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COMMENTARY: US Airline Investors Need to Accept Capacity Growth

By: Vinay Bhaskara / Published: February 8, 2016

Airline investors in the United States are leaving money on the table. We’ve now had more than a year of oil prices averaging $50-60 a barrel or lower, and the West Texas Intermediate (WTI) crude just dropped beneath $35 a barrel. So it’s high time for airline investors to stop getting spooked at the mere whisper of capacity increases.

For too long, airline investors have punished airlines through their stock price for any increase in capacity, perceived or real, that took an airline outside of certain bounds. A very good example of this came in May 2015, when Southwest Airlines Chief Financial Officer (CFO) Tammy Romo hinted at plans to take capacity growth beyond the accepted 7% to a range between 7% and 8%. Combined with comments from American Airlines CEO Doug Parker about “aggressively” matching low-cost rivals, Romo’s comments led to a sudden and sharp dip in the share prices of both Southwest and other US airlines. A few days later, Southwest pulled back its comments and reiterated a 7% cap on capacity growth in 2015 and its share price rebounded accordingly.

Unlike many commentators, we don’t see anything wrong with a company’s shareholders attempting to affect strategic decision making by generating movements in the company’s share price. Outside of annual shareholder meetings, most small and mid-size shareholders have few levers outside of selling a portion of their shares and driving down prices in aggregate to exert any kind of control over a company that they are ostensibly the owners of.

Far from a situation of “holding an airline hostage,” this type of indirect influence on strategy is better termed as “an airline’s owners affecting strategic changes that they believe to be in their own self-interest.” But our defense of the institution and right for shareholders to take such action does not insulate them from criticism about what they perceive to be their self interest. And in this case, airline investors are dead-wrong about what exactly is in their self interest.

PRASM is not the “one true metric” of an airline’s financial success

The key driver behind the current mentality of current airline investors is the idea that low growth or declines in passenger revenue per available seat mile (PRASM) portends poor profitability in subsequent quarters. Historically speaking, profits and PRASM have had a direct correlation, so investors reason that since US carriers’ PRASM figures have been falling since the fourth quarter of 2014, the return to huge losses must be right around the corner.

This is misguided. PRASM is a useful metric but it isn’t the be-all and end-all of an airline’s existence. We do not quibble with the historical usefulness of this metric, but the utility of this technique in an environment where fuel prices are declining is limited. And the drop in fuel prices has been nothing short of precipitous, with a similarly large effect on cost per available seat mile (CASM).

Indeed as Judson Rollins of the Skywriter Aviation site noted back in August,

Falling RASK doesn’t matter if CASK falls even faster. It makes no sense to forgo profitable flying just to optimize your system average RASK (or PRASK).

Instead, airlines, like any business, should be focused on profit or even free cash flow maximization. In today’s fuel environment, which means putting up more capacity than they currently are and not leaving profitable flying on the table. This might even mean trading off some margins in the interest of maximizing total cash returns. Would you rather have 20% margins on total revenues of $10 billion ($2 billion) or 19% margins on revenues of 11 billion ($2.09 billion) in a quarter? Right now, airline investors are literally leaving hundreds of millions of dollars on the table annually – money destined for their own pockets – by not accepting slightly higher capacity growth?

Companies are priced-based on multiples of earnings or free cash flow, not margins. And airline investors would do well to remember that their dividends as well as share price appreciation come from profits and cash flow, not from PRASM.

Shifting fundamentals of the oil market point to a multi-year period of sub $60/barrel oil

The drop in fuel prices, far from being a temporary blip as many predicted, has instead proven to be surprisingly leggy. Shale oil producers in the US have proven surprisingly resilient in the face of a price war instigated by Saudi Arabia and the Organization of Petroleum Exporting Countries (OPEC), and they continue to move up the learning curve to bring down the cost of production for shale-based crude.

Even if the shale producers are weakened, the lower cost segment of the market is far from operating at a peak. Iran’s re-entry into the global market post nuclear-deal could boost supply, as would an end to hostilities with the Islamic State. And even if OPEC elects to tighten supply, a spectrum of shale operators and wells with breakeven cost ranging from $40-60 would quickly re-enter the market, keeping prices capped at a relatively affordable $60/barrel. And this is before the positive shock of ever-improving shale oil technology is taken into account. Any reading of the global oil market points to the idea that prices will be lower than $60 for an extended period of time (3+ years).

A new definition of capacity discipline

Much has been made of the airline industry’s turn towards capacity discipline since 2008, and that newfound discipline has certainly been a welcome change for an industry that spent much of its post-deregulation life deepening the troughs and falling short of the peaks of the business cycle due to over-exuberant capacity growth.

But this is not the same airline industry as 20 or even 10 years ago. For one thing, we are now in an airline oligopoly and regardless of what that portends for consumers, it means that the potential for irrationally high capacity growth is lower (since there are fewer players overall and plenty of profitability to be had in tacit cooperation). More importantly, the airlines’ network planning teams are no longer staffed by the same planners that chased market share off a cliff in the 80s, 90s, and early 2000s.

This new generation has come of age in an era where the benefits of capacity discipline have been illustrated loud and clear throughout the formative years of their careers. We spoke with several network planning team members at various US carriers in preparation for this story and came away reassured that they still very much believed in the virtues of and were planning for a future defined by capacity discipline.

But many of them shared the opinion, as do we, that the definition of capacity discipline needs to be a sliding scale. Fuel is the single largest cost borne by an operating airline (between 30-40% in 2014 for most US carriers) and accordingly a precipitous drop in fuel prices changes the frontier of what routes are possible for US airlines to profitably operate.

At $35 a barrel, fuel prices are now at a level where we could have two years plus of 10% capacity growth from everyone in the market including the legacies and still deliver 12-15% operating margins with an extra $3-4 billion in overall profits (assuming no recessions). Most of the carriers aren’t trying to grow capacity at that level – they’re nowhere close. So the more modest capacity growth plans offered by most US airlines are correctly classified as “disciplined”

To be clear, I’m not saying that airline investors need to accept illogical or unreasonably high capacity growth figures – there is still virtue in capacity discipline. But the target figure for “discipline” needs to move when fuel declines. Airline investors need to get comfortable with a few percentage points of capacity growth and targeted defensive moves in key markets against ULCCs by legacies.

Airlines have the ability to add capacity in a low risk manner by extending retirement timelines

In fact, for airline investors, the added capacity is extremely low risk, because it can be largely achieved by extending retirement timelines for older aircraft. US carriers have a sizable aging fleet which is currently being phased out, such as Southwest’s 737-300s, American’s Mc Donnell Douglas MD-80s or Alaska Airlines’ Boeing 737-400s. But while these aircraft are simply uneconomical when oil is over $100/barrel, they are given a new lease of life at current prices.

By keeping these aircraft around for longer and delaying retirements until the next scheduled heavy maintenance check, airlines could add more marginal routes and boost capacity to capture additional profits that are on the table. And since these aircraft are usually owned or fully depreciated, if the price of oil spikes, the economy tanks, or the competitive situation in the US airline industry dramatically shifts, the airlines can simply cancel the marginal routes, re-assign newer aircraft to core routes and park the older jets. In this sense airlines and their investors would get the best of both worlds: the extra profits from incremental flying with the ability to avoid major losses with a quick draw down if things go bad. This is a no-brainer and could be extended over several years if conditions remain positive.

Airlines have established themselves as high quality industrials but are treated as buggy whip manufacturers

Everything that US airlines have done over the past five years indicates that they have more than established themselves as high quality industrial stocks or at the very least high quality transportation stocks. Price to earnings ratios for such stocks ranges from 15-20 times projected earnings (P/E) for the following year in the US (forward P/E)

Here are the estimated 2016 forward P/E figures for the US airline industry.

American 6.7
Alaska – 11.2
Delta – 8.0
Hawaiian – 10.0
JetBlue – 9.9
Southwest – 10.5
Spirit – 10.1
United – 6.8
Virgin America – 7.9

That’s good for a sparkling forward P/E of 9.0, implying that US airlines are undervalued by about 40% in a range from 25% (Alaska) to a whopping 55% (American). Usually, the only time this type of undervaluation is justified is when an industry is in danger of fading out from use in society due to a long run shift (hence the reference to buggy whip manufacturer). The rise of Cisco’s WebEx aside, it’s pretty clear that this isn’t the case for the airline industry (at least not until the Hyperloop becomes reality), so there really is no justification for these valuations. But until airline investors toughen up and stop jumping at the mere whisper of capacity growth, we fear that this chronic undervaluation will persist. The sad irony is that it is the airline investors themselves that are potentially losing billions of dollars in share price appreciation and dividends as a result of their stance.


VinayVinay Bhaskara covers finance, operations and regulatory matters surrounding the U.S. and international airline industry. Bhaskara has been quoted in the Washington Post, Wall Street Journal and South China Morning Post, The LA Times, and his work has appeared in Forbes, Business Insider and Skift. You can contact him at vinay.bhaskara@airwaysnews.com.


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Images: First Alaska Airlines 737-900ER In New Branding

Still no site of this scheme in the sun in Seattle, even on a dull overcast sky it still looks sharp!

Still no sight of this scheme in the sun in Seattle. Even on a dull overcast sky the new Alaska Airlines scheme still looks sharp!

Photos and Story By: Brandon Farris / Published: February 05, 2015

On a typical, gloomy wet afternoon in Seattle, the first new re-branded Alaska Airlines 737-990ER (N494AS, MSN 41729/LN 5768) took to the skies for the first time this week.

The aircraft rolled out of the Boeing paint hangar earlier in the week at Boeing Field adorned in the new livery.

300_4965With Alaska Airlines having just unveiled the new scheme just ten days prior, this 737-990ER was shrouded in some secrecy on the Boeing Renton flight line prior to its first flight on Wednesday January 27th. It rolled out of the final assembly line with a white rudder and its winglets masked by some sort of plastic wrap to help mask its identity prior to the Alaska unveiling event last Monday. With the flight line in full view of photographers from a viewing park, this was done so as not to spoil the debut of the new livery.

This 737 will be the 150th in the fleet barring Alaska retiring a 737-400 or 737-700 prior to the delivery of N494AS.  It will be the 36th 737-900ER and 48th 737-900 overall after they took delivery of N493AS on Friday just after the MAX completed its first flight, that one was still in the interim scheme.

Alaska Airlines was the launch customer for the initial batch of 737-900s but after not achieving the expected range they switched to the 737-800 for the majority of the fleet before going back to the 737-900ER after if had proven its legs. Alaska still has another 29 737-900ER’s on order along with 20 737 MAX 8s and 17 737 MAX 9s.


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ANALYSIS: Does International First Class Have a Future?

By: Vinay Bhaskara / Published: February 5, 2016

First Class on the Thai Airways Airbus A380.

Thai Airways Airbus A380 First Class Cabin.

This past summer I took my first trip in international first class, flying both Lufthansa in the Boeing 747-8 and Thai Airways in the Airbus A380 on my way to Jakarta, Indonesia. Each carrier offered a different experience: Lufthansa was more professional and reserved, whereas Thai Airways was more engaged and aggressive with its service. But both were fantastic flying experiences, among the best I’ve ever had.

But despite the absolute quality of the product, the future of international first class is far from secure. Carriers around the world have drawn down or eliminated their first class cabins, and the airlines that remain are increasingly concentrated in a few key global hubs. So what are the key drivers behind the decline of international first class?

The experience isn’t good enough

First Class on the Lufthansa Boeing 747-8i

First Class on the Lufthansa Boeing 747-8i

This will sound contradictory to my opening paragraph, but despite how objectively amazing those first class experiences were, they weren’t that much of a leap. Later on that same business trip, I flew Singapore Airlines in business class on a flight from Singapore to Delhi. That experience was 95% as good as either first class product due to the exceptional service and hard product that was nearly as good (the gulf between flat bed all aisle and angled lie flat 2-2-2 is a lot larger than the gulf between a partially enclosed suite and a flat bed).

Even if you want to argue that Singapore Airlines is an outlier in terms of being ahead of the market in all cabin classes, my Finnair trip from Delhi to Helsinki to New York JFK was perfectly fine as well (maybe 85% as good). And while 5-15 percentage points is a tangible drop off, it probably isn’t big enough to justify the usual $5,000 plus price delta between first and business class.

