I know that every reader of the blog is fully aware that Kingfisher Airlines is having serious financial problems. It is nearly a weekly headline. Back in early January, I took the bold step of making what was a very controversial prediction at the time. I said,

Kingfisher Airlines will not exist in July 2012.

Liquor Baron (Read: Drunkard) Vijay Mallya, the Guy Behind Kingfisher

At the time, some people thought my prediction was crazy. People argued that Vijay Mallya will save the airline somehow, that it will get a bailout, that it will join oneworld and everything will be alright, that that British Airways will invest once FDI gets passed.

Well, none of those things happened. Vijay Mallya hasn’t done anything. The government has  (thankfully) decided not to bail the airline out. Its oneworld alliance membership was suspended, and British Airways has shown no inclination whatsoever to help the airline. Not that it matters – the FDI proposal is sitting in some desk gathering dust anyway.

In the meantime, more planes have been grounded and repossessed, staff still haven’t been paid, many staff have decided to leave the airline, the airline has closed more routes, and the income tax department has frozen their bank accounts due to non-payment of taxes.

So, now I’m here thinking that maybe I was too generous. I wouldn’t be surprised if Kingfisher isn’t around in March, forget July.

Anyway, let me bring you guys up to date.

Last week, Kingfisher announced that it had made a 435 crore (almost $100,000) operating loss for last quarter. Not a surprise – their loads factors have been dismal, their yields at all time lows, and their schedule took a major haircut. They’ve also been cancelling a lot of flights. With all these problems, there is no way in hell that they could have made any money. So this announcement is not a surprise in any way. Regardless, it hasn’t exactly been the kind of announcement which inspires confidence in investors or the banks.

Over the weekend, Kingfisher closed operations at Kolkota, the third largest metro area in India. Flights were zeroed out on GDS, and cancelled at the airport. Reportedly, Kingfisher declined to give refunds, instead instructing people to dispute the charges on their credit cards. Those who paid through cash? They’re SOL.

In addition to Kolkota, it appears that Kingfisher is winding down Lucknow, Bhubaneswar, Patna, Srinagar, Pune, and Hyderabad. These are major cities. Kingfisher shutting them down is not good at all.

More Kingfisher aircraft have been repossessed and grounded. It appears that their operating fleet is down to 20 Airbuses and 8 ATRs. That’s out of what was a fleet of 64 aircraft just a few months ago…

More Kingfisher employees have walked off their jobs. While Kingfisher maintains that they have enough crew to fly their current schedule, the massive number of cancellations indicates otherwise. I suppose those cancellations could be for reasons other than crew shortage, but either way, it’s not good.

Finally, the biggest problem for Kingfisher: the income tax department has frozen their bank accounts because they haven’t paid their taxes. Unlike other airlines, they are forced to pay for fuel upfront because the fuel suppliers don’t trust them. They are also forced to pay landing fees up front at some airports. Not having access to their bank accounts means that they can’t operate their schedule. As you can imagine, this has wreaked havoc at airports around the country.

Today, some executives have been called to the office of India’s aviation regulator, the DGCA to explain what is going on with the carrier.

Hopefully, they will be arrested there and sent to jail where they belong. Tax evasion, not paying employees, looting the government’s loan money is all criminal conduct. Sadly, that is unlikely to happen. However, I suppose it is more likely that Kingfisher surviving much longer…

Oh, and there is a bright side to this mess as well: Air India’s revenue is up over 30%, their load factors are up 5%, and their yields have increased by almost 20%. While the government will likely never get their loan money back from Kingfisher, at least they might get it back in the form of Air India. Even with this, we taxpayers are still going to get ourselves stuck with a nice large bill.

Here’s a shocker: Hawaiian Airlines didn’t have the best on time record in December 2011. With the Hawaiian climate, Hawaiian always seems to have the best on-time record in the country.

For December, AirTran edged Hawaiian out with an on-time record a little less than 1% better.

