MIAMI — Following up on yesterday’s LCC News Update, today we bring the best and brightest news from around the world in the legacy carrier markets. Take it away, Vinay:
Delta reported August traffic, main news here is that PRASM was up 4.0% YOY – good news after PRASM growth was really soft for Delta (and the industry) in Q2.
The Delta – Memphis de-hubbing went down as planned – sad day for fans of aviation history, in particular Republic Airlines and Northwest. I guess we’ll just have to remember the glory days of a sea of bowling shoe narrow-bodies competing for space on the tarmac alongside the FedEx heavies.
Delta adding flatbeds on Buenos Aires – Atlanta: not sure who in Argentina is paying for flatbeds but more power to Delta.
Delta is joining the S&P 500. Congrats and well deserved on the part of Delta. They’ve worked hard to get themselves up to investment grade status, and this is affirmation of those efforts.
Delta sues Pratt & Whitney over parts – the Delta-Pratt relationship isn’t the strongest – partly why they went GE on the new A330s.
Delta upgrades food at JFK Terminal 2, mirroring improvements at Terminal 4. In case you missed it, big week for Delta news.
The Street has an interesting article on United and how recently-announced Chengdu might just be the start for United expanding into secondary China with the 787. I’m not 100 percent sure about that – Chengdu has outsized business ties to San Fran because of its role as the electronics manufacturing hub of China. Outside of the Guangdong province (Guangzhou/Shenzhen), I don’t know anywhere else that has the high yield demand to sustain a long haul to San Francisco. Maybe Chongqing, Hangzhou, or Xian? But those aren’t exactly high yielding, and are SkyTeam hubs to boot. *Maybe* you could make a 3 weekly Dalian-Shenyang routing work on manufacturing links, but even that’s sketchy. Moreover, keep in mind that if China’s international market gets deregulated as the rumblings are, you’re also going to see a flood of Chinese carriers jumping onto these routes as well.
United launched an integrated seniority list finally merging pre-merger United (PMUA) and pre-merger Continental (PMCO) pilots (no pun intended) into one employee group after a joint contract was agreed upon in December. Nothing major to report here, except that the 787 has a fence around it for PMCO pilots and the 747/A350 for PMUA pilots till the delivery of the 25th 787 to United (which I think happens before any A350s are delivered so…). Anyway, it certainly took them long enough; three years to be exact. Delta-Northwest had it right negotiating this before hand. But of course it pales in comparison to US Airways – America West, which is going on nine years now, and at least would have resolved post merger with American which now might not happen. And of course Southwest and Air Tran seem like they’re trying to set a record for the slowest merger in human history. The sticking point here is Southwest’s reservations system. I can just see in my head one of those old mainframe computers from the 1960s in Southwest’s res centers. Tell me I’m wrong.
Michigan is joining the DOJ lawsuit against the American-US Airways merger. Why? Politics. Michigan didn’t do too badly in past mergers, retaining its hub in Detroit and even getting an expanded Asian gateway and new service to Sao Paulo. But Michigan is in a state of political flux right now, with Detroit’s bankruptcy (folks the Metro area is just fine) casting a shadow over things, and the Attorney General sees a chance to raise his political profile, while not actually doing much to piss off the real important airline constituent in the state (Delta).
American adding 10th daily JFK-LAX from Feburary 2014 – expected – frequency will likely rise into the low teens. But they need to beef up frequency on JFK-SFO to stay competitive. I’m not asking for 15x daily like United on Newark – San Francisco when it went into Kill Virgin America mode. But definitely more than 4x daily.
American up-gauging Los Angeles – Maui to 767-300ER on 12 out of 14 weekly flights – more LAX growth.
US Airways reported record traffic growth for August, and PRASM was up 5.0%. Doesn’t help the case that they need a merger, at least not in the rose-colored eyes of whichever lawyer at the DOJ decides to crown him or herself as the airline expert of the day.
Hawaiian reported August traffic – I’d be interested to see PRASM figures for them – they were struggling a bit on that front in Q2 after the massive expansion internationally.
Air Canada also transferred E175s from mainline to a regional partner Sky Regional, probably the right move – labor contracts make the smaller E-Jets un-viable at mainline Western carriers.
Etihad and Korean Air expand code share to Hawaii — See Delta? Korean doesn’t bite.
It would not be the year 2013 without more growth from the MEB3.
Etihad went double daily to Kathmandu. That sound you hear – it’s the sound of Indian subcontinent full service airlines dying a long and painful death.
Emirates launched Stockholm and resumed Tripoli.
Finnair has the first A321 with sharklets.
Lots of routes news from British Airways this week:
- Increased Accra to 10x weekly from daily, cancelling 3x weekly Lusaka services instead.
- Many changes to the long haul network for Summer 2014:
Added Heathrow – Austin with 787s – initially 5x weekly in March 2014, jumping up to daily in May. To all the people questioning this route – pound for pound, Austin has the most high yield long haul business travelers of any city its size in the US – tech traffic. There are cities with more volumetric demand to Heathrow without service, but not many with better yields. Keep in mind too that the JV with American comes into play here; American dominates corporate travel in the Austin area.
CSA says farewell to Stuggart.
An Austrian court has ruled the whole Austrian – Tyrolean switcheroo to be illegal. This doesn’t bode well for Iberia Express. That being said you can’t blame them for trying. Labor costs are slowly strangling full service European carriers to death.
Turkish Airlines adding an arrivals lounge at Istanbul. Good move. The Business Class lounge there is supposedly spectacular.
Lufthansa is hiring new flight attendants – 500 to be exact – they’ve been shrinking capacity recently, so unless they’re expecting a spate of retirements….