A market constrained by changing corporate behavior and shrinking cost of private jets

Historically, First Class was the purview of flat bed seats on long haul trips, both for company executives and for leisure flyers seeking a more premium experience. But with the introduction of flat bed and then all-aisle access business class seats like those on American Airlines’ Boeing 777-300ERs, the product boost offered by a First Class cabin shrunk (as noted above). Simultaneously as this occurred, corporate behavior changed. Once businesses could guarantee that their employees could get a good night’s rest in a flat bed business class seat, the impetus for first class (i.e. the boost in productivity) also declined.

Beyond basic economics, the rise of the internet, fast access to information, and social media changed how publicly traded companies could budget and pay for travel. Back when company filings with the SEC were distributed on paper, figuring out a company’s travel budget would have been really hard. So even a publicly traded company could have sent its CEO/CFO level employees and even its vice presidents in First Class without anyone caring.

But in today’s media world, when a company’s financials can be quickly scanned using a PDF reader and when inequality/conspicuous consumption have become such big stories, it’s not hard to imagine a company getting skewered on Twitter for having too luxurious of a travel budget. For most companies today, it’s safer just to put everyone in business class, even the CEO.

There are still some travelers who crave that more exclusive experience – but today, they are more likely than ever to opt for private jets. Previously, private jets were outrageously expensive, with a similar percentage wise (and much larger absolute) pricing gap as that of first class to business class, plus a large cash outlay required for outright ownership.

But with the rise of fractional ownership (such as NetJets) and better charter options, private jets are plenty accessible to today’s ultra-wealthy. Why fly commercial when for 20 or 30% more you can fly in your own jet?

What this all cascades to be that there are very few markets worldwide that can genuinely handle a first class cabin to more than one or two long haul destinations. And the vast majority of first class demand is between these cities:

  • London
  • New York
  • Los Angeles
  • Dubai (weakly)
  • San Francisco
  • Tokyo
  • Singapore
  • Hong Kong
  • Shanghai
  • Seoul
  • Frankfurt
  • Paris
  • Zurich
  • Beijing
  • Sydney

High opportunity cost

As business class demand has exploded around the world, particularly in developing markets, there is an increasing sense that the first class cabin is taking up valuable floor space in airplanes that could be better used on an expanded business class cabin. For example, former United CEO Jeff Smisek noted in a July interview with Buying Business Travel, “It’s a money loser, and we will be eliminating it over time. For example the 767s that have it today, as they get retrofitted you will not see it reappear. The problem is that it takes a lot of real estate, and people are not willing to pay for that. I suspect the other carriers, apart from the subsidised Gulf airlines, would say the same thing.”

The math behind Smisek’s statement is that each first class seat takes up 1.5 times as much space as a business class seat and 3 times as much space as an economy class seat. So a cabin of 8 First Class Seats on average could be converted to 12 business class seats or 24 economy class seats. Assume that first class seats retail for $6,000 one way while business class ones retail for $3,000 one way. In that case, the First Class cabin represents more revenue potential than the additional Business Class seats ($48,000 versus $36,000).

A growing trend

And airlines continue to draw down their first class footprints. For example, Brazilian carrier TAM Airlines (part of LATAM Airlines Group, South America’s largest airline) removed first class cabins from its Airbus A330s and Boeing 777s last year. United Airlines currently offers first class on Boeing 747, 767, and 777-200 aircraft, but it will not offer a first class cabin on its new Boeing 777-300ERs, which are earmarked for flagship routes from its Newark hub.

And while United hasn’t yet made a firm decision on whether to offer First Class on the Airbus A350-1000, it is highly unlikely to retain the product, meaning that first class will be retired with the current generation of aircraft. Meanwhile in Korea, even as larger rival Korean Air has doubled down on a first class cabin, full service carrier Asiana Airlines has made the decision to strip First Class off of its fleet save for the six Airbus A380 superjumbos it operates to Los Angeles and New York JFK. On the whole, the prevalence international first class is clearly on the downswing.

The future at carriers that remain

The following airlines currently offer international first class cabins:

  • Air China
  • Air France
  • Air India
  • American Airlines
  • ANA
  • Asiana
  • British Airways
  • Cathay Pacific
  • China Eastern
  • China Southern
  • El Al
  • Emirates
  • Etihad
  • Garuda Indonesia
  • Gulf Air
  • Hainan Airlines
  • Japan Airlines
  • Jet Airways
  • Korean Air
  • Kuwait Airways
  • Lufthansa
  • Malaysia Airlines
  • Oman Air
  • Qantas
  • Qatar Airways
  • Saudia
  • Singapore Airlines
  • Swiss
  • Thai Airways
  • United Airlines

For some of these airlines, you can be secure or optimistic about the future of first class. Within the Chinese market, Air China only offers first class in its long haul Boeing 747-8is and Boeing 777-300ERs, and its long haul gateway is Beijing, a market that has genuine First Class demand. The same applies to China Eastern with its home gateway of Shanghai (once again with a limited sub-fleet).

China Southern’s case is a little less secure given that Guangzhou/Shenzhen are smaller First Class markets, but for the moment, there is so much money floating around in Shenzhen (China’s startup hub) that they’ll be able to fill the cabin for the next few years at least.

Air France, ANA, British Airways, Cathay Pacific, Japan Airlines, Korean Air, Lufthansa, Qantas, Singapore Airlines, and Swiss are all based in markets that have true demand for international first class, so they will retain the product for the foreseeable future.

The future of first class at Gulf Air, Oman Air, Kuwait Airways, and Saudia depends on political factors. These are countries that have a two-tier economy with plenty of oligarchs who pay for First Class. But if their economies shift to a more egalitarian structure, the impetus for first class might shrink.

Elsewhere in the Middle East, Emirates, Etihad, and Qatar Airways (who only offers First Class on the A380 moving forward), don’t necessarily have home markets with tons of First Class demand, though they do capture a large share of what you might call the “Oligarch” market in the Middle East. Moreover, they have built their reputations and public relations campaigns around the first class cabins, so they are likely to retain the cabins whether they make economic sense or not. Jet Airways’ long haul fleet functions as an offshoot of that of Etihad, so they are likely to retain the cabin even though First Class doesn’t really sell in India.

For other carriers, the future is bleaker

In the United States, American hasn’t quite eliminated first class, but it is being removed from the Boeing 777-200ER fleet and will be constrained in the future to flagship 777-300ER routes, and United as previously mentioned is all but certain to eliminate first class.

Air India’s wide body aircraft of the future – the Boeing 787 – isn’t configured with a First Class cabin, and its first class cabin will die when the Boeing 777-300ER fleet is phased out. El Al doesn’t really have a justification for First Class anymore – they can probably subsist on flat bed business class for their incoming fleet of Boeing 787 Dreamliners, though the 777-200ERs with first class might stick around for a while.

First Class has been a spectacular failure for Garuda Indonesia, whose home market of Jakarta is too price sensitive to sustain such an ornate service. They will likely convert over to Business Class at some point in the near future. Two thousand five hundred miles to the north, Hainan isn’t in the right markets in China (they nominally have a hub in Beijing but can only serve secondary international destinations (i.e. San Jose instead of San Francisco), and first class will be eliminated when the A340-600s leave the fleet.

Finally, Malaysia Airlines and Thai Airways are in a very similar place when it comes to first class. Both carriers have A380s that are too big for their network and current market conditions but simultaneously are too expensive for the cash strapped airlines to reconfigure. Both carriers also operate in home markets that no longer justify a first class cabin. Bangkok in particular is much more of a vacation market than it is a business travel one for long haul device), so as long as they behave rationally (and with heavy government involvement in both carriers that is an open question), each carrier is highly likely to end first class service.


VinayVinay Bhaskara covers finance, operations and regulatory matters surrounding the U.S. and international airline industry. Bhaskara has been quoted in the Washington Post, Wall Street Journal and South China Morning Post, The LA Times, and his work has appeared in Forbes, Business Insider and Skift. You can contact him at vinay.bhaskara@airwaysnews.com.


Editor’s noteWhat are the benefits of subscribing to our weekly newsletter? You’ll get a summary of our top stories of the week, along with our exclusive Weekend Reads column and a Photo of the Week from the extensive AirwaysNews archives. The newsletter comes out every Saturday morning. Click here to subscribe today!

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American to Offer Free Snacks and More Entertainment in Main Cabin

By: Staff / Published: February 1, 2016

Duo_5740_crp_original

A sample of the new snack options that will be available to Main Cabin passengers on American on all domestic flights starting in April. / Photo courtesy of American Airlines

Just as free snacks in economy return to the “Friendly Skies” at United today, American announced that it will begin offering complimentary snacks again and more free movies, TV shows and music in the Main Cabin.

RELATED: United Airlines to Introduce New (and Free) Snacks in Economy

Customers traveling on flights departing prior to 9:45 a.m. will receive Biscoff® cookies. On flights departing after 9:45 a.m., customers will have a choice between Biscoff® cookies or pretzels, rotated on a seasonal basis. American’s Food for Sale items will also be available for purchase on all flights.

Complimentary snacks in the Main Cabin will be available initially on American’s transcontinental routes, but by April, complimentary snacks will be available in the Main Cabin on all domestic flights.

The new snack options are the same options Delta offers on its flights. However, from today, the Atlanta-based carrier will also offer for purchase three different Luvo-branded wraps. These will be available only for passengers in Delta Comfort+ and in Main Cabin on flights greater than 1,400 miles within the U.S., the Caribbean, Central America and Mexico.

But wait, there’s more!

American will begin offering complimentary meal service in the Main Cabin on all flights between Hawaii and Dallas/Fort Worth starting in May. Among legacy carriers, this service will be unique to American as neither Delta nor United offer complimentary meals in economy on flights to Hawaii, even on flights from the east coast to the island. Hawaiian is the only U.S. airline currently to offer free meals in economy on domestic flights.

“We want customers to choose American every time they fly,” said Fernand Fernandez, American’s vice president – Global Marketing.  “We are giving our customer more choices to enhance their personal flying experience by offering new service and new entertainment options in all cabins.”

More Free Entertainment Options

Meanwhile, American is expanding its complimentary entertainment on domestic flights equipped with in-seat entertainment. Customers will now be able to choose from up to 40 movies, 60 TV shows and 300 music albums. In addition, live television channels are now available on long-haul international flights with Wi-Fi, operated by Boeing 777-300ER, retrofitted 777-200ERs and 787-8s. Customers can enjoy news, sports and entertainment as they happen with four satellite channels in all cabins, making American the first U.S. airline to offer complimentary, international live TV.

Other Product Investments

Customers flying on long haul international and transcontinental flights in the premium cabins starting this March will have new amenity kits, and International First and Business Class customers on select transpacific flights will also have new, pure cotton luxury sleepwear.

Also later this year, American’s new International Premium Economy product will debut when it takes delivery of its first Boeing 787-9 Dreamliners. American Airlines will be the first U.S. carrier to launch an International Premium Economy class. Nevertheless, other carriers offer a similar product such as AA’s oneworld partners British Airways, Japan Airlines and Qantas.

RELATED: American Airlines to Launch International Premium Economy


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Swiss Receives a New Flagship: The Boeing 777-300ER

By: Andreas Spaeth / Published: February 2, 2016

Switzerland is a very aviation-minded country – there is no other way to explain the huge commotion at Zurich’s Kloten airport last Friday: The open air rooftop terrace was specially opened at 07:00 for an event that the outgoing Swiss CEO Harry Hohmeister describes as “a historical day for Switzerland, a symbol of our first step into the future.”

DSC_0029It was the arrival of the first Boeing 777-300ER for the Swiss national carrier, having emerged from the ashes of former Swissair and now firmly established as a solid money-maker within the Lufthansa Group. But still it was fascinating to watch how a simple Boeing 777-300ER, a mainstay of many of today’s long-haul fleets with over 580 in service worldwide, could mobilize thousands of spectators to flock to the airport early on an initially rainy January morning.

There was quite a bit of pushing and shoving when the aircraft finally appeared in the skies over runway 16/34 shortly after 9am local time, escorted by two F/A-18 fighter jets of the Swiss Air Force. “Our pilots flying the delivery flight from Everett’s Paine Field to Zurich are themselves former air force pilots, and the fighter pilots are friends of theirs, so it was a natural gesture for them to escort the new flagship and do some aerial photography with their reconnaissance cameras during a flyby of the famous Matterhorn peak in the Swiss Alps,” Captain Ola Hansson, the Swiss Fleet Chief for the Boeing 777, told AirwaysNews. Finally at 9:14 local time, after an estimated flight time of nine hours and 55 minutes, but with all the extra loops amounted to a total time of 10 hours and 21 minutes, the new “flagship of Switzerland”, as it was referred to, touched down at its new home base.