Here is the full list, released by the DOT yesterday:

PEOPLExpress 737-100 in original livery; Source: Wikimedia

Back in 1981, an airline named PEOPLExpress began operations. It was one of the first LCCs in the USA after deregulation. It pioneered bag fees, and charged a plethora of other fees. Food was buy-on-board, even for transatlantic crossings. While the fees, tight seat pitch, and poor customer service earned it names such as “People Distress,” the carrier grew attracted many people with its cheap fares, and it grew extremely quickly. From it’s hub in Newark, the airline was one of the most successful carriers in the 1980s. However, the company went on a purchasing spree, buying numerous regional airlines. The pressure of integrating the airlines, along with improved revenue management systems pioneered by American Airlines, put the airline into serious financial trouble. The airline was merged with Continental in 1987, and the brand disappeared. But now the brand is back.

Some businessmen have decided to relaunch the carrier from Newport News, Virginia, with a fleet of high-density, all economy class 737-400s. They’ve put out a press release detailing their future plans. They plan to launch service to Newark, West Palm Beach, and Providence. They also plan to operate a focus city in Pittsburgh.

New PEOPLExpress Livery

In a major turnaround from the original PEOPLExpress, the new carrier will not charge bag fees. Apparently they agree with Southwest Airlines that charging bag fees is not a good idea. They also plan to have complimentary seat assignments. Their route network will be point to point, connecting important markets with their focus cities.

While they may not be copying all the original fees, some things will be common with the original PEOPLExpress. Firstly, the seat pitch will presumably be ~28-29 inches, less than the pitch on regional jets. I say presumably because I can’t think of another way that they will manage to fit in 158 seats into a 737-400, other than perhaps making rows 7 across.

Personally, I’m not too optimistic about the chances for this airline. Everything from the choice of aircraft and base to their product differentiation argument doesn’t add up. The 737-400 is one of, if not the biggest fuel guzzlers in the 737 aircraft series. Even if they are getting the aircraft extremely cheaply, with sky high fuel costs, it will be difficult for them to keep costs, and therefore fares low. The choice of focus cities is also questionable. Pittsburgh is a city where US Airways has a lot of brand loyalty. It also has extremely high costs – that’s why US Airways scaled down their operations at Pittsburgh. With high fees, it will be difficult for the airline to keep fares low. Newport News, on the other hand, is also a head-scratcher.  There isn’t a lot of demand for air service in the area, so I’m not sure where the airline plans to get passengers from.

The airline is expected to be pretty small for the next few years. They don’t expect to have more than 50 departures daily for the next few years. However, it is always exciting for a new airline to be founded. Aviation enthusiasts everywhere must be ecstatic about the news. Now, if they would only start working on those FAA approvals, maybe they might actually get flying sometime soon!

Source: Lion Air

Lion Air, an Indonesian airline, has firmed an order for 230 737 aircraft, worth $22.4 billion at list prices, along with 150 options. The order, which was first announced last November, is the largest commercial aircraft order for Boeing in history, both for order value and the number of airplanes.

Breaking down the order Lion Air has ordered 201 737 MAXs. The MAX is Boeing’s new re-engined variant of the Boeing 737NG that is currently in development. It is Boeing’s answer to the Airbus A320neo. This large order of 737MAXs makes Lion Air the launch customer for the Boeing 737 MAX-9.

It is highly unlikely that Lion Air will operate all the aircraft at the same time. Considering that their current fleet is only of 66 aircraft, adding another 230 aircraft would be an unsustainable amount of expansion. Since Lion Air is an LCC, it is more likely to use the later orders to replace the earlier orders, keeping average fleet age low. This will mean lower operating and maintenance costs for the low-cost carrier.

After weeks and weeks of bad news for Kingfisher, some good news has finally arrived. The IATA announced today that Kingfisher Airlines has been reinstated into its clearing house. This news comes a little over a week after Kingfisher’s membership was suspended.

Kingfisher’s financial woes have been well documented on the blog, so I won’t go into detail about it.. However, this temporary suspension has had serious consequences for Kingfisher. Its entry to oneworld was put on hold because of this suspension – being a member in good standing of the IATA Clearing House is a contractually required prerequisite to alliance membership. Even after being reinstated, Kingfisher’s entry will be pushed back for months, if it happens at all.

