Category Archives: Airplanes and Airports

A 36-hour Odyssey with Qatar Airways

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

QTR B77L - LFL - DOH

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

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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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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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Spirit Airlines Adds Two New Routes at Chicago O’Hare

By Vinay Bhaskara / Published October 1st, 2014

Spirit Airlines' new livery. Photo courtesy Spirit Airlines.

Spirit Airlines’ new livery. Photo courtesy Spirit Airlines.

Spirit Airlines is expanding its Chicago O’Hare focus city with new nonstop service to San Diego and Philadelphia. Flights to both cities will commence April 16, 2015 using 145-seat Airbus A319 aircraft. The announcement of service to Philadelphia comes just one day after rival ultra-low cost carrier (ULCC) Frontier Airlines announced nonstop service between O’Hare and Philadelphia to begin in “spring 2015.” Both cities will be served with one flight per day and have flight schedules as follow:

NK 260 ~~ ORD – PHL ~~ D: 2045 A: 2345 ~~ Daily
NK 261 ~~ PHL – ORD ~~ D: 0610 A: 0725 ~~ Daily

NK 563 ~~ ORD – SAN ~~ D: 1044 A: 1259 ~~ Daily
NK 564 ~~ SAN – ORD ~~ D: 1350 A: 1940 ~~ Daily

Spirit will face indirect competition from Southwest, who serves both cities from its hub at Chicago Midway, and Frontier, who offers nonstop service between Midway and Trenton. At O’Hare, Spirit will face competition from Frontier Airlines (as mentioned), as well as from legacy carriers American Airlines and United Airlines.

O’Hare is one of Spirit’s largest focus cities, with nonstop service to 23 destinations (5 seasonal). Both routes have strong origin and destination (O&D) demand, but can also be viewed as a pre-emptive strike against Frontier, who is launching a major expansion of its operations in Chicago. By next spring, Frontier will offer nonstop service to 11 destinations at Chicago O’Hare, and there are still six months for the Denver-based ULCC to announce additional service. Given the increase in fares by both the legacies and Southwest Airlines in the Chicago metropolitan area, Frontier and Spirit can likely co-exist in many large markets. But it is increasingly clear that Frontier’s network strategy under the umbrella of Indigo Partners will brush directly up against that of Spirit Airlines.

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Contact the author at vinay.bhaskara@airwaysnews.com

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Frontier Airlines to Launch Service to Miami

By Vinay Bhaskara / Published September 30th, 2014

A Frontier Airlines Airbus A320 painted in the new livery: Image Credit - Ben Bearup / Airways News

A Frontier Airlines Airbus A320 painted in the new livery: Image Credit – Ben Bearup / Airways News

Frontier Airlines is adding service to Miami, Florida, with nonstop flights to Philadelphia, New York La Guardia, and Denver beginning December 20, 2014. The ultra-low cost carrier (ULCC) will also add nonstop service to Chicago O’Hare International Airport on March 2, 2015. In total, the four destinations will be served with 38 flights per week, with frequencies as follow:

  • Philadelphia - 1 Flight / Day
  • New York La Guardia - 2 Flights / Day
  • Denver – 10 Flights / Week
  • Chicago O’Hare – 1 Flight / Day

Aircraft and schedules for the new flights have not yet been released.

Frontier Airlines’ launch of service to Miami comes on the heels of expansion in major markets such as Cleveland, Cincinnati, Houston, Phoenix, and Washington Dulles. Frontier also announced a major expansion from Philadelphia Tuesday, funding the growth with major reductions in frequency on routes from its largest operation at Denver.

Year over year, Frontier is reducing frequency from Denver to Nashville, Cozumel, Dallas Fort Worth, Des Moines, Detroit, Fargo, Spokane (eliminated), Indianapolis, Las Vegas, Los Angeles, New York La Guardia (eliminated), Chicago Midway (eliminated), Minneapolis St. Paul, Oklahoma City, Omaha, Portland, Phoenix, San Diego, Seattle, San Francisco, Salt Lake City, ad St. Louis. Airways News estimates that Frontier will reduce frequency at Denver by close to 220 weekly departures, downsizing capacity by more than 25%.