This first aircraft, a Boeing 777-3DE(ER), (MSN: 44582 / LN: 1363), is registered HB-JNA. Decals of hundreds of Swiss employees in different sizes were applied to the fuselage before the aircraft was due to embark on pilot training flights early this week.

DSC_0401From February 8th there will be two weeks of commercial crew training flights on scheduled short haul services around Europe, “we need our pilots to accumulate landings”, says Ola Hansson. These flights are bookable on Swiss.com.  The most densely flown route will be Zurich to Frankfurt, on some days several times daily. The easiest way to spot them on the booking page is the indication “Operated by Swiss Global Air Lines”, which now operates the 777s as well as the Avros and soon the Bombardier CSeries from this summer under its own AOC. The other AOC is “Swiss International Air Lines”, operating the Airbus fleet. Swiss Global operates with lower labor costs, although Swiss won’t reveal by how much cheaper it produces.

Swiss will receive five more Boeing 777s of an initial order of nine by the end of August, replacing the outdated Airbus A340-300s, of which Swiss operates 15 to date. The main reason for buying the 777s, that were only ordered in early 2013, was “that we got them relatively cheaply and relatively quickly”, discloses Hansson. “The Boeing 787 is too small for us and the Airbus A350 would have only been available in 2019, but we needed new aircraft now.” Two more 777s will join the Swiss fleet in 2017 and one in 2018. “I hope it will be more 777s”, says Harry Hohmeister, who after 11 years at the helm of Swiss now returns to Lufthansa’s headquarters top ranks in Frankfurt. Lufthansa itself is the launch customer for the 777-9, with the first of 34 firm orders expected to join the fleet by 2020.

DSC_0365The cabin of the Swiss-777 seats a total of 340 passengers and is a leap forward in comparison to the interiors of the Airbus A340-300s it is replacing. The eight individual cabins in First Class boast the largest video screens in the industry measuring 32 inches and electro-mechanical window shades, serving all three windows per seat at once.

The 62 seats in Business Class are configured either 1-2-2 or 2-2-1, creating a total of 12 single “throne seats” with extra storage space and armrests-cum-tables on both sides of the seat. The current Swiss Business offering has been refined and enhanced, with more storage space and better privacy, also for the first time introducing three-point seat belts instead of an airbag in the lap belt. The 270 Economy Class seats boast more recline, bigger 11-inch touchscreens and USB and audio ports for every passenger.DSC_0439The biggest novelty of the aircraft, however, is the Panasonic eX connect IFE system, with Swiss as the first major European carrier now allowing voice calls on its 777 fleet. “This function will be disabled after the inflight service on night flights”, says Frank Maier, Head of Product and Services at Swiss. “We will test it for one year but expect to keep it on with not too many people using it, but it is something you have to offer as an airline these days.” Online access will be offered in three different data packages, 20MB costing 9 Swiss Francs (ca. US$ 8.82), 50MB going for 19 Francs and 120MB costing 39 Francs, a model much more expensive for the passenger usually than flat-fee models like Lufthansa utilizes.

Swiss will deploy its first Boeing 777 on regular long haul flights from Zurich to New York JFK from February 21 four times weekly, then it will switch to daily Montréal services on March 27. For this route, the aircraft is actually too big for commercial reasons, “but we are forced to do it because of the required ETOPS training”, reveals Ola Hansson. In mid-April, the 777s will be finally starting to take over Hong Kong services, a route well suited for the aircraft, followed by Los Angeles (June), Bangkok (July) and then San Francisco and Sao Paulo. But it will probably never again create such a stir as during its premiere on this damp Friday morning in January in Zurich.

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Countdown to Launch: The Boeing 737 MAX Timeline

By Staff / Published: January 27, 2016

With the Boeing 737 MAX’s successful maiden voyage on Friday, January 29, AirwaysNews takes a look at the history of the program, which officially launched with Boeing’s Board of Directors giving the go ahead on August 30, 2011.

737 MAX Rollout / Photo by Paul Thompson

The first Boeing 737 MAX was dubbed the “Spirit of Renton” (Photo: Paul Thompson)

The 737 MAX is the fourth generation family member of the Boeing 737 program, and to date, it has received over 3,000 orders from more than 60 customers worldwide.

RELATED: Inside Boeing’s 737 Configuration Studio

About ten years ago, Boeing started to work on the development of a clean-sheet replacement for the Boeing 737. The project, known as Project Yellowstone (Y1), was devised as a a smaller version of the 787 Dreamliner, boasting a carbon fiber fuselage and double aisle. in 2011, the project was finally shelved for various reasons, including being unable to find a feasible method to scale down the carbon fiber fuselage. Although, Boeing intends to have a clean-sheet replacement for the Boeing 737 by 2030.

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The Airbus A320neo (Photo: Airbus)

In 2010, Airbus decided to go ahead with its A320neo program. The ‘neo’ suffix stands for “new engine option”, which brings two new engine models produced by Pratt & Whitney and CFM, and also includes some upgrades to the current A320ceo (current engine option) which is intended to replace. The program posed a threat to the future of the Boeing 737 program, especially as Airbus received positive feedback from its customers. The program definitely increased the pressure on Boeing.

RELATED: Onboard the Inaugural Airbus A320neo Low-Key Lufthansa Launch

RELATED: Airbus A320neo: Delivered!

Back to the Drawing Board

The manufacturer realized that airlines wanted more fuel efficiency above anything else. So, the decision was made to make upgrades to the Boeing 737, and on August 30, 2011, Boeing’s Board of Directors approved the 737 MAX project.

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Boeing 737 MAX -7, -8, -9 Artwork. (Image: Boeing)

The 737 MAX program was devised with three variants: the 737 MAX 7, 737 MAX 8 and 737 MAX 9. These are based on the 737-700, 737-800 and 737-900, all of them variants of the current 737 Next Generation family aircraft.

Among the improvements to the MAX include the new CFM LEAP-1B engine. Boeing says the MAX will have an eight percent lower operating cost than Airbus’ A320neo family, thanks to fuel efficiency and maintenance advantages. The new split-scimitar winglets on the MAX will save 1.8% more fuel than the current blended winglets by Aviation Partners which entered into service in 2004. Boeing also says the MAX will burn about 20 percent less fuel than first 737NGs, which rolled out for the first time almost two decades ago.

RELATED: The Boeing 737 NG Family

ANALYSIS: CFM Missing On the LEAP-1B Would Be a Major Blow to Boeing 737 MAX

After Boeing’s Board of Directors approved the MAX program, there were some doubts as to how committed Boeing was to the program. At the time of the announcement, only one customer was disclosed, despite Boeing previously reporting that it had 700 firm orders from nine different customers.

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Southwest Airlines Boeing 737 MAX 8 Rendering. (Image: Southwest Airlines)

All doubts were blown away when Southwest Airlines announced that it would place a firm  order for 150 737 MAX 8 aircraft as well as options for 150 more on December 13, 2011. Southwest also announced that it would be the launch customer for the MAX, which would be the second time it would be the launch customer of a new generation of the 737. The following month, Norwegian Air Shuttle announced an order of 100 737 MAX 8 aircraft, and in February 2012, Lion Air announced an order for 201 737 MAX 9 aircraft. Later on in 2012, Aeromexico, Alaska Airlines, GOL, United, and a few other airlines placed orders for the 737 MAX.

2013 was another big year of orders for the 737 MAX program; Boeing received orders from Air Canada, American, FlyDubai, Icelandair, Turkish, WestJet, and a few leasing companies. Plus in July, Boeing completed the final configuration for the 737 MAX 8, and it launched the 737 MAX 7 variant with Southwest.

There were also a number of orders for the MAX in 2014; Ethiopian, Monarch, and a few other airlines placed orders for the MAX. In September, Boeing announced that it would offer a high density version of the 737 MAX 8 which was dubbed the 737 MAX 200, launched by Irish low-cost carrier Ryanair. The high density version will be able to seat up to 200 passengers in a single-class high-density cabin, and Boeing says it will be about 20% more cost efficient per seat than existing 737 models.

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Ryanair 737-MAX 200 Artwork

RELATED: Ryanair Launches the Boeing 737 MAX 200

Later in the fall, Boeing announced that production of the first 737 MAX fuselage stringers–which run the length of the fuselage to provide stability and strength were under construction at the manufacturer’s Fabrication Integrated AeroStructures in Auburn, Washington. They were then shipped to Boeing partner, Spirit Aerosystems in Wichita, Kansas, to be incorporated into the first 737 MAX fuselage.

RELATED: Boeing Starts Building First 737 MAX Parts

Taking the 737 to the MAX

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First 737 Max front wing spar. The automated machine drills 30,000 spars per day. Photo by Chris Sloan / AirwaysNews

2015 was an even bigger year for the program. At the very end of May 2015, Boeing started the assembly of the wings for its first 737 MAX right on schedule at its Renton factory; wing assembly is considered the official first step in building any aircraft.  The wing load began in Boeing’s new Panel Assembly Line (PAL) which itself opened just a few months earlier. The new PAL replaces the original system dating back to the 737 program launch in the 1960s. With an assembly daily rate of eight panels—currently at 75% of automation—each upper and lower wing skin panel will require 2,500 fasteners to be completed. Four wings are produced each day with 84 per month.

RELATED: Inside Boeing’s 737 Renton Factory As They Take It To “The MAX”: Part One / Part Two

RELATED: Boeing Starts Building the First 737 MAX

On August 13, 2015, Spirit Aerosystems rolled out the first Boeing 737 MAX fuselage, and it was then delivered by rail to Boeing’s final assembly facility in Renton, Washington. Spirit Aerosystems produces approximately 70 percent of the Boeing 737 structure, including fuselage, pylon, thrust reverser and engine nacelle.

RELATED: Spirit Aerosystems Completes First Boeing 737 MAX Fuselage

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737 Max; Renton Factory; 1st 737 Max on line / Photo courtesy of Boeing

About a month later, the first Boeing 737 MAX entered into the Final Assembly Stage, again right on schedule, and the 737 MAX entered final assembly just as Airbus opened up its new A320 Final Assembly Line in Mobile, Alabama. The MAX is being built on a third production line in Renton, called a surge line. Boeing had to reconfigure the floor space at the factory to make room for this new line, in order not to interrupt current 737NG production.

Faced with the challenges of taking the 737NG production to 42 aircraft per month by mid-2014, and at the same time adding in the production of the new MAX without causing production disruptions, Boeing opted to open a third “temporary” line dedicated to the MAX. Unlike the main two lines, the surge line is not a moving line. Progressively, the MAX will be merged into the existing two lines as the 737NGs phase out, but depending on demand and the increased production rate to 52 per month, the temporary line could become permanent.

RELATED: Boeing to Trim 777 Production, to Boost 737 Build Rate

RELATED: The First Boeing 737 MAX enters into Final Assembly Stage

Quietly on November 30, the first 737 MAX aircraft rolled off the assembly line to the paint hangar, exactly the day scheduled four years ago

On December 2, 2015, the first Boeing 737 MAX was rolled out. During the roll out, Keith Leverkuhn, vice president and general manager, 737 MAX, Boeing Commercial Airplanes, explained: “Today marks another in a long series of milestones that our team has achieved on time, per plan, together. With the rollout of the new 737 MAX – the first new airplane of Boeing’s second century – our team is upholding an incredible legacy while taking the 737 to the next level of performance.”

RELATED: Boeing Introduces its First 737 MAX

The first MAX was painted in Boeing’s MAX house livery similar to the Dreamliner livery, but uses teal instead of blue.

The aircraft, 1A001, has been undergoing pre-flight preparation and testing since rolling-out of the factory. After type certification, it will go to launch customer Southwest Airlines in the third quarter of 2017. The next 2 aircraft are in final assembly with the 4th entering soon.

The program will be over 50 years old by the time the MAX enters service with Southwest. This makes it the longest running and best selling airliner of all time. To date, more than 8,888 737s have been built since it took to the skies for the first time in 1967.

On Friday, January 22, Boeing announced that the flight testing window for the 737 MAX program opens on Friday, January 29. And as expected, and under a typical cold and rainy morning, in Seattle, the 737 MAX took to the skies over Washington on Friday, January 29.

RELATED: The Boeing 737 MAX Makes First Flight

To date, Boeing has received more than 3,000 orders for the MAX; it has received 60 orders for the MAX 7; about 1,700 for the MAX 8; more than 400 for the MAX 9; and about 660 orders have not specified the variant.


