The extra white space does look a bit weird at first, but Delta is going to put it to use soon. The airline wrote on its blog that passengers will be able to “use a single document for up to four flight segments.” I hate keeping track of multiple boarding passes, so I look forward to this change.

Photo Credit: Delta Air Lines.

While Delta’s new boarding pass looks great, Virgin America’s (kiosk) boarding passes are still my favorite. All the important information is easy to find, their small size allows them to easily fit in a pocket without folding, and plus they are printed on thicker stock than other airlines use so they don’t crumple easily.

The Atlanta- based airline appears to have kicked off the new year very well, reporting a 14.5% year-over-year increase in consolidated passenger revenue per available seat mile (PRASM) in January. The increase was driven by “company’s capacity discipline and revenue momentum contributed to a strong increase in yields,” according to Delta.

For anyone interested, PRASM can be calculated by taking yield (passenger revenue divided by revenue passenger miles) and multiplying it by load factor. So both pricing and capacity measurement are reflected in the number. Delta’s consolidated load factor was up 2.3 points, to 77.5%, so that increase probably played a role in the double-digit PRASM increase (in addition to yield growth, of course).

Delta added that “all regions generated double-digit unit revenue gains” but the strongest performance was in the domestic and transatlantic markets. Total transatlantic capacity for the airline was down 9.7% year-over-year, the largest decline of the regions where Delta operates. The airline said last year that it would be working with its joint venture partners to bring down capacity in this market.

The airline’s PRASM increase compares favorably with other carriers that have reported the same metric so far. US Airways said last week that its January PRASM rose 10% year-over-year, while Southwest today estimated a 7% increase.

One of the markets I’ve found interesting of late is Boston- Philadelphia. This graph compared the fourth quarter of 2009 (the last full quarter before Southwest announced service) with the same period a year later. It’s pretty interesting, especially the top 50% of fares. Previously a big range of those were seen in the market, but that wasn’t the case once Southwest came in.

I’m hoping to do more analysis like this in the near future, and take a look to see if a similar effect has been seen in other markets where Southwest entered. Also, Southwest ended up cutting the Boston- Philly route, so it’d be interesting to take a look at this market a bit further to see how it developed for them.

It’s worth pointing out a couple of things about the data I used. First, fares under $50 are excluded in an attempt to exclude fares that are just taxes and fees (like award tickets). Also, fares listed aren’t considered credible in the DB1B Ticket database are excluded. There were also a few fares over $600 in both periods, but I just cut off the x-axis there for purely aesthetic reasons.

I decided to do just that for three hubs that have seen days of higher passenger numbers – Pittsburgh, Cincinnati, and St. Louis for 2000 through 2010 (full-year 2011 data isn’t out yet). A similar pattern seems to emerge with each one. Despite big reductions in passengers driven by capacity cuts, total O&D traffic remained relatively flat — which I think shows that it’s a challenge for new entrant carriers to make a move in such cities since so much of the prior traffic was driven by connections. Cincinnati, I think, is a perfect example – Delta’s cut a load of flying, but I’d argue that most of those cuts were in areas where there wasn’t a bunch of local demand, and most of the connecting traffic could be funneled elsewhere.

Of course one wonders what cities could be at risk if we see yet another round of consolidation. The Charlotte Observer had a good story about CLT’s prospects in the case of any potential deals that involve a US Airways.

Anyway, enough rambling — here’s what I found:

When construction began in March 2010, officials said the revamped Runway 13R-31L would reduce flight delays by cutting the time planes spent traveling to and from the gate by up to a minute, or an estimated 10,500 hours a year.

But since the runway reopened in July 2010, the percentage of late arrivals and departures has increased.

When playing with operational data, it’s very important to be using the right statistics. According to the article, the runway was supposed to reduce taxi times, but instead uses late departures and arrivals to judge its effecgtiveness, which in my opinion is an error. First, departure delays are based on gate departure time, so a shorter taxi to the runway wouldn’t have any affect on departure delay. One could argue that a shorter taxi-in time for the inbound flight could lead to better departure performance, but I think that’s a pretty minor factor. Second, there are many factors that can affect flight delays, so using broad on-time statistics and implying that the runway is involved isn’t accurate. (Granted, the author does mention that delays have many causes, but that’s buried a few paragraphs into the article.)

If we actually look at taxi times (which is included in the DOT data), the story at JFK looks quite different. The author compared October 2009 – March 2010 to the same period a year later. In the later period, taxi in times at JFK were shorter in five of the six months being compared. Taxi out times were shorter in four of the six months.

But while taxi time numbers are (in my opinion) more reflective of the runway’s impact on operational performance, there’s still some very important caveats to consider. First, the DOT data doesn’t have any information on weather conditions at the airport, so if one month is stormier than the other a fair comparison might not always be generated.