Kingfisher also had trouble with bilateral interline agreements due to the IATA Clearing House issue. Cathay Pacific, Korean Air, and Dragonair all terminated their bilateral interline agreements, leaving passengers stranded and leaving Kingfisher in a bad position. Kingfisher got a lot of bad press for these issues in the Indian media as well. Cathay Pacific’s termination in particular is a massive blow to Kingfisher since Cathay will be a major alliance partner of Kingfisher once (if) they join oneworld.

Hopefully this good news is a sign of Kingfisher turning around and becoming profitable. I don’t have my hopes up though…

JetBlue may be a New York City airline, but it also has a major hub at Boston Logan International Airport. In an attempt to strengthen branding in New England, JetBlue is the official airline partner of the Boston Red Sox.

JetBlue Red Sox Livery; Source: JetBlue

Today, they unveiled a special livery on N605JB, an A320 aircraft. The new livery is designed to “have their (the Red Sox’) colors soaring the skies and runways,” according to airline officials. The plane is the first in the country to have a Major League Baseball livery. Many other aircraft have been painted with liveries celebrating teams from other sports however.

The aircraft was painted in New Mexico, and was ferried to Boston Logan overnight so that the livery could be kept secret. The plane will go to Fort Meyers, Florida, for its first flight later today.

JetBlue has been very supportive of the Red Sox since becoming the team’s official airline in 2008. In addition to this livery, they will be opening a new spring training facility, JetBlue Park, later this month.

Vinay Bhaskara over at the Aspire Aviation blog put out a post today suggesting that Southwest Airlines is likely to introduce bag fees on its flights. It’s a long post, so here is the quoted section that is of importance:

Thus, checked baggage fees, while controversial, would allow Southwest to most effectively increase net revenues. In fact, baggage fee revenues are typically around 95% profit, and are untaxed by the federal government in the United States.

In the short term, Southwest has committed to not charging baggage fees, even launching a widespread “Bags Fly Free” advertising campaign centered on the theme. However, Aspire Aviation believes that over the longer term, the upside of huge potential revenues is simply too large to ignore. Charging a checked baggage fee would not be without consequences for Southwest, after the carrier has repeatedly stated that it has seen upticks in market share and position since the rest of the industry with the exception of JetBlue Airways added such fees. It would adversely affect Southwest’s excellent customer service reputation and would likely result in some leakage of travelers to other carriers. Furthermore, over the next 3-4 years, passengers are likely to become more de-sensitised to checked baggage fees as they will be forced to pay them when flying other carriers.

But in the same vein, the additional revenue gained would be very lucrative. Utilizing a “back-of-the-envelope” calculation method, Aspire Aviation has roughly estimated the revenues Southwest would have received in 2011 from baggage fees. In 2011, Southwest carried roughly 104 million revenue passengers. Assuming 5% leakage to other carriers because of the fee, and using the figures for flow versus origin and destination (O&D) passengers given to Aspire Aviation by Southwest Airlines, and assuming that around 70% of passengers check baggage at US$25 a bag, Southwest would have received roughly US$1.47 billion dollars worth of baggage fee revenue. Even that figure is conservative, as AirTran manages to get close to US$30 worth of ancillary revenue per revenue passenger whereas Southwest Airlines in this scenario would only be getting about U$15 per passenger.

Thus, Aspire Aviation believes charging a checked baggage would allow Southwest to continue to reward its employees for their efforts, while ensuring profitability with minimal investment.

While I understand where the idea is coming from, I am absolutely sure that Southwest Airlines will not be adding checked bag fees. In fact, I am convinced that adding bag fees would be suicide for the airline – from 40 years straight of profitability to bankruptcy.

