ECLAT vs Campbell Hill - Consultants battle over Love & DFW

In this corner, Campbell Hill for the Southwest/Love team. In the other corner, ECLAT for the AA/DFW team. ------- Eclat Consulting Says Wright Amendment Repeal Could Result in Major Loss of Air Service in Dallas/Fort Worth Market and Adversely Impact Dozens of Communities in 22 States. The results of the study, commissioned by American Airlines, were based on publicly-available data and Eclat's internal models. "American and the other airlines currently operating out of DFW would be forced to move a large number of flights from DFW Airport to Love Field to compete with Southwest Airlines if the Wright Amendment is repealed," said William S. Swelbar, president and managing partner of Eclat Consulting. "If that happens, 'hub degradation' would take place, making marginal routes unprofitable. Inevitably, those unprofitable routes would be eliminated." (C'mon Bill, unprofitable routes should be eliminated anyway) The study also suggests that small cities that rely solely on federally- subsidized Essential Air Service (EAS) provided by the AmericanConnection carriers will see the effectiveness of their only air service degraded as they lose the ability to connect to important domestic and international destinations. "Those consequences simply can't be avoided by American sitting back and doing nothing if the agreement upon which we and the communities have relied for years is suddenly undone. Given the disproportionate economic power and resources of Southwest Airlines, which is now the nation's largest and wealthiest domestic airline and which dominates Love Field, we would have no choice but to respond decisively." --------- And the sky will fall? Nah. Don't think so. Competition is good. Other cities with multiple airports do fine. Let the consumer decide which airport is better for their travel needs. The argument is conveniently made into a near-national issue because international service from DFW might be affected. So what? People have choice, let them choose. As for American responding decisively, they can do so now. How did Southwest become the most successful and wealthiest US airline? Surely nobody is going argue they got there because they were protected at Love Field. This is about the most interesting thing going in US commercial aviation now - so enjoy it! Both teams are smart and will play every card they can so expect a rejoinder from the other side in a week or so.

Britain Rejects Air Travel Levy - cool heads prevail

Reuters -- The British government said on Monday it would not implement a suggested GBP£1 (USD$1.76) levy on all air passengers leaving the UK. Britain's Civil Aviation Authority had put forward the plan to fund protection for travelers if their airline went bust. "The government has decided not to implement the Civil Aviation Authority's recommendation for a one pound levy," the Department for Transport said in a written statement. "The attractions of the CAA scheme are outweighed by the disadvantages," it said. The department said it did not believe a compulsory scheme was appropriate, adding that the government did not organize refund schemes for other industries such as retail, building or financial services. Airlines, which had criticized the levy as unnecessary and said it would have raised ticket prices, welcomed the decision. "We are pleased that the government has made this decision as there is no justification or need for our customers to pay this cost," a British Airways spokeswoman said. Low-cost carrier easyJet earlier said the levy would have created a GBP£250 million (USD$438.9 million) fund within three years, well out of proportion to what would be needed to compensate passengers. Chief Executive Ray Webster said commercial insurance and voluntary codes of conduct provided passengers with adequate protection. --------- Phew! At last a tax rejected!

Overseas traffic not the panancea Delta & Northwest think

Northwest Airlines' daily Amsterdam-to-Bombay run fetches $1,400 a ticket, the airplane flies nearly full, and JetBlue doesn't go there. Which is why international flying is a moneymaker for most U.S. carriers -- and why Northwest and Delta Air Lines Inc. are both making international flying a big part of their bankruptcy makeovers. So this sounds good? Well factor another SARS type event (avian flu is coming on) and you will see this traffic dry up overnight. It used to be the US network (legacy) carriers could depend on huge domestic traffic to bolster their overseas business. Now the domestic suppport has started flying jetBlue and Southwest. Moreover the US carriers simply cannot compete with overseas carriersin terms of service. Their fleets are older, missing critical technology like in-flight WiFi and then there are the crews. Oh my. If you fly overseas on a US airline and then on ANY foreigh flag you know exactly what we mean. There is simply no comparison. Therefore we see Delta's (a carrier known for its really nice Southern politeness) and Northwest's growing dependecy on overseas routes as actually more risky. You see, we think the only people who will fly the US carriers are the people who want to pay the least. This means they are bottom fishers, and not the people these airlines want. Business traffic won't easily succumb to the absence of service - and we think think in-flight internet is a big thing. You know that if you visit this site. Watch how ANA and other airlines push their broadband WiFi and you know who they are pitching. Not the family of four on a vacation. Its the Blackberry and laptop set. That is where the money is and Northwest and Delta don't have Connexion - for that matter no US carrier does. How unbelievebly short sighted! So even if you beleive the Northwest comment abou their India flight being full - think about he route and the price. $1400 for that many miles? Get real, trans Atlantic in business is over $4000. They are carrying the cheapest travelers and that means they are becoming the Greyhound of the skies. No great future there.

Standing downstream from Northwest's bankruptcy

The parent of Mesaba Aviation said bankrupt Northwest Airlines' plan to remove 10 planes from Mesaba's schedule could push the regional Northwest partner into bankruptcy. As we stated before the bankruptcies of Delta and Northwest have been treated too lightly. We see significant impacts - all negative - for the communities of Detroit, Minneapolis and Atlanta. Watch for a rise in homes for sale and personal bankruptcies next.

Helios not doing so great

Reuters -- A Helios Airways flight to Glasgow with 184 people on board returned to Cyprus on Sunday after reporting a technical problem, the second such incident in the last few days, the Cyprus News Agency (CNA) said. The Boeing 737-800 returned to Larnaca without incident thirty-five minutes after takeoff, reporting a problem related to air distribution with one of the engines, the semi-official news agency said. Helios was not immediately available for comment. A Helios Airways Boeing 737-300 from Larnaca to Prague crashed north of Athens on August 14, killing 121 people after it ran out of fuel. State radio reported that passengers on Sunday's flight complained they had difficulty breathing. Helios has asked Boeing engineers to check the plane, CNA reported. On Friday evening a Helios flight from Larnaca to London's Heathrow with 139 people on board also turned around after reporting a technical problem. Greek officials are still investigating the causes of the August 14 crash. Preliminary reports suggest the aircraft lost pressure, rendering both pilots unconscious as the plane glided on autopilot for two hours. Helios said its remaining fleet of Boeings underwent checks in the aftermath of the crash which gave them the all clear. -------- The 737-800 is relatively new. But either the crews are jumpy (with good reason?) or this airline due to join the Euroland "no-fly" list in short order. Its one thing to give the aircraft an "all clear", but what of the airline's maintenance and crews? Take a look at this link on Skytrax - http://www.airlinequality.com/Airlines/ZU.htm the airline's rating is suspended. This airline is simply too small to have so many issues. Fly somebody else.

Boeing in talks with AI, Jet for Connexion

Rediff.com -- Boeing is in talks with Air India and Jet Airways for installation of its high-speed Internet service, Connexion, on the long-haul flights of these carriers. Connexion, a proprietary Internet service of Boeing, will help passengers to surf the Net, check e-mails and send pictures while the plane is cruising at over 35,000 feet above sea level. Connexion director (strategy and business development) Beverly M Wyse said a team from the company had met top officials of Air India and Jet Airways. Boeing had also flown down one of its Internet-enabled planes to Delhi and demonstrated its wireless fidelity capabilities to the carriers. --------- Based on how India buys anything, Boeing can expect an order that will take years to discuss and review. All the while the Indians will also speak with OnAir and they will negotiate thinking they are being clever to get the lowest price. Meanwhile Indian business travelers will discover they can get the service on Singapore Airlines now without fuss & bother.

Scary news - Plane crashes with vials of viruses Aboard

The Associated Press reports that a small aircraft from a Federal Express feeder carrier has crashed near Winnipeg -- with small amounts of flu and herpes virus aboard. According to the report, Cessna 208 of Edmonton-based Morningstar Air Express crashed on a flight to Thunder Bay, Ontario from Winnipeg when it crashed on railway tracks. Aboard it were six vials of virus samples being transported to Thunder Bay for research purposes. The plane's pilot was killed in the crash. It is believed the vials were destroyed in the crash and did not endanger anybody on the ground, according to an investigator from Canada's Transportation Safety Board. Weather may have been a factor in the crash. ------- Now this should scare the pants off people. Think of a crash where there is no fire and the virus escapes into the air.... yikes!

Seattle on a roll

The Seattle Times reports that Alaska Airlines has submitted a competing bid to Southwest Airlines' proposal to move its Seattle flights to the airport. According to the report, Alaska Airlines has sent a proposal to King County, which owns the airport, proposing to build a $150 terminal with eight gates and plans to operate 68 daily flights a day from the airport. Southwest Airlines made a similar proposal in July, for eight gates in a $130 million terminal, after negotiations with the county. Alaska, which like Southwest currently operates from Seattle-Tacoma International Airport initially opposed Southwest's plans, saying it would mean an increase in costs for airlines at Sea-Tac and would put the carrier at a competitive disadvantage. But King County says it would be impossible to accommodate both airlines at Boeing Field, saying its cap is 13 gates and 130 flights a day. The county's plans also still are subject to public hearings on noise, traffic and economic impact. --------- Must be great to be Seattle - having two competing bids like this. Other cities would kill for this. But watch, Seattle may yet blow this opportunity. The EIS might strangle the whole deal. Be sure that Sea-Tac and its allies will do whatever they can to make it so. In case you don't think this can happen, take a look at DFW vs Love Field. Airport in-flighting is ugly. Rather than give the citizens a choice, bureaucrats will do anyhting to protect their turf.

Boeing May Launch Stretched 747 Soon

Reuters -- Boeing's proposal for a stretch version of its 747 jumbo jet has attracted interest from several airlines and the planemaker may soon announce its launch, a Boeing executive said on Thursday. "We've got a number of airlines that are very interested and we hope to have something soon on that (the official launch)," Randy Baseler, vice president of marketing for Boeing commercial airplanes, said. ----- A consideration about why the 747A should be very successful - because all the airports it needs to fly to or from already can handle the airplane. It might be heavier, but it is a known aircraft. Compare this to the 380, and how many of its target airports are ready for it. Rumors are that a number od Asian airlines are keen to order the 747A and of course we know that there are already 10 freighters sold. This launch may hurt Airbus' prospective 380 sales precisely because Boeing could probably bring the 747A out fast and priced very aggressively. With 787 engines, this aircraft would meet LHR's low noise requirements.

Airbus launches A350

ATW -- Airbus received formal approval from its shareholders, EADS and BAE Systems, yesterday for industrial launch of the A350 on the basis of 140 "firm order commitments" from nine customers, one of which is unidentified.In Washington, Airbus COO Charles Champion said the company is "confident" it will reach 200 commitments by year end, while Executive VP-Procurement Henri Courpron said that all 200 will be firmed within the same timeframe. As previously announced, the aircraft will be offered in two versions, the A350-800 seating 258 in a three-class configuration with a range of 8,800 nm. and the dash 900 seating 316 with a range of 7,500 nm. The dash 800 will enter service in mid-2010 while the larger dash 900 arrives later in the year. The current customer list comprises Air Europa (10), ALAFCO (12), CIT (5), GECAS (10), Kingfisher Airlines (5), Qatar Airways (60), TAM (8), US Airways (20) and an unidentified customer (10). ----------- So now its official. Boeing has already stated it needs to increase production of its 787, the direct competitor to the 350. Boeing's official 787 orders stand at 118. Its early days for these two airplanes but we think that these aircraft types are the most likely to succeed as we move to a point to point market rather than a hub dependent market as we have today.