In concert with expansion at Miami, Frontier will eliminate its nonstop flight between Denver and Fort Lauderdale, though it will preserve nonstop service to five other destinations from Fort Lauderdale. Frontier’s expansion at Miami also pre-empts in small part, a potential expansion by rival ULCC Spirit Airlines. Spirit currently does not serve Miami, but has its largest focus city at Fort Lauderdale. Airways News reported last year that Spirit is weighing incentives from Miami International Airport to move its entire focus city to Miami. Spirit and Frontier have increasingly brushed up against each other in their quest for profitable opportunities, and Miami looks to be no different.

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Contact the author at vinay.bhaskara@airchive.com

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Bombardier Q400 Program Head Discusses Cargo Combi; Q400X

By Vinay Bhaskara / Published September 30th, 2014

Image Courtesy of JDL Multimedia

Image Courtesy of JDL Multimedia

We sat down with Simon Roberts, Vice President and General Manager of Turboprops and Toronto Operations for Bombardier at the Farnborough Airshow in July, discussing the Q400 Cargo Combi, its potential for regional jet replacement, and the Q400X. We also discussed the state of the Q400 program in our program analysis published on September 29, 2014, though the program analysis covers several different themes.

Airways News: So today you launched the Q400 Cargo Combi

Simon Roberts: So the Cargo Combi, it’s the ideal balance of passenger comfort, up to 50 passengers, and also very large payload capacity. What that allows really is an airline to optimize their revenue both in terms of payload and freight and also passengers. Today at the event, one of the panelists from South Africa shared his desire to actually see a Q300 be replaced, which is a reality after he received his briefing on the Cargo Combi. What he realizes now is basically you have that flexibility within one aircraft. So where the routes are thin in terms of passenger traffic you can now have the opportunity [to serve them], particularly to regions where you do require central services difficult to access by conventional means of transportation. In the near future we will be able to announce to launch customers. We are at very advanced stages of negotiations and in the very near future we will be able to make those announcements.

Airways News: So in the African aviation market, passenger demand is still a little volatile, but cargo demand, especially because of the lack of adequate surface transport options, is very high. Do you think that Africa will be the core market for the Cargo Combi?

Simon Roberts: I wouldn’t say necessary Africa as a region will be the core market but I think regions that need to find that sweet spot, that optimum balance between payload and passengers, are exactly where the Cargo Combi will play a critical role. We have flexibility as well in terms of configuration so we can adapt to certain specifications: the size of the payload and also the passenger configuration as well. So again I think it demonstrates the flexibility of the Q400. This is another example of the versatility of the design of the aircraft. Customers have the ability now to operate 86-seats, 50-seats with a Cargo Combi configuration, and other variations. The Q400 is becoming the perfect companion to single aisle. Additionally, you also see now greater flexibility to use dual class configurations with business class; a premium service for your premium customers. We have sold over 50 Q400s with business class configurations.

Airways News Does this Q400 Combi offer a Q300 replacement? Can it replace the Q300?

It offers more than that. It offers obviously the cargo capacity, and obviously the passenger capacity around 50 passengers. So again, I think it’s the perfect balance to meet the needs of your business model, not to compromise your business model because of the limitations of the aircraft. And I think that’s what we are demonstrating consistently with the Q400 now. The Q400 offers four times the flexibility of rival aircraft: single class, duel class, Cargo Combi, and extra capacity of 86 seats.

Airways News: In terms of larger Combi aircraft, particularly with the 747-400 Combi which was a reasonably popular aircraft in the market, regulatory changes in the United States and Europe that made it harder for sort of airlines to change where they place the quick conversion between passenger capacity and cargo payload they had. There were some regulatory changes around that that culled the market for Combis. Is the Q400 going to be affected by the same regulatory constraints?

Simon Roberts: This meets class C requirements for payload and freights and transportation so of course during development, that was at the forefront of the requirements for the Combi. So it meets all regulations and it’s the only in-production Cargo Combi. The performance of the Q400 allows it to get into regions, allows it to land on gravel runway, it’s hot and high superior performance, it’s economics, it’s superior fuel efficiency. Obviously when you combine all of them together it brings a lot of flexibility but it also brings a lot of value to a customer that’s trying to balance it’s business model and I think we have the perfect solution to meet all of those demands. And today we also announced the launch of a fuel efficiency manual. A fuel efficiency manual is basically 16 tools and techniques that an airline can use to improve their fuel consumption and by definition increase their profitability. So this has been a collaborative project we’ve done with a number of customers one in particular who spoke today is Flybe. Over the last 2-3 years we’ve seen a 13% reduction in their fuel costs through these initiatives.

Airways News: 13%?