The major reasons for this are:

1. It would be destructive to the brand that Southwest has worked so hard to perfect
2. It would lower the revenue premium that Southwest can command over competition due to its branding, since the branding itself would be destroyed
3. It would increase costs for Southwest in multiple ways, completely nullifying the revenue advantage from bag fees

Bags Fly Free On Southwest Airlines

The first reason is the most obvious reason that Southwest won’t add bag fees. “Bags Fly Free On Southwest” has become a common household phrase thanks to powerful marketing by Southwest. Anybody based in the USA has undoubtedly watched one of Southwest’s advertisements on the topic. A poll done last year showed that over 30% of respondents thought that Southwest’s Bags Fly Free advertisement was the most memorable advertisement aired during the Super Bowl. This is absolutely incredible for one simple reason – Southwest has never purchased a Super Bowl advertisement before! People have this positive impression of Southwest so ingrained into their minds that they remember hearing the message even when it wasn’t shown. This is a testament to how good Southwest’s marketing team. At the same time, it means that Southwest won’t be able to remove the perks that they tout so much without significant backlash. People everywhere would be furious that Southwest is being so hypocritical – first ridiculing their competitors for checked bag fees, then introducing them as well. It would lose the airline a significant amount of goodwill, which the airline has worked very hard to get in the first place.

Source: FlightGlobal

Adding checked bag fees would mean that Southwest would be able to charge less for their tickets as well. Currently, Southwest is able command fare premiums over its competitors for many reasons. A major reason is that people can justify paying more on base fares to save on bag fees. Another major reason is that Southwest has an incredible strong brand that drives people to be willing to spend more. Adding bag fees wipes both of these advantages out. That means that while Southwest would get revenue from people checking bags, it would lose passengers. Carrying more passengers at higher fares is how Southwest makes money. If they can’t do it anymore, their entire business model is ruined. No amount of revenues from bag fees will make up for that.

The third reason isn’t quite as obvious but it is just as important. Southwest Airlines’ costs will go up significantly by implementing bag fees. Getting rid of free checked bags would mean that Southwest would have to increase its turn-around times, and therefore reduce its fleet utilization. Introducing baggage fees would make more passengers carry-on their bags, which significantly adds to turn around times. The lack of carry-on shenanigans and overhead bins filling up is a major reason that Southwest can turn its planes around so much faster than its competition. If it can’t do that anymore, it would be a major cost. It would take billions of dollars worth of additional aircraft to just cover the same schedule that Southwest covers today if they even added an extra 10 minutes to each turn-around. This massive increase in cost would probably not be offset completely by the increase in revenue from checked bag fees.

That’s why it’s pretty clear to me that checked bag fees are not coming to Southwest. That said, Southwest does have some tough times ahead. It will have to find new ways to increase revenues and cut costs, or it will be forced to deal with its massive labor costs. And dealing with labor is certainly not a task that Southwest will relish.

Air India is known for being a great airline in the air, but a horrible one on the ground. As fantastic as the in-flight product is, the amount of incompetence on the ground is downright ridiculous.

Now, Air India recently announced a promotion on their website:

Nice promo, right? I know I certainly wouldn’t mind a free ticket (and I’ve been obsessively checking the “winners” page to see if I won anything). However, the winners page had some evidence of the ridiculous amount of incompetence that Air India is known for:

They’ve put the web reference, booking reference, AND ticket number all up for the public to see! Why don’t they just display your credit card number while they’re at it???

This is truly ridiculous. Shame on you Air India.

EDIT: A little over a week later, I have realized that none of these codes actually work. If you go try to view a booking using these codes, the reservation doesn’t show up. So I’m not really sure what’s going on, but it seems as though this doesn’t actually compromise anybody’s privacy. But even giving that appearance is ridiculous.

A Kingfisher Red Aircraft Falling Apart - Parked At Delhi; Photo Credit: Sankaps

There has been a lot of coverage on this blog about Kingfisher Airlines’ financial woes, like this post, this post, this post, and this post. Now, Kingfisher Airlines has had a rough enough couple of days to warrant yet another post on the topic. Yesterday, it was suspended from the IATA clearinghouse. Today, it was announced that oneworld alliance is deferring its application until it can get its financial side in order. These are massive blows to Kingfisher from which it won’t recover easily from.