Editor‘s noteOur readers now have access to our weekly eNewsletter, which includes a recap of our top stories of the week, along with the subscriber-only exclusive Weekend Reads column and Photo of the Week from our extensive archives. The newsletter comes out every Saturday morning. Stay in the know; click here to subscribe today!

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Turkish Airlines’ “Batman v. Superman” Plane Takes Flight

By: Staff / Published: January 26, 2015

Last Monday, Turkish Airlines (THY) announced a partnership with Warner Bros as part of a promotional campaign for the “Batman v. Superman: Dawn of Justice” movie. The deal includes a commercial for the airline, starring Ben Affleck and Jesse Eisenberg as the film’s Batman and Lex Luthor, respectively, along with a specially-themed Boeing 777 aircraft.

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Photo courtesy of Turkish Airlines.

“The excitment around Batman v Superman: Dawn of Justice will enable Turkish Airlines to showcase our global network and unrivaled hospitality to a legion of moviegoers across the world” said Ilker Aycı, Turkish Airlines’ Board Chairman.

According to the airline, the sponsorship deal means the inclusion of limited edition travel kits with slippers, headphones and other in-flight items befitting the film’s theme, as well as new movie-themed menu items, dedicated travel guides to Gotham City and Metropolis, and a special edition frequent flyer card. The carrier has also announced a contest in which passengers will be eligible to attend the film’s premiere in Los Angeles on March 25th.

During the last years, there has been a trend in which airlines and movie studios are teaming up together to launch movie-themed liveries as part of global marketing campaigns. An example is Air New Zealand and “Lord of the Rings and “The Hobbit” movies, which have showcase not only creative and fantastic liveries and safety videos, but also stimulated tourism in New Zealand and raised their brand awareness.

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Photo courtesy of Air New Zealand.

Last April, Japanese airline All Nippon Airways (ANA) and the Walt Disney Cop. announced an agreement to paint three aircraft as a promotion of the coming movies of the Star Wars saga. The first of these, named Star Wars: The Force Awakens, was released in December 2015. Also, Mexican carrier Interjet sponsored the 007 Film “SPECTRE”, by applying titles on two of its Airbus A320.

Photo courtesy of ANA

Image courtesy of ANA

RELATED: Boeing, ANA Unveil the First Themed Star Wars Dreamliner


Editor’s note: Keep up with AirwaysNews by subscribing to our weekly eNewsletter. Every Saturday morning, subscribers get a recap of our top stories of the week, the subscriber-only exclusive Weekend Reads column wrapping up interesting industry stories and a Photo of the Week from the amazing AirwaysNews archives. Click here to subscribe today!

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JetBlue Introduces Gate-to-Gate Fully Connected In-Seat Experience

By: Staff / Published: January 25, 2016

JetBlue has announced that it will update its fleet with new interiors, a new fully-connected in-flight entertainment system, and offer its passengers gate-to-gate FlyFi, as part of the carrier’s Airbus A320 cabin restyling program, previously announced in November 2014.

RELATED: Celebrating “Bluemanity” with a Look Back at 15 Years of JetBlue Airways

RELATED: JetBlue Reveals New Fare Structure, Offers Mint Update

The restyled cabin will enhance the JetBlue experience by including a greater focus on connectivity, comfort, and space. A major focus will be keeping customers connected throughout their flight, including free gate-to-gate Fly-Fi high-speed Internet, high-definition seatback televisions, and in-seat power outlets with USB ports. This marks JetBlue’s first complete redesign of the interiors on its original A320 fleet since it launched in 2000.

a320-cabin-restyling-entertainment-large“Travel preferences have changed in the last 15 years, and we’re investing in what customers want today” said Jamie Perry, vice president brand and product development. “Our new cabin, combined with our award-winning customer service, is a powerful way for us to once again challenge the status quo.”

The A320 cabin will closely follow JetBlue’s A321 cabin design introduced in 2014. The retrofit will include new ergonomic B/E Aerospace Pinnacle seats, and the installation of Airbus’ Space-Flex v2 galley and lavatory models. The gained space will allow the carrier to incorporate an additional row of economy seats. taking the total number of seats to 162 in the case of the A320s and 200 seats in the case of the A321s. The additional seating, of course comes at a cost with the previously announced slight reduction in seat pitch on the A320s in the main economy cabin from 34″ to 33” – still more generous then most domestic carriers.

a320-cabin-restyling-new-interior-a-downloadJetBlue and Airbus will add the new Space Flex v2 and seating configuration to all-core A321 aircraft in the second half of 2016. The A320 restyling will begin in early 2017 with completion targeted for 2019.


Editor’s note: Keep up with AirwaysNews by subscribing to our weekly eNewsletter. Every Saturday morning, subscribers get a recap of our top stories of the week, the subscriber-only exclusive Weekend Reads column wrapping up interesting industry stories and a Photo of the Week from the amazing AirwaysNews archives. Click here to subscribe today!

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EXCLUSIVE: Onboard the Inaugural Airbus A320neo Low-Key Lufthansa Launch

Story, Photos and Videos by: Andreas Spaeth / Published: January 25, 2016

The Airbus A320neo has officially entered commercial airline service today. The extremely low-key non-event caught almost all passengers of Lufthansa flight 100 by surprise this morning when they flew from Lufthansa’s main base Frankfurt to its second German hub in Munich.

The aircraft, registered D-AINA (MSN 6801) was handed over and delivered, also on short notice, last week from the Airbus factory in Hamburg-Finkenwerder after problems were discovered on the acceptance flight, that had to be rectified by Airbus. Originally the delivery to Lufthansa had been planned for December 22, then pushed to the week between Christmas and New Years. When that didn’t happen, Airbus CEO Fabrice Brégier  said  at the Annual Airbus Press Conference on January 12th that the delivery would happen “within 2 weeks”.  After delivery took place last week, the first flight was set for Sunday January 24 from Frankfurt to Hamburg, but postponed on short notice due to “valve problems” in one engine, according to a Lufthansa spokeswoman.

RELATED: Updated: Lufthansa’s First Airbus A320neo Entry-Into-Service Delayed

RELATED: Airbus A320neo: Delivered!

Everything about the aircraft that is supposedly the new bread-and-butter plane of Airbus and many airlines in the decades to come is low key, even on the outside it’s just ordinarily announced as “Airbus A320-200” with no mention of the neo branding. At least this is a fact with the launch customer, which Lufthansa became somehow accidentally, after Qatar Airways refused the role it was initially supposed to play. This was due to minor early operational shortcomings of the new Pratt & Whitney PW1100G Geared Turbo Fan engines, which affected turn-around times when the engine was started cold.

REPORT: Airbus to Swap A320neo Deliveries, Lufthansa Becomes Launch Operator

Lufthansa stepped in as launch customer despite these foibles as it has its own maintenance division Lufthansa Technik close by in Hamburg, able to support and mature the engine while the aircraft is already in line service. Original launch customer Qatar couldn’t and wasn’t willing to do the same, Lufthansa officials privately acknowledge. These much bigger engines, supposed to save at least 15% of fuel consumption and being much more silent, are at the core of the of the A320neo’s mission. Standing besides the PW1100G engines, measuring 81 inches (2.06 meters) in fan diameter versus just 56.7 inches (1.44 meters) with an A320ceo (current engine option), the difference becomes obvious.

Almost 6,900 A320s have been built since production started in 1986, and Airbus’ order books are bursting with further nearly 4,500 orders of around 80 customers for the A320neo family. So the commercial premiere of the A320neo is quite significant for the airline, the manufacturer and the traveling public. Nothing of this was showing today at Frankfurt airport. There was no ceremony, no signage or speeches acknowledging the event. The only reference to this world premiere was the Captain’s announcement over the PA. An official delivery and handover ceremony is planned for the second aircraft, taking place on February 12 at Airbus Hamburg-Finkenwerder factory.

Entering Lufthansa’s A320neo is  déjà vu at first, as initially nothing out of the ordinary meets the eye and the cabin is equipped with the same Recaro slim line seats as the rest of the Airbus narrowbody fleet. Fact is that the A320neo in Lufthansa’s new configuration carries 180 passengers, twelve additional seats in two seat rows more than the current A320s of the carrier, which physically have the same fuselage dimensions. Swiss meanwhile, already flies the A320 with 186 seats even. It’s clear that these legacy carriers want to copy the high density of the LCC’s while still maintaining some attributes of full-service carriers. Lufthansa for example still serves free soft drinks and a small snack to Economy passengers even of the lowest fare classes. And seat-wise, the full service German carrier still offers a slight recline and leather seats.

But never has the distinction between premium seats in Business Class and others in Economy been as clear as in the new Lufthansa A320neo cabin. Lufthansa claims it has gained space by rearranging toilets and galleys, but it has also squeezed seat pitch considerably aft of about the first third of the cabin. This author did his own measurements today: On a current Lufthansa A320, there are 11.8 inches (30cm) of space between the back of the seat in front and the edge of the next seat. The space to sit on, measured from the edge to the beginning of the backrest, is 16.92 inches (43 cm). Compare this to Economy seats in the new A320neo: Here the foot- and leg space measures just 11.22 inches (28.5 cm), the seat itself offers only 16.1 inches (41 cm). The recline especially of the window seats on the premiere aircraft was not well-oiled yet and a bit hard to apply, other seats were easier to recline, although the actual recline is minimal. Official seat pitch in Lufthansa’s Economy cabin on the A320neo is 29.1 inches (74 cm).

But in all fairness it has to be said that for the author, measuring 5 feet, 10 inches (1.88m in length) and often flying equally LCCs and otherwise long haul Business Class, the space was adequate for a short flight like from Frankfurt to Munich, taking 35 minutes in the air. Subjectively, it felt more comfortable than seating on easyJet. Big difference in Business Class: In the first about six rows, with a guaranteed free middle seat, the leg space measures a lofty 14.17 inches (36 cm), while the seat itself from edge to back offers 16.53 cm (42 cm) of space, so even in Business Class one centimeter less than before. Officially the seat pitch in Business is 31.8 inches (81 cm).

In the back of the aircraft, the last row has no windows, while there is now only one lavatory, which has been squeezed in front of the rear bulkhead wall, taking half of the fuselage diameter, with the other half taken by a now much smaller galley. On take-off, the A320neo is audibly quieter than earlier models. In flight however, seated in seat 23A behind the wings, it was fairly noisy and vibrations could be felt.

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The captain of the flight commented later: “We didn’t want to incur a delay right on the first flight, so we flew faster than normal, that’s what caused the extra noise.” Lufthansa group has 116 neo-type aircraft on order, 45 of them are for the larger A321neos. 60 of all A320neo family aircraft for Lufthansa will be equipped with the PW1100G engines. The first aircraft will mostly fly from the main base Frankfurt to both Munich and Hamburg.

This is a big week for the narrow body middle of the market segment. Boeing’s 737 MAX is scheduled for its first flight on Friday January 29th. We will be running an A320neo vs 737 Max 2 part analysis beginning later this week.


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Updated: Lufthansa’s First Airbus A320neo Entry-Into-Service Delayed

By: Staff / Updated: January 24, 2016

UPDATE: The entry-into-service of the Airbus A320neo scheduled for Sunday Morning January 24th has been scrubbed due to an engine “valve issue”. Lufthansa tells Andreas Spaeth, who was scheduled to be on the inaugural, that the flight has been rescheduled for Monday as LH100 FRA-MUC at 10.15am CET. Spaeth will be on hand for another attempt at chasing the illusive A320neo inaugural.

ORIGINAL STORY / First Published: January 22, 2016 /

The First A320neo for Lufthansa has been transferred to Frankfurt today. This week, the German carrier took delivery of the airliner, and is expected to carry out its first regular flight this Sunday January 24 at 10:00 am local time operating flight LH010 to Hamburg, the home of MRO Lufthansa Technik. Given the low key delivery earlier in the week, short notice, and fluidity of the delivery and acceptance flight, Lufthansa has not opted for any special events and ceremony for this first entry into service. Airbus and Lufthansa are planning a more public event in a few weeks.

RELATED: Airbus A320neo: Delivered!

Lufthansa’s A320neo (MSN 6801), now with its permanent registration D-AINA, took off with the flight number LH9922 at 13:34 local from the Airbus factory site in Hamburg-Finkenwerder and landed 40 minutes later at 14:14 in Frankfurt.

