Southwest’s latest schedule is out, and guess who is paying attention to Memphis? It’s not technically Southwest yet, but Southwest is using its AirTran subsidiary to add destinations and flights in Memphis. As one airline fades in the land of Elvis, another grows. The circle of life continues.

Back in December, I profiled the remains of Delta’s hub in Memphis which now has fewer than 100 flights daily. At the time, I said the cuts “should open the door even further for someone like Southwest to come in and bring fares down.” And that time has now come. Like a vulture feasting on the carcass of a rotting corpse, Southwest sees opportunity in the remains in Memphis. I don’t doubt that’s the case.

As of this summer, AirTran had scheduled only 4 flights a day between Memphis and Atlanta on 717 aircraft. In other words, it’s great if you want to get to Atlanta and you aren’t time sensitive. Sure, there are some connecting options, but it’s a very minimal presence. That changes on August 11 when AirTran adds 1 daily to Orlando, 1 daily to Baltimore, and 2 daily to Chicago/Midway, all with 717s. This looks a lot like a Southwest schedule, doesn’t it?

That’s why I was a little surprised to see this flown by AirTran, because it fits quite nicely into the Southwest service pattern. But now I get it. First, Southwest and AirTran just started limiting codesharing. It will be up and running soon on the rest of the system. So Southwest can really use AirTran as a trial balloon. Think about it. It can put a smaller airplane (717) into these markets so it has fewer seats to fill. Oh, and it can charge bag fees and change fees as well. So putting AirTran in this market lets Southwest test the waters to see if these routes are going to work out or not.

It would seem likely that they would work. Delta still has up to 3 daily mainline airplanes flying from Memphis to Orlando so that appears to be a good market. And while Delta doesn’t fly to Midway or Baltimore, it does fly to O’Hare and National. Still, the real point is that AirTran can connect people into the Southwest network at both those points anyway.

I would assume that this is just the start of what we’re going to see happen in Memphis. As Delta kills off its presence there more and more, that provides opportunities for others to come in. And while I don’t expect to see Memphis grow to the size of Nashville for Southwest, I imagine this is just the first of several new flights that the airport will see. Southwest doesn’t have a ton of growth opportunities in the US, so this should be a welcome one.

So will this now please all the locals in Memphis who crow about how awful and expensive Delta is? Nah. This gets those people to a few more places, but it’s not going to solve all their problems. It will, however, be very interesting to check in with them in 5 years to see if they’re happier at that point. They might have lower fares on some routes but they’ll have fewer nonstop destinations. We’ve seen this play out in many cities around the US.

By that point, I imagine Delta will have little more than flights to other hubs in the Delta system. But will others have replaced it with enough service to please Memphians? We’ll find out.

[Original Memphis Belle photo via Richard A. McGuirk / Shutterstock.com ]

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CF johalputt The Cranky Flier

04:38

In the Trenches: The Neglected Corners of the Business – Intuit Small Business Blog

Though the concierge business is where I spend most of my time, there are other pieces that don’t get enough attention.

What Not to Do When a Snowstorm Threatens to Cancel Your Flight – Conde Nast Daily Traveler

For a change, I didn’t write this one. Instead, they interviewed me about what to do when a snowstorm hits. Timely topic.

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CF johalputt The Cranky Flier

04:10

It has been more than 2 years and 4 months since Southwest announced it would purchase AirTran. Since that time, the two airlines have operated as completely separate entities in the eyes of travelers. That is finally changing as the airlines have mercifully begun codesharing, although so far only with a very limited test that the airline isn’t talking about.

As reported by ch-aviation, Southwest has put its code on AirTran flights from Atlanta to both Ft Lauderdale and Ft Myers. AirTran has its code on flights from Atlanta to Louisville and Norfolk. I asked Southwest’s PR team for details and was told that it’s just a test and more information will be forthcoming in mid-February. If all goes well, it will roll out fully by April. Without any official info, I had to dig around to try to piece together the story.

It appears that you can’t buy nonstop flights on the codeshare. It only works on connections. You can, of course, purchase directly through the airlines, but you can also buy AirTran codeshares on Southwest through travel agents online and off. Here’s what it looks like on the Southwest site.

Now, this brings up all kinds of questions, and it’s bound to be confusing to loyalists of either airline. Basic pricing seems to be the same whether you buy from AirTran or Southwest, but there are so many differences in the business model that things get very confusing, very quickly.

