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The Painful Merger Lesson

November 11, 2008 By Leave a Comment

A little over 3 1/2 years ago two large airlines, US Airways and America West, merged to create the new US Airways.  Since then planes have been repainted, counters rebranded, and operations merged on the surface.  However, once you start looking further the story changes.

Earlier this year a disgruntled US Airways “East” (original US Air) pilot group voted for and got new representation under the US Air Pilots Association, freeing itself from the Airline Pilot’s Association (ALPA). This move was made after an arbitrator responsible for merging the two pilot group’s seniority lists made a decision that arguably hurt the seniority of many US Airways pilots.  Since this move there have been lawsuits filed and threats made between the two former pilot groups, US Airways and America West.  It is so bad that neither will legitimately recognize the other as being part of the company.

In addition to these struggles, many former America West customer service personnel have had a tough time changing to the US Airways name and brand.  The America West brand, one they worked hard to make successful, is their identity and change is not easy.  Old US Airways customer service personnel are also facing tough times as hubs are closed or reduced and jobs are being lost on the East Coast due to the new West influence.

With all of these problems still showing up 3 1/2 years later, how will Delta manage to get Northwest successfully into the fold?

The first and most important step is that the pilot groups have been talking throughout the entire process, already reaching and voting on a mutually beneficial labor agreement.  Second, Delta has started to adopt many of Northwest’s policies, fees, and culture so that the changeover for Northwest personnel will be less painful.  Flight attendant’s are already gearing up for standardized uniforms even as the two airlines operate independently.

It seems that thankfully the lessons of the still mangled US Airways merger are being learned and adapted.  Hopefully future mergers will take this “people first” approach and realize if the employees aren’t on-board, you may find fewer and fewer passengers on-board.

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United Making Smart Fuel Decision

November 9, 2008 By Leave a Comment

Yesterday, United announced that it may have to ground up to 100 airplanes in response to growing fuel prices. Today, the airline took an even better step by adding fuel surcharges to most domestic tickets sold. Passing the cost to the consumer is the only way that airlines will be able to keep up with fuel costs and remain profitable in the future.

The average large airliner uses 500-1,500 gallons of fuel every hour that it is in the air. Until now, airlines have been able to absorb the increased fuel costs by changing they way they fly to save fuel. Now with $3.00 per gallon fuel prices, it is impossible to offset growing costs. Instead, all airlines need to take United’s lead and start passing rising costs on to consumers.

When the price of fuel goes up, the price to ship a package via UPS, FedEX, or the US Postal Service goes up. Milk prices have risen along with countless other items that are shipped to stores. All of these price increases are the result of companies passing on their increased costs to consumers. Airlines should be no different.

The average US flier has enjoyed the same air fares for roughly the last 30 years. Fares have not gone up with inflation or changed due to increasing or weakening demand. A ticket that cost $100 in the late 1970′s probably costs right about $100 today give or take a few dollars. Airlines have been unwilling to increase fares due the rise of internet bookings where passengers are automatically shown the lowest price flights first and are much more willing to buy the first fare they see. Prices have also stagnated because of reduced demand following 2001. As a way to lure more passengers to air travel, airlines kept fares low. Now airlines are afraid to unilaterally raise fares and risk losing business to other air carriers.

It is time for prices to go up and for the cost of airline tickets to accurately reflect what it costs to fly and airplane across the country. Other airlines need to take note and start passing their real costs of business on to the consumer. Only then will the industry complete its turnaround and the airline will once again be profitable.

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TSA Family Lanes, Finally

November 8, 2008 By Leave a Comment

The one problem plaguing US security checkpoints is that one-size does not fit all travelers.  The differing level of experience amongst travelers often causes backups and frustration at most checkpoints.  Finally, the TSA may have come up with a solution.

Family Lanes are designed to allow travelers who are unfamiliar with security procedures, traveling with small children, or otherwise need assistance to move through without being rushed by screeners.  Anyone who will potentially cause a backup at a normal security lane will be brought over to a Family Lane so that they can get the attention they deserve.

While this is a necessary first step, the second issue the TSA needs to resolve is the disparity in security screening methods at airports across the country.  With a standardized security plan, travelers will not be caught off guard so often and will be able to more easily move through any airport’s security checkpoint.

It’s a good move, but we hope to see more out of the TSA to help streamline their security process and remove needless hassles.

