MIAMI — It’s the season of giving thanks, but there’s a few bird brain ideas going around in the industry that our team and notable industry experts and analysts couldn’t resist calling “fowl” on. And now, ladies and gentlemen, we are presenting the first annual AirwaysNews – The Flying Turkeys Awards… which of course is apt, as turkey’s aren’t necessarily known for their deft flying abilities.
N° 1 Stuffin’ your Airbus A380 cabin with 11-abreast seating layout concept.
With a mock cabin on display at the Aircraft Interiors Expo in Hamburg, Germany, images of a rather uncomfortable passenger in the window seat quickly went viral. Many major news outlets and even TV morning shows covered the story with the same picture, with near universal reactions of disgust. Some in the industry even accused photos from the mock cabin as being doctored because they were just so unbelievable. Now, seven months later, no airline customer has expressed interest in the 11-abreast A380 layout, and the future does not look bright for the idea out of Toulouse.
N° 2 The Terrible Stuffin’ and the Dressing of Emirates Airline’s
Ten-abreast 77W economy seats, angle-flat business product, and the aging suite product across the fleet need a real update. The shiny wood veneer is also more dated than Aunt Agatha’s marshmallow pie, and far less appealing.
N° 3 The Inconsistent Turkey belongs to United and its Wi-Fi and IFE.
While there is an attempt to address this, the fleet stills operating two different WiFi systems, one of them not compatible with aircraft that have live DirectTV on-board; both seem to have different pricing schemes, and both could be on two different ends when it comes to reliability.
N° 4 Book this Turkey and the Software Glitches of Frontier Airlines and its online glitch from last May. The transition to Navitaire’s new reservation system sent traveler to airports hours too early, and when called for assitance were forced to spend hours on the line waiting for a solution to their own flight limbos. Also, United Airlines system outage also deserves a special mention.
N° 5 Sit tight next to Zodiac Aerospace’s Seat Crisis, a classic example of a company that took its eyes of what matters — controlling its supply-chain and paying attention to the fundamentals of its business. There’s a business school case study in this, in terms of poor management and clearly lax manufacturing Quality Assurance processes. It’s truly a shame, because Zodiac has a good product that has met with positive passenger acceptance. American Airlines replacing its well received Zodiac J Class seat for its 777-200 retrofit and future 787s with another vendor is a further example of customers losing their patience.
N° 6 Virgin America’s DAL move was short-sighted.
Virgin America has lacked a clear strategy in serving Dallas Love Field (DAL). Its marketing is aimless, its presence in the city nearly invisible, and its overall value almost nil. Had it remained at DFW, Virgin America would have had far more flexibility to build up its presence in the Metroplex and be a far stronger competitor. DAL is definitely a far more convenient airport to Dallas, but Virgin America is severely limited by having access to only two gates and a limited fleet. Virgin America hasn’t been able to offer enough flights to any one destination to truly “own” that city-pair — problematic against the extensive schedules and networks offered by Southwest at DAL and America at DFW. Virgin America’s decision to serve AUS with no more than five flights is a head-scratcher against Southwest’s shuttle-like schedule. Compounding this are Virgin America’s costs, which aren’t low enough to allow it to be the true price leader (Spirit takes that title). So what should Virgin do? Sell its gates to American or Delta. Either airline would do a better job competing at DAL than Virgin, and as a result the community would arguably be better served. Virgin America should return to DFW. If it wants a significant presence in Texas, it should build up its presence at AUS, which lacks a true airline “hub,” and where Virgin America can compete for and win with the city’s high-tech base of travelers.
N° 7 In for a Dime, in for a Dollar and the Metered Wi-Fi Airline service which have become a terrible passenger experience and damages an airline’s brand. Look, airlines, if you picked a wi-fi solution that’s so cost-ineffective you need to charge through the nose, it’s time to switch providers.
N° 8 Bombardier is not a Thanksgiving Basket but a Financial Basket Case.
The financial condition of the airframer impacted negatively on the CSeries. The lack of sales flexibility of the manufacturer and the general regional market conditions have tanked Series sales despite it by all accounts being an excellent, future forward aircraft. Plus other extrinsic factors such as Porter’s inability to win jets at Toronto City Airport haven’t helped.