Southwest T-Shirt

OK OK we give up! So many hits here today looking for the T-Shirt that caused a passenger to be kicked off a Southwest flight. It looks like this. Now lets get back to the real news.

SAA COO Leaves After Just Six Months

In a further shake-up of South African Airways (SAA) management, the company this week announced that its chief operating officer, Kyrl Acton, "has decided to leave the company to pursue other commercial interests." "Acton and the company have agreed to a consensual termination of his contract of employment as a result," said the airline in its statement. And that's all the airline is saying. "Did Acton jump or was he pushed?" queried the headline of an editorial in South Africa's Business Report. The departure of Acton, a 25-year airline industry veteran from Aer Lingus, Lan Chile and Unisys who arrived at SAA just five months ago, is the subject of much speculation in South African media. Business Report and South Africa's Sunday Times both reported sources saying Acton was fired by the company's chief executive, Khaya Ngqula. But SAA is saying it will not comment on the departure -- one of several executives to leave or be suspended from the company in just over a year -- beyond the two sentences in its statement. Some of the executive departures seem to coincide with the departure of the company's former top executive, Andre Viljoen. Viljoen's replacement, Ngqula, has no airline experience and has been criticized for taking extravagant helicopter trips at the company's expense. ----------- Another example of what happens with government run airlines. There is obviously something going on, but the SAA managers won't say a thing. This is the ANC with wings - corruption running ever deeper and screwing up the works. Service has declined and now this. They won't be able to attract a skilled airline person now. They will have to go with a home-grown person and who knows what that will bring.

Bomb Brussels?

Straight talk from the Robert Crandall School of Communications - An angry Michael O'Leary lashed out at the European Commission over compensation regulations this week, calling bureaucracy incompetent and saying the Brussels bureaucratic establishment should be "blown-up." "I think we should blow the place up and shoot all the regulators and the airline business might actually prosper," O'Leary told The Daily Telegraph. O'Leary, famous for such an understated demeanor, this time is angry over a one-day strike by French air traffic controllers that disrupted the carrier's French flights. Unlike airline initiated delays and cancellations, for which Ryanair now is required to compensate passengers under new EC-mandated rules that came into effect earlier this year, the French government is not required to provide compensation under the rules. "It highlights again the incompetence of the Brussels compensation regime. Air traffic controllers can walk-out any time they like and no one gets compensation," O'Leary told the Telegraph. O'Leary reportedly says the EU "numbnuts" have confused passengers, many of whom have come to Ryanair looking for compensation and blaming the airline when they are told they are not entitled to it. ------ You got to love this guy! He makes this industry interesting - which it plainly is not. Mavericks are wonderful people.

GAO on Chapter 11

ATW -- Contrary to conventional wisdom, "there is no clear evidence" that US airlines operating under Chapter 11 bankruptcy protection "harm the industry by contributing to overcapacity or underpricing their competitors," according to a new study by the US General Accounting Office, the investigative and research arm of Congress. Furthermore, GAO found that in individual markets and industrywide, "the liquidation of major airlines has had only a very temporary or negligible effect on capacity, as other airlines have quickly replenished capacity." In what may be its most controversial finding, GAO suggested that one reason capacity has not left the industry despite 162 airline bankruptcies since deregulation is that companies higher up in the aviation "value chain," including OEMs, financiers, lessors, GDSs, airports and credit card companies, do not want capacity to depart. "There is considerable evidence that these other members of the value chain have earned a good return on capital while airlines have not," the agency stated. "Those companies further up the value chain face less competition and are able to impose higher costs on airlines. Accordingly, these companies have a vested interest in ensuring that airlines survive and that capacity [does] not leave the industry." The report also notes that few airlines have been successful in reducing costs significantly during bankruptcy. --------- Kind of interesting to read this in light of the recent comment by the now retired BA CEO Eddington accusing the US airlines of being State subsidies. Maybe he thought GE is a state-owned firm?

The Remarkable Disappearance of JetConnect

By Glenn Fleishman Special to Wi-Fi Networking News Permanently archived item The dramatis personae comprise Airbus, Tenzing, and SITA: As our story opens, a Web site's life is dramatically cut short, ripped from the ether. The last time the site was sighted (or cited) was in [1] early 2004. Then, the big sleep. Tenzing, Airbus, and integrator SITA created a new company called OnAir absorbing Tenzing which no longer appears to offer JetConnect in connection with Verizon AirFone. You can't find a mention on the [2] current site of the email and instant messaging service that was, at one point, available on thousands of domestic U.S. planes operated by United and other airlines. Tenzing's past was erased. Which might explain the [3] strange article in today's New York Times accompanied by a [4] stranger sidebar. The main article focuses on Connexion by Boeing's business case; Connexion is a broadband in-flight operator for Lufthansa, SAS, and seven other airlines currently using satellite for the Internet relay and Wi-Fi within planes. The article traces the history of Connexion, which began during flush airline times before Sept. 11, 2001; the company shifted strategies as the domestic carriers shed expense and long-haul international routes gained appeal. The division won't turn a profit until 2008, the article quotes the current general manager of the division saying. I've noted many times on this site that "profit" excludes what has been estimated as billions that Boeing must already be prepared to write down at some point (or perhaps has written down in an oblique fashion already) or they wouldn't keep funding this division. Because Airbus now has its own competing service, they are practically compelled to keep running Connexion. Here's where the article seems to parallel the missing Tenzing. The writer notes, "Airbus, Boeing's European rival, quickly countered by buying a 30 percent stake in Tenzing, a Seattle maker of in-flight Internet systems, thinking it would enable it to provide onboard e-mail in 500 planes by 2003." In fact, by early 2004, Tenzing's email system was active in something like 2,000 domestic planes by piggybacking on existing AirFone installations. I have some leftover one-flight-free kits from that marketing effort. The article fails to mention Tenzing's current incarnation in which they will be reselling Inmarsat's fourth-generation satellites and offering units of about 450 Kbps that can be bonded into higher-speed offerings. Back when it was Tenzing, the company explained to me that they believed Inmarsat's offering was more robust than the approach Boeing was taking: Connexion relies on cells of coverage from commodity satellite transponders. Too many planes in a cell of several hundred square miles, and the total available bandwidth could drop quite a bit. Inmarsat is using beam forming to pinpoint airplanes and other ground resources, which both offers more flexibility--each plane getting essentially its own connection--but could be a victim of success in which there just aren't enough beams to go around. That's a problem any satellite company would love to have. Then the article talks about United committing to Verizon's service which won't be available to 2007--and doesn't note that the auction for the 4 MHz in question is still up for grabs; here's [5] my take on this from Dec. 2004. Verizon is a very likely winner of some large part of it, but there's no guarantee. And another bit of Twilight Zone from the main article: "Meanwhile, American, Continental and Delta have no plans to add connectivity to any of their planes. "We are still reviewing it but it has not been on the front burner,' said Benet Wilson, a spokeswoman for Delta Air Lines, which sought bankruptcy protection last month.' " Continental, United, and US Airways [6] all offered or signed up for the JetConnect service with Tenzing and Verizon. Verizon AirFone [7] still archives the press releases. Here's a [8] better article from last month from Canada's Globe and Mail that covers the same scope of this main story. The [9] sidebar in the Times is more problematic; I emailed the author because of a few errors in it. Oddly, the errors are not in the main story that the sidebar accompanies. First, the service isn't $9.95 per hour, easily confirmed by [10] visiting Connexion's site. It's both more and less expensive. The $9.95 rate buys 60 minutes in a row on some airlines that offer that option, but it's only 30 minutes (non-contiguous) on the pay-as-you-go model in which additional minutes are 25 cents each. Unlimited usage per flight varies from $14.95 for flights under three hours to $29.95 for flights of six hours or more. Second, the writer asserts that the Connexion system takes two weeks to install. This might be correct, but Connexion's sales director told me and a plane full of reporters last September (see [11] my post) that they had reduced the installation time to seven days to fit within a routine maintenance window. Right after this point, dozens of additional planes--up from a handful--had Connexion added, so I expect that statement is true and the NY Times got this wrong. Since it's not attributed, I don't know where the detail came from in their report. This article misses a kind of overarching issue, too: with international routes full, ostensibly profitable, and competitive, the weight factor is an issue, but so are additional paying passengers. Every airline I have spoken to about Connexion has said that they see this as a fundamental way to both poach passengers from airlines that don't offer the service and to have people fly more because they know the service will make flight time productive. The 600 to 800 pounds of gear corresponds to three to four passengers with luggage more or less. If Connexion adds business-class fares or business travelers who will pay $15 to $30 for the Connexion service, thus covering the fuel, and hundreds or thousands of dollars for the flight, then this is how Connexion works for the airlines. How Connexion works for Boeing involves aspects mentioned throughout both Times articles: they have to diversify outside of pure passenger services and into areas that the airlines spent a lot of money on. The telemedicine issue is large and only mentioned briefly in the sidebar: "Lufthansa, which operates about 40 wireless-enabled aircraft, is developing an application with Charité Hospital Berlin that lets doctors monitor a passenger's vital signs via a broadband Internet connection." Each time a plane needs to land because of a passenger illness, which happens with real frequency, and it could have been avoided through good telemedicine, it can cost the airlines tens of thousands of dollars or more. There's a lot of money to be saved just through that one additional service. URLs referenced: [1] [2] [3] [4] [5] [6] [7] [8] [9] [10] [11]

Airbus 'to turn down state money'

BBC -- Airbus is to forgo government aid in developing its new A350 plane in a bid to calm a subsidies row between Europe and the US, media reports say. Allegations of unfair state aid for both Airbus and US rival Boeing are currently under investigation by the World Trade Organisation. Airbus had initially asked EU governments for approximately 1.5bn euros ($1.8bn; £1bn), reports said. ------ Hello! What's this? If Airbus does not need the launch aid, then where, oh where, will it come from? Banks of course. Watch for the names of these banks.... this will tell you a lot. You might wonder who guarantees the loans... I guess Airbus just blinked or, more likely, they are about to do something very clever with the financing. A whole industry is watching because this is going to be VERY interesting.

Airbus 380 delays not easing

Flight International reports -- The first shipset of Engine Alliance GP7200 engines has been delivered to Toulouse, but Airbus has yet to tell the engine maker when it plans to use them to power the A380. First deliveries to (GP7200) launch customer Emirates are now provisionally expected in early 2007 –- sometime between February and April that year – rather than late 2006 as previously planned. The delay is in line with the six-month slip expected for the Rolls-Royce Trent 900-powered variant. The first GP7200 shipset is now being prepared for podding trials and pre-assembly build-up in Toulouse before being fitted to the initial Alliance-powered A380, aircraft number MSN009. -------- So despite recent rumblings that Airbus is catching up on their initial delays, this may not be true. In fact, recall the 747 delays whn it was launched. The current delays should not have been unexpected. But with today's instant flow of information it is vital that the truth comes out early as it is known. Otherwise image problems mount fast and credibility is out the window. We have all noted how quiet Airbus has become about the 380 - they seem to have learned this. It is, apparently, true that it is better to under-promise and over-deliver.

