became the first European airline to introduce a frequent flyer program – “Flying Dutchman”.  In January 1993, the U.S. Department of Transportation granted KLM and Northwest antitrust immunity, allowing them to deepen their partnership.  Eight months later, the airlines operated all their flights between the U.S. and Europe as part of a “joint venture”.  KLM passed an important passenger numbers milestone in November 1993 when it carried more than ten million passengers in a single year.  In March 1994, KLM and Northwest introduced a new harmonized class of service “World Business Class” on all intercontinental flights.  Furthermore, KLM increased its Northwest stake to 25%. Throughout the 1990s KLM continued investing in other airlines with the acquisition of a 26% share of Kenya Airways.  In August 1998, the airline became private again after it purchased all regular shares from the Dutch government.  In 1999, KLM took delivery of its first Boeing 737 Next Generation, and today it operates the -700, -800, and -900 variants.

2000s

A new decade witnessed the first phase of a fleet renewal program and a major merger.  In the first half of 2002 KLM ordered three 747-400ER freighters and eight 777-200ER passenger aircraft to replace its 747-300s.  Two additional 777s would replace two MD-11s.  Airbus was also part of the modernization plan with an order for six A330-200 planes.  On September 30, 2003, KLM and Air France announced a merger plan in which both airlines would become subsidiaries of a larger holding company.  The European Commission and the U.S. Department of Justice approved the merger in February 2004, and shareholders voted in support two months later.  On May 5, 2004, the AIR FRANCE-KLM Group was born.  The airlines retained their own brands operating out of their respective Amsterdam and Paris hubs.  In September 2004, KLM and Northwest joined the SkyTeam alliance, which Air France was already a part of.

During the 2000s, KLM also took some innovative steps.  In December 2006, it became the first airline in the world to introduce self-service transfer kiosks that allowed transfer passengers at Schiphol to print out their own boarding passes quickly and easily.  In June 2007, the carrier partnered with the Worldwide Fund for Nature to limit carbon dioxide emissions.  This effort earned KLM the title of “best in class” in terms of energy efficient flying among all the major international airlines.

KLM 738 - AMS - LFL KLM 763 - AMS - LFL
KLM Boeing 737-800 and 767-300ER at Schiphol in 2001:  Photos by Luis Linares / Airways News

On March 30, 2008 the Open Skies treaty went into effect, allowing airlines to fly freely between Europe and the U.S.  Two months later, the U.S. DoT granted antitrust immunity to SkyTeam members KLM, Air France, Delta Airlines, and Northwest Airlines, allowing them to make better use of the treaty by streamlining activities and better attuning them to customer demands.  KLM also continued to invest in other carriers.  On December 31, 2008, it became a 100% owner of the Dutch cargo and charter airline Martinair and eventually absorbed the passenger portion.  Moreover, Air France – KLM took a 25% stake in struggling Alitalia on January 12, 2009.  The alliance with Northwest ended after its merger with Delta, but KLM and Delta, which has a strong partnership with Air France, continue to be part of a SkyTeam joint venture across the Atlantic.

The Present and Future

Today, KLM has three Dutch subsidiaries – KLM Cityhopper (its regional airline), Martinair, and charter carrier Transavia.com.  It also has a 100% stake of Taiwan-based KLM Asia.  The newest member of the fleet is the A330-300, which entered service in 2012.  KLM has also received excellence recognition by winning the “Best Airline Staff Service” in Europe at the World Airlines Awards in 2012 and 2013.  This award recognizes the combined service of airport and cabin staffs.  Furthermore, “Flying Blue”, the combined AIR FRANCE-KLM loyalty program won “Airline Program of the Year [Europe/Africa]” at the 2014 Freddie Awards.  In 2012, KLM flew 25,774,000 passengers, and in 2013 the number rose to 26,581,000.  Finally, KLM will introduce a new generation of aircraft to its fleet with the Boeing 787-9 Dreamliner in 2015 and the Airbus A350-900 in 2019.

KLM A350-900 and B787-9

The future – (L) KLM Airbus A350-900:  Image courtesy of Airbus; (R) KLM Boeing 787-9:  Image courtesy of Boeing

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Contact the author at luis.linares@airwaysnews.com

Contact the editor at vinay.bhaskara@airwaysnews.com

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British Airways Launches A380 Service at Washington Dulles

By Benét J. Wilson / Published October 3rd, 2014

Image credit - David Dyson

Image credit – David Dyson

British Airways launched its second Airbus A380 flight to the United States between London Heathrow and Washington Dulles Thursday. The British flag carrier also used the occasion to open a new 10,000 square foot business and first class lounge at Dulles.