Simon Roberts: Yeah, it’s a significant saving and I think it’s instrumental to the competitive advantage that the Q400 provides whether that’s in Europe or any other region.

Airways News: 13% will allow you to more closely match the ATR 72 on a trip cost basis?

Exactly and we’re already dependent on the configuration, we’re not only meeting but we’re now surpassing trip cost and seat mile cost and fuel cost. So if you actually take the 86-seat configuration, we actually have a 17% cost advantage per seat and a 7% fuel burn advantage over the ATR 72. That’s at the heart of the Q400; fuel efficiency. The Q400 is the only turbo-prop that airlines have the option to fly slow or fast, and a number of airlines are starting to enjoy that adaptability now. Where speed isn’t the primary requirement because of the network design and the business model, they’re able to not use the full speed but enjoy the benefit of a low fuel consumption

Airways News: So you guys have basically just done what ATR is still waffling about with a 90-seat turbo-prop. So I want to change tack a little bit and discuss how turboprops can play a role in the future of regional capacity provision in the US. The combination of pilot shortage, aging 50-seat fleets, and other factors have colluded to make regional jet economics in the US rather unprofitable. The Q400 in particular with its high speed offers decent potential for regional jet replacement. So does the Q400 have an opportunity to serve as a regional replacement because with its lower fuel costs, an airline could pay the higher pilot wages and still maximize the economics of their present regional fleet? Is that something you see an opportunity in?

Simon Roberts: Absolutely. I think if we look to Canada, if you look at Porter, Jazz, or WestJet all now fully utilize the Q400 either exclusively within their fleet or complementary within their fleet alongside single aisle jet aircraft. You’re actually seeing them now enjoy the economics you just described. You also see them now access markets that help generate growth in feed to the mainline business. I think to specifically answer the question, I would look to Horizon Air. Alaska Airlines in the last 12 months has seen continued growth to the [Q400] fleet with Horizon Air. We’ve now seen the Q400 Next Gen actually enter into the state of Alaska. Obviously there are additional opportunities to Alaska Airlines in terms of how they utilize the aircraft. I think answering your question, there are many examples in Europe, Canada, and now there is a very good example with Horizon Air of airlines that enjoy the benefits that you describe in terms of costs, as well as speed and passenger comfort.

Airways News? Can you give any color as to what the distance is where the slower speed of the Q400 and the lower costs start to converge with regional jets?

Simon Roberts It’s a difficult question to answer, you really have to look at the cost structure from customer to customer. From airline to airline it’s a different number, but there’s certainly an optimum point, and what we enjoy is actually working with the airlines and finding what that point is for them. That’s really about looking at the design of the network and looking at their overall cost structure. But I think as I described, the single most one or one of the significant advantages of the Q400 is the ability to adjust speeds on different routes. So I think there is no single answer to your question. It’s adaptable to the business needs and that’s the value proposition the Q400 offers – you don’t adapt your business model to the product, the product can be adapted to your business model.

Airways News: Can you comment on a potential Q400X with higher speed engines, perhaps using the GE CPX30 derivative?

Simon Roberts: I think what we’ve been able to do with the extra capacity is really further exploit the design point of the aircraft and we’re very confident of the future development capability of the aircraft. It’s a very young platform, and I think what we’ve seen in the 86-seat variant is, that by listening to our customers and the demands of the market, we’ve been able to adapt the product to meet the needs of the customer and we will continue to do that. I think at the moment our focus is around the actual capacity but I think today, you leave this event knowing the Q400 has four times the flexibility: single class, dual class, Cargo Combi, and the extra capacity. And no other turboprop can offer that flexibility. As part of our strategic planning, we always look to the future market and product requirements, so we’ll assess that situation as the market dictates.

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Contact the editor at vinay.bhaskara@airchive.com

 

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PEOPLExpress Temporarily Suspends Operations

By Vinay Bhaskara / Published September 26th, 2014

Image Credit - PEOPLExpress

Image Credit – PEOPLExpress

PEOPLExpress will be suspending service until October 16, 2014, impacting the travel plans of thousands of customers around the United States and particularly in the Hampton Roads region of Virginia. PEOPLExpress, based in Newport News, Virginia, has been struggling with operational reliability for nearly a week after one of its aircraft was struck by a service vendor’s truck. The suspension of operations may prove to be a terminal blow for the fledgling ultra-low cost carrier (ULCC).