WebMonitorXP and this Blog

Some of you visiting this blog may have noticed little red boxes popping up across the top of your browser when you arrived. This is because we are using a fabulous new tool that enables us to monitor who is on the blog in real-time. If you come often - and many of you do - we have been able to pop a small note to you. Some people have ignored these messages and been blocked from further site access. So the software not only lets us know who's in the house, we can greet them or even boot them. Rest assured we only want to know you better to improve the blog -its a kind of quality control, so you won't get blocked for ever if you contact us. Bet you can't do that with anything else out there! If you know of a better tool, we'd like to hear about it at info@iag-inc.com. If you want to know more about the software tool, please visit www.webmonitorxp.com. When we pop you a note to say "Hi" - please answer us.

Joe Mangan - even more

Having never met the man, we are impressed by him no less. Our first post on him occurred of the same day the 380 first flew. It was amazing to watch that large aircraft ascend so fast and quietly. An impressive sight - from Toulouse to Seattle. Unfortunately for Airbus it was also the day that Joe Mangan appeared in print with his allegation of the 380's potential safety. Since then we have seen the impact of rapid depressurization with the Helios 737. Now we all know what Joe is talking about - except the prospect of 550 souls instead of 114 gives us the creeps. This blog has a few updates on Joe since the 380 first flight. But for us is the amazing fact that there have been searches for his name every day that turn up on this blog. This story will attract them, too. It remains importan to note that Mangan's output so far has NOT been proven correct. He has taken a bold stand but there is no evidence the 380 is unsafe.

Oil and Tourism

From TOURISM & MORE'S "TOURISM TIDBITS" For October, 2005: If we like it or not, tourism entities need to begin to consider the relationship between the cost of oil and the tourism industry. Tourism is a very oil/price sensitive product that sells a commodity with high spoilage rates. That is to say, once an airplane has left the gate, the profit from unsold seats can never be regained. The same is true of unsold hotel rooms, or attraction tickets. To make tourism even more sensitive, most people are not obliged to travel except in cases of business and family. For the most part, leisure travel is something that people elect to do, rather than are obliged to do. This right to not travel, simply to spend one's vacation at home, means that the tourism industry dare not allow itself to become arrogant or too self-assured. It is in this light that travel and tourism experts need to watch the rising cost of oil carefully. No one knows at what point travel can become so expensive that people simply decide to forgo it. While no one can predict the future, it is also a mistake not to plan for the future. Then as realities develop, those plans can be adjusted as needed. To help you plan, Tourism and More offers you the following ideas and scenarios. *Assume that gas and oil prices will continue to rise, at least for the foreseeable future. Gas pump shock is now something that tourism officials are going to need to consider. In those countries, such as the USA, where gas prices have traditionally been low, the public is less likely to ignore rising fuel prices. There is already a move to greater carpooling, and seeking of alternative forms of transportation. *Do not panic; do plan. The continual rise in fuel prices will impact every aspect of tourism. This is not the time to panic, but rather to be creative. Hold a local summit meeting between hotels, restaurants, attractions, and even such secondary tourism components as police and city governments. Develop several scenarios and then develop creative methodologies to meet these potential challenges. Remember, in a crisis, it is easier to modify a pre-set plan than it is to develop a new one from scratch. *Take an active role in developing gas price incentives. Until now tourism entities have mainly taken a reactive role in gas price issues. With gas pump price-shocks becoming more common, tourism and travel may need to become creative. For example, create promotions that include a free tank of gasoline for new visitors, or people spending an extra night in hotels or at attractions. The bottom line is that gas pricing often creates emotional reactions, and tourism is a business of emotions. *Make sure you know how people arrive in your community. If you are a destination to which most people drive, then you are going to be directly impacted by the high cost of motor fuel. If your tourism industry is airline dependent, airline service cutbacks and flight frequency (often caused by high airplane fuel prices) will impact every aspect of your tourism industry. One solution for many will be to expand markets by finding more visitors closer to home. While this temporary solution may help the local hotel industry, it is not adding to the community's economy as tourism revenues from outside of the local region begin to fall. Instead, develop compensatory marketing schemes that will continue to make travel to your destination worthwhile. In some areas, such as many island destinations, there are no closer markets. In that case, develop creative pricing, along with creative airport hospitality. Get travelers to forget the woes of travel as soon as they deplane. *Higher fuel prices means that the tourism industry needs to be thinking of its product as an integrated whole rather than as a series of independent components. The additional cost of transportation means that visitors will be seeking other ways to economize. Visitors do not see their tourism experience separately as hotels, restaurants, transportation and attractions, but rather as a unified experience. The tourism industry now needs to do the same. Each component needs to be working with the other sectors of the industry to find ways to compensate for higher fuel prices. If visitors do not see the total experience as worthwhile, then all of the tourism industry’s components will suffer. *Be aware that the rise in fuel prices has caused many airlines to cut back on service. Most airlines have taken the position that higher fuel costs should translate into (1) poorer service and (2) higher ticket prices. It may be a number of years until travel historians will be able to determine if this policy was wise or not. What is known is that people enjoy flying less, and now where once the trip was a positive part of the travel experience, when combined with security considerations, many people now dread the transportation component rather than looking forward to it. This cutback in service means that on-the-ground tourism service providers must work extra hard to provide compensatory good service. For example, hotels (a major component of the hospitality industry) may want to ask their guests how they are arriving, and notify front desk personnel to be extra patient with people arriving by air. Registration counters may need to provide a small snack realizing that airlines no longer provide meals, and rooms may need to be readied at earlier hours for those people who arrive by air prior to 12 noon. *Show your appreciation. All too often tourism businesses act as if they are doing the customers a favor. This is the time to develop creative ways to show appreciation. For example, locales may want to develop "welcome passports" to be used at restaurants and hotels where visitors are provided with a free "extra" as a way of showing appreciation. Follow-up letters may also be sent in which the local tourism industry thanks people for visiting. The letters can even be e-letters and used as a way to encourage visitors to return for another visit. Dr. Peter E. Tarlow is the President of T&M, a founder of the Texas chapter of TTRA and a popular author and speaker on tourism. Tarlow is a specialist in the areas of sociology of tourism, economic development, tourism safety and security.

Another 757 across the Atlantic

Continental Airlines yesterday announced it will launch daily nonstop flights between New York and Copenhagen, Denmark starting on May 23, 2006, pending government approval. Continental's New York/Newark-Copenhagen flights will be operated with a 172-seat Boeing 757-200 aircraft, carrying 16 passengers in the BusinessFirst cabin and 156 in economy. As this aircraft develops its ability for long thin routes we wonder about Boeing's decision to stop production. Perhaps there too few orders, but we increasingly the use of 757s on routes we would of expected 767-200s. Just as the US domestic market saw DC10s replaced by 757s (at AA for example) now we see the 757 working its way into longer hauls. This is truly a versatile aircraft.

Indonesia grounds 13 aircraft

JAKARTA, Sept 29 Asia Pulse - A government team declared 13 aircraft of seven Indonesian airlines not airworthy and banned them from flying after discovering technical damage in each of the aircraft, the Bisnis Indonesia daily reported. An official of the Airworthy Certification Directorate Yurlis Hasibuan told the daily the decision was based on a report from ramp checks at major airports - Jakarta, Denpasar, Bandung, Surabaya and Medan. Until Sept 26 a number of 128 aircraft were checked at random everyday and found 13 of them not fit to fly, Hasibuan said. The 13 grounded aircraft are mostly Boeing 737-200. Intensive ramp checks have been ordered by the transport minister following a recent disastrous crash of a Boeing 737-200 aircraft of PT Mandala Airlines in North Sumatra's city of Medan killing more than a 100 people. ------ Where were these heroic inspectors last month? This is a pathetic response. And 100 people are dead. This is where the US legal system would be useful to extract maximum damages from various bodies - starting with the government.

Broadband coming to US plane near you

From Airfax -- As the revamping of the US wireless in-flight connectivity and voice system continues, the FCC (in conjunction with the FAA) is preparing for an auction of the wireless bandwidth in the 800 and 900 Megahertz frequency bands. Previously called NATS, the bandwidth auction next year will no doubt bring a virtual Noah’s Ark of teamed competitors to the party. Names like Boeing, AirCell, Verizon will be most assuredly be on the bidders list but we think names like Sprint, T-Mobile will be there too. What would attract names like this to a mere 2 Megahertz of bandwidth? For one thing, future airborne high-speed data and voice usage with the technically acceptable PED’s for starters, and another, a new way to reach, connect and entertain airline passengers. But let’s start at the beginning. Conceived and implemented in the 80’s and 90’s, in-flight telephony was the child that never quite grew up. Names like In-Flight Phone Corporation, GTE Airphone, Magnastar, AirOne, AT&T Wireless, Verizon, AirCell have been associated with telephones on airplanes in the US. The fate of onboard passenger phone and data connections on commercial aircraft, however, would be dealt a fatal blow by pricing and universal connectivity on the ground. The ubiquitous cell phone won. While rates dropped lower there were other factors that influenced the demise of NATS as we knew it. Billing was a big issue; passengers wanted to pay one bill and connectivity providers scrambled to deliver cross platform payment solutions…and some succeeded. Aircraft equipment pricing also presented challenges for some. In the end, there was no escaping the ugly truth: passengers wanted to talk on their cell phones on planes and wanted to do so at rates comparable with cell phone ground charges. They also wanted ground-like speeds for Internet connectivity. For many reasons that was never to happen, at least in the air. The FCC noted the clamor and wisely saw that technology could come to the aid of an underused spectrum. The rest, as they say, is history. Jump to September 2005 and an airfield outside Boulder Colorado. AirCell, an in-flight connectivity provider who in the past adapted cell and satellite technology for aircraft usage, taxied leased and modified Falcon Jet 2000 in position for takeoff. The plane had one slightly different outward appearance…an unusually small antenna, about the size of a deck of playing cards, on the rear underbelly. The plane continued roll, lift-off and proceeded toward Kansas City to an experimental cell tower site where something different was to be demonstrated. The aircraft was full of technicians, marketers, a few journalists, cell phones, laptops, and a very small set of black boxes all connected to the small, external antenna. At 11,000 feet the fun began! Broadband, AirCell Broadband to be exact. We tested GSM and CDMA phones first. While the handsets were not optimized for background noise, they were very acceptable. Ground listeners were able to hear our words clearly and we did find an onboard tendency to raise our voices. The hands-down winner was Skype for voice, a flavor of VOIP. Thru a laptop and headset, conference calling was spectacular. This solution is by far the best voice option and this author clearly talked to a conference room full of people and could be heard by all. Not to mention the noise canceling boom microphone and earpiece aided in hearing on the noisy plane environment and required lower levels of talking. Email over Wi-Fi was perfect. The speed was DSL-like and email and Internet surfing worked flawlessly…even when there were some 8 people using the system. This is an addictive problem as we noted earlier, if you can get your email while flying, you are gonna do it! The PDA’s using Wi-Fi worked equally well. We further tested an interesting technology called SlingBox. Essentially, SlingBox is an inexpensive black box connected to your ground-based television (like TIVO), but unlike TIVO, it is also connected to your high-speed Internet router. So, we in the air could watch what the ground TV was playing…and we did. Think of the possibilities! As a personal note, this author had not been too impressed by the possibility of working on an airplane. I’m always jealous of those corporate boys and girls glued to their laptops and PDA’s in an environment that is just slightly quieter than a pressroom or machine shop…too much computer work with too little room. But when the old “e” of Internet Explorer became active on my computer, I was glued to my screen! Actually everybody, and I mean everybody who had a laptop or wireless PDA, was getting his or her email. IFExpress Inflight Rule 1 - If high speed email and/or Internet connectivity is available on an airplane, you cannot resist. AirCell CEO Jack Blumenstein, noted the many ways that airlines could use his new system. By providing almost every ground-based connection option (CDMA, GSM, Wi-Fi,) and the means to control it, the AirCell approach would let airlines choose their solution to in-flight telephony. Those that did not want to tackle the cell phone issues in the air could choose to provide different options in different locations in the plane…perhaps voice & data in business class and text messaging and Wi-Fi in economy. Choice is he operable word here. The system tested was of a COTS nature. An amplifier/diplexer is connected to the external antenna and lined to 3 picocells that delivered phone and data in 3 flavors: 802.11, GSM, and CDMA. AirCell patents (14 and more in the works) gives them a strong position for the forthcoming auction/selection. Their experience in high altitude cell phone development proved very useful in the understanding and manipulation of transmission problems emanating from Doppler effects. Cell to cell hand-off is another challenging issue in air-based cell telephony systems but their name should be indicator enough for the reader . The net result from all this technology was expressed by Blumenstein; “the AirCell network will bring the cost of airborne connectivity features down from $4 bucks a minute to prices closer to what cell phone subscribers pay for roaming in the US, Canada and parts of the Caribbean today. After all, this market comprises some 40% of the worlds airline traffic.” But there is more here than meets the eye! Look at it this way: this system, when coupled with an appropriate server, becomes a “new IFE”. I wont elaborate on this possibility but there has never been such a IFE opportunity, indeed, one in which the passenger brings the seat hardware! Vendors, think about this one. With these AirCell Broadband, the airline has a new pipe for customer interface on their airplanes, bigger than ever before. As newer and newer handheld products appear in passenger’s hands, entertainment and communications options open up. The airline controls the wireless interface and aloso has the opportunity to provide more services. And more possibilities for revenue, dare we say it? Take smartphones, for example, with a Windows interface; smartphones should provide a very serviceable computer-like phone GUI in locations where Internet connectivity was previously unavailable or physically impossible – think economy. Wi-Fi, VOIP, email, streaming audio and video, high data rate cell and voice comms may be in your future, even if enough legroom isn’t! Data upload to, and down from the aircraft can be much larger and cost less at the same time with AirCell Broadband. If you are thinking of ACARS, you have also uncovered another application, Aircraft trend data, crew information, IFE content, spares and maintenance updates as well as airline communication are also possible at 2.4 megabits/sec to, and 150 kilobits/sec from, the airplane. “My only worry about the forthcoming auctions is an irrational buyer in a monopolistic marketplace,” said Jack. Loosely translated he means that a spectrum bidding environment that gets very expensive and provides only one solution/winner will be the “perfect storm” AirCell would like to avoid. Although, we think their patent position and the possibility of attracting high value partners still places them in a very good light, especially since their worldwide Iridium satcom connection solution has been very successful and continues to grow. All in all, we all were all impressed by the speed and clarity of the AirCell Broadband System and if there was one reservation, it was the urp-potential presented by flying at sub-ten thousand foot altitudes in choppy air, with lots of head-down, computer time. Airlines will undoubtedly solve the problem by shutting the system down before take-off and during approach…and we will not mind at all. Trust me.