Kingfisher Red A320 Falling Apart In Delhi; Photo Credit: Sankaps

Yesterday, it was announced that Kingfisher Airlines has been suspended from the IATA Clearing House due to non-payment of debts. The IATA Clearing House is the way that airlines do interline and service transactions with each other. Kingfisher Airlines being suspended means that other airlines have to deal directly with Kingfisher to get payment for tickets issued by Kingfisher. That means that other airlines will find it very difficult for other airlines to accept tickets issued by Kingfisher. This will certainly have an adverse effect on Kingfisher.

However, the bigger problem for Kingfisher is the fact that their membership with oneworld is being deferred. As I explained:

Joining oneworld will help the airline in many ways. Kingfisher’s King Club frequent flyer program will be fully integrated with other oneworld partners. Earning and redeeming miles will be possible on any airline throughout the alliance, and status will be recognized by all carriers. This is expected to bring a significant number of passengers to Kingfisher from other domestic airlines, as many people want to earn miles and have their status recognized. In addition, Kingfisher will gain interline and ticketing agreements with all other oneworld partners. This means that tickets from other alliance airlines will use Kingfisher for domestic segments  over competitors. Currently 7 oneworld airlines serve India. These airlines will provide feed for Kingfisher’s operations.

Kingfisher Will Not End Up Joining This Group Of Carriers Soon After All; Source: Kingfisher Airlines

All of these advantages are gone with this one decision. Kingfisher will not get the loyalty of oneworld elites flying to and within India. This will hurt Kingfisher’s load factors and revenue significantly. With the cash crunch that Kingfisher is facing today, that pain will not be easy to deal with.

The deferral of oneworld membership and the suspension from the IATA Clearing House are related, according to sources at IATA and oneworld. It appears that oneworld carriers do not want to deal with Kingfisher Airlines directly, worrying about financial risk. Therefore, they decided to delay Kingfisher’s entry into the alliance until their finances are back in order. It is unclear whether they mean that Kingfisher should rejoin the IATA Clearing House, or whether they should completely return to profitability. If the demand is the latter, chances are Kingfisher won’t be joining oneworld any time soon. If it is the former, Kingfisher’s delay might be relatively short. Sources indicate that Kingfisher will probably join between Air Berlin and Malaysia Airlines if it is accepted once again.

Kingfisher is second airline in India to have its entrance to an alliance deferred. Air India had the same issue last year with Star Alliance. Some have been saying that the Airlines of India are jinxed, and will never be able to join an alliance. Perhaps they are right…

This decision also came on the same day that another oneworld member, Malev, ceased operations. A post about Spanair and Malev ceasing operations will be posted early next week.

This past year has been a rough one for Silver elites in most of the legacy airlines’ frequent flyer programs. Airlines use these programs to reward loyal flyers with increasing perks the more you fly with an airline. Now Silvers aren’t the most frequent flyers, but we fly more than the average person – somewhere between 25k-49k miles in a year. Silver perks usually included 2 free checked bags, priority services on the ground, preferred seating, and a small mileage bonus. Some even gave complimentary upgrades on a space available basis. While the benefits were significantly better in the higher tiers, Silver benefits were nice enough that it was worth showing loyalty to an airline. However, things went sour with some programs this fall.

United kicked off the program gutting with major changes to its program, Mileage Plus. While all levels saw benefit “enhancements”, the lowly Premiers (United’s former name for its 2012 Silver level) took the brunt by losing two major benefits. First, Premiers took a major loss with the extra leg room Economy Plus being reservable at check-in instead of booking. Many saw Economy Plus as the biggest benefit for flying United and now fear either being stuck with the middle seat leftovers or that it will be completely full by check-in time. Of course, United was now more than willing to sell Silvers the same advanced access they once enjoyed if they didn’t want to spin the wheel. The other was the complimentary baggage allowance reduction to one free bag. Delta and US Airways matched the reduced baggage allowance and made other changes to their programs.

While “enhancements” aren’t unusual in today’s market, these hit particularly hard. All of the announcements were made late in the year and were to take effect in the next program year. Many had already requalified for the next program year based on the promised benefits. Needless to say, many felt gypped with an 11th hour change. Had the airlines announced the changes earlier in the year or announced that the benefits would change for 2013, many affected would have less of an issue. At least then we could evaluate our travel plans, consider the benefits, and adjust travel if necessary.