The other issue with the DOT database is that a bunch of flights aren’t included, as the data only covers domestic flying. Second, only carriers that “have at least one percent of total domestic scheduled-service passenger revenues” are required to share their data, so that excludes smaller airlines like Virgin America, Spirit, and a bunch of regionals. The only exception is ExpressJet, which reports voluntarily. Obviously this can be an issue at a major airport like JFK. Just for fun, I took the T100 segment data, filtered out flights operated by all-cargo aircraft*, selected airports with at least 10,000 departures, and determined how many of those flights were performed by carriers that didn’t report data that month:

The DOT on-time database is very powerful and has a wealth of useful information for those interested in operational performance. But one has to be careful with the data and understand its strengths and weaknesses when analyzing it.

*I was having a tough time with this decision. Obviously, freight and boxes don’t have feelings and won’t get ticked off about a delay, but those flights are still buzzing around and can have an effect on congestion. But in the end I felt that eliminated all-cargo flying was the best for this post.

The vast majority of the cities that are being cut are some of the smallest in the AirTran network. The two largest stations being eliminated are Dallas/Ft. Worth and Newport News/Williamsburg. Southwest cant serve the former due to the Wright Amendment, and the latter city was probably cut due to its proximity Southwest’s Norfolk operation.

By the way — It’s worth noting that the numbers for the two “smallest” cities – Bermuda and Des Moines – are a bit misleading. AirTran only started flying to Bermuda a few months ago, and the same goes for its own-metal flying to Des Moines, which had been previously served through AirTran’s small partnership with SkyWest. Also, while Washington-Dulles is one of the airports losing AirTran service, but that airport continues on as a Southwest station.

Cranky Flier already had a good rundown and analysis of the latest cities to be cut, so I recommend taking a look there. But this latest round of network changes has got me thinking about the Southwest network going forward. Here’s what CEO Gary Kelly had to say about the AirTran deal when it was announced:

It offers Customers more low-fare destinations as we extend our network and diversify into new markets, including significant opportunities to and from Atlanta, the busiest airport in the U.S. and the largest domestic market we do not serve, as well as Washington, D.C. via Ronald Reagan National Airport. The acquisition also allows us to expand our presence in key markets, like New York LaGuardia, Boston Logan, and Baltimore/Washington. It presents us the opportunity to extend our service to many smaller domestic cities that we don’t serve today, and provides access to key near-international leisure markets in the Caribbean and Mexico.

A lot of what Kelly mentioned in that quote is already done, at least to some extent. Southwest will be launching its own service to Atlanta next month, and it now has access to AirTran’s slot portfolio at LGA and DCA. The carrier is already adjusting its schedule at the former, and will be launching service from LaGuardia to Denver and to St. Louis. But further expansion at the slot-controlled airports is iffy – Southwest lost out to JetBlue in the slot swap and additional slots are hard to come by. (Though one possibility that comes to mind is a potential divestiture in any potential M&A activity with American crops up.)

And while Kelly did mention the opportunity presented by smaller markets, the cuts in AirTran’s smaller-city service would indicate that opportunities might be limited in this area.

So what’s next for Southwest? Near-international seems to be an important opportunity for them, especially as the airline plans to increase its Mexican flying to destinations like Cabo, Mexico City, and Cancun. And the fact that Southwest’s soon-to-be-delivered 737-800s will be equipped for ETOPS would indicate that Hawaii is a possible location for a future expansion in Southwest’s network. The expiration of the Wright Amendment in 2014 could open up some interesting opportunities from Dallas as well, though the number of gates at the airport is restricted.

Obviously, those three opportunities are significant, but I’m just wondering where Southwest sees itself growing over the next 5-10 years or so. It seems that Southwest might not grow significantly over that time period, especially as the carrier mentioned that its latest Boeing order “intended to predominately serve as replacement aircraft as the airline continues the modernization of its fleet.” Obviously, the airline’s orderbook of 737-800s will allow it to increase capacity on existing routes, but I’m just wondering how many cities left in the US that would support a Southwest level of service.

Menke’s message is incredibly clear, writing that: “on the current path, our financial position will continue to worsen at an alarming rate; we need to act immediately,” and latter adding that “we may ultimately conclude the best way for us to achieve our goal is to use the court-supervised Chapter 11 process.”

Menke attributes Pinnacle’s current challenges to the airline: a longer than expected integration, issues with a new integrated seniority list that came as a result of a new pilot deal, and most interestingly, the nature of its agreements with mainline carriers. Pinnacle currently has four major capacity purchase agreements (CPAs) with mainline carriers.

Pinnacle’s two largest contracts represent 75% of the company’s revenue, and both cover CRJ-200 flying for Delta (one is a legacy Pinnacle contract, the other is a legacy Mesaba agreement). Menke says that these agreements “have historically performed well, and contractual rate adjustments scheduled for 2012 and 2013 will improve the economics in 2012 and beyond.” The agreements have “reasonable contract terms and will continue to be the backbone of our organization.”

But the company’s other agreements do not seem as promising. Menke says Pinnacle’s contract with Delta to operate the CRJ-900 in the Delta Connection network “will benefit from the pilot-related rate adjustment in 2012, there are no additional adjustments throughout the balance of the contract, which begins to wind down in 2017.” Menk adds that the agreement “only produces marginal economics today” and “it will only worsen over time as maintenance and fleet aging expenses surpass contractual rate increases.”