Delta tries tentative growth step

Reuters reports that Delta Air Lines planes to resume flights to Israel, which it had suspended since Sept. 11, 2001. The airline reportedly will resume service to Tel Aviv in 2006, most likely with Boeing 777s. This time flights will operate from Atlanta instead of New York's John F. Kennedy International Airport. Delta could even use 764s or 763s on the route. They will likely pick up a lot of traffic from Florida to Israel - as well as California origin travelers. ElAl would do even better if they had another US competitor. Continental has been doing well in this market form what we have been able to gather. Perhaps this is another sign that Middle East travel is going to improve. The importance of this seeming small announcement is this - Delta is starting to look for growth again. This is a VERY big step. Amidst layoffs and turmoil, somebody is thinking about tomorrow and that is a great sign. We see another opportunity they may consider - South Africa. Delta understands this market better than any other US carrier because of their relationship with SAA - now terminating as SAA joins Star Alliance. Delta is very aware of the high loads and relatively good yields on the long hauls to South Africa. Were they to annnouce service, Delta would likely capture the higher yield traffic becuase its service of its ability to connect seamlessly in ATL. There is a lot of traffic behind ATL that goes to Africa. Connections through IAD are simply not that great. BTW - just a thought. As Delta focuses on longer hauls overseas it may also be thinking about being a US launch customer for Boeing Connexion.

Joe Mangan - more

Found online but not verified at www.eaawatch.net which appears to be Mangan's now famous blog ------------ From: joseph mangan To: botho.zichner@airbus.com Cc: jmangan02@earthlink.net Subject: Criminal Activity of Obstruction EASA - Airbus discovery of TTTech A380 CPCS Certification Data Package non compliance to CRI F09 Date: Oct 6, 2004 11:44 PM Attachments: 2004_09_29_telephone_meeting.doc From: joseph mangan Sent: Oct 6, 2004 1:23 PM To: botho.zichner@airbus.dassa.de Subject: Criminal Activity of Obstruction Airbus - EASA discovery of TTTech A380 CPCS Certification Data Package details Mr. Botho Zichner. I have reported this information to the EASA director's office, however, I am concerned that you and Mr. Claude Espinat of the DGA|CEAT may not yet be aware of this information. You may remember that I brought up the fact that TTTech's and Nord Micro's documents do not comply with CRI F09 in your audit at our facility. My firm was not happy with my having disclosed this, and has since conspired with Nord Micro, to prevent your further efforts to discover the issues with the Certification Data Package for the Device - Microcode - and Nord Micro claimed use of the device as a 'SIMPLE' testable device under the CRI and DO-254, when in fact it is a complex device. The evidence of this conspiracy is contained in the enclosed attachment. TTTech have, since becoming aware of my notification of EASA, terminated my employment. I am concerned that the EASA are not moving fast enough to prevent the possibility of destruction of evidence. As TTTech have poor archiving and file access controls in place to prevent tampering with additional evidence. As you will see, I attempted on Friday to contact Mr. Claude Espinat of the DGA|CEAT referred to in the email. I left a voice message, but have not been contacted back. Please get in contact with him to determine if he is aware of this activity. Thanks for your efforts. Joe Mangan Vienna Austria Phone Number 069910446552 Country code is 43 ::EASA Director Notification Email

Ryanair going longhaul?

Michael O'Leary expects European consolidation to eventually give Ryanair the crtical mass, making development of a complimentary longhaul network. The longhaul venture, which O'Leary does not see happening for at least five years, would have a different model to Ryanair. We have been grumbling about this for some time. Longer range 737s make trans-Atlantic flights feasible.

Joe Mangan

Today this blog has been hammered with searches for news on Joe Mangan. Even his Austrian employers bang away, "Googleing" for anything on him. Seems he has created a lot of interest. Today's LA Times reports his family is still in Austria and nearly penniless. "A year ago, Mangan told European aviation authorities that he believed there were problems with a computer chip on the Airbus A380, the biggest and costliest commercial airliner ever built. The A380 is a double-decked engineering marvel that will carry as many as 800 passengers — double the capacity of Boeing Co.'s 747. It is expected to enter airline service next year. Mangan alleges that flaws in a microprocessor could cause the valves that maintain cabin pressure on the A380 to accidentally open during flight, allowing air to leak out so rapidly that everyone aboard could lose consciousness within seconds." Given the most recent Helios crash you can imagine the fear everyone has of such an event of a 380 with over 500 people on board. Imagine further what damage this plane could cause if it crashes into a populated area. We're potentially talking big time devastation. Crashes by 747s in populated areas are models - remember the ElAl 747 freighter crash in Amsterdam? Understandably Mangan's employer and Airbus went after him. But with a vengance. Airbus acknowledges that designers face challenges to reduce the A380's weight. The company elected to use four outflow valves on the A380, with only one motor on each valve. Each motor uses a TTTech controller chip, and there is no manual override system. Airbus says that the A380 has achieved redundancy by installing the extra cabin-pressure valves, which provide a safety cushion in case a valve fails. As for Mangan's allegations, they are "an unsubstantiated crusade," Airbus spokesman Clay McConnell said. TTtech's new chips cut the cost of aviation chips to about $20 apiece, versus $500 for previous designs. Mangan said he found serious flaws early last year in TTTech's computer chips and the software for the A380's cabin-pressurization system, according to legal documents. Because all four motors in the A380's cabin-pressurization system use the same type of flawed TTTech chip, Mangan says, "if one fails, they all fail." TTTech has offered to drop its legal action against Mangan, court records show, and pay him three months of severance, if he retracts his statements. But Mangan has refused. You have to admire this man, he ha staken an amazing stand, and its almost certain nobody will give him a job in aviation anywhere now.

UAL and other stats

Their May market share was 8.3%, down from 10.7% in December 2002 when they first filed for Chapter 11. During this time its workforce declined 18%. And we suspect this will be the way ahead for the new Chapter 11 airlines. USAirways government loans will soon be sold to the market. Any buyers? Bet you the pricing is going to be really way out there - imagine what anyone will be paying for these bonds? The risk is immense. So the coupon has to reflect that. They won't be an easy sell.

Another Dumb Tax Idea from Euroland

Britain's Civil Aviation Authority has proposed a contentious 1GBP ($1.50) levy tax on each airline passenger over 3-5 years in order to build a 250GPB million ($370 million) fund to compensate passengers for their lost tickets when an airline goes bust. According to The Independent, the CAA proposal has the backing of Britain's Department for Transport, which wants it included into an aviation bill currently going through Parliament. But the proposal reportedly is opposed by Treasury. It is not popular with Britain's major airlines either! "There is no doubt in easyJets view that penalizing airlines and their passengers by imposing a blanket levy regardless of the fare paid or the financial viability of the carrier flown is a highly burdensome and costly approach to the financial protection of air travelers," said easyJet in a statement. EasyJet, which says it is "violently" opposed to the measure, also says that it would be harsher on passengers of airlines offering low-fares: The 1GBP levy would represent a 2.3% addition to easyJets average fare compared to 0.5% of the average British Airways fare, easyJet says. In the past year, several smaller privately held low-cost carriers have suddenly ceased operations in Europe, including most recently EUJet of Britain. ------- Can you believe this! Is there something in the water over there? How dumb can gnomes get? This defies anything and smacks of the Chirac- tax. It would be rude to write anymore that expresses our true feelings about this. Suffice to say taxing this industry anymore is totally unacceptable. Pity you can’t toss out gnomes because they don’t run for office. But you can toss out the morons who listen to them.

Boeing blinks

Boeing seems to have given in to the IAM - which may be the right thing to do, given Airbus and the order boom. Terms of the contract offer include: - A pension multiplier of $70 per month for each year of service - Retention of the employees' existing health care plans under the same cost provisions of the IAM's previous contract with Boeing - A ratification bonus equaling eight percent of each employee's total pay during the past 12 months, which will average about $5,200 per worker - Two lump sum bonuses, of $3,000 each, which will be paid at the end of 2006 and 2007. Boeing says the total cost of the agreement is similar to the company's previous contract with its IAM employees. ------- Whatever! The union may have been crazy to strike now but after reading a really good analysis in Business Week we became more sympathetic to IAM. They were not being crazy and what's more, Boeing's traditional hard nosed approach is simply not working the way it used to. Even Boeing has to realize it cannot outsource everything.