PEOPLExpress currently leases a pair of Boeing 737-400 aircraft from Vision Air, a charter airline whose previous attempt at running scheduled operations from Destin, Florida had failed. PEOPLExpress had been in the works since early 2012, but struggled with the Federal Aviation Administration (FAA) certification process, eventually launching operations on June 30, 2014 using FAA Part 121 certification.

However, with one half of its fleet out of commission, PEOPLExpress can not continue to fly all seven of its routes, and has been forced to shut down. Normally, small airlines in such dire straits will opt to wet-lease an aircraft (and even crews) to maintain service on most of their network. In failing to do, PEOPLExpress may have blundered, as the goodwill it won from bringing low-cost service to a smaller community will be outstripped by the negative effect of thousands of irate customers – many of whom will likely never fly PEOPLExpress again. The only reasonable explanation for PEOPLExpress decision is that the airline lacks sufficient funds to wet-lease the required aircraft, which does not bode well for its long or even short term prospects.

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Contact the author at vinay.bhaskara@airwaysnews.com

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American Airlines Celebrates 25th Anniversary of Miami Hub

By Luis Linares / Published September 26th, 2014

AA - 763 - MIA - LFL

American Boeing 767-323ER landing at MIA:  Photo by Luis Linares / Airways News

In September 1989, American Airlines made a bold decision to transform its small operation in Miami into a major hub and international gateway. At the time, Eastern Airlines and Pan American World Airways (Pan Am) were the main carriers at Miami International Airport (MIA), especially when it came to connecting South Florida to Latin America and the Caribbean. Eastern had taken over the Latin American operations of bankrupt Braniff in 1982. However, Eastern and Pan Am both collapsed in January and December 1991 respectively.  American bought Eastern’s Latin American routes in 1989, while United bought those of Pan Am in 1991.  American was founded in 1926, but had not served MIA until it started a modest presence there in 1979. Finally, financial troubles contributed to United closing its MIA to Latin American service in 2002, leaving American alone at the top.

Extra: Historic images and memorabilia from Miami International Airport

Timetables

Timetables showing evolution of MIA hub – Braniff 1982, Eastern 1989, and American 1990:  Images from Airways News Collection

American’s Operations at MIA

As American celebrates the 25th anniversary of its MIA expansion, the airline boasts 339 flights per day that connect MIA to 123 destinations around the world — more than 100 of them not served by any other domestic carrier at the airport.  This makes American the top US airline serving Latin America, with more flights than any other carrier.  In addition to service to cities in the U.S. and Latin America, American also serves Europe with flights to Barcelona, London, Madrid, and Paris and Canada with flights to Montreal and Toronto. American’s service today is larger than the combined service of Eastern and Pan Am at their peak of operations at MIA.  Before taking over for Eastern, American had a modest operation consisting of only 19 flights per day at MIA.

EA 752 - MIA - Jose Lauzardo AA - 752 - MIA - LFL
Boeing 757s then & now at MIA – Eastern Boeing 757-225:  Photo by Jose Lauzardo and American Boeing 757-223:  Photo by Luis Linares / Airways News

In an airport press release this week, Miami-Dade County Mayor Carlos Gimenez and Miami-Dade Aviation Director Emilio Gonzales congratulated American on its milestone.  Mayor Gimenez said, “American Airlines is without a doubt one of the community partners that has had the greatest impact on our local economy.  AA is responsible for nearly 70 percent of the flights at our top economic engine, a vast route network drawing leisure, and business travelers to our region from around the globe, and more than 11,000 employees in its Miami hub operations — they have truly helped build Miami into a world-class city like none other. On behalf of the residents of Miami-Dade Country, it’s my pleasure to congratulate our partners at American on the 25th anniversary of their Miami hub.  Thank you for your unwavering commitment to our community.”  Aviation Director Gonzales remarked, “I proudly congratulate American Airlines on its 25th anniversary of establishing Miami International Airport as its hub for Latin America and the Caribbean.  Since its decision in 1989 to build a gateway to the Americas at MIA, American has expanded from 19 daily flights to more than 340 this year — an all-time record.  The partnership between American and MIA has truly been a match made in heaven – service between MIA and 121 destinations around the world and more than 27 million annual passengers, all served by MIA’s award-winning North Terminal.  As MIA closes in on another record-setting year for passenger traffic and American continues their expansion at MIA with new routes like Cap-Haitien, and Campinas, Brazil in the coming months, I offer my deepest congratulations and thanks to the American Airlines Miami hub team for 25 groundbreaking years and more to come.”