Bag Fees

Southwest lets you check two bags for free while AirTran charges like nearly everyone else. So which bag fee applies? It seems that the bag fees of the airline through which you buy the ticket applies. That’s right. You could buy an itinerary on AirTran.com and pay bag fees. But you could buy the exact same itinerary from Southwest.com and pay none. What’s more, you check in with the airline that operates the flight.

Think about that. You might buy from AirTran and show up at the AirTran ticket counter in Ft Lauderdale and pay the bag fee as usual. But then you might buy the same ticket from Southwest. You still show up at the AirTran counter but you won’t be charged a bag fee. The assumption is that the counter agent knows where you bought your ticket, but is that really also going to be the case for skycaps as well? Having just spoken with some AirTran reservations agents (see below), I’m skeptical that this will be enforced properly, at least initially.

The good news here is that your bags will be transferred between airlines. That means we can now say something that I never thought I’d see – Southwest is interlining!

Where You Should Book: Southwest

Seating

As we all know, Southwest doesn’t have assigned seats while AirTran does. And though AirTran assigns seats, the airline charges if you want a seat assigned in advance. So how does this work? Well, it’s a two-step process. For the flight you have on Southwest, you still check in 24 hours in advance as you normally would. You’ll get a boarding card and it’ll work like normal.

But what about the AirTran flight? Well, if you buy on AirTran’s website, then you can just buy a seat assignment for a few bucks as you would today. (There is no charge for Business Class seat assignments.) If you book with Southwest, it simply says you “will be assigned a seat and will have the opportunity to change the seat once you arrive at the airport.” I assume this means that you get a random seat, and it’s unclear to me if you’ll know what it is in advance. If you can find out and you don’t like it? Well, you can’t change until you get to the airport – not even when you check in. That is unfortunate.

Where You Should Book: AirTran

Business Class

AirTran has a Business Class cabin while Southwest is all coach. So how does that work? Well, it sort of works now that Southwest has Business Select.

I couldn’t get answers despite the PR team’s efforts, but the Southwest reservations agent I spoke with said if you buy a Business Select ticket, you get Business Class on AirTran. The fares are the same for Business Select via Southwest and Business Class via AirTran, so that seems like it should be true. And I have to assume that they just cap Business Select at 12 on AirTran flights since there are only 12 Business Class seats instead of 15 as they do on Southwest flights. The agent also said that if you buy Business Class on AirTran, you get Business Select on Southwest.

Wanting to confirm, I called the AirTran reservations line to make sure that was correct. Apparently nobody told the AirTran folks how this all works. The first person told me that if you bought a Business Class ticket on AirTran, you get coach on Southwest. I asked about Business Select or priority boarding and she had no idea. She said it was just a coach seat. Right, but…. So I called back and the second guy said that Southwest and AirTran don’t codeshare. Oh boy. I see where this is going. I gave up.

But it seems to me that the original Southwest agent got it right. The only thing I couldn’t figure out is whether you can change your seat assignments in Business Class on AirTran if you book via Southwest or if it’s like coach where you can’t.

Where You Should Book: Tie (with possible edge to AirTran)

So there you have it; the codesharing has begun. This should allow Southwest to more efficiently schedule aircraft and start mixing the AirTran and Southwest fleets more. (I doubt we’d see AirTran expanding in Memphis without this on the horizon.) But definitely be careful. The business model differences may make things a little more confusing. Hopefully we’ll learn more soon when Southwest starts talking about this.

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CF johalputt The Cranky Flier

03:56

There were certainly some, shall we say, spirited comments on my American/US Airways merger post last week, but there were a couple comments from someone posting as “Doug” that caught my eye. He predicted that big layoffs were going to happen if the merger comes to fruition. Here’s one of his comments:

Exactly Cranky, so why is Parker lying to everyone and saying there aren’t going to be layoffs when the merged airline is going to have around 30k more employees than UAL with the same revenue? That math is so simple and yet even you fail to acknowledge it. This is going to play out perfectly. Parker is going to win the job and then he’s going to get ousted in 2 years after he lays off thousands of people and probably makes a god awful mess of the whole thing. If he was smart he’d let Horton keep the job and take over after the layoffs ala DL.

Clearly Doug has no faith in Parker, but let’s forget about that. Can we expect layoffs in a merger regardless of who runs the show? Naturally, I decided to look into the numbers. So is Doug right? Yes and no. He’s right that the math is indeed simple. He’s wrong, however, in his assertion that a combined US Airways/American has 30,000 more employees with the same revenue as United and would therefore need to shed thousands.