Airbus 320 nose wheel issue

AP -- There have been at least seven cases in which the front wheels on Airbus A320s became stuck in a sideways position, forcing pilots to make emergency landings. The A320 landing gear is moved through hydraulic pressure, when fluid is pumped into a valve, which moves a piston. Rubber seals called O-rings are used to prevent the hydraulic fluid from leaking. That's what happened in at least two previous incidents. Airbus said the landing gear got stuck because of problems with the seals, and told airlines they should replace the seals on A320 and A321 aircraft. That message came after a Feb. 16, 1999, incident in which an America West A320 landed at Port Columbus International Airport in Columbus, Ohio, with its nose wheels sideways. On Nov. 1, 2002, a JetBlue flight from Buffalo, N.Y., made a safe emergency landing at John F. Kennedy International Airport in New York. Just 19 days later, a United Airbus A319 turned back after takeoff from O'Hare International Airport in Chicago because the pilot couldn't retract the landing gear. ------ And the recent jetBlue event got so much attention?

Delta pays Giuliani $400k per month!

Chapter 11 does not mean you have no money. Bankruptcy in your personal life is much less attractive then the corporate version. Delta Air Lines Inc. has paid a consulting firm of former New York City Mayor Rudolph Giuliani $2.4 million and expects to pay it another $400,000 per month for advice on working through Chapter 11 bankruptcy proceedings. So what exactly does this man or his firm know about this? Giuliani Partners is made up of units that focus on consulting in various industries, including law enforcement, emergency management, and mergers and acquisitions. Turns out they have been exposed to airlines before. This isn't the first time that Giuliani Partners has gotten involved with a company in Chapter 11. Giuliani Capital Advisors was also hired by the company or creditors' committees for the bankruptcies of Georgia textile maker WestPoint Stevens, Aloha Airlines and USG Corp., the maker of Sheetrock-brand wallboard. Great work if you can get it.

Air Canada & Pilots To Resolve Jet Dispute?

Reuters -- Air Canada said on Friday it had agreed with its pilots on a process to resolve a dispute over the airline's proposed USD$6 billion purchase of 32 Boeing wide-body airliners. The airline said the protocol agreement on a binding arbitration process would give it certainty on pilot costs for operating the Boeing 777 and 787 jets. Subject to a satisfactory outcome of the arbitration process, the airline said it would then go back to reach a new agreement with Boeing on the jet order, which was canceled in mid-June. Air Canada was forced to back out of its April 25 agreement to buy the aircraft after the Air Canada Pilots Association did not ratify an agreement on costs and compensation for flying the jets. The airline had hoped to renew its long-range, wide-body fleet with 18 Boeing 777s and 14 787s. The 787s had been scheduled for delivery in 2010. Air Canada said there will also be a mediation process on pilot seniority issues stemming from its takeover years earlier of insolvent Canadian Airlines. -------- Much of this may be moot. Air Canada has likely lost its delivery slots and Boeing is on strike.

British Airways' Chief Says Subsidies Prop Up U.S. Airlines

``State subsidies preserve bad habits and America should do itself a favor by returning to the principles of free competition,'' Eddington, 55, said at a lunch in London today. ``America is turning from the land of the free to the land of the free ride.'' U.S. carriers ``have been dumping capacity on the north Atlantic'' and benefiting from ``protected routes,'' Eddington said. ``They still cannot make a profit.'' --------- Quite something isn't it? How about picking on the Euroland government protected airlines first? There are more subsidized airlines across the English Channel. And lets not bring up the protection the UK gives their airlines by holding up slots at Heathrow. BA can basically flies anywhere it wants in the US. Is the supposition here that BA's management could operate better here in the US? BA invested in USAir a few years back - that was no great investment. Would BA buy into American now? We think not. For the same reason KLM won't put any new money into Northwest. Its simply a lot tougher in the US market. Perhaps the only Euro airline CEO who can point fingers at US carriers is the CEO at Ryanair. And he learned from Southwest.

Virgin Offers Passengers InnerTalk

Virgin Atlantic Airways is to offer passengers InnerTalk, the world’s first subconscious inflight audio product, as part of its extensive inflight entertainment system V:port. Vitalia Health, a company which specialises in alternative, technology solutions for health, has provided a series of self-improvement products for the audio inflight entertainment system which will be onboard from October 1 2005. ---------- We hear an inner voice that says, don't ask for another drink...stay in your seat....go to sleep...don't bother the crew. What next? Beam me across the ocean? Sure beats sitting in a 30 inch pitch seat.

Chap 11 layoffs - round 1

AP reports that Northwest Airlines has informed its flight attendants that about 1,400 of them will be laid off between Oct. 31 and January. About 400 pilots also will be laid off. The airline, which is under Chapter 11 bankruptcy protection, reportedly will layoff 900 flight attendants Oct. 31, including 480 based in Detroit and 355 based in Minneapolis. Delta Air Lines Inc. said on Thursday it plans to cut up to 9,000 jobs, or 17 percent of its work force, as part of cost cuts aimed at returning the bankrupt airline to profitability. --------- Like we said before, this will be a huge hit. Watch housing prices fall in the locations affected. This is just the start.

Southwest & DFW - more

Something interesting on the matter we cam across today -- Lost in discussion of the $22m "free rent" that DFW was proposed was the requirement that Southwest serve certain markets from DFW. Southwest is not going to let the DFW airport board dictate where they do and don't fly. This stipulation was a poison pill for the deal. In addition the DFW airport board would have forced them to take 10 gates right off the bat. With their high gate utilization business model, that would have amounted to 100 flights a day. There's no way that this was going to happen. In fact I honestly believe the offer was made with the understanding that there was no way that Southwest would accept it. It was a bad offer that had no chance of being accepted. As for some of the other arguments that were made here abotu Southwest serving LAX, BUR, SNA and ONT for example, DAL and DFW are only 8 miles apart. It doesn't make much sense to serve both of them. We are not going to see Southwest stuck behind a slowly taxiing silver MD-80 any time soon, and for that I am happy. I am doubly happy that I will continue to be able to fly from Austin to Dallas, not Austin to Grapevine (DFW).

Miracle at LAX - jetBlue 292

A JetBlue airliner with faulty landing gear touched down safely Wednesday at Los Angeles International Airport after circling the region for three hours with its front wheels turned sideways, unable to be retracted into the plane. in this picture you see the gear shooting off flames as the plane finally touches down. The pilot - the hero in the story - kept the nose gear off the ground until the plane slowed considerably. The other hero in the story is Airbus - the nose gear did not snap off or collapse. When the plane came to a stop the passengers and their baggage walked down a stair and got onto buses which took them away. Not one injury out of 140 passengers and six crew! TV coverage showed the nose gear stayed on the runway centerline all the way to stopping. This was a miracle and the passengers are reported to have clapped and cheered for the crew. Bravo jetBlue & Airbus!

WestJet to Serve Honolulu and Maui

WestJet yesterday announced it will begin offering nonstop service to Honolulu and Maui in Hawaii. WestJet will operate Vancouver/Honolulu service five times a week starting Dec. 9 and Vancouver/Maui service twice a week starting Dec. 17. So here we see the start of really longhauls with 737s as pioneered by Aloha. If these flights work, why not fly across the North Atlantic? We see this happening as the 737NG comes on stream with its longer range.

bmi & TAP go with OnAir

TAP Air Portugal and British carrier bmi both have agreed to introduce OnAir's voice and text service for cell phones in separate three-month trial runs, Chief Executive George Cooper said. The planes, which will be the first to allow passengers to make and receive calls with their own cell phones while onboard, will give OnAir the chance to assess its service ahead of its general release slated for 2007, he said. "With both airlines, initially there will be a couple of airplanes - two or three airplanes equipped with this system," Cooper told The Associated Press from Germany. "During that three months, we'll all be evaluating how it's going, what the usage is, how we handle the crew issues and so on." OnAir's system will be used by TAP on its Airbus 321 model and by bmi on its Airbus 320s, both single-aisle planes primarily used for flights within western Europe. -------- This is the way to go. Airlines can make money out of information access. With air travel now taking longer due to those security lines, "dead time" from travel becomes ever more expensive. Being able to stay in touch becomes more valuable. Business travelers will pay for this with joy - imagine those busy thumbs banging away at the BlackBerry next to you. It sure beats inane conversations with a stranger.

Sweden Announces Air Ticket Tax

Reuters -- Sweden plans a tax on airline tickets of between 50 to 100 Swedish krona (USD$6.50 to USD$13) from May next year as part of efforts to help the environment, the government said in its 2006 budget proposal on Tuesday. Airlines have already protested at the prospect of such a tax, but the government said it was a necessary step as part of tax increases worth 3.6 billion krona (USD$468.5 million) to encourage more environmentally friendly energy use. "It is appropriate that all sections of society contribute to the reduction of harmful emissions and meet environmental goals. This also concerns air traffic," said the draft budget. "It is appropriate to introduce a system of taxing air traffic without unnecessary delay," it added. The heads of four airlines wrote in newspaper Dagens Nyheter that new taxes would make ticket prices surge, hitting a sector already under pressure from high fuel costs and competition. "It is extremely regrettable that the government is considering imposing new taxes and duties on an already hard pressed airline sector," wrote the heads of SAS Sweden, Fly Nordic, which is owned by Finnair, Skyways and Malmo Aviation. The minority Social Democrat government closely cooperates with the Green Party in parliament and has in recent budgets taken measures that increase taxes on environmentally unfriendly energy uses. --------- Here we go - a new disease sweeps Euroland - it’s called "Chiracitis". The symptom is a perceived need that needs solving (Environment, African poor, whatever). The cure – tax the airline ticket. Can you imagine such stupidity? Maybe Reagan was right – government is the problem.

MAXjet To Launch All Business Class Service November 1, 2005

MAXjet Airways, Inc. today announced it will offer scheduled all business class passenger service on November 1, 2005, with six flights each week between New York’s John F. Kennedy International Airport and London’s Stansted Airport. MAXjet will offer an all-business class service with everyday fares starting at just $779 each way. Fares will be 50 to 75 percent less than those currently in the marketplace. MAXjet will operate Boeing 767-200ERs on the initial route. Typically configured to seat more than 200 passengers, MAXjet will configure its B767s with just 102 seats with 60” pitch to greatly increase legroom and space for each of its passengers. There will be no middle seats on the aircraft. --------- This is a cool price. But how do they drive traffic into their system? It looks like an O&D operation. Can they pull it off? Remember Freddie Laker, PeopleExpress...? And how do they compete with Virgin for what appears to be the same type of customer.

Got to love the lawyers

In case you are wondering who is making money from airlines these days, let us assure you its not vendors. Its the consultants - particularly of the legal variety. Here is an example of how it worked at Hawaiian. Pacific Business News reports that Hawaiian Airlines has issued a stinging rebuke of the carrier's former trustee, Joshua Gotbaum, in a 72-page objection to the $8 million "success fee" he is trying to secure through the bankruptcy court. "Gotbaum attempts to take credit for virtually everything good that happened during the Chapter 11 case. In reality, most of the good results achieved in the case were either not a result of the trustee's presence or were achieved in spite of his presence," the airline was quoted as saying in its submission. Gotbaum reportedly says that he was responsible for daily operations at Hawaiian and helped the company save $179 million and achieve $151 million in market capitalization. But the airline in its objection says that only former chief operating officer Mark Dunkerley reported to Gotbaum, with everybody else reporting to Dunkerley -- who is now the airline's president and chief executive officer. "He was not qualified to serve as CEO, never having been a CEO and never having worked in the airline industry," the airline reportedly said of Gotbaum in its submission, alleging that he also was "disrespected and disliked by virtually every employee...supplier and advisor in the case." The airline also says that much of its restructuring was underway before Gotbaum arrived. Installed by the U.S. bankruptcy court at the request of Boeing Capital, one of Hawaiian Airlines' biggest pre-bankruptcy creditors, Gotbaum was in charge of running Hawaiian Airlines during its bankruptcy restructuring. He already has received $720,000 in fees and living expenses, the airline says, but is seeking nearly $1.2 million more plus the $8 million bonus. Also filing objections to Gotbaum's request were the airline's pilots and flight attendants unions and the Office of the U.S. Trustee, which found Gotbaum. A hearing on the matter is set for Sept. 29.