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FAA Needs to Stop Whining and Start Acting

November 9, 2007 By Leave a Comment

For the second time in just a few months, a major air traffic control facility has lost all air-ground and ground-ground communications. This morning, an unidentified outage occurred at the Jacksonville Center facility in Jacksonville, Florida. Jacksonville Center handles the major traffic routes between Florida and further North up the east coast. It is the 7th busiest air traffic control center facility in the country.

Not long ago the Memphis Air Traffic Control Center lost all of its communications as well, blocking a major portion of US airspace and causing the delay and diversion of hundreds of flights bound for its airspace. This outage was caused by the cutting of a telephone line to the center facility.

These two outages are the face of a much larger problem that the FAA has chosen to ignore and not fix for the last few decades. The air traffic control system in this country is outdated, unreliable, and subject to complete failure from even the smallest of problems. Complete outages are rare, but it’s the every day problems that put lives at risk.

Almost daily, radio transmitters fail, lines go down, and failures occur. Often radio transmitters become so hard to understand that pilots have to report them to controllers to be fixed. In addition, pilots may radio air traffic control several times before they are heard. Air traffic control instructions are also frequently not heard due to weak transmissions and static.

To compliment the problem, air traffic control staffing is becoming an issue and more controllers are working longer hours. Fatigue is simply intolerable in a profession where thousands of lives can be at risk. Controllers may forget to give clearances or not notice discrepancies due to fatigue. In addition, one air traffic controller may only control a small number of aircraft at a time. This means that if staffing continues to be reduced, flight delays will escalate since fewer aircraft can be in the sky at any given time.

The solution that the FAA has been unwilling to accept is the addition of funding for hiring controllers and upgrading systems. Instead it has been pouring money into a “free flight” program by which aircraft would monitor each other for conflicts and the system would be operated off of satellites. There are some places where more automation is good, air traffic control is not one of them. Every day pilots and controllers make mistakes. It is the vigilance of both parties that has allowed the United States to have the safest air traffic control system in the country.

By removing the human link of observing flights across the country, the FAA risks significant safety deviations due to automation failure and human error on the flight deck. Computers fail, plain and simple. There is not a computer in the world that will not fail at some point because of an error the designer could not plan for. If the air traffic control system in turned into an airplane autonomous system, the possibility of failure is increased because of the increase in computer reliance. Also, the number of eyes watching the sky will be reduced, therefore lowering the possibility of conflict being resolved in time.

The FAA needs to take its funding and upgrade radar sites, radio sites, and controller equipment in air traffic control facilities. By sticking with what works, the FAA will continue to be able boast the safest skies in the world.

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Southwest Eyes International Market

October 2, 2007 By Leave a Comment

Following the trend of almost every other major US airline, Southwest has started to look into offering service to international destinations. Long a holdout on international routes, domestic price pressures and lackluster earnings on new domestic routes could be the driving factor in looking abroad. In addition, the US market has become nearly saturated.

Delta, Northwest, United, US Airways, and American Airlines have all gone international in their efforts to turn business around and turn a profit. International routes can command higher ticket prices, and there is usually less competition on routes. Airlines are also less likely to get into ticket pricing wars on international routes since carriers generally have a lot to lose from just a little bit of business.

Southwest has long been a holdout on the international scene, focusing instead on opening up more US point-to-point destinations that it has become known for. This strategy has served the airline well for the last 30 years, however declining revenues on its newest routes and expired fuel hedges are starting to take a toll on the airline. Over the last year it has repeatedly lowered earnings expectations and even bought employees into early retirement to trim its work force.

Southwest has been code-sharing with partner ATA for flights to Hawaii which both helped ATA out of a precarious Chapter 11 situation and gave Southwest more gate space at its Chicago-Midway “hub”. It seems like a natural progression for ATA to start code-sharing European flights with Southwest and possibly use some of its larger wide-body airplanes for flights to Asia. This agreement has proved fruitful for both carriers in the past and there is no reason to believe it could not continue.

In addition to mentions of code-sharing, Southwest mentioned that it is considering using its own planes to fly to international destinations after 2010. This would probably be limited to Canada, Mexico, and South America unless Southwest decides to expand its fleet to larger aircraft. This seems unlikely since the airline is able to keep operating costs low with common maintenance and flight crew training for its entire fleet of aircraft.

This development will not cause much upheaval in the long-haul market, but may be significant for carriers such as Frontier, AirTran, and Spirit who are direct competitors with Southwest and offer flights to other countries. Southwest has been slowly moving towards international flying by upgrading its airplane’s navigational capabilities which is probably the only reason to delay international flying until 2010.

Southwest execs see ‘significant opportunity’ in international routes (USA Today)

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