The A380 landed to the traditional ceremonial fire-hose welcome and media were given a tour of the new lounge, located in Concourse B. Sean Doyle, BA’s executive vice president, Americas, hosted the festivities.

“The story here is bigger than the A380 arriving at Washington Dulles. The bigger story is about British Airways’ investment in new aircraft and lounges, and our customers are loving it,” he said. “We’re already flying the A380 to Los Angeles, and have announced service from San Francisco. We have 12 A380s on order for delivery through 2016.”

BA’s A380 holds 469 customers across two decks and four cabins, including: 14 first class lie-flat suite seats, 97 lie-flat Club World seats, 55 World Traveler Plus premium economy seats, and 303 World Traveler seats.

The first class seats are on the main deck, while business class is on the main and upper deck, said Doyle. “But the seating in all four classes are broken up, so you don’t see long rows of seats. It’s actually cozy and quiet,” he said.

The airline will start service by offering five A380 flights a week between London and Dulles and by the end of October, the service will operate daily.  The flight will complement BA’s existing daily Boeing 747 flight and a Boeing 777 flight that’s operated three times a week.

Lounging Around

BA built a new, larger lounge at Dulles to accommodate the 14 first class and 97 business class passengers departing on the A380 to London Heathrow, said Doyle. “We also wanted to invest in a better experience. We want them to enjoy the lounge and relax before they get on the plane,” he said. It can accommodate 200 passengers.

The lounge, which can accommodate 200 passengers, has a mix of private spaces, plenty of open seating, a bar with great views of the airport and work areas. First class passengers can have a pre-flight meal in a private dining with waiter service and premium wines and spirits.  Business class passengers have access to a full buffet with full meals and gourmet appetizers and snacks.

“We want passengers to enjoy and relax in the lounge before they get on the plane,” said Doyle. “They can dine beforehand to maximize their sleep on their flight.”

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American Expands Domestic Service in Miami

By Vinay Bhaskara / Published October 2nd, 2014

Image Credit - JDL Multimedia

Image Credit – JDL Multimedia

American Airlines is expanding in Miami, with new nonstop service to Austin, San Antonio, Kansas City, and Salt Lake City. Each city will gain daily nonstop service to American’s Latin American hub beginning March 5, 2015. All four routes will be served using American’s Boeing 737-800 aircraft seating 166 passengers in a three-class configuration ( 16F / 60Y+ / 90Y ). Flight schedules for the new route are as follow:

MIA – AUS ~~ D: 0610 A: 0958 ~~ Daily
AUS – MIA ~~ D: 1950 A: 2158 ~~ Daily

MIA – MCI ~~ D: 0600 A: 1009 ~~ Daily
MCI – MIA ~~ D: 1955 A: 2205 ~~ Daily

SLC – MIA ~~ D: 2359 A: 0750 ~~ Daily
MIA – SLC ~~ D: 1955 A: 2311 ~~ Daily

SAT – MIA ~~ D: 0610 A: 1003 ~~ Daily
MIA – SAT ~~ D: 1950 A: 2158 ~~ Daily

American will face indirect competition from both JetBlue and Southwest from Fort Lauderdale to Austin, as well as seasonal indirect competition from Southwest on Fort Lauderdale – Kansas City. Delta will begin nonstop service between Miami and Salt Lake City on December 20, 2014.

These routes have been on American’s radar for years. The Dallas-based airline operated nonstop Austin – Miami service until roughly 1998, and will draw on a large frequent flyer base in the Texas city. Moreover, all four cities are large origin and destination (O&D) markets to South Florida, and the flights are well timed for connectivity to Central America and the Caribbean. None of the four flights, however, is timed well to connect with American’s massive South American hub in Miami, as those flights depart in the night and arrive in the morning. For connections to South America, American will instead route passengers through its largest hub at Dallas Fort Worth International Airport, which also serves as a secondary gateway to South America. These routes have been under consideration for years by American, but its narrowbody fleet of McDonnell Douglas MD-80 aircraft would have rendered them uneconomical. Now that it is replacing those aircraft with more efficient Boeing 737-800s, Airbus A319s, and Airbus A321s, American can begin bulking up its profitable hubs.