Pilot override system

Flight International -- Honeywell is in talks with Airbus and Boeing about fitting a device aimed at preventing 9/11-style hijack. The device is a recovery system that uses the automatic flight control system in fly-by-wire airliners to override pilots who set a course that would enter restricted airspace or intentionally collide with buildings. Honeywell’s marketing strategy for the “automatic” or “assisted” recovery system is focused on gaining acceptance with the Airbus A350 and the Boeing 787, with the former seen as the more natural candidate given Boeing’s philosophical objections to any system that overrides the pilot’s control of the aircraft. A retrofit option for existing fly-by-wire airliners is deemed unlikely because of the high costs of development and certification. Flight tests of the system were conducted in April this year with a United Airlines A319 in airspace near Monterrey, California. Honeywell says the tests demonstrated that the automatic flight controls could be reprogrammed to assume control of the airliner, rather than simply give the pilot a warning. The system also has been tested in flight aboard Honeywell’s Beech King Air testbed. The automatic recovery system is essentially an upgrade to Honeywell’s enhanced ground proximity warning system (EGPWS), which uses a worldwide terrain database to alert pilots to obstacles such as mountains. Automatic recovery would require adding “virtual keep-out areas”, such as restricted airspace above the White House, into flight computers equipped with the EGPWS terrain database. The system would give the pilot a warning as the aircraft enters a buffer zone around restricted airspace or certain prominent buildings. If the pilot fails to respond to the warning, the flight controls would override the pilot’s commands and steer the aircraft out of the danger zone. ---------- Heard the joke about the successor to the two-main flight deck? It has 3 seats, one each for the pilots and one for the monkey. The monkey’s job is to smack the pilot’s hands if they touch the wrong instrument. OK, jokes aside, this enhancement takes us closer to the inevitable. Yes we know the idea will be derided as foolish and outlandish. But mark our words. We will live to see freighters which have no pilots – we have the proof from UAVs that the technology works very well. We also know airlines increasingly regard unionized labor – especially expensive pilots – as a pain in the bank. Imagine the cost savings of having no pilots? There would be no sickouts and no pensions or healthcare. Of course once this is proven to be effective the passenger version will be rolling out real quick. So you’re scared of having no pilot? You would be amazed to know how little flying the pilot does these days. Ok now, all you pilots tear us apart! Meanwhile you can complete our short survey on this: here

Chirac Tax Update

Reuters -- More than 66 countries support France's campaign for a new tax on airline tickets to raise money to fight global poverty, Foreign Minister Philippe Douste-Blazy said on Sunday. France is organizing a conference at the ministerial level in February to ensure the initiative is rapidly put in place, Douste-Blazy told the UN General Assembly. Britain and France have been pressing other rich nations to put a new tax on air tickets to finance a big increase in development aid after French President Jacques Chirac proposed the idea earlier this year. But the plan has run into opposition in the United States and has failed to win widespread backing in Europe. The idea is also unpopular with airlines already struggling to pay for soaring fuel costs, who fear that higher-priced tickets could drive away customers. But France has said that some countries joining the scheme might simply ask passengers to donate money for development rather than levy a compulsory tax. France says it plans to impose a new tax as early as 2006 while Britain intends to redirect some of the money it raises from existing taxes on air travel. "More than 66 countries have given their support to a pilot project of contributing via airline tickets, and we are delighted by that," Douste-Blazy said. ---------- Wouldn't you think it important to state which the 66 are? We bet the majority are the beneficiaries. While most taxes are dumb - this is among the dumbest. It is yet another ex-colonial guilt driven excuse that inadvertently maintains ex-colony dependence. Leave the poor nations to solve their own problems through hard work and democratic means. Many of the dependent states which will benefit from this tax are undemocratic and not worthy of this assistance. Why should travelers be taxed some more? It’s insane! How much of this money will go to Zimbabwe, for example? There we have a basket case nation led by a crook - clearly the poor Zimbabwe people need the help. But do you think this tax will ever get to the man in the street? We don't either.

Alitalia's Strike Plan for October

October 8th 2005: 4 hours nationwide air strike (1200-1600) of Alitalia flight assistants. October 18th 2005: 4 hours strike (1200-1600) of Enav Catania flight controllers. October 19th 2005: 4 hours strike (1200-1600) of Enav Milano flight controllers. October 19th 2005: 4 hours strike (1200-1600) of Enav Roma – Peronale Turnista e Normalista. October 19th 2005: 4 hours strike (1200-1600) of Enav Saav Milano Malpensa. October 21th 2005: 6 hours strike (1000-1800) of Alitalia Pilots October 21th 2005: 4 hours strike (1200-1600) of Alitalia staff - Torino Source:http://strike.skynetblogs.be -------- How this airline has managed to stay in business is amazing - the poor Italian tax payer.

IT Survey

The North American results of the seventh annual SITA Airline IT Trends Survey were announced at their Insight Conference in Ft. Worth, TX. The conference, in its fifth year, focuses on effective ways to use technology solutions to cut airline & airport costs, enhance business process efficiencies and simplify the travel and transportation industry. The survey underscores the fact that while North American airlines are still struggling with pricing and competition, they are much more advanced than other regions regarding the use of technology to meet business objectives. However, the financial difficulties faced over the last three years have forced many airlines to shift their strategic focus from innovation to streamlining, putting in jeopardy their technology leadership position. U.S. carriers are largely ignoring in-flight service enhancements, such as access to Internet and email, despite the potential for developing new revenue streams and consolidating customer loyalty. (We have been raving about this issue here for months now -- Ed) Other innovations on the horizon, such as replacing bar-coded baggage tags with the more robust RFID tags to reduce levels of mishandled baggage, also appear to have little appeal for North American carriers. While its high cost means few airlines see RFID as today's technology, 64% of Asia-Pacific carriers expect to have deployed it within four years, nearly seven times the number of North American carriers. Highlighting the problem is that average investment by the region's airlines in telecommunications and IT has dropped to only 1.4% of revenues from the 1.9% recorded last year, and much lower than the 2.0% and 1.9% spent by Asia-Pacific and European airlines, respectively. This has put added pressure on airline CIOs to deliver business results with limited upfront investments. Not surprisingly 89% of survey respondents cited 'short-term projects with proven payback' as either their first or second priority for investments, while long-term strategic projects were rated much lower. "There is strong competition in the North American industry making it difficult for airlines to generate the returns they need to maintain high levels of technology spend," says Peter Buecking, President, SITA Group. "But to some extent this is a re-investment in innovation story. North American carriers are pioneers of many of the technologies that are now being embraced by airlines globally and can, to some extent, afford to take a breather while the other regions play catch-up," he explained. For example, air travel in North America has already largely migrated online with airlines selling on average around 63% of tickets through web channels, far higher than the 24% and 10% of European and Asia-Pacific airlines, respectively. Other automated passenger systems, such as self-service kiosks, have also become mainstream, while remaining fringe technology in other regional markets. "Streamlining can only take you so far," says Buecking. "As each customer touch-point from the reservation stage to boarding the aircraft becomes automated, the only differentiator valued by travellers will be the in-flight service. Those carriers that have ignored this part of the value-chain will then find themselves at a competitive disadvantage," he continued. (This another item we have been going off about for months - Ed) The SITA Airline IT Trends Survey shows that the airline industry as a whole is on the verge of revolutionising the travel experience of many passengers through the widespread introduction of customer-facing technologies both on the ground and in the air. The results indicate passengers will have more convenience and greater control right through from the booking stage to the in-flight service. Summary of SITA Airline IT Trends Survey Key Findings regarding North American Airline Industry -- North American airlines spend an average of 1.4% of revenues on telecomms and IT. -- 67% of airlines expect their IT budget to increase in 2006. -- Customer service or marketing advantage projects were rated the highest IT priority by the most airlines - 56%. Short-term projects with proven payback were ranked highest by 44%. (Really? We don't see any of this anywhere - in-flight WiFi is a natural for the US - see it anywhere? Nor do we) -- Only 11% of airlines expect to offer some form of in-flight voice or data connectivity by 2007. (see comment above) -- 56% of airlines have deployed self-service kiosks for check-in. -- 67% of airlines currently use bar coded boarding passes. -- 85% of airlines sell some tickets online. -- 63%, or more than 3 in every five, of all tickets are sold online. Of these, 55% are sold on the airline's own website. -- 61% of all tickets are fulfilled as e-tickets.

Cameroon Airlines banned

France on Friday banned Cameroon Airlines flights for safety reasons, saying inspectors found worn tires on planes, leaks of hydraulic fluid and other violations of international standards. This is the sixth airline banned from France. So we see no common Euroland banning - which is odd considering the power given over to Brussels. Also, note how many of the banned airlines are African. Its virtually only African carriers that are banned. Maybe the Chirac-Tax can be used to improve African aviation safety?

Northwest & Delta merger?

Yesterday we mused on what was left for either in a merger. One option we did not consider (who wouldda thunk it?) - a merger of these two! We still don't think is realistic. ------------ Reuters -- "There is not excessive (route) overlap, which makes it an enticing possibility," said Joe Schwieterman, transportation expert at DePaul University. "(But) I think the integration problems would be staggering." Analysts acknowledged that Delta's domestic southeast routes would balance well with Northwest's Midwest franchise. Internationally, Delta has prominence on Atlantic routes, while Northwest has more flights to the Pacific region. However, the companies' mismatched aircraft fleets could pose innumerable problems for a combination. The two carriers operate a combined fleet of more than 1,200 aircraft. But the only aircraft model the two have in common is the Boeing 757, one analyst said. "Intermingling those fleets or working on a fleet plan would be billions (of dollars). Training pilots would be billions," said airline consultant Michael Boyd. "They could be considering it. But at the end of the day, they would end up with a limping mess." Airline consultant Robert Mann added that for Delta and Northwest to team up, they would need an impressive amount of exit financing as well as management with a vision. It would be difficult for two major airlines -- potentially creating the largest US carrier ahead of American Airlines -- to attract the needed financing in an era of low-cost competition, Mann said. The two carriers may well take the merger route, but not necessarily together, said Anthony Sabino, airline expert and professor at St. John's University. Sabino said the airline industry, plagued by overcapacity, is crying out for a merger or a liquidation that would take some seats out of the air, adding that a Delta and Northwest coupling is just one of many possibilities. "Certainly this is something that people are thinking about, that they should be thinking about," Sabino said. "These are troubled airlines and they have to be thinking of ways to get out of trouble."