AA 722 - MIA - CS

American Boeing 727-223 in 1999:  Photo by Chris Sloan / Aircways News

The North Terminal (Concourse D)

Today, American operates from MIA’s state-of-the art North Terminal (AKA: Concourse D).  In 1989, this area consisted of three “finger” terminals designated as Concourses B, C, and D.  MIA added Concourse A in 1998.  As American’s presence grew, so did the need for significant expansion and modernization of its facilities.  The transformation of Concourses A to D into the North Terminal began in 1998 and was supposed to be completed in 2005, but the project faced many delays because of cost overruns. Furthermore, the Miami-Dade Country Aviation Department took over the project from American Airlines during a tense time that involved major legal action between the county and the airline stemming from the delays and higher costs that resulted in a five-year delay.  By August 2010, all gates and extensions to the building were finished.  A new international arrivals facility opened August 2012, and three more gates opened in August 2013.  The official completion of the North Terminal project was in February 2014 with the opening of the baggage handling system’s international-to-domestic transfer.

Extra: Extensive Photo Gallery of Miami International Airport and the AA Hub.

Terminal

Evolution of MIA Terminal – 1990, 2005, and 2014:  Images from Airways News collection

North Terminal Construction - MIA - CS Concourse E - MIA - CS
North Terminal under construction in 2002 and American using Concourse E gates in 2003:  Photos by Chris Sloan / Airways News

The result is a 3.6 million square foot linear facility that absorbed Concourses A and D, while B and C were demolished. The new terminal, designed by Corgan Associates, Anthony C. Baker Architects and Panners, Perez & Perez, and Leo A. Daly, measures 1.2 miles in length and consists of 45 gates designated D1 to D12, D12 to D17, D19 to D25, D29 to D33, D37 to D40, D42 to D51, D53, D55, and D60.  The facility handles 20 million passengers annually. American has two Admirals Clubs, one by D15 and the other by D30. American Eagle uses the ground-level gates D53, D55, and D60 located on the westernmost side of the terminal.  A people mover known as “Skytrain” opened in September 2010 to facilitate the movement of passengers from one end of the terminal to the other, and it has four stops at gates D17, D24, D29, and D46.  Despite the enormous size of the North Terminal, American’s operations still overflow to the older Concourse E, which can be reached from the North Terminal via a connecting walkway.

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Concourse interior and Skytrain entrance at North Terminal:  Photos by Chris Sloan / Airways News

King at MIA

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American classic and new tails at North Terminal:  Photo by Luis Linares / Airways News

American emerged from bankruptcy with a new look and merged with US Airways in early 2013 to form American Airlines CEO Doug Parker reintroduced the “banking” of American’s hubs in August 2013, starting with MIA.  Prior to the merger, the old management used the” rolling” system, which had been established after the 9/11 attacks, for its hub operations in order to minimize costs during this financially difficult period.  The re-banking of movements means many flights will land within a narrow time period, and take-off within a similar narrow time window.  The goal is to maximize connections, as well as increase revenue.  The only risk that comes with banking MIA is the heavy afternoon thunderstorms during the summer months.  Regardless, American’s dominant position at MIA is very likely to remain unchallenged, especially with no competitor present to match the scope of Latin American operations.

AA - 738 OC - MIA - LFL AA - 738 NC - MIA - LFL
American Boeing 737-823 in classic and new look at MIA:  Photo by Luis Linares / Airways News

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Boeing 777-323ER viewed from Skytrain:  Photo by Luis Linares / Airways News

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Contact the author at luis.linares@airwaysnews.com

Contact the editor at vinay.bhaskara@airwaysnews.com

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Bombardier Commercial Aircraft President Talks CSeries; CRJ Improvements

By Vinay Bhaskara / Published September 26th, 2014

Image Credit - Bombardier

Image Credit – Bombardier

We sat down with the president of Bombardier Commercial Aircraft, Mike Arcamone, at the Farnborough Airshow to discuss everything from the status of CSeries program to the improvements of the CRJ-900 Next Gen.

Airways News: So you’ve announced a few orders for the CSeries and unfortunately there was a little snag in the CSeries program a few months ago. But in terms of customer potential, there were a few orders here [at Farnborough]. You have upwards of 500 commitments now, but only in the range of about 250 firm orders. What sort of progress are you making in terms of converting those commitments into firm orders? And will that process accelerate as you enter into service?