Positive PRASM growth at Air France – KLM and decent traffic in August. Baby steps at an airline with weakening home markets and a long road back to profitability ahead of it.
Bad news on that front: Air France unions ask French government for protectionism. A lot of rumblings in recent months about losses mostly being driven by Air France in the group, even going so far as to claim that the KLM half of the business is profitable. I don’t know about that, but KLM certainly has more realistic unions.
Aer Lingus had solid long haul traffic in August even as short haul stagnated. They’re making a bit bet on long haul with the 3 new 757s earmarked for Shannon and the addition of Toronto and San Francisco.
Swiss is launching:
Geneva – Copenhagen/Lisbon/Rome, and Zurich – Menorca from April 2014.
Geneva has really solidified for Swiss into a strong secondary hub. I wonder if it could support more long haul service – maybe Tokyo on an ANA 787? It certainly has the high yield traffic in the finance industry to maybe make that work, though volume is always the struggle with Geneva.
Alitalia’s in a cash crisis – needs 300 million Euros to keep running. Is anyone really surprised? I mean Alitalia’s got a long haul route network with a hub that has zero profitable traffic; the city that should have a hub can’t because it’s got two airports splitting the traffic and it can’t concentrate high yield short haul feed at one. And I mean, it’s Alitalia – the airline that recently put out a turnaround plan involving long haul expansion from Venice.
Air China cancels Gatwick. To all those people trying to claim that Gatwick is a viable alternative to Heathrow in the London area, answer me this. How many long haul routes does Gatwick have today excluding the leisure stuff to the Caribbean and charters? After this – 4; Orlando, Las Vegas, Tampa, and Hanoi/Ho Chi Minh City (Vietnam Airlines). Heathrow has over 100. Case closed… Build the dam* third runway already.
Biman Bangladesh is recovering. Everybody but Air India I guess.
Vietnam Airlines resumes Hue – there was runway work happening previously.
Hainan launched Beijing-Chicago nonstop on the A340-600 2x weekly. They plan to jump to 4x weekly 787 by December.
Good week for Shanghai with A380s – first Air France launched 3x weekly (out of 14x total) A380s on Paris – Shanghai, and then Singapore Airlines announced 5x weekly A380s on Singapore – Shanghai from late October. Lufthansa’s bringing its A380s later this month.
Hainan launched Beijing-Chicago nonstop on the A340-600 2x weekly. They plan to jump to 4x weekly 787 by December.
Is this a Philippines Airlines A321 with sharklets?
Mostly tech news from India’s airlines, though both hiked fares 25% in response to the falling Rupee.
Jet Airways launched an Android app.
Air India launched a new website. Major cosmetic improvement over the old one. Almost looks like a new carrier. Then of course you see the A380 (which Air India doesn’t operate) on the about page, read about the “Hot Chocolates Capacity of 173 Passengers” offered in Air India’s Mumbai lounge or the “Deserts With A Capacity Of 200 Passengers” in the Newark lounge – and you see the old Air India flash right back before your eyes again.
Kingfisher, refusing to die, is suing IAE for $234 million claiming that the V2500 engines on its A319/A320/A321 fleet were defective. Right…. The V2500 is only the third most successful commercial jet engine program in aviation history, with more than 5,700 engines delivered and a further 1,600 engines on order with dozens of airlines around the globe. Remind me again how someone let Vijay Mallya within a mile of an airline boardroom again?
LAN Colombia joining oneworld from November 1st.
COPA Airlines grew some more – they’re fast becoming the Emirates of the Americas.
LAN ended Lima-San Francisco in favor of going doubl daily on Lima-Los Angeles. Makes sense: California-South America is low yielding, and at least Los Angeles is a oneworld hub with good connectivity to Asia.
Avianca is adding daily Bogota – Leticia (LET) – Bogota flights — its first service to an airport in the Colombian Amazon in nearly a decade.
TAP Portugal is close to launching Manaus and Belem. They’ve nearly rounded up the set of large Brazilian cities, and far and away dominate the Brazil-Europe market (much as Iberia does for most of the rest of Latin America). Still, their finances are iffy, and wait to see whether they get sold to IAG or Lufthansa Group (the two likely bidders for strategic Brazil reasons) before making a judgment.
Here‘s Aerolineas Argentina’s first new A330-200. Looks mighty fine. Of course it’ll probably take a new Argentinian government before that plane is ever full.
Virgin Australia is considering 787s and A350s, replacement for the existing fleet of 777-300ERs and A330-200s. The 787 probably has a slight edge here, if only because the 787-9 is a solid replacement for both the A330-200, and the 777-300ER (first from capacity, second from range), and they could move to a single subfleet – increasing efficiency and opening up growth.
Air New Zealand shakes up regional services:
Upgauged to a Q300 on Auckland – Raratonga, cancelled Auckland-Masterton and Wellington-Wanganui — I love New Zealand city names by the way Wanganui is awesome.
More importantly than my silly affinity for New Zealand nomenclature is the fact that Australian authorities approved Air New Zealand’s bid to increase its stake in Virgin Australia by 6% to 26%.
I don’t really get this move – Virgin Australia isn’t really profitable and is up against a re-vitalized Qantas on the domestic side. Air New Zealand would be blocked before it could ever take over Virgin Australia, and I don’t know if the strategic benefits of trans-Tasman feed and having a stronger thorn in Qantas’ side are worth the cost.
Qantas wants to code share with Jet Airways through Singapore. Not a bad move, Jet recently added a second daily flight between Mumbai and Singapore and India-Australia links are growing.
Virgin Australia took delivery of its 100th 737 and did something nice for the children along the way.