Outsourcing at Northwest

Northwest Airlines has proposed a restructuring plan that will outsource almost 60% of its flight attendants. They have 9800 FAs you can imagine how this will impact the airline's employees. Many years ago, using data from the US Dept. of Commerce "Survey of International Air Travelers", we used data to demonstrate that US carriers and Japanese carriers would always have vastly different passenger ratings - the Japanese always superior to that of the US. These ratings were consistent from both Asian or US residents. After looking at the data over a number of years we concluded that fundamentally different cultures could explain this. In Western culture, if you serve somebody, then the server is seen as "socially lower" than the service recipient. But in Japanese culture, it is the opposite. On a Japanese airline, the flight attendant has huge "face" when providing excellent service. Whereas on a US carrier, the flight attendant wants to be treated as a "social equal" to the passenger. You can imagine the subtle but distinct difference in the service because of the cultural backdrop. What is the point here? If Northwest can outsource this function, then these FA's might make a huge impact on their current service levels by looking to Asia.

Garuda orders ten 787s and 18 737-800s

Flight International -- Indonesian flag-carrier Garuda Indonesia has agreed to acquire ten Boeing 787-8 aircraft and reaffirmed its long-awaited intention to take 18 Boeing 737-800s under a fleet-renewal initiative. Garuda adds that the signing of the agreement is a “further elaboration” of a previous contract between the two companies for Boeing 777-200ER aircraft. This 777-200ER order has also been long-deferred and it remains unclear whether Garuda still intends to take the jets. -------- With Garuda's history of deferrals and financial performance, can this order be taken seriously?

O'Leary warns of creeping reregulation

ATW -- European regulators aim to stem the rising tide of low-cost competition with a slew of new laws and regulations designed to prop up tottering legacy carriers, Ryanair CEO Michael O'Leary charged yesterday.Delivering the keynote address at the World Low Cost Airlines Congress in Amsterdam, O'Leary pointed to the new passenger rights legislation, the proposed world development tax, restrictions on route development aid from regional airports, emissions trading for airlines and illegal state aid to carriers such as Alitalia as examples of how the EU is trying to hurt competition. "The politicians are determined to screw it up. . .because they want to protect the flag carriers," the typically outspoken Irishman declared, adding, "The idiots in Brussels would, if they could, restart Sabena so they could lose money for another 75 years." However, "The low fare revolution has come to Europe and it won't be reversed. . .European passengers would crawl naked over broken glass to get more low fares." O'Leary said Ryanair is completely committed to even lower fares, looking to enhance revenue from onboard passenger purchases of goods and services and convincing airports to share the parking and retail revenues his passengers bring in to push fares down, ideally to zero. In real terms, he is targeting €30 fares and looking to get €30 from other sources. A lot of fighting is going to be needed to reverse the reregulation trends, including enlisting the support of passengers and joining the European Low Fare Airline Assn. for concerted action, O'Leary said. -------- He's right. The genie is out of the bottle. Many people(mostly at legacy airline & Euro-gnomes) hate the changes this man ushered into their world. Bottom line is Ryanair will be flying long after the "flag" carriers have exhausted even illegal state aid. Think Olympic & Alitalia. Consumers rule because they pay for things - and they won't pay for inefficient state sponsored companies forever.

Chapter 11 - what's next?

Delta and Northwest may have begun the long road to recovery today. But this will include cutting employees, pensions, fleet and routes. If they survive, (a HUGE if) they will be smaller or more likely, we think, merged with other airlines. The problem is that the US market is over-served by airlines - there are too many seats in the market. Southwest and jetBlue's efficiencies make it even worse. What are the options? Delta's debt stands at $28.3 billion; Northwest's at $17.92 billion. Delta You have read here before that we see Delta and Continental joining forces - they nearly did this before. Delta is the largest US carrier into Europe. It has close ties with Air France (which now also owns KLM). But we doubt that the French will support Delta financially as KLM once did for Northwest. Delta has been trying for some time to sell its 777 fleet. Delta has said it wants to simplify the fleet. What does Delta have to raise cash? Not much - it already sold its regional carrier. Prospects look downright awful. Can Delta shrink itself to recovery? We're doubtful. We see massive layoffs coming with horrible impacts on the Atlanta economy. Can Delta focus on international service? Maybe, but that did not save Pan Am. The options are nasty - you can imagine whatever in-flight "service" is left will slide further into the abyss of misery. Think TWA on steroids. Northwest American might swallow Northwest - with few common routes that would work, but fleet commonality is a problem, and then there is the KLM connection. More likely Northwest will have to sell off routes to American - especially juicy Asian access. Northwest used to have great real estate in Asia - gone by now. They used to own most of their fleet, too. Northwest says in a bankruptcy court filing that it wants to return 13 aircraft immediately, and it has designated 102 more for potential removal. Twenty-eight Boeing 757-200s are either parked now or proposed for abandonment to the leaseholders, according to their filing. We expect to see them ground the DC9s - solves gas consumption and maintenance problems right away. Regionals will pick up the slack. In summary - air travel as we know it in the US is OVER. The industry is now in a spiral of doom the likes we have never seen. Unions and pensions are toast. Pilots will be lucky to have jobs. Mechanics best keep very quiet. Flight attendants should just turn up for work and smile. People at American and Continental should not take comfort. There are now too many people chasing too few jobs in the industry. Whichever airlines remain will have the pick of the best.

Greek Defiance

Reuters -- Greece's flag carrier Olympic Airlines will keep flying despite crippling EU fines for receiving state subsidies until privatization efforts are exhausted, the government said on Thursday. In a signal no imminent closure and grounding of the airline was planned, the Finance Ministry said in a statement: "The government's goal is that the company's privatization should continue as long as it is possible." The European Commission ruled on Wednesday that Olympic Airways and its successor, Olympic Airlines, must repay as much as EUR540 million (USD$660 million) in state aid and taxes to the Greek government. The ministry said it would study the Commission's ruling and look into whether and if the requirements would allow for the privatization to continue. It planned to ask the investors if they are still interested in the airline after the ruling. Olympic Airlines, which flies to 35 domestic destinations, 25 European and 12 intercontinental, posted an EUR87 million (USD$106.3 million) net loss in 2004. Its main competitor in the domestic market, privately held Aegean Airlines, now boasts a market share of more than 50 percent on domestic routes. It recorded a profit of EUR9.4 million (USD$11.5 million) in 2004. Olympic Airlines' only assets are its fleet of 40 planes, 18 of which are company-owned, and its landing slots. The government last month signed a preliminary deal to sell the carrier to Olympic Investors-York Capital, with the agreement subject to the Commission's approval. Press Minister Theodore Roussopoulos had said the government was likely to sell the airline or wind it up while selling off the carrier's assets. --------- You have to wonder at the Greek defiance of Brussels. The country plainly does not need Olympic yet so many voters have been given jobs over there. This is the true cost of a "national" airline owned by a government. Greeks now will begin to see how much the cost is as they continue to get fined. Olympic should simply be shut down. The 18 planes owned by the airline are worth very little. The staff is demoralized beyond repair. One has to wonder, what exactly does Olympic Investors-York Capital see that is worth saving? Even if they get the company, whoever is left working there will go on strike. Who needs this?

Southwest wants even newer 737s

Southwest Airlines CEO Gary Kelly told reporters the airline has "strongly requested" that Boeing develop a future generation model of its 737, incorporating efficiencies the company is building into its 787. Southwest is well-hedged, but oil costs are simply too high for even Southwest to be comfortable at $60 a barrel. ------- This is going to happen - Southwest has over 430 737s now and over 70 on order. What Southwest wants, Boeing will deliver. Based on the success of the 787 we expect to see this new 737 drive Airbus 32X orders down - unless Airbus quickly starts talking up a next generation 32X. Mr. Leahy, your move.

More Fuel Savings in store

Aside from the revisiting the idea of UDF engines, we hear that American is adding winglets (like Continental has done) to 20 757's and 1 738. Now the 757s will likely serve Hawaii and Europe. But 1 738? Is this an experiment? Seems really silly since Southwest has proven beyond any doubt the winglets work. If one were to assume the winglets save 5% and UDF saves up to 20% - then we can see where the future aircraft designs might evolve. The potential for 25% savings is very attractive especially when see how much of an airline's cost structure is now tied up in fuel.

Wright Amendment - Missing Nugget?

We have just heard something REALLY interesting. Apparently DFW officials went to see Gary Kelly at Southwest and offered the following: $22m to start flying from DFW - meaning DFW would buy gates & equipment to support Southwest AND allow them to keep Love Field. How come nobody else out there has come out with this info? So the deal was DFW wanted to mitigate against the loss of Delta. Bringing in Southwest would easily do this. And it would put pressure on American. And it would mean uniformly lower fares across the Metroplex because Love would still operate. How could an airline ignore this offer? Now bear in mind that Southwest is the biggest carrier into New Orleans - New Orleans ops were about 50% of Love ops to give a perspective. You got to wonder what Southwest is doing with all those "spare" ops now. Imagine that - Southwest could keep its monopoly at Love and keep American honest - and they turned it down. If Southwest goes with the 737-900 (as is thought by many in the business), DFW service would be a great place to enable the long haul service they cannot do out of Love without the Wright Amendment being lifted. Either we don't get it or Southwest management is not quite as perfect as we think.

$70/Barrel - time to revisit the Unducted Fan Engine?

In a bid for increased efficiency with speed, a development of the turbofan and turboprop was created that had an unducted fan, known as the propfan engine. The fan blades are situated outside of the duct, so that it appears like a turboprop with turbofan-like blades. The bypass ratio is much grater than on typical turbofans. A logical approach to improving fuel consumption is even higher bypass technology. During the 1980s, GE developed the Unducted Fan UDF® engine which eliminated the need for a gearbox to drive a large fan. The jet exhaust drives two counter-rotating turbines that are directly coupled to the fan blades. These large span fan blades, made of composite materials, have variable pitch to provide the proper blade angle of attack to meet varying aircraft speed and power requirements. Powerplants such as the UDF® engine are capable of reducing specific fuel consumption another 20-30 percent below current subsonic turbofans. In a cooperative General Electric/ NASA program, the UDF was extensively ground tested in 1985-86 and it demonstrated a fuel consumption rate 20 percent better than modern turbofans. Then General Electric teamed with Boeing Commercial Airplane Company to test the UDF in flight aboard a modified Boeing 727 jetliner. Flight tests began in August 1986 and continued into 1987. General Electric also built a second demonstrator engine for 1987 flight tests on a McDonnell Dougias MD-80 twinjet.

jetBlue gets its first E-190

JetBlue Airways yesterday became the first airline to accept delivery of the Embraer 190, as it unveiled its first 100-seat aircraft from the Brazilian manufacturer. JetBlue has firm orders for 101 Embraer 190s with options for 100 more through 2016. The low-fare carrier is scheduled to take delivery of eight Embraer 190s this year, and 18 in 2006. Scheduled service will begin in November to destinations within North America. Specific markets will be announced shortly. The 2005 deployment plan for the newest member of JetBlue's fleet will focus on cities already served by JetBlue's current fleet of Airbus A320 aircraft. "Today is a day JetBlue customers and crewmembers have been looking forward to for years,'' said JetBlue's CEO David Neeleman, in a statement. "As I look at this beautiful new aircraft I see many new opportunities to bring the JetBlue experience to communities all over North America." As with JetBlue's Airbus A320s, the airline's Embraer 190s are outfitted with individual seatback television with 36 free channels and 100 channels of XM satellite radio. ----- Now watch USAirways die a few more deaths from these little airplanes slicing up their route structre - picking the cherries. Even if USAirways tries to fly the same planes on the same routes they cannot compete with jetBlue's efficiency. Not to mention their employee's attitudes. 1200 cities is what this airplane allows jetBlue to add to its network .... think about this as you ponder Delta & Northwest hitting Chapter 11.