Mike Arcamone: We’re very confident. Actually we’ve maintained all along that our goal is 20 customers and 300 firm orders. We’ve reached 20 customers at the show. We have 513 commitments, which include the 210 firm orders. Between now and August, September, as the months go on, we will translate those letters of intent. Some are already more advanced than others towards becoming firm orders. So I’m confident that we’ll obtain the 300 firm orders way before entering the service.

Airways News: In terms of the CSeries’ positioning in the market, vis-a-vis in particular, your biggest competitor in the regional market, they are touting the fact that their E195E2 offers expanding seating, and they’re saying its competitive with the CS100. How would you assess the competitive balance between the C series and E2? Are they chasing different markets or the same market, in particular the CS100 versus the E2? Where does that competitive balance lie?

Mike Aracamone: Well I liked your opening remarks. They’re chasing us. We’re leading with a brand new aircraft. The aircrafts’ structure, avionics, engines, composite wings, it’s all-new. The interior is all-new. We lead with the interior. We have made progress in terms of luggage space, and the whole interior cabin is very friendly to customers. The angle that the bins open, the access of the galleys for flight attendants, the fact that you can move around, wider seats…. The wall of the aircraft, the way it sands, the egg shape so it’s more comfortable. When you put that all together, there’s not another product that comes close to CSeries and it’ll be entering into service next year. By the second half of next year, we’ll have our aircraft entering into service. We have a real product that customers can purchase and will have in their hands. Compared to something that doesn’t exist, what are they going to do? So we’re leading and they’re chasing.

Airways News: And what is the balance in terms of operating economics

Mike Arcamone: Our aircraft is light. We maintain our fuel burn advantage and the position that we’re in right now. In terms of operating costs, we still retain the advantage. We look at the seating capacity gap between the CS100 and the E2, and if customers want to go up to the CS300, we offer extra capacity. So if you can fill 160 seats, with an aircraft that already gives you 12-15% better operating costs, you’re ahead by a lot. You put 160 passengers and with the fuel burn savings and the seat-mile costs improve tremendously, it’s tremendous. And so I’m not afraid of what they might come up with because they’ll still have to figure out how to catch up [with the CSeries] and how to beat it. And we are distancing ourselves with this type of performance.

Airways News: Could you speak a little to the potential of the Q400 as a replacement for regional jet aircraft for the U.S. and around the world? And Mark has heard this question.

Mike Arcamone: Well, first what we’ve done with our current product, which is already used by companies like Horizon that have over 50 [Q400s], West Jet, who actually recently purchased and has continued acquiring Q400s, Air Canada Jazz, Porter that runs on Toronto Island that runs a fleet of Q400 aircraft. It [the Q400] is a great, great regional aircraft if you want it. We’ve listened to our customers and our customers have said, “can you put more seats on the aircraft” and so we’ve launched the E6 seats. So again, why? Because there are areas of the world where passengers want to go from point to point. Within certain regions, we’ve had our customers ask for fewer passenger seats, and more cargo space. So we’ve been responding continuously with a very flexible setup that yes can go up to 86 in the jet areas, but can also vary cargo capacity. The Q400 performs very well: short runways, fast take off, where you can land – you don’t need a runway. So definitely we see growth and as a matter of fact, I think a lot of operators are starting to realize it’s quiet. We do a lot of demonstrations for our customers. We demonstrate how quiet it is. How quiet the turbo prop is… How smooth it is. So the fear of flying in a turbo prop is offset, and airlines can have the speed the Q400 offers, and the ability of a low speed light jet. So definitely in certain markets it can probably replace the low end of jets, absolutely.

Airways News: On Day 1 at this air show, you announced a host of aerodynamic improvements to the CRJ 900. And today’s CRJ series is already about 5.5 percent better than the initial CRJ 900. How much more potential is there for incremental improvements to build on the CRJ 900’s superior economic performance to the E170 and E175, and how much incremental opportunity do you have to push the performance of today’s CRJ 900 so it can compete with the E175-E2?

Mike Arcamone: We have declared that by 2020, within 5-6 years, we’ll be at double digits.

Airways News: Is that double digits from today or from the beginning?

Mike Arcamone: From entry into service. We’re at 5.5%, but we’re going into double digits. So we’ve done half. And there are changes coming, physical changes on the CRJ that will give it the double-digit advantage. We have started to define what thse will be. We will want to look at it as a module as well so we can go back and offer it to our existing customers and customers of our previous generations. But we’re looking at double digits within 5/6 years.

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Contact the author at vinay.bhaskara@airchive.com

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