In fact, the November 2012 airline employment numbers just came out via the federal government, so we can dig in quite easily to see how the stats look. American had 61,457 full time equivalent (FTE) employees while US Airways had 30,383. That means combined, there were 91,840 compared to United’s 82,381, 11.4 percent more. So yeah, not even close to 30,000 employees more at the combined airline. It sounds like he was including regional airline employees but that’s really irrelevant to whether or not the combined airline would have layoffs. The numbers I’m using are mainline numbers.

What about that revenue piece? Do they have the same revenue? We now know fourth quarter revenue so it’s easy to look. Using mainline passenger revenue only, US Airways had $2.098 billion in the quarter while American had $4.440 billion for a combined total of $6.538 billion. Meanwhile, United had $5.913 billion in revenue. That means a combined US/AA would have 10.6 percent more revenue than United. In short, a combined US/AA appears to be in a very similar situation to United’s position today.

This doesn’t even take into account the general belief that US Airways would be able to extract more revenue from American after a merger, but even without that, it certainly doesn’t make it look like layoffs are a given from a high level. But let’s go beyond just these airlines and compare to other airlines as well.

There are a lot of ways to look at employee productivity, but a fairly simple one is revenue per employee. And I’m talking about mainline revenue per employee so you don’t get things skewed too much by regionals which deliver a lot of revenue without any employees. This metric does have its issues, and I’ll discuss below. But first, let’s look at the chart.

The chart shows the amount of revenue that each airline produced per full time equivalent employee in the fourth quarter. Clearly airlines like Southwest and JetBlue look way better, but this isn’t an apples to apples comparison. After all, since this includes passenger revenues for mainline operations that means it doesn’t include ancillary fees which generally fall into “other” revenue. Southwest and JetBlue have a lot less of that revenue so more of the total is included here. And airlines that don’t have regional operations like Southwest and JetBlue will also be higher here.

But still, when you see Southwest having such a high revenue per employee, a lot of that is due to greater productivity. That is one of Southwest’s hallmarks. But the gap versus the legacy airlines is exaggerated. Instead, let’s focus on the legacy carriers.

Delta is by far the best when it comes to productivity. I would imagine some of that is due to having more scheduling flexibility with its employees. When it comes to front line labor, Delta is largely non-union and has more flexible work rules. Of course, some of the advantage is simply due to the fact that Delta is generating a revenue premium as compared to the rest of the industry. But some may also be due to various amounts of outsourcing. I’m not sure about that last point and that could make a difference.

Is anyone surprised to see US Airways lowest on the list? I’m not. This doesn’t mean the US Airways employees are less efficient. US Airways has been clear for years that with hubs in cities that can’t generate as much revenue as the hubs of the big three, it is at a disadvantage. So to see US Airways generate less revenue per employee isn’t a shock.

American, however, is a bit higher as it should be. The two combined would see revenues per employee similar to those of United. Naturally, United should see its revenue production go up as it gets over its merger pains. A combined US Airways/American would see the same if a new revenue team comes in.

So are layoffs inevitable in a merger? Nothing from the high level data shows that. Oh sure, there will be some duplication, especially in the management ranks. But a lot of that can be addressed via attrition or shifting jobs. (You can be sure a fair number of people in Tempe today won’t want to go to Ft Worth.) But that’s far different than massive, widespread layoffs.

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CF johalputt The Cranky Flier

03:54

How to Protect Yourself from Antiquated Airline Computers That Could Ruin Your Trip – PTMoney.com

I talked a little more about how we have helped clients with computer system issues. He used my recent example of our client stuck in Beijing.

US Aviation Review 2012: Vinay vs. Cranky Flier – Bangalore Aviation

Vinay and I had a fun back and forth about the big news in the US airline industry in 2012. We talked about a potential US Airways/American merger, the United IT issues, the Delta/Southwest deal for 717s, and lastly, the United/Southwest customs facility fight in Houston. It’s a long read, but it was fun to put together.

ONT passenger traffic decline continues in December – Inland Valley Daily Bulletin

Another bad news story for Ontario. I helped the reporter dig in to why the passenger numbers are dropping again.

Test Drive: New Paperless Car Rental Service Silvercar is Sleek but Buggy – Conde Nast Daily Traveler

I promised you more details on my Silvercar rental at Dallas/Ft Worth, and here it is. I put in plenty of pictures as well.