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The first Airbus A320neo arrives to Frankfurt after a 40-minute flight from Airbus production plant in Hamburg. (Photo Credits: Lufthansa)

A320_Neo_004According to Airbus, The ‘neo’ or ‘new engine option’ is an upgraded version of Airbus successful narrow-body single-aisle family aircraft which also includes other enhancements such as wingtip devices named Sharklets and further aerodynamic improvements intended to offer 15% more fuel consumption efficiency when compared to the current engine option or ‘ceo’.

The first A320neo was originally scheduled to be delivered before Christmas of 2015. The German carrier swapped delivery positions, becoming the first customer to receive the neo, with Doha-based Qatar Airways, after QR declined to take delivery of the airliner due to operational constraints in place for the Pratt & Whitney PW1100G engine. The fix is expected to be implemented in the coming weeks, according to the manufacturer.

REPORT: Airbus to Swap A320neo Deliveries, Lufthansa Becomes Launch Operator

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Lufthansa’s Airbus A320neo will offer a two-class cabin with a seating for 180 passengers. (Photo credits: Lufthansa)

The A320 family aircraft has become a best seller for Airbus. The manufacturer claims to have sold over 4,400 aircraft to date, outpacing its rival, the Boeing 737 MAX due to enter service in 2017 with launch customer Southwest Airlines.

Your AirwaysNews crew will be onboard the first A320neo flight this Sunday with veteran journalist Andreas Spaeth. Follow us on Twitter @AirwaysNews.


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The Remaining Boeing 747-8 Orders Re-Visited

By Contributor / Published January 21, 2016

Boeing has less than two dozen confirmed 747-8 aircraft orders left to fill, and there has been little change to the order books over the past year, although in a report by Bloomberg, Randy Tinseth, Vice President of Marketing for Boeing, did say that there are some “near term opportunities” for the 747-8.

747-8F First Flight K64878-51_FA252600

747-8F First Flight

Boeing offers both passenger and freighter versions of the 747-8, but close to 60% of the orders have been for the 747-8F. Industry analysts predict that the world’s air cargo market’s growth rate will need to increase quite a bit to cause airlines to place more orders for the 747-8 in order for 747 production to continue.

PHOTOS: Boeing 747 Factory Tour & Program Update

The 747-8 program has long been a challenge for Boeing.  Since starting production in August 2008 with only one customer for the aircraft, Boeing’s critics have had their doubts on the success of the 747-8 program. Unfortunately, things did get a bit worse as the first flight was pushed back by a few months, and then-Boeing Chief Executive, Jim McNerney, began publicly questioning the success and future of the 747-8 program.

Over time, Boeing proved to its critics that the 747-8 could be a success as it marched through flight-testing and secured orders, although at the time of the first delivery in October 2011, the number of orders was not exactly the strongest, with only 111 firm orders. Now if we fast forward to early 2016, the order books have seen very little change as only a dozen or so firm orders have been added.

In a widely anticipated announcement a little over a year ago, Boeing announced its bid successfully won the contract from the United States Air Force to produce at least two 747-8s to fly as “Air Force One.” For a few years, the Air Force had been looking to replace its two aging 747s that fly the U.S. president. The 747-8s are expected to be delivered in 2018, but then they will have to undergo extensive modifications over a few years and begin flying the U.S. president sometime after 2020. However, this order is being criticized in the congressional budget so the future of this order is in some unchartered territory.

While the U.S.A.F. 747-8 order is sort of up in the air, Boeing still has some “white tailed” 747-8s to get off the lot, which are aircraft that have already been built but do not have an owner. This can be a hard task for any manufacturer, let alone for an aircraft that has been a hard sell.  The Seattle Times does report that Boeing was able to get the number of “white tail” 747-8s down from six to four as Air Bridge Cargo of Russia took delivery of the two jumbo jets and leased them through Boeing Capital. On the bright side even though they are still owned by Boeing, they are making Boeing some money, and the delivery of these two marked the 99th and 100th deliveries for the program.BOEING-MEDIA-DAYS-2015-EVERETT-747-8-LINE-2-1024x680

2015 was a difficult year for the 747-8 program; Transaero folded which means it would not take delivery of the four it had on order and Nippon Cargo cancelled four of the 14 it had on order. Plus, the production rate will be cut down to half per month in September, down from the proposed tarhet of one per month that it will reach in March. The move is obviously intended to keep production going till more orders will come from air cargo carriers signifying stronger growth in the airfreight market.

RELATED: Boeing to Cut Production Rate of the 747-8 as Demand Slows

Now, 2015 was not all bad; Boeing surpassed the 100 delivery mark of the 747-8, and during the 2015 Paris Air Show, Air Bridge Cargo signed a preliminary agreement with Boeing to take delivery of 20 aircraft through a mix of leasing and direct purchases. Still, Air Bridge Cargo’s order has not been fully finalized, and it may not necessarily be enough to help sustain the program long-term if finalized, unless Boeing is able to continue to bring in orders. And 2015 was bittersweet as long time Boeing 747 customer, Lufthansa, took delivery of the final 747 aircraft it had on order.

The remaining 747-8 deliveries include:

  • A few more 747-8s for Air Bridge Cargo, but there order has not been fully confirmed
  • Up to three potential 747-8s for the U.S. Air Force
  • One 747-8F for Cargolux
  • Two 747-8F for Silk Way Airlines
  • Four 747-8F for Korean Air Cargo
  • Five 747-8I for Korean Airlines
  • Two 747-8F for Nippon Cargo
  • One 747-8F for Cathay Pacific Cargo
  • One 747-8I for a private customer

Overall, the 747 has been a success for Boeing; more than 1,500 have been delivered to customers all over the globe; it has flown government leaders, movie stars, artists, families, and countless other people; and the aviation community has fallen in love with it and has rightly been dubbed the “Queen of the Skies.”DJ8A4220

There is truly no other plane like the Boeing 747, but for better or worse, the end of 747 production is near, especially as the backlog of the 747-8 continues to dwindle and few changes occur to the order books. Like the old saying goes, all good things must come to an end, but nobody quite knows when we will see the end of 747 production. It does seem likely to be sooner rather than later.

Boeing is optimistic that it may be able to gain a few more orders as air freight companies are retiring older aircraft. Boeing expects to see a demand of approximately 250 aircraft over the next few years. Still, airlines and cargo companies are switching to more-efficient and twin-engine aircraft as the economics of the “Queen of the Skies” are a bit of a royal pain.

EXTRA: A Look At The Remaining 747-8 Orders (May 1, 2015)

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

EXTRA: Boeing Delivers 50th Boeing 747-8

EXTRA: On-Board the Inaugural Boeing 747-8I Flight

PHOTOS: Lufthansa Boeing 747-8 Intercontinental Inaugural

PHOTOS: Lufthansa Reveals Retro Livery on Boeing 747-8I


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Then and Now: 45 Years of Boeing’s 747 Passenger Experience

By: John Walton / Published: January 11, 2016

The first Boeing 747-400 was retired by Delta Air Lines last September, with a quiet celebration on an entirely different scale to its role in world aviation, outfitted with an onboard product practically unimaginable to the cabin designers of the original 747-100 half a century ago.

RELATED: Onboard the Final Scheduled Flight of the Very First Boeing 747-400

HISTORICAL REVIEW: Key Boeing 747 Customers

It’s fascinating to delve into the AirwaysNews Boeing historical archives and look closely at this Boeing brochure from 1970, for example, and note the 2-4-3 “tourist section”, which of course we’d now call economy class. The nine-abreast layout didn’t last long in the 747, with the 17” seats that replaced it when every airline went 3-4-3.

Tourist pic

It’s a telling historical echo of the more recent decisions of airlines to move from 3-3-3 or 2-5-2 Boeing 777 economy cabins to ten-abreast layouts, or to avoid the 2-4-2 economy class cabin on the Boeing 787 Dreamliner in favor of the 3-3-3 layout that’s even narrower than the 747 seats.

tourist cutaway

RELATED: How to Refurbish a Boeing 747-400

It’s interesting to note that the standard for premium economy cabins today, including on Lufthansa’s newly refitted Boeing 747-400 aircraft, is a 2-4-2 cabin — just one seat fewer in each row than in the economy cabin being advertised here.

Seat map

The size of those early 747 seats are particularly telling when you look at the fuselage comparison with the 707 — a fuselage width that persists today with the best-selling Boeing 737, its 727 tri-jet predecessor, and the 1980s’ 757. With the ongoing discussion about seat width in the context of the 787, 777 and other aircraft, it’s simply fascinating to note Boeing’s thinking 45 years ago.

First class cutaway

First class, too, was just seats, arranged six-abreast across the main width of the 747 cabin. In some ways, that’s changed — that section of the market is now served by everything from premium economy to Etihad’s three-room Residence suite — but in some ways it hasn’t. United, for example, offers a six-abreast BusinessFirst cabin as the top product on the aircraft it has outfitted with B/E Diamond flat beds.

fuselageJust five of those initial Boeing standard seats would fit in the 707 fuselage. With the 757 — and soon the next-generation 737 MAX family — flying routes longer than the 707 in many cases, and the DC-9 based Boeing 717 out of production, will there be a point at which we get back to five-abreast seating on the 737 fuselage? Japan Airlines’ domestic premium product, Class J, is still along those lines.

first loungeThe upstairs onboard lounge aboard the 747 disappeared and then started to return, initially with Virgin Atlantic’s bar concept on its 747 aircraft (and later to other longhaul jets) but more extensively on the Airbus A380, where bar areas from Emirates, Etihad and Qatar Airways all provide an enjoyable relaxation space for business and first class passengers. (Business class, of course, was only a twinkle in the eye of airline marketers back in 1970, appearing roughly a decade later as a perk for full-fare economy passengers.)

While Delta refurbished its Boeing 747-400 fleet with on-demand entertainment back in 2012, there are of course still US airlines flying widebody aircraft with overhead movies — and not even with the large bulkhead projector screen to make it an enjoyable experience. It seems incredible that, forty-five years later, this is still the inflight entertainment offered to so many passengers.

overhead entertainmentThe atmosphere of the time, when the jet age was really getting going, is almost as palpable in the brochure as the air was in the smoking section at the rear of each cabin. Looking back at the “golden age” of air travel, though, it’s striking how much — and how little — cabins have evolved.


jwJohn Waltonan international journalist, specializes in cabin interiors, seating, connectivity, and premium class service. A keen analyst of how developing tools can be applied to aviation news, John is at the forefront of social media in the aviation sector, When not at the keyboard, John lives out of a suitcase, and adds languages to his “I speak this enough to get by while traveling” collection. John welcomes email from readers and industry insiders to john@walton.travel, and discussion on Twitter: he’s @thatjohn.


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JetBlue Lands in Daytona Beach

By Jack Harty in Daytona Beach / Published January 7, 2016IMG_3852

From Broadway to the Speedway, JetBlue’s inaugural flight to Daytona Beach pulled into gate 6 greeted with a traditional water cannon salute at 11:28 AM on Thursday, January 7. As passengers de-planed, they were able to strut down the blue carpet as Volusia Country personnel, Daytona Beach Airport staff, and many local business representatives cheered. But for some passengers, the cherry on top to their arrival was the “JetBlue colored skies and 70 degree weather.”

Although it may be seen as just another landing at Daytona Beach Airport, it signified a win for Volusia County and the Daytona Beach area. County officials worked to recruit JetBlue to add Daytona Beach to its growing route network for several years through dozens of face-to-face meetings with the airline, phone calls, and working extensively on an incentive package to recruit JetBlue.

The Incentive Package

JetBlue’s incentive package is worth about $2.3 million. About $250,000 of the incentive package is derived from pledges by members of the Daytona Regional Chamber of Commerce to purchase nearly $250,000 worth of JetBlue tickets over the course of a year. Plus, the airline was also given $400,000 to fund an advertising campaign to target its New York audience. Also, the airline is said to have received discounted landing fees for some period of time as well as a few other incentives that help make up the rest of the $2.3 million.IMG_3845

In February 2015, JetBlue announced that it would commence daily flights with an Airbus A320 between New York JFK and Daytona Beach, and it was a sigh of relief. “JetBlue’s arrival in Dayton Beach is part of the overall renaissance that the greater Daytona Beach area and Volusia County is experiencing,” said Rick Carl, airport director, Daytona Beach International Airport. “Having the most convenient airport in the east central Florida region, Daytona Beach International Airport is well-suited for the partnership with JetBlue.”