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Contact the author at vinay.bhaskara@airwaysnews.com

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JetBlue Adds San Francisco – Las Vegas

By Vinay Bhaskara / Published October 2nd, 2014

Photo Courtesy JDL Multimedia

Photo Courtesy JDL Multimedia

JetBlue Airways is launching nonstop service between San Francisco and Las Vegas, adding two roundtrip flights per day in the market beginning January 5, 2015. The New York-based airline will operate the route using a 150-seat Airbus 320 aircraft in a two-class configuration ( 42Y+ / 108Y ). The flight schedules for this new route are as follow:

B6 88 ~~ SFO – LAS ~~ D: 1315 A: 1445 ~~ Daily
B6 888 ~~ SFO – LAS ~~ D: 1915 A: 2045 ~~ Daily

B6 2889 ~~ LAS – SFO ~~ D: 1100 A: 1230 ~~ Daily
B6 1889 ~~ LAS – SFO ~~ D: 1700 A: 1830 ~~ Daily

JetBlue does not have a focus city on either end of this route, though it has expanded recently at both Las Vegas (with a nonstop flight to Fort Lauderdale) and San Francisco (with expanded service to New York JFK in conjunction with the launch of Mint on the route). However, it is likely that the route addition, which occurred late Wednesday afternoon, is a direct response to Virgin America’s new Boston – Las Vegas flights, which were announced earlier in the day.

JetBlue is not particularly noted for its “tit-for-tat” responses to other airlines, but given the increasing overlap with Virgin America in its product offering (high end leisure travel), it is perhaps a rational response in this case to combat Virgin America’s expansion. Additionally, the route will boost JetBlue’s aircraft utilization during the lower demand winter months, much as Virgin America seeks to boost utilization with Boston – Las Vegas.

JetBlue will be able to tap into a massive origin and destination (O&D) market between the Bay Area and Las Vegas, though it will face substantial competition. The San Francisco – Las Vegas market directly has 21 competing daily flights from Virgin America, United Airlines, and Southwest Airlines. San Jose – Las Vegas has nine daily flights from Southwest, while Oakland – Las Vegas has 11 daily flights from Southwest and Spirit. But it is unclear whether the route is intended to generate a substantial profit at all. Rather, JetBlue appears to be taking a shot across the bow of its San Francisco-based rival.

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Contact the author at vinay.bhaskara@airwaysnews.com

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ANALYSIS: Virgin America Adds Utilization Flying in Las Vegas and New York

By Vinay Bhaskara / Published October 1st, 2014

Virgin America currently operates a fleet of 10 Airbus A319-100s and 43 A320-200s. They cancelled 20 A320 orders due to 3Q 2012 loss. The airline was the original A320 neo launch customer, but they deferred delivery on their 30 A320 neos from 2016 until 2020, slowing their expansion. Image Courtesy: Virgin America

Image Credit – Virgin America

Virgin America is adding point-to-point (p2p) utilization flying in the Northeast this winter, adding seasonal nonstop service from New York JFK to Fort Lauderdale and Boston to Las Vegas. The San Francisco based leisure airline will also boost its offering on seasonal nonstop service between New York JFK and Las Vegas. New York JFK – Fort Lauderdale will be served daily, Boston – Las Vegas will be served four times per week, and New York JFK – Las Vegas will be boosted from daily service to nine flights per week. Both Las Vegas flights will be operated by Airbus A320 aircraft seating 146 passengers in a three-class configuration ( 8F / 12Y+ / 126Y ), while the New York JFK – Fort Lauderdale flight will be operated by an A320 seating 149 passengers in a similar three-class configuration ( 8F / 12Y+ / 129Y ). Flight schedules for the new services and their operational dates are as follow:

12/18/14 – 4/28/15
VX 501 ~~ JFK – FLL ~~ D: 0800 A: 1105 ~~ Daily
VX 500 ~~ FLL – JFK ~~ D: 0915 A: 1155 ~~ Daily

1/8/15 – 4/28/15
VX 913 ~~ BOS – LAS ~~ D: 1030 A: 1340 ~~ 1567
VX 910 ~~ LAS – BOS ~~ D: 1450 A: 2240 ~~ 567
VX 262 ~~ LAS – BOS ~~ D: 1535 A: 2325 ~~ 4