Even more unsettling, though, was the fact that United offered most of the new Silver benefits to anyone willing to get a Mileage Plus Explorer Visa card and buy an Economy Plus membership. In some ways, those flyers had MORE perks than the supposedly loyal frequent flyer. Many Premiers felt United valued the short-term buck over loyal long-term flyers.

I’m sure the airlines have their reasons for making the changes. However, I’m writing this from the perspective of someone directly affected by some of them.

I flew with United almost exclusively for the past several years. I chose United despite it being more expensive and not having the most convenient schedule. I chose United in spite of that because they always treated me well no matter what what tier I was in. I was a top tier (1K) flyer in 2010. I dropped to Premier for 2011 due to reduced travel and requalified for Premier by late summer for the 2012 year. Being “only” a Premier didn’t bother me as the benefits were good for the amount of flying I was doing. Yes, I was a loyal flyer. With the impending changes, though, I had to evaluate my options. During this process, I only used award tickets. I didn’t see the benefit in earning more miles as I was nowhere near the 50k Gold tier.

Like many, I began to look at other options. Some decided to suck it up and deal with the new changes. Some chose to go the “Kayak” route – hitting Kayak.com and buying the cheapest itinerary that met their needs. If extras were needed, they could be bought at the airport. Others decided to give their patronage to another airline. “Kayaking” wasn’t a good choice for me as price wasn’t a differentiator. Most airlines charged roughly the same for where I travel so I wasn’t going to save much. With upcoming work travel and being in a long distance relationship, my travel will significantly increase this year. I’m expect to travel around 90k-125k miles this year. “Kayaking” could easily cost me more in fees with that amount of travel. Choosing one airline seems to be the best deal for me, but where would I go? 50k miles of limited benefits until I hit Gold and the constant difficulties higher level frequent flyers experienced with redeeming upgrade certificates eliminated United pretty quickly. If United had implemented the changes for 2013, I would have considered them more favorably.

So now what?

I looked at where I needed to go and who could get me where I needed to go the best. That included evaluating the airlines’ networks and their alliances for areas the airline didn’t serve. I also considered the frequent flyer programs and benefits. Lastly, I also considered what I had invested with branded credit cards, club memberships, and how hard it would be to change carriers. All the airlines had their pros and cons. They all had something I didn’t like. In the end, I decided to give US Airways a whirl as I could still fly the Star Alliance and use my existing United Club membership in the US Airways Club.

So now I’m doing a 90 day challenge. I’m starting with a trial of the Preferred Silver level. If I fly 7500 miles during that time, I keep it for the rest of the year. I can also qualify for higher tiers during that time if I fly more and cross the 7500 mile thresholds. With current planned travel, I’ll reach Preferred Platinum by the end of the challenge. How will this pan out? Find out next week as I wrote this from the first of my US Airways flights.

A couple weeks ago, ATR announced its sales total for 2011. It’s order backlog outstrips that of its competitor, Bombardier, by a very very large margin. This post will shed some light on why ATR turboprops have been so successful, while Bombardier has been struggling.

An ATR 72-600; Source: ATR

To any passenger, the Bombardier Dash-8 Q400 appears sleeker, faster, and generally better. Bombardier boasts off an amazing plane that can perform much like a jet, flying faster and higher than the ATR 72-500 or -600, while carrying more passengers. What Bombardier doesn’t acknowledge is that the fuel consumption of the Q400 is around 30% higher than the ATR72′s, for the same flight. Despite the fact that the Q400 can pack in 6 passengers more than its competition at a comfortable 30″ seat pitch, and theoretically fly an extra 300Nm flight in a day, the economics still work in favor of the ATR72. In addition, the ATR72-600 has a much smaller price tag than the Q400, by at least US$7Million. In the airline business, it all comes down to the dollar.

The only real market that has embraced the Q400 is North America. Longer routes that the Q400 replaces with jets makes sense. But in the rest of the world, regional routes are truly regional, and the job is well done by the ATR72, be it the -500 or the -600. This has led to a larger number of ATR72 aircraft in operation, which has an important effect: a higher resale value. A used ATR72 can fetch much more than a similarly used Q400, all because the demand-supply economics work in its favor.