The Bigger Picture

With the addition of Daytona Beach, JetBlue now serves eight Florida destinations and offers more flights between the Empire State and the Sunshine State than any other airline with up to 83 daily non-stops. The addition of Daytona Beach is also a win as JetBlue is able to gain an even greater presence in the New York-Florida market.IMG_3840

“We launched our airline with its inaugural flight between New York’s JFK and Florida almost 16 years ago and we are so pleased that all these years later we continue to offer even more new routes between these two popular regions,” said Scott Laurence, senior vice president of network planning at JetBlue, and a graduate of Daytona Beach’s Embry-Riddle Aeronautical University. “Daytona Beach features so many exciting and sunny attractions that we knew it was time to offer travelers new flights and better value to this top destination.”

Other Daytona Beach-New York City AttemptsIMG_3859

Although this will be Daytona’s only nonstop service to New York City, it will not be the first time that an airline has attempted to serve the market. Continental Airlines offered daily nonstop flights between Daytona Beach and Newark for close to 18 years, but the airline cut the flights when the 2008 recession occurred.  AirTran Airways launched daily service to New York JFK AIrport in March 2008, but eventually ended it.

Delta Air Lines attempted to fly Saturday-only seasonal flights between New York LaGuardia and Daytona Beach with an Embraer E170/175 when it was first known that the airport and JetBlue entered talks about possibly starting flights. Unfortunately for Delta and the airport, it was difficult to make the flights work, and the service was subsequently cancelled.

Will jetBlue Be a Success?

The first few months should go well for the New York based airline with lots of college student traffic, NASCAR races, Biker Week, and Spring Break, but after that, some are skeptical of how well JetBlue will do in Daytona Beach with daily 150-seat A320 service; though, passengers will get to ride in style on its 150-seat A320 aircraft which feature free Fly-Fi®, the fastest broadband internet in the sky, unlimited snacks and soft drinks, and 36 channels of live DIRECTV® programming at every seat in addition to 100+ channels of Sirius XM Satellite Radio®.

Although some are skeptical, the flight times have been well-timed for connections to various cities on both coasts as well as onward connections through JetBlue’s more than 40 airline code-share partners.

JFK – DAB Flight #393     DAB – JFK Flight #500IMG_3869

10:29 a.m. – 1:13 p.m.     2:00 p.m. – 4:21 p.m.

Rick Carl, the Airport Director of Daytona Beach International Airport, explained that JetBlue has “[Daytona’s] pledge that we will be good business partners to make sure [JetBlue] is successful as we want the relationship to grow so we can see multiple JetBlue flights on the flight monitors.

Scott Laurence, senior vice president of network planning at JetBlue, commented that he “looks forwarding to adding flights to Boston and maybe additional New York flights based on a ton of local support.”

As always, time will tell as long as passenger numbers how successful JetBlue is in Daytona Beach, but one thing is for sure: Daytona Beach is ecstatic to have JetBlue service.


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All Nippon Airways Reportedly to Order the Airbus A380

By Contributor / Published December 31, 2015

All Nippon Airways (ANA) is reportedly planning to order three Airbus A380s, according to Nikkei Asian Review. Neither Airbus nor ANA have made any official announcement or confirmed the veracity of the report, which is expected to take place during the next week after holidays.

ANA A380

CGI Image of ANA’s Airbus A380 (Image Credits: Wings 900)

According to the report, ANA will take delivery of its first A380 during 2018, and that the carrier plans to deploy the fleet type on routes to Hawaii.

If confirmed, 2016 will be off to a positive start for the A380 program, which has experienced an order drought and cancellations from Japan’s Skymark Airlines and Russia’s Transaero due to financial difficulties. Also, the acquisition of the type is an interesting move by ANA, as it recently phased out all of its four-engine Boeing 747s and replaced them with new twin-engine, fuel-efficient aircraft.

RELATED: Rouble Trouble -Transaero Defers VLA Deliveries

RELATED: Airbus Terminates Skymark A380 Order

Being a primarily  Boeing Customer, ANA has a fleet of over 200 aircraft. Back in March 2014 the carrier announced firm orders for 70 new Airbus and Boeing planes. Airbus won the narrow-body battle with seven A320neo and 30 A321s (4 of the “ceo” type and 26 “neo”). On the other hand, Boeing took home the wide-body order. Nikkei Asian Review reports that ANA “indicated to Airbus the possibility of future orders in return for supporting the Japanese carrier’s turnaround plan [of Skymark] during an August vote among creditors.”

Last August, ANA won creditor backing on its plan to lead a turnaround of troubled Japanese budget carrier Skymark Airlines, defeating a proposal from Delta Air Lines. ANA, which offered to buy 16.5 percent stake in Skymark, won a majority of votes from the creditors, and ANA was granted access to Skymark’s 36 landing slots at Tokyo Haneda Airport.

RELATED: Skymark Creditors Choose ANA as Sponsor, Delta Proposal Rejected

RELATED: Delta Offers to Sponsor Skymark

Three: A Small Order

Although the order seems to be modest, there is the possibility that ANA add some more A380s. The smallest A380 order has come from Air Austral, but plans have been apparently shelved. Should we disqualify orders from Air Austral and Transaero, China Southern currently holds the record for the smallest number of A380s ordered which is five.

Time will tell if ANA will actually become a Airbus A380 operator.

Developing Story.


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AirwaysNews’ 2015 Top 10 Stories

By: Staff / Published: December 30, 2015

There were many firsts, lasts, ups, and downs in the airline industry in 2015. It was a memorable year for various reasons, and we had a lot of fun writing about everything that went on this year. We appreciate you reading our stories so in our last regularly scheduled post for 2015, we take a look at the top 10 stories of 2015 based on our Google Analytics.

10: How Much of a Game Changer is the 787 

To kick off our top 10 stories of 2015 we start it with this question: how much of a game changer is the Boeing 787 Dreamliner? This is a valid question to ask especially since the 787 Dreamliner had a fairly good year with a fair amount of orders and deliveries occurring. Boeing’s lead salesman, Rand Tinseth, was speaking at an event where he dredged up all of the same old debates about the 787 versus the Airbus A380, and about whether the 787 is truly revolutionary. Senior Business Analyst, Vinay Bhaskara, examines how much of a game changer the 787 actually is.

787 Factory December 2013 K66032-01

9: American Airlines 2015 Fleet Plan

2015 was a pivotal year for American as it continued its merger with US Airways. In 2015’s ninth most popular story, we take examine American’s 2015 fleet plan which includes information ranging from interior modifications to new aircraft to the retirement of older aircraft.

 

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8: American’s First 787 Dreamliner Takes Flight 

On January 6, 2015, American’s first Boeing 787 Dreamliner took to the skies for the first time over Everett, Washington. A few weeks later, American took delivery of its first 787 which made it the second U.S. airline to own one. Over the course of three months, the Dallas/Ft. Worth based airline put its Dreamliners through a rigorous entry-into-service program so it could begin operating passenger flights domestically on May 7 without any hiccups.

 

AA 787

7: A Look at the Remaining 747-8 Orders

In April 2015, Lufthansa took delivery of the final Boeing 747-8 it had on order which meant that Boeing only had less than three dozen left to deliver to customers. We take a look back at the rocky road Boeing has had with the 747-8 variant as well as the other 747-8 customers. Unfortunately, the program continues to struggle as Boeing has yet to see any new orders for the 747-8 in quite a while which could mean that the end of 747 production is near.

748

6: Boeing Introduces Its First 737 MAX 

In early December, Boeing introduced its 737 MAX which is the very first of the fourth generation of its 737.  With more than 2,900 orders from 60 customers as of press time, the 737 throughout its history is the world’s best-selling commercial aircraft. The aircraft that rolled out is the first of four that will be used for flight testing to receive all of the certification it needs before the first one will be handed over to Southwest in the third quarter of 2017. As of now, Boeing expects the first 737 MAX to take to the skies sometime in early 2016.

Photo Credits: Boeing

 

5: The Wings of Man Unfolds its Wings: Eastern Air Lines Returned Thursday with Flights To Cuba 

With just a week’s notice, Eastern Air Lines announced that it would begin flights between the U.S. and Cuba as it signed an agreement to support HavanaAir’s charter operations to Cuba in and out of Miami, and the carrier wasted no time commencing operations between the two countries. In this story, we sat down with Eastern CEO, Edward J. Wegel, talking to him about everything from the FAA certification process to flight crew training to what the future of Eastern might entail.

Eastern Boeing 737-800 at Havana-7 2015

4: Which of American’s Nine Hubs are on the Chopping Block 

Although a majority portion of the American and US Airways merger is now over, American Airlines will undoubtedly keep evolving somewhat over the next several years as it continues to blend the two brands which includes cross-fleeting as well as right-sizing its presence at airports.If history repeats itself, it seems somewhat likely that one of American’s nine hubs could see some cuts in the future so which of the nine hubs are on the chopping block?

Boeing 757-200 - American Airlines

3: United Airlines 2016 Fleet Plan

In 2015, United made great strides in expanding WiFi to the majority of its fleet as well as continued to install its new slimline seats on both its mainline and regional aircraft. Meanwhile, United unveiled a new domestic first class seat that it has just started installing on its A319s and A320s. 2016 will be another big year of changes to the fleet; the airline will take delivery of the final 737-900ERs it has on order. And it will take delivery of its first 777-300ER and more 787 Dreamliners. Plus, United will begin taking delivery of some used A319 aircraft to add to its fleet.

United_Boeing_747_livery_2

 

2: Inside the World’s Largest Airline Owned Maintenance Base: American Airlines Tulsa 

 

AirwaysNews was granted unprecedented access into American’s Tulsa Maintenance base which is the world’s largest airline owned maintenance base. Spread across 33 acres that encompasses 22 buildings and 3.3 million square feet of hanger and shop space, thousands of American employees go to work everyday to fix everything from your seat-back tray table to the lavatory sink to repairing the tires as well as complete the heavy-C checks. It is definitely worth a read to see how Tulsa’s airport has become an aviation and economic powerhouse as the United States’ largest airline services hundreds of its aluminum hulks here each year.

Winglets for the entire AA 737 fleet were added at Tulsa

1: Op-Ed: Responsible Journalism and the Air Crash Du Jour 

For our number one story of 2015,  Captain Eric Auxier’s Op-Ed stole the show. The 20 year A320 veteran pilot discuses how the media does not always report the “news” in lots of aviation stories, which was especially prevalent during the coverage of Germanwings 9525. Captain Auxier breaks down media coverage of aviation accidents and explains why it is not a good idea to speculate or report unconfirmed facts.

1009_Eric Auxier P1505_036

 


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Most Significant Aviation Events in 2015

By: Staff / Published December 29, 2015

The Entry Into Service of the Airbus A350, the ANA ‘Star Wars’ jets, the crash of Germanwings 9525 and the finding of Malaysian Airlines 370 debris. In the final year of US Airways and the sudden resignation of United Airlines CEO, what were the most significant aviation news in 2015? Our staff, contributors and analysts share their opinion about the year’s top events.

Chris Sloan – President and Founder

chris-sloan-at-the-first-boeing-787-dreamliner-inaugural-october-2011_22729

Whether Boeing or Airbus want to admit it or not, the frothy new aircraft order bubble of the last five years has popped. Orders of mainline aircraft are on pace to be the softest since 2010 – the nascent days of the global “Great Recession” economic recovery. While deliveries and backlogs are at record levels, the sales guys are feeling pretty lonely. As of now, once the $10 billion China Southern 737 MAX’ order finalizes, Boeing’s 2015 order book will stand at 743 aircraft versus 1,432 in 2014 – about a 50% decline. Airbus is far ahead with 1,007 new aircraft orders captured but this too is substantially down from 1,456 orders from the previous year.

Anecdotally, the most recent Dubai and Paris Air Shows were a bust compared to previous years. Most delivery positions for high demand aircraft are sold out for years. And there are plenty of headwinds: cheap oil delaying retirement of some older aircraft, economic softness the world-over particularly in Latin America, Europe, and Russia. The topper is a glut of excess airframes especially in the wide-body market (Richard Anderson’s used 777 for $7 million comments withstanding). Increasing production bridge gaps between current and next generation A330s and 777s coupled with a VLA (Very Large Airplane) market clinging to life-support are only making matters worse. The clear and present danger are black swan events like the Transfer shutdown, Malaysia’s restructuring and Skymark’s near collapse leading to order cancellations and more excess aircraft dumped onto the market.

787-Dreamliner-Paris-Air-Show-takeoff

This isn’t to say there aren’t bright spots and blockbuster orders to be had out there. Boeing did after all secure a record $38 billion dollar order for 300 new aircraft (nearly half its new orders this year) from China back in September. But the simple fact is that most customers have done most of their shopping for the foreseeable future.