Perhaps the most interesting agreement for Pinnacle is its contract with United/Continental to operate the Bombardier Q400. While the aircraft certainly provides favorable economics, it appears that current agreement between Pinnacle and United/Continental is not sustainable, as Menke writes that the company has “found that the payments being received from United/Continental are not covering the expenses to operate the Q400s.” Menke adds that “the performance of the Q400 CPA will only worsen as this fleet ages and expenses increase.”

Menke’s commentary on the profitability of its contracts is fascinating. On one hand, Republic has touted in the past how it has a great fleet mix compared to its competitors thanks to its larger E-Jets. Yet Pinnacle says that its 50-seat flying is the most profitable. Obviously, it all depends on how the regionals negotiate their deals with the mainline carriers, but it just stood out to me.

Meanwhile, Pinnacle might be the regional carrier in the most precarious situation at the moment, the issue of declining profit margins is certainly not unique or new. This slide from a December Republic investor presentation tells the story better than I can:

I know I’ve said this before, but it will be simply fascinating to see how the regional industry evolves in the coming years. On one hand, common sense would dictate that regional carriers have more bargaining power than in the past thanks to recent consolidation. But at the same time the number of major network carriers has shrunk to four (and that number could shrink further, if the latest media speculation about American is correct).

Meanwhile, the whole issue of pilot scope remains up in the air, as contracts at United, Continental, US Airways, and American are all amendable, while Delta’s contract becomes amendable at the very end of this year.

The airline said in its application that its frequency of service in the Austin- Cancun market will vary from four times per week to daily with a proposed start date of May 25. The proposed Denver-Cancun service would be slated to launch around April 16, with daily service during the December-to-June high season, and would fly “several times a week during the off- peak period.” The company noted for both markets, however, that the exact schedule depends on “demand and market conditions.”

The bilateral agreement between the US and Mexico limits the number of carriers that can operate on Mexican routes (in many cases the number of US carriers is capped at three), but the airline notes in its filing that designations are available. One designation is available for Denver-Cancun service, as only United and Frontier currently have the authority to fly between the two cities.

Sun Country and Continental have the authority to fly between Austin and Cancun. Delta has flown on the route in the past, but notified the DOT last month that it had ceased service and had “no objection to the withdrawal of its own-metal designation on these routes.”

As I wrote earlier this week, I really like this move. I think Virgin’s superior onboard product is most “valuable” (for lack of a better word) to travelers on long-haul flights, and Philadelphia fits the bill. Plus, I think adding another major East Coast destination will help the airline increase its relevance to West Coast (business) travelers.

It will be interesting to see how the competition reacts on this one. Naturally, one would expect US Airways to be a strong competitor on both routes, and the same goes for United on the San Francisco route (the airline recently cut its service between LAX and PHL). I’m most interested in Delta, which added a few weekly flights between Los Angeles and Philadelphia in October. It will be interesting to see how Virgin’s entry will affect Delta’s presence in the market (if at all).

Virgin also included a couple of interesting data points in its press release:

Virgin America will bring much needed nonstop competition from California’s largest airports to PHL….When entering markets that offer little low–fare competition, Virgin America has historically seen fares drop by up to one–third. In addition, 50 percent of travelers flying from PHL to the Los Angeles market now use connecting flights and 45 percent of those traveling from PHL to the San Francisco Bay Area are connecting passengers.

With those statistics in mind, it will be fun to watch to see how much Virgin can stimulate demand in these markets with lower fares, but also affect the mix of connecting vs. nonstop passengers. It also makes me wonder how Virgin’s entry has affected that mix with some of its other market entries — which is hopefully something I can examine at some point in the future.

The new seats bring some new features that should be nice for customers, including more space for bags underneath seats a fixed-wing headset that looks much more comfortable than Southwest’s current seat. The new seats also feature less recline. That change might not be popular with everyone, but as someone who is sick of having people recline and restrict my laptop usage I welcome this move! Here’s a handy diagram of the seat:

The upgrade also entails an increase in seat count from 137 to 143 seats. While the airline says this move “provides the unique opportunity of greater revenue potential,” the additional seats should also put some downward pressure on cost per available seat mile (CASM), in my opinion.

“[I]t was never our objective to add a row of seats, and the extra row isn’t the main reason for this redesign. Once we examined how much space would be saved, it was determined we could accommodate the increase, without sacrificing comfort,” said Executive Vice President and Chief Commercial Officer Bob Jordan in a post on the airline’s blog.

Jordan added that “we hope to start making those additional seats for sale on southwest.com here by the end of the first quarter, for travel in the second quarter.”

Southwest says it will begin retrofitting its fleet of over 370 737-700 aircraft this March and will complete the modification next year. In addition, the airline said it “anticipates that AirTran’s Boeing -700s and 717s will also be retrofitted with the new cabin interior as those aircraft are converted into the Southwest brand over the next several years,” suggesting that the AirTran brand is here to stay for quite awhile.

The airline also noted that “Other Southwest fleet types are still being evaluated for a possible retrofit.”

Granted, this change was only announced earlier today but at first blush I really like this move. I’ll be flying Southwest for a trip this summer, so hopefully I’ll luck out and fly on one of the retrofitted -700s!