N° 9 Forget Turkey, Wall Street Will Eventually Eat Crow When It Comes To Spirit.
In defense of Spirit, the analysts and investors who have sent Spirit’s stock price down 50% in 2015 are missing the hunt as it were. With jet fuel hovering around $40 a barrel and a relatively benign economic environment, Spirit’s success has “poked the sleeping bears”. In the short term, this has actually been a negative for the contrarian ULCC. Their newly emboldened legacy competitors are more aggressively matching fares, unbundling their product, and adding capacity then they would otherwise – a decision that could come back to haunt them later. The sunset agreement of the Wright Agreement has empowered Southwest to grow DAL substantially even at the expense of RASM. And American has responded as well to Spirit’s DFW and ORD increasing market share with lower fares putting pressure on NK’s yields. Spirit’s business model is not in doubt, though one could argue increasing its capacity growth of 30% – above its 15 to 20% target has not done them any favors. Still, despite RASM declining over 15% in 2015, SAVE’s pre-tax margins are hovering around 22%. Even though their competitors are catching up in operations margins, Spirit is much better positioned to whether future oil shocks and economic storms – maintaining and even grow these margins as their competitors face their own revenue and cost pressures. SAVE needs to take a long, hard look at making sure its operations can catch up to its growth and perhaps needs to curb its growth enthusiasm. But to make a long story short – stay long on Spirit.
N° 10 The Haters Are Gonna Hate.
Hating airlines is so 2005. Never before has the industry been safer, more economically sustainable, more convenient, more reliable, and ecologically friendly. Sure, fares in some markets have increased. Some cities have lost service – secondary hubs and small markets. And Y Class pitch is as tight as ever. But the airlines and their investors aren’t just pocketing the profits. They are making upgrades in connectivity, technology, distribution, investing in modern fleets, improving the experience particularly upfront for those willing to pay for it, and this carries over to the ground experiences. The media, government officials, and in fact customers often vilify the airline industry as robber barons raking in obscene profits. The industry is burdened with excess taxes approaching the sin taxes of tobacco and alcohol. The DOJ continues to short-sightedly, capriciously slam lawsuits against airlines trying to align their networks. Even the most minor blip or event become’s the news cycle’s cause celebre’ of the day .The fact is this nearly 100 year old industry has defined boom and bust… with much more vicious, pronounced busts then booms. In good times, operating margins historically averaged low single digit margins. In bad times such as 2001-05 and 2009-12, the U.S. industry lost more money as a whole then it had made in its entire history. Not to mention, the loss of jobs and service that accompanied that. For now with obscenely low fuel prices, yet escalating labor costs, the average operating margins are in the teens and low 20s. The S&P 500 averages 14% margins as of 3rd quarter 2015. The profit margin party clearly won’t last, but it’s wrong to deny the airline industry the ability to sustain itself, reinvest in itself, and just as important bring stability to its employees and its customers.
N° 11 A good Thanksgiving movie would be Les Misérables, or the Striking Workers at Air France reflecting how the European airline industry has undergone a series of structural changes that shifted the balance of power from legacies to LCCs and Middle Eastern carriers. But employees at Europe’s full-service airlines are partying like it’s 1985, and passengers are caught in the fray. Lufthansa sour labor conditions also have a dedicated movie… U-571!
N° 12 The Russian Boeing Ban U-turn by Interstate Aviation Committee and the Federal Air Transport Agency disputing over a purported 737 certification suspension. All the noise fizzled in a matter of days, and the 737s, (except those of Transaero) continue to fly in Russia.
N° 13 In memoriam of Transaero, we have a Special Dos vedanya tribute
In the first half of 2015, the Russian airline announced a rebranding and the impending arrival of new Boeing 747-8s and Airbus A380s for its long-haul routes. However, by September, the airline had over $4 billion USD in debt and separate negotiations for stakes by rivals Aeroflot and S7 went nowhere. Russia’s geopolitical misadventures over the last couple of years contributed to a devaluation of the Ruble. Transaero surely was a casualty, and its last flight took place on October 25.