Enrique Perrella – Publisher & Editor-in-Chief, Airways Magazine

New Airways owner Enrique Perrella.

For me the most significant event of 2015 was the merger of LAN and TAM. Two completely different airlines, with two completely different cultures, merged to become LATAM. Their new corporate image is strong, modern and elegant, and encompasses the concept they want to portray to the world. This airline has become a major player in the Americas and should be expanding its network in 2016 with the arrival of the A350 and newer 787s.

Roberto Leiro – Executive Editor

RobertoThe biggest 2015 aviation headline has been the crash of Germanwings 9525, The accident has put into practice new cockpit occupancy procedures, and has also changed the psychological assessment of pilots and cabin crew, who already undergo a series of background checks during the hiring process by both the airline and authorities. The crash was also  a major blow to Lufthansa, which has one of the most formidable safety records in the industry.

Vinay Bhaskara – Senior Business Analyst

Vinay

The most significant aviation event of 2015 wasn’t really an aviation event at all. Instead, it was the continued and sustained drop in the price of oil (now below $35/barrel for West Texas crude at a pipeline near you!). The drop in oil prices has had several knock off effects that have cascaded throughout the industry. Demand for Airbus and Boeing’s newest planes has cooled off, though the rise in profits has helped offset some of that. On the plus side for the duopoly that controls global aviation, selling the A330 ceos and 777-300ERs necessary to bridge production to the new re-engined aircraft is probably a bit easier.

The decline in oil prices has also given a new lease on life to airlines with mediocre business models around the world, boosting everyone’s financial results by 5 percentage points or more. India’s basket case of an airline industry is once again raking in profits, and airlines that had been under increasing pressure after years of losses now have more breathing room worldwide. In the US, the effect has mainly been to make wildly (by airline industry standards) profitable airlines even more wildly profitable. At the same time, they might be wilder than wildly profitable if airline investors weren’t so skittish about capacity growth.

Alex McIntyre – Correspondent

Photo May 25, 0 53 04

After taking delivery of its first Boeing 787 early in 2015, American Airlines formally operated its first revenue flight with the aircraft on May 7, flying from Dallas/Fort Worth to Chicago O’Hare. Afterward, the airline wasted little time putting the Dreamliner to international use, opting to service Beijing, Shanghai, and Buenos Aires courtesy of the Boeing 787 from its DFW hub alone. American plans to kick off service to Tokyo’s Haneda Airport with the 787 in early 2016, launching a daily flight from Los Angeles after taking over the route from Delta Air Lines.

Photo courtesy of Ian Petchenik

Photo courtesy of Ian Petchenik

The airline’s first Dreamliner flight certainly marked a highlight for aviation enthusiasts (who flooded Flight 2320 in the morning’s early hours), but more broadly it opens the door to more “long-and-thin” routes to operate profitably in 2016.

When Southwest’s CEO Gary Kelly repeatedly dubbed 2015 “the year of Houston,” it’s clear he wasn’t kidding. In the early morning hours of October 15, Southwest Airlines officially pulled back the curtain on its new five-gate international terminal at Houston Hobby. Flight 305 to Cancun marked the airline’s first international plane to lift off from the airport, boldly ushering in a new era of international flying from Southwest. The new facility represents just the first of three international gateways for Southwest, a historically domestic-bound carrier, as international traffic comes into greater focus for the airline. Currently the largest carrier nationally, Southwest looks to spread its wings to international skies, right at home from one of the airline’s first ever destinations.

Southwest Airlines CEO Gary Kelly

One could easily look at the U.S. airlines raking in record profits and grouse over their unwillingness to pass along the buck this holiday season. But in reality – largely due to pricing pressures stemming from the Dallas and Chicago markets, and softness in key international markets – the average airfare has descended slightly, to the benefit of many consumers. While more precipitously, falling oil has translated into record profits, the airlines’ facing unit revenue declines and labor negotiations are bound to inflate non-fuel related costs qualifies as one of 2015’s biggest storylines. Wall Street has dully taken note, keeping many airline stocks about flat (or in some cases, with less value) this year despite gleaming profits.

Brett Snyder – Founder and Editor-in-Chief, The Cranky Flier

4ojbBw9BAs far as the US industry goes, I think the most significant event of 2015 was the firing of United CEO Jeff Smisek. United has long had a culture problem, and it was clear that a change was needed. When the board saw the opportunity to kick Smisek out, they opted to bring someone in who was known for his people skills. When Oscar Munoz started, there was a palpable shift in the way people felt about United both inside and out. (Ok, not really far outside, but at least among industry-watchers.) The long-suffering employees seemed to have hope that change was coming. Yes, there have been bumps in the road with Oscar’s heart attack. But if he can pick things up where he left off when he returns, then United has a real shot at becoming a truly competitive airline. That will make every other airline work harder and it can only be good for travelers.

Smisek

Henry Harteveldt –   Travel Industry Analyst and Advisor, Atmosphere Research Group

Henry_Harteveldt

In 2015, we witnesses the near-flawless cutover and integration of US Airways’ and American Airlines’ reservations systems. That was one for the textbooks. High praise to all involved in that enormous effort.

Also, it is worthy to mention hooliganism displayed by some Air France workers on their company HQ in Paris.

Delta’s attempts to stop funding reauthorization the Export-Import bank and to counter the ME3 carriers, the scandal that cost Jeff Smisek his job as United’s CEO, and the airline’s selection of Oscar Munoz as the new CEO and the shameless, cowardly attack on the Metrojet flight 9268 from Egypt to Russia were also major news.

Paul Thompson – Correspondent

Paul ThompsonThe most significant event of 2015 happened early in the year, with the first delivery and introduction of the Airbus A350. Though it came to market after the competing 787 Dreamliner, its “XWB” width is proving highly popular with passengers who have flown in economy. The single most important plane of the year is ANA’s 787 painted like R2D2, from Star Wars. It not only generated a lot buzz about “Star Wars – The Force Awakens” but it made planes cool, especially ANA, perhaps an airline not known to many travelers from the U.S.

Eric Auxier – Commercial Pilot and Contributor

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There were three major aviation news in 2015. The finding of Malaysia Airlines MH370 flaperon in Réunion Island. This is the first confirmed piece of wreckage from the flight, which disappeared on March 8, 2014 with 239 people on board.

Also, the drop in oil prices has allowed airlines to reap in record profits, and the unfortunate Germanwings crash blamed on suicidal FO are my top three news.

Benét Wilson – Founder and Editor-in-Chief, Aviation Queen LLC

ZHljDBwDThe most significant aviation event to me was the abrupt resignation of United Chairman, President and CEO Jeff Smisek. Yes he was dogged by what the industry saw as difficulties after United and Continental announced their merger in May 2010. But the conventional wisdom about Smisek’s tenure was it’s better to stay with the devil you know than the devil you don’t. But when the U.S. Attorney for New York starts a probe over a sweetheart route for the chairman of the Port Authority of New York and New Jersey (which manages United’s Newark hub) — and your own company does an internal investigation — United knew it was time to move on. United brought in a new (and diverse!) face in Oscar Munoz and now haa the chance to reboot and put a new face on the airline. And don’t feel too bad for Smisek – he walked away with a lump-sum severance payment of $4.875 million in cash, along with outstanding salary and vested benefits, lifetime flight and parking benefits and the title to his company car.

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Rohan Anand – Analyst and Contributor

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In 2015, we were given some semblance of hope that the mistery around Malaysian Airlines MH370 would be unsheathed, and then… nothing.

Also, we saw the jaw-dropping footage of a TransAsia ATR72-600 that crashed shortly after takeoff from Taipei’s Shanghsa downtown airport.

 

Other major news were:

 

  1. SkyMall’s parent company, Xhibit, went bankrupt; 
  2. The Boeing 787 (finally) joined the AA fleet, and the carrier wasted no time in deploying them on routes to Asia; 
  3. United finally went live with its new website after a 2… 3? (I’ve lost count) year delay; 
  4. Air India and Jet Airways were restored to Category I status by the FAA after failing safety audits in 2014; 
  5. IAG acquired Aer Lingus, and former Aer Lingus CEO jumped to take the lead of Malaysia Airlines to save it from another unsuccessful “restructuring;”
  6. Speaking of which, Malaysia formed a game-changing codeshare agreement with Emirates, a la Qantas + Falcon Route strategy of 2012, and will retreat from serving continental Europe on its own metal save for 2x A380 services from London Heathrow to Kuala Lumpur;
  7. American successfully re-banked its operations in its Dallas/Ft. Worth and Chicago O’Hare hubs; 
  8. Thai pulled out of Los Angeles (and the US altogether) after 35 years of service;
  9. American Airlines and Qantas announced plans to start a Joint Venture;
  10. Air India commenced the first nonstop flight from the US West Coast to India; 
  11. Montreal landed Air China as its first Asian carrier (and flight to Asia in general) by way of Beijing, and Cuba also got in on the deal as Air China added a tag-on 5th freedom route from Montreal to Havana (which is still causing several people to scratch their heads);
  12. United and Delta have (or will) withdraw all services to the Middle East, and 
  13. Southwest opened a new International terminal at Houston Hobby

Michael Slattery – Correspondent

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By far the most significant – the price of oil. The fall from $65/barrel in early 2015 to $36 (today) means that most airlines were able to reap big profits for the year, and that trend is likely to continue in 2016. Don’t expect lower fares based on the oil price, however!

The relatively smooth and seamless transition toward a single operating certificate for the AA/US Airways merger.

 

Nicolas Bernier – Correspondent

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US Airways went into the sunset on October 17, 2015 as it completely merged with American Airlines. This leaves now only three major legacy carriers in the United States: American, Delta, and United.

Also, a major news in 2015 was the bankruptcy of Russia’s second largest airline, Transaero, which ceased operations last October 25. This leaves Aeroflot Group as main airline group in Russia.

Also, the ups and downs in Bombardier, which included a major executive management shakeup in February, the drought of orders for the CSeries program, failing to be behind schedule and over budgeted, causing $1 Billion investment by the Government of Québec to keep the company alive. Despite this traumatic year for the airframer, the company finally obtained the certification of the CS100 last December 18.

Bombardier C Series, C Series, CS100, c/n 50005, BBA505, Swiss International Air Lines, Bombardier Inc. DeHavilland Division, DHC, Bombardier Inc., Toronto Downsview Airport, YZD, CYZD, Toronoto, ON, September 10 2015, copyright Andrew H. Cline 2015, Andrew.cline@sympatico.ca, 416-209-2669

Jack Harty – Former AirwaysNews Senior Correspondent

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Thinking back to 2015, I think the most significant event in the U.S. airline industry was Jeff Smisek stepping down and somebody else taking over the reigns at United, although it was a bit turbulent. Almost all of the U.S. airlines are very strong players in both the operational and management senses with United being one of the exceptions. Living in Houston, I have been following the merger fairly closely, and I think it was best that somebody new took over the reigns because a change in leadership that focuses on improving United for both employees and the customers is what is needed. If history has taught us anything, this may work, or well, it worked for Continental when Gordon Bethune took over.

Who can forget the final US Airways flight? Out of all the firsts and lasts flights this year, it seems safe to say that it might have been the most historic, especially since it occurred during the cutover with US Airways and American finally operating on the same computer system. Although there is still a bit more work to be done to finish the American/US Airways merger, this sort of marks the end of consolidation wave we have seen in the U.S. airline industry.

Finally from a loyalty perspective, American switching over to a revenue based system was also major news story since the amount customers spend is now becoming a bit more important that miles/segments flown for determining one’s status with an airline.


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The AirwaysNews Aviation Holiday Wish List for 2016

By: Staff / Published: December 23, 2015

It’s that time of the year when we are all creating holiday wish lists and those for the New Year. When speaking to our staff members, contributors, analysts, and industry observers, we asked about their aviation-related wishes for 2016, and here are the answers:

Chris Sloan – President and Founder

chris-sloan-at-the-first-boeing-787-dreamliner-inaugural-october-2011_22729My belated Hanukkah wish list is for new aircraft orders for two different aircraft and two different ends of the spectrum, for two different reasons. A bit of sentimental passion first, the Boeing 747-8I: With only two net orders in 2015, order cancellations from NCA and Transaero, and the production rate dropping to one aircraft per month from March 2016, this has been the annus horribilis of the “Queen of the Skies.” Despite the significant sales campaigns, there are significant headwinds to propel the 747 past 50th Anniversary of its first flight in 2019.