AirCell Begins Airborne Demonstrations of Wireless Broadband

LOUISVILLE, CO. – September 14, 2005 – Yesterday morning, an AirCell Falcon business jet departed the Jefferson County Airport in Broomfield, CO, commencing a weeks-long demonstration program that allows potential airline customers and other industry constituents to sample the AirCell Broadband System’s technology in real time. Targeted for commercial deployment in 2007, the AirCell Broadband System will enable airline passengers to use their own laptops, PDA’s and mobile phones in a fully-integrated wireless cabin over a broadband air-to-ground link. It will provide access to a host of popular high-speed cellular and Wi-Fi services including voice, e-mail, Internet, corporate VPNs, and text messaging. “The heart of what makes our system unique is the advanced, direct air-to-ground link – it’s a big, affordable pipe – and we’re pleased to demonstrate it publicly for the first time,” commented Jack W. Blumenstein, AirCell Chairman & CEO. “Our flight demonstrations mark the very first time that people experience the full power of a wireless cabin served by an affordable, high-speed, air-to-ground link.” AirCell’s use of advanced wireless technology makes the AirCell Broadband System compact, lightweight, and a fraction of the cost of satellite-based broadband systems to install and operate. Notably, the system incorporates a 5-ounce, belly-mounted blade antenna – the smallest antenna ever used for broadband in aviation. Technological Firsts AirCell’s flight demonstration program highlights a number of important technological firsts the company has achieved during its development program to date. •The first end-to-end demonstration of wireless broadband using a direct air-to-ground link •The first use of advanced wireless technology for a broadband air-to-ground link •The first support of CDMA, GSM, VoIP and Wi-Fi over a common air-to-ground pipe •The smallest broadband antenna and electronics ever used in aviation These achievements are critical in AirCell’s effort to allow commercial airlines to install and operate the AirCell Broadband System at a fraction of the cost of satellite-based alternatives. Passengers will be able to operate their own mobile phones, laptops and other personal electronic devices in flight at prices very similar to what they pay on the ground. Key Demonstration System Details The flight demonstration program is showcasing an advanced technology prototype of the AirCell Broadband System. Key demonstration system components and features include: •A Broadband Air-to-Ground Link that uses advanced EVDO wireless technology. The link provides a high-speed connection directly from the aircraft to the ground, delivering a “to-the-seat” user experience similar to a DSL link on the ground. •A Cabin Telecommunications Router (CTR) that provides high-speed, in-cabin wireless connectivity for WiFi-equipped laptops (802.11b/g), personal digital assistants, and Voice over Internet Protocol (VoIP) voice communications. •Multiple cabin Picocells supporting CDMA and GSM voice communications AirCell’s Background in Airborne Cellular AirCell remains the only company ever to receive regulatory approval to use cellular frequencies for airborne telecommunications. Having operated its own terrestrial network in the United States for many years, AirCell has more patents and experience applying cellular technology in the airborne environment than any organization in the world. Building on its success, the company is now leveraging this unique experience in developing its next generation of airborne connectivity – bringing affordable broadband voice and data services to airline passengers. Operating over a new, next-generation digital network in North America, the AirCell Broadband System is targeted for initial airline trials beginning in early 2007. Pending the acquisition of a spectrum license from the FCC, the AirCell network will initially cover the continental U.S. and will be expandable to include Canada, Mexico and the Caribbean. ------- This is very important. In the midst of all the bad news in this industry its great to see something positive that impacts passenger experience. Good for AirCell!

Bankruptcy fatigue

Here we are, waiting for the hammer to fall at Delta and Northwest. Delta is no surprise; everyone has been waiting for this for some time. Northwest while not unexpected, is more of a surprise because it seemed with the strike taking place, they had overcome a major cost hurdle. Given the fuel price, all the legacy carriers are in big trouble. American and Continental appear more stable – but who knows? It seems to us that industry observers are basically suffering from bankruptcy fatigue. So are passengers who have their own financial pressures and consequently show limited interest in strikers at Northwest. Delta, once a bastion of polite (and really nice) onboard service has succumbed to the post 9/11 US airline reality – passengers are a burden to be tolerated. Flying in the US simply is no fun anymore – unless you fly jetBlue or Southwest. It is quite amazing to fly an airline that breaks even or is profitable. Their staff is happy, so their passengers are happy. Perhaps American travelers have simply become too weary of the constant airline industry bad news. They simply don’t seem to care about losing those miles – which you can never seem to use anyway. Bankruptcy fatigue has set in and we all hope that some cataclysmic event will happen to shake up the industry to make it better. Unfortunately between now and this future, there are going to be huge layoffs and really unpleasant weeks for both airline employees and passengers.

Some Good Airline/Fuel News

EVA Air seems to be pleased with the 777-300ER even though it entered service only 5 weeks ago. EVA Air's CEO is quoted "We are surprised to see the 777 is 20% more fuel efficient compared to a 747" - Based on the regional flight to HKG and BKK. This helps a lot because Taiwan's Civil Aviation Authority will not approve an increase in the fuel surcharge.

Richard Aboulafia - Sept Newsletter

As usual the guy is hysterical! -------- Dear Fellow Wage Slaves, Dry dog food. I hope it’s tasty. Like a lot of Americans, my retirement plans revolve around cultivating a taste for the stuff. I spent the ‘90s enthusiastically buying dot.com stocks. Having learned nothing about economic bubbles from that experience, I moved into real estate, like a lemming waddling toward a cliff. Years ago, I politely asked my boss, Bill, whether we had any kind of pension arrangements; his demonic laughter followed me as I quickly retreated down the hall to my office. Me and my countrymen ain’t great about saving for the future. Most of the nation’s defined benefit plans resemble undernourished dinosaurs; their obligations killing legacy manufacturers and airlines alike. Mentioning Social Security guarantees groans. US savings rates are impossibly low, comparable to Bolivia and Chad. Then there’s our small Argentina-like national deficit problem. Meanwhile, globalization means job security is a quaint anachronism. Even DMV workers have that nervous look. And there’s a guy in Bangalore waiting to write Teal market analysis reports from boilerplate. With this joyless reality in the background, Boeing’s machinist union is making a stand for pensions and job security. BCA management has predictably reacted as though they were offered jellyfish venom mousse at a China Southern 777 acceptance banquet. They’ll consider almost anything except higher defined-benefit payments. Unlike higher wages, a cost that varies with workforce size, pension payments are the gift that keeps on giving. If the jetliner market shrinks, payments stay high, even if company revenue is halved. Throw in pension fund investment uncertainties (changing returns, volatile interest rates) and you’ve got a recipe for financial disaster. Job security inflicts equal damage, obliterating BCA cost flexibility in hard times. BCA management would be out of their minds to accept this. But they might have a tough time refusing. BCA machinists are the last union with any power in the US. Boeing is healthy, the market is growing, there’s a market share war to be won, and hiring Oompa-Loompas as replacements isn’t an option. For a contrast of union strengths, look at the feeble mechanic’s strike at Northwest. Labor may choose to fight a climactic battle with Boeing, a battle to preserve eroding benefits and security that no other union has the power to fight. Other unions may even support the Boeing folks. The machinists have a few points, other than the sheer power of their position. Boeing management bears some of the blame for past labor relations disasters. From the union view, the turbofan of capitalism is oiled by the blood of machinists. Boeing laid off thousands of workers, which was bound to have consequences for morale. And, BCA might not have done everything it could to work with labor to keep work in-house. The unions are now less willing to negotiate as partners. The unions also point to parallel examples, although these don’t work. Pensions might be higher at one or two other aerospace companies, but these build products for government customers, who are much less cost sensitive than airlines. Lockheed Martin can pass higher pension costs on to the government; higher BCA pensions can’t be passed on to anyone, except the struggling airlines. No US aerospace primes have Boeing’s level of commercial market exposure. BCA needs to keep their costs accordingly low. BCA needs to balance short-term pain with long-term pain. Waiting the strike out means a jetliner delivery stoppage, and the high cost of satisfying customers (or watching them defect to Airbus). Settling the strike now will damage BCA’s long-term cost structure, hurting market share. They’ll probably go for the short-term pain. This means a long strike. After all, the union strike vote wasn’t 66-34. Rather, 86% voted to reject Boeing’s offer. This implies militancy. They won’t just settle when Boeing sweetens the offer with extended nap times and cookie breaks. If the strikers get what they want, they should consider retirement as quickly as possible. Higher pension costs will tip the balance in favor of much more outsourcing. Boeing will likely rid itself of as much manufacturing as possible, whether by direct contracting or divestiture. This strike explains why Boeing spun off Wichita to create Spirit Aerostructures. Ironically, Spirit would benefit from BCA’s increased outsourcing. Is there anyone foolish enough to think Congress will pass laws against outsourcing and offshoring? And if any machinists resent open borders, perhaps they’ll make a principled stand against working on jets for foreign customers? Meanwhile, Europeans are having a good chuckle. It isn’t just the opportunity for Airbus to pursue customers annoyed by Boeing delivery delays. It isn’t just the predictably smug European attitude that American hyper-capitalism is doomed. Rather, Europe has a cost advantage for many industries. If a US firm (manufacturer, airline, etc) competes with a European firm that has pension and health costs taken care of by the government, the European firm has an advantage. Airbus can even use this benefits advantage to pay workers less. Europe has higher taxes as a result of its social largesse, but this burden can be pushed on individuals, not strategically-impor-tant companies. This advantage may be on par with Airbus’s launch aid. And it’s totally ethical. One answer is the US Pension Benefit Guaranty Corp. (PBGC), which is inheriting the unfunded obligations of many US companies, especially airlines and manufacturers. By one account, total US pension underfunding exceeds $300 billion. We’re looking at either a wholesale realignment of US industry away from pensions (and towards jobs like mine), or a PBGC-led adaptation of Euro-socialism. Lucky workers will get residual pensions from the PBGC. For the rest of us, well, I hear one brand makes its own gravy…. As for BCA, they’re in a uniquely vulnerable position. They’re too healthy for a PBGC bailout, yet too hostage to market reality to increase pension commitments. I have no idea how this strike gets resolved. One solution: give the union a lump sum, and let them handle their own pensions with no future uncertainty for BCA (five years hence: “Well, because giving organized labor a large sum of cash seemed like a good idea at the time…”). But again, the smart money now is on a long strike. Until I join them, September’s updated reports include the C-17, Tiger, Rafale, F-2, AH-1, Super Puma, Avanti, and the Military Transports overview. Yours, On Behalf Of Analysts, Timewasters, and Forecasters Union Local 744, Richard

French Ticket Tax - not too popular

This Chirac invented idea seems not to be getting much traction. The Austrians are not keen at all having denounced the plan. Austria described the air tax debate as a "sideshow". The Germans and Spanish are backtracking. Will cooler heads prevail? Europeans surely cannot afford more taxes. They are already overtaxed and not getting great benefits for their taxes. Moreover it is arrogant to impose a tax on air travel to help halve global poverty by 2015. "The aviation industry thinks there is no logical reason why air travelers should be singled out," said a spokesman for Virgin Atlantic Airways. That's for sure! But as Euroland becomes controlled by unchecked gnomes in Brussels, what can you do? Funny how the people who were asked about the Euro constitution rejected it but the gnomes go on as if nothing happened.