1/5/15 – 4/28/15
VX 253 ~~ JFK – LAS ~~ D: 1135 A: 1425 ~~ 34
VX 258 ~~ LAS – JFK ~~ D: 1510 A: 2300 ~~ 1
VX 258 ~~ LAS – JFK ~~ D: 1535 A: 2325 ~~ 3

The primary rationale behind these additions is clearly aircraft utilization. During the winter, air traffic demand between Virgin America’s hubs at Los Angeles (LAX) and San Francisco (SFO) and the Northeast declines, and the airline needs a place to fly its fleet of 53 Airbus A320 family aircraft ( 10 A319s, 43 A320s ). Meanwhile, winter demand to Las Vegas is more stable, and for South Florida, the winter is actually the peak O&D season. LAX/SFO – JFK/BOS are more expensive to operate than JFK – FLL, and JFK/BOS – LAS because the flights from California are longer and those airports are more expensive to operate from. Furthermore, New York JFK, like many slot-controlled airports around the world has a “use it or lose it” provision. Under prevailing rules,  airlines have to utilize a certain percentage of their slot portfolio in order to preserve control over their slots (which are otherwise forfeited). Thus the eighteen new weekly flights (and existing daily services to Las Vegas and Palm Springs) from New York JFK allow Virgin America to keep control of its slots at JFK that are used during the summer season to operate more than 12 daily flights to LAX and SFO.

Virgin America Utilization Flying CompetitionVirgin America will face ample competition on these routes. The table to the left shows flight schedules for the New York – South Florida (Miami, Fort Lauderdale, and Palm Beach), New York – Las Vegas, and Boston – Las Vegas city pairs for Thursday, February 19th (the peak day for daily departures in each market). The New York – South Florida market has an astounding 113 daily departures, while New York – Las Vegas, and Boston – Las Vegas are a lot more modest. There is competition from several airlines on most routes, but the majority of the competition comes from legacy, full service airlines like Delta, United, and American, who have higher costs than Virgin America. There is limited ultra-low cost carrier (ULCC) competition in South Florida from Frontier Airlines on Miami – New York La Guardia and Spirit Airlines on Fort Lauderdale – New York La Guardia, but for passengers looking for a more upscale option, Virgin America is well positioned with only JetBlue competing head-to-head in its segment of the market. The same is true of the flights to Las Vegas.

And Virgin America will be drawing on markets with high O&D demand. The air travel market between New York City and South Florida generates an enormous 10,504 passengers per day each way (PDEW), with an average one-way fare of $206.08 and an average yield of 18.4 cents. Even though the route is lower yielding, Virgin America should have zero trouble filling its single daily flight in America’s second largest air travel market. JFK – Las Vegas is similarly low risk. Even up against 15 competing daily flights (excluding its own), Virgin America can tap into an O&D market of 1,695 passengers PDEW with a respectable average one-way fare of $319.08 and an average yield of 14.0 cents. Boston – Las Vegas would appear to make less sense. The market is much smaller at 632.5 passengers PDEW, and the average one-way fare and yield are low at $270.65 and 11.4 cents respectively. Virgin America will likely lose money on this route (the other two are likely to at least break even), but less money than if it had to operate a longer haul route from Boston.

While the new routes outside of Virgin America’s core operations at Los Angeles and San Francisco are welcome additions to the network, they do not signal any sort of substantial shift towards a more point-to-point (p2p) network model for the carrier. Even including the yet-to-commence nonstop service from Dallas Love Field to New York La Guardia and Washington Reagan, just six (16.2%) of Virgin America’s 37 nonstop city pairs do not involve Los Angeles or San Francisco, and less than 5% of its capacity (measured in available seat miles) meets the same criteria.

Beyond simple aircraft utilization there is another benefit for Virgin America. After years of financial misfortune, Virgin America’s investors appear to be pushing the airline towards an initial public offering (IPO). The present investing environment for airlines is reasonably positive, but in recent months, performance of airline stocks has lagged a little bit due to concerns over revenue growth (Delta and America were most noticeably affected with ~15% declines in valuation over the past month). This is a signal that airline investors are focused on top-line growth as a key area of evaluation. For Virgin America, the winter would normally be a time of poor revenue generation and growth, but with this additional utilization flying, Virgin America has a low risk way to boost its revenue without diluting its margins to a substantial degree. This revenue boost, while temporary, could make Virgin America’s financials more attractive for potential investors in an IPO.

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Contact the author at vinay.bhaskara@airwaysnews.com

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