As of this writing, only 20 orders (13 for the Intercontinental and 8 for the freighter) remain in the backlog (less than two years of production), the four-engined VLA category has almost been given up for dead, and the worldwide airfreight market (a sweet spot for the 747-8F) has remained soft. We’re hoping for a miracle for Sutter’s Balloon, even a late one – just not too late.

747-8-factory-tour-june-2014-15_32994On the flip side, wish for a smooth entry into service and hence more orders for the future-forward Bombardier CSeries . The plane seems poised to add to its order book when the CS100 finally begins passenger service with Swiss in the first half of 2016. In an industry, burned by “moon shots” and now gravitating toward incrementalism, we should all cheer on the success of a clean-sheet design. It has been quite the odyssey and one that has bought the 100 year old iconic Canadian company to its knees. With solvency at stake, the Quebec government purchased a $1 billion 49.5% stake to keep the ailing company afloat. The Series program has been beset by years of agonizing delays, anemic sales mired at 243 firm orders, and the failure (for now) of securing a Canadian operator –most recently Porter due to the Toronto Island Airport controversy. 

Nevertheless, there have been rays of light poking through the Mirabel clouds. The flight testing program has revealed fuel burn metrics to be even lower than originally projected. Praise for the new cabin has been widespread during customer and air show tours. And a secret weapon when Lufthansa fleet guru Nick Buchholz, who basically fathered the aircraft has joined Bombardier. Perhaps the brightest light on the horizon is the possibility of United placing an order in the 100 seat range. If Bombardier’s CS100 and /or CS300 are to out compete against the A319neo, 737 MAX-9, and Embraer E2-190/195 for the supposed UA order, thus securing the 40-50 aircraft that’s been rumored, that would meet Bombardier’s promise of 300 firm orders by entry-into-service. An aggressive win on the part of the Canadian airframer coupled with an all important smooth EIS would signal to the world that Bombardier is in the game to stay.

Enrique Perrella – Publisher & Editor-in-Chief, Airways Magazine

New Airways owner Enrique Perrella.

I would like to see an increase in comfort, connectivity, ease of travel and expedited security / customs clearance worldwide. To begin with, connectivity is a must in today’s fast paced world. People need to be in constant touch, and flying for 10+ hours without a good reliable connection may become an issue sooner than we expect. This applies for both leisure and business travelers, who might start seeking for airlines that offer such technology rather than frequency or price.

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Roberto Leiro – Executive Editor

RobertoMy Christmas wish is for aviation security, calling for the implementation of a ‘black box’ cloud that would allow flight-data streaming for passenger airliners flying over oceans and remote regions, so to improve tracking and location in case of an in-flight event. Despite the recent and unfortunate cases of Malaysian Airlines flight 370 and Air France flight 447, carriers and legislators have not been able to reach a consensus on the matter. 

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Vinay Bhaskara – Senior Business Analyst

VinayMy Christmas wish is for airline investors to pull their collective heads out of their rear ends. We have now had more than a year of oil hovering at $50-60 a barrel or lower, and oil just dropped beneath $35 a barrel. It’s time for airline investors to stop getting spooked at the mere whisper of capacity increases. Fuel prices are now at a level where we could have two years plus of 6% capacity growth from everyone in the market and still deliver 15-20% operating margins. Most of the carriers aren’t even at that level – they’re far from it.

Passenger Revenue per Available Seat Mile (PRASM) is a useful metric but it isn’t the be all end all of an airline’s existence. Historically, judging airlines on the basis of PRASM has been a good guide to their overall profitability, but the utility of this technique in an environment where fuel prices are declining is limited. Airlines, like any business, should be focused on profit maximization. In today’s fuel scenario, that means putting up more capacity than they currently are. Airline investors would do well to remember that their dividends come from profits and cash flow, not from PRASM.

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To be clear, I’m not saying that airline investors need to accept illogical or unreasonably high capacity growth figures – there is still virtue in capacity discipline. But the target figure for “discipline” needs to move when fuel declines. Airline investors need to get comfortable with a few percentage points of capacity growth and targeted defensive moves in key markets against Ultra-low-cost carriers (ULCCs).

Henry Harteveldt –   Travel Industry Analyst and Advisor, Atmosphere Research Group

Henry_HarteveldtMy Holidays wish is a pledge by airlines that they will stop using navy blue in their employee uniforms. We get it. You’re airlines. You fly in blue skies. You want to create professional appearances. There are a lot of other colors that will let you do that.

 

 

Brett Snyder – Founder and Editor-in-Chief, The Cranky Flier

4ojbBw9BWell, I guess technically, I wanted this for Hanukkah, but that came and went and no change, so… I want the airlines to stop making so many obnoxious schedule changes.  The frequency of schedule changes has gone up dramatically over the last years to the point where anyone buying a ticket more than a couple months out is resigned to the fact that he will never fly on the flight on which he buys a seat.  This doesn’t apply across the board. 

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American, Delta and United are all huge offenders, but Southwest rarely makes schedule changes.  (I understand this is more of a technological limitation than anything else, but I’ll take it.)

Paul Thompson – Correspondent

Paul ThompsonI know that my wish list is the long-shot to end all long-shots, but I would love to see airlines continue to make economy flying more humane. United captured a lot of headlines this month, with their promise to being back free snacks to economy –but I’m talking about actually improving the overall seat comfort. Stop reducing legroom, and stop wedging in extra seats. I’m looking at you, 10-abreast 777 and nine-abreast 787!

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Eric Auxier – Commercial Pilot and Contributor

edRkvmTqI wish that the Federal Aviation Administration should stop playing politics with safety regulations, repeal the ridiculous 1,500 hour rule, and fix the absurd rest rule “improvements” in FAR117, that are exhausting pilots.

 

 

Benét Wilson – Founder and Editor-in-Chief, Aviation Queen LLC

ZHljDBwDWhat do I want? More Stroopwaffles! Seriously, I’m heartened by United Airlines’ plans to make the passenger experience just a little better for those of us who sit in the back end of the plane. New CEO Oscar Munoz hit the ground running, saying that he wanted to stop being awful to United’s loyal passengers and employees. It’s a small step, but offering things like Stroopwaffles (they’re delicious, by the way), Illy coffee (a major upgrade from the swamp water its used to serve) and other free snacks in coach will help the carrier fulfill Munoz’s promise.

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Rohan Anand – Analyst and Contributor

0a2a71aI want American Airlines (AA) to introduce a free snack in Y, better than the United Airlines stroopwaffle (that will be a tough one). In fact, I want AA to introduce a new menu in ALL of their cabins, including International F, all the way down to Buy-On-Board in Y (I’m pretty sure the “chicken” in my “salad” the other day was grown in some questionable food services labyrinth at DFW.) I would also like New York LaGuardia Airport to create a customer experience that is not on-par with what you’d receive at any third-world country airport.

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For Southwest to say, “we forgot to say in previous announcements that our new nextgen seats will have USB outlets” (at the very least, bonus points for electrical ones.)

Spirit to add TSA precheck (I would even pay $5 per use for this, don’t ask why)

For Delta to leave Dallas Love Field for once and for all and Virgin America /Richard Branson can pick up the tab at an epic Going Away Party hosted at the frontiers of flight museum (Gary Kelly can come,
too). Everyone will kiss and make up. 

Luis Linares – Correspondent

t_6_dsc249036125It’s the holiday season and oil prices are at an 11-year low.  I know the airlines are in a joyous and giving spirit with all the extra money, and I want them to reinstate complementary meals, more legroom, and flexibility if travel plans change; better labor contracts for their employees, and … what’s that?  They are still all about the bottom line?  The Grinch and Mr. Scrooge are the latest airline CEOs?  Oh, well.  Never mind. 

Boeing 757-200 - American Airlines

How about if the ghost of future Christmas can prod Boeing a bit, and show it what the future will be like if it keeps waiting to unveil a 757 replacement?  I love the Boeing 757, and in 2015 I had a chance to fly it for seven hours and six minutes from Miami to Brasilia, but I know this great aircraft is getting old and there is a gaping void between the 737 and 787 families.

Michael Slattery – Correspondent

Slatteryphoto1My Holiday wish list includes a real Premium Economy product for American carriers on international routes. Oh, wait! American Airlines (AA) already announced that so, THANK YOU Santa! It’s been incredibly frustrating trying to use British Airways (BA) World Traveler Plus (WTP) product, either through revenue tickets or mileage awards, which leads me also to ask for a more realistic inventory (and pricing) in BA’s WTP cabin.

Every year, I make two to three trips to South Africa from Dallas/Ft. Worth (DFW). Business Class fares from there are out of reach and, at 6′ 5″ tall, 22 hours in seat 468G is, well, potentially thrombotic! But BA makes it almost impossible to find WTP inventory, matched by competitive pricing, during the summer, even when booked six to nine months out. Who would pay $4,937 one-way from CPT-DFW in WTP when they could spend $3,501 in Business? And why even advertise a $10,508 ONE-WAY fare in premium economy, even if it does include Business Class on American across the Atlantic? Santa, please have a word with both BA and AA and get them to sort out their premium economy pricing. It’s confusing to say the least. And while you’re at it, could you fix their Upgrade Awards from WTP to J using miles? Right now, you have to have a full-fare WTP ticket to do it which often exceeds the regular J fare anyway.

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I also wish searchability for AAdvantage Award availability on all oneworld airlines. Now, THAT would be fantastic! Right now, any award travel inquiry to South Africa gets routed through London Heathrow (LHR) with their lovely fees and taxes exceeding $1,000 per ticket in almost every case. Countless hours on the phone to American, Etihad and Qatar amounted to nought. Not a single Business Class ticket available into southern Africa over a six-week window searched nine months out. So Santa, could we up the availability for mileage awards a tad? Thanks! Earning miles is great. Being able to actually use them is a whole other story.

And my last (but not least) wish is a better electronic communication between AAdvantage and their partner airlines for mileage accrual. I have flown Etihad twice now and both times waited over FOUR months for the mileage to post. Actually, I am still waiting for a trip flown this past July, with two rounds of “justification” letters and missing mileage credit forms already filled out.

Nicolas Bernier – Correspondent

1525a4bMy wish list is for more CSeries orders, which would give a push to Bombardier’s backlog. The manufacturer did not log a new order for this new aircraft in over a year. My bet is Air Canada, which wants to get rid of their 25 E190s and still has 18 A319s to replace, so there might be a chance. In the case of the US Big 3, a CSeries order is unlikely as United is sticking with its Airbus A319s and even taking second-hand frames, and It is not in Delta Air Lines philosophy to add brand-new planes in the 100-seat capacity.

Opening Day for New Terminal at Dallas Love Field

I wish to see American carriers to add new non-stop service to Cuba in 2016. Particularly, I would love to see Southwest Airlines flying to the Island, as it has started various international routes this year. Particularly, I would love to see them expanding to Canada.

Jack Harty – Former AirwaysNews Senior Correspondent

0RiIYvcgI think I have been a fairly well-behaved aviation business student so this year for Christmas, I would like the big three U.S. airlines to try to find peace with the big three Middle East carriers, or should they want to continue the fight, let’s make it a little less public. Further, I would like to see a way for airlines and internet companies to allow first/business passengers to have access to on-board Wi-Fi free of charge. 

 


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WestJet Spreads Holiday Cheer 12,000 Times

By Contributor / Published December 21, 2015

WestJet has become quite famous for its “WestJet Christmas Miracle” videos during the holidays in which Blue Santa and his thousands of elves (WestJet employees) travel around Canada to spread good holiday cheer as well as to help encourage others to spread cheer.

Though, WestJet took its Christmas miracles to a whole new level this year.

WestJet spread its wings across ten time zones, hit the streets in 12 cities and visited 38 airports to complete 12,000 random acts of kindness in 24 hours.

Some of the random acts of kindness included picking up someone’s tab at a restaurant to giving out two roundtrip tickets to Vancouver to Ellen’s audience to sending an entire family on vacation to Hawaii.

“We are humbled and amazed at the outpouring of response to the mini miracles initiative. Our expectations were absolutely shattered,” said Richard Bartrem, WestJet Vice-President, Marketing Communications. “The video illustrates how the day played out. It brings to life the human connection and joy that WestJetters spread from coast to coast and around the world. There is no better way to celebrate the spirit of the season than with a WestJet Christmas video,” said Bartrem. “We love to package our friendly, caring and fun loving personality, attributes that are core to our brand, in one awesome, emotion-filled video.”


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