A Bombardier Dash-8 Q400 in Spicejet Colors; Source: Bombardier

ATR is stretching its production limits on the ATR72, while Bombardier is going the other way with the Q400. The problem with Bombardier is more with the manufacturer than the aircraft itself. Bombardier’s focus is divided amongst its various aircraft, some competing with each other. For example, Bombardier’s turbofan CRJ700 is in the same league as the Q400, except for the engines. And the Q400 is marketed as a jet replacement, effectively killing the CRJ700. This internal product conflict can be very detrimental to sales and marketing efforts.

To a passenger, a turboprop is simply a prop. The noise levels in the ATR72 aren’t any much higher than the Q400 with its ANVS system. A short hop on a noisy plane is more bearable than a longer, so deploying a turboprop on a sector longer than 500NM is plain torture. For a typical regional sector flying distance of about 300NM, the ATR72 picks up a maximum of 13 minutes over the Q400, which hardly makes a difference. To the well informed passenger, the Q400′s safety comes under question, after the spate of landing gear incidents that the aircraft suffered.

To an airline, 5 ATR72s can be bought in the price of 4 Q400s, and still a good amount can be saved. This gives 360 seats for the ATR operator as compared to 312 seats for the Q400 operator. On top of this, the ATR72 consumes much lesser fuel, which can translate to savings. Typical operations on the 300NM sector reveal the ATR having only a 7 minute disadvantage in exchange for about 300kgs of fuel savings. Three ATR72s will save 900kgs of fuel over three Q400 flights, sufficient to fuel another ATR72 over 300NM. The ATR72 breaks even at around 35% load factor, while for the Q400 it is a much higher 60%. The ATR72 makes absolute and undisputed economic sense.

To a manufacturer, the ability to focus on one single product makes all the difference in winning a customer. You can’t expect to sell a jet and then introduce a product that kills the very jet you sold.

ATR’s focus on its turboprop-only product line, its offering of the most economical 70-80 seat airplane, its large geographical footprint, and its proven safety record have all contributed to the success of the now world’s best selling regional turboprop.

Press Release:

US Airways (NYSE: LCC) today announced that it has reached a tentative agreement on a new collective bargaining agreement with the Association of Flight Attendants (AFA), which represents the airline’s 6,700 mainline flight attendants. Details of the agreement will be made available by AFA.

“We are very pleased to have reached a tentative agreement with the AFA and thank the union leadership for their dedication in support of our flight attendants,” said Doug Parker, Chairman and CEO.

“We want to express our appreciation to the National Mediation Board and our mediator Jim MacKenzie, for his instrumental role in helping both parties reach a successful conclusion to our mediated negotiation sessions,” said Al Hemenway, US Airways’ vice president, Labor. “I would also like to thank the leadership of AFA for their hard work in helping us reach a tentative agreement with our exceptional flight attendants.”

The AFA Master Executive Counsel’s (MEC’s) must first approve the tentative agreement before it can be sent to its members for consideration. This first step is expected to take place in the coming weeks. The tentative agreement would cover the airline’s 6,700 mainline flight attendants, who are based in US Airways’ three hub cities of Phoenix, Philadelphia, Charlotte, N.C., and in its Washington D.C. focus city.

6 full years after US Airways and America West merged, the flight attendants have finally gotten a joint contract. This will give US Airways more scheduling flexibility, and will presumably get the flight attendants their first pay raise in 9 years. It’ll certainly be an interesting analysis to see what the terms of the deal are…
Perhaps the pilots will be next?

American Airlines is having problems with the new Department of Transportation disclosure rules that came into effect yesterday. A warning on its website says that the airline is having technical difficulties and the initial fares don’t include taxes and fees.

Given the DOT’s recent streak of fining airlines for violations, I’d guess that a fine will be American’s fate too. Whether they will ever pay it is a different question – bankruptcy protection will make it very hard for the DOT to collect any fine…