In the Trenches: The Flu Bug – Intuit Small Business Blog

I came down with the flu earlier this week, and man, it is tough to operate a small business when sickness hits.

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CF johalputt The Cranky Flier

03:54

The big US airlines have reported fourth quarter earnings, so now it’s your turn to play financial analyst. Which one had the best results? Which one had the worst? And while we’re at it, what are you predictions for financial performance in 2013?

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CF johalputt The Cranky Flier

03:53

Here we are at the end of January and a merger between US Airways and American still has not been announced. This is downright silly since just about every party agrees that it’s the right thing to do. So what’s up? Well, I say “just about” every party, because from what I can see, it’s American’s current management team that is the lone holdout. And it’s that stubborn stance that seems to be keeping the right thing from happening here.

Last week, Reuters put out a joke of an “exclusive” article saying that a merger between the two could come in the next two weeks. Why was it a joke? Apparently the airlines were in final negotiations with “the final price and management structure still to be resolved.” So the “only” two sticking points are the ones that have always been the issue. Maybe this was leaked to try and help build some more traction, but it didn’t really say anything new.

Now the latest “news” of the day is that American CEO Tom Horton may end up being the Chairman of the combined entities. There is some good and some bad to this kind of thing. The good is pretty simple to explain. If Horton is willing to settle for a Tilton-esque agreement where he can just sit in a fancy office and collect a huge paycheck for a couple of years, then that finally removes the last real barrier to a merger – the fight being put up by management.

On the other hand, if he insists on a more active role, then it’s a bad idea. There are very few supporters of Horton outside management ranks. Wall Street has been quite clear that Horton’s plans to date are unacceptable. In particular, the plan to grow the hubs by 20 percent is suicidal. As one analyst, Dan McKenzie, puts it, the growth plan “would be toxic for industry pricing and ruinous for shareholders….” The views throughout the financial community appear to echo that sentiment. If Horton has any kind of influence in the merged entity, then the money folks will not be happy. And that hurts the chances of the deal going through.

Other than Wall Street, we know the employees have lost all faith in the current management team. That happens to any leadership team that takes an airline through bankruptcy, as it should. That’s why it’s best to have a new team to take you out of bankruptcy. Delta did this well.

Delta Does Bankruptcy Right

When Jerry Grinstein took over at Delta, he started making deep cuts and then led the airline into bankruptcy. He wasn’t exactly hated since he was quite upfront with what had to happen and didn’t take excess compensation, but it was always meant to be a temporary job so there would be no residual friction. When he stepped down, the hard restructuring work had been done. Richard Anderson stepped in to lead the resurgence which included the Northwest merger. Today, Delta is the industry leader.

American could have a similar story if it wanted. Tom Horton has made a lot of necessary cuts that have angered people in order to get this airline in a position where it would even have a shot at competing. He should get credit for that, but now it’s time to step aside and let the people who know revenue take over. When you come out of bankruptcy, you need a new leadership team with a solid revenue plan that people can rally behind. Horton is clearly not the guy to lead that team.

When I talk about the leadership team, I think some people might picture US Airways management coming in and throwing American leaders out the window, but that’s not the case. There is clearly a need for American leaders to run a combined airline. The US Airways team has to know that. In fact, I bet there are people in high places at American who secretly want to see a new leadership team at the top, because it will provide more opportunity for them. This new leadership team needs to fill the key roles at the very top. The rest will be a mix of experience between the two sides.

Too Many Promises

Without a new team, what we get is a current leadership team with a highly questionable plan. The thought seems to be that if American promises enough bells and whistles, people will fly the airline. And it will need 20 percent more capacity to serve all this magical new demand. Not a good plan. First, the promises are lofty and expensive. Today is the first day that any passenger on American can experience those amenities with the introduction of the 777-300ER on the Dallas/Ft Worth to Sao Paulo route, but that is just one airplane. It will take years for the airline to consistently deliver a product that can live up to what is being promised. All this “new American” stuff including the new livery will result in the worst thing possible – overpromising and underdelivering for years to come.

But even then, does it make sense to put all of these amenities out there? Some, yes (like flat beds in biz, of course), but probably not all. It seems like the airline is going overboard with announcing its plans just to try to sway people who may have influence on whether a merger happens or not. If it doesn’t happen? With a 20 percent increase in capacity and no merger, the airline is not going to have the revenue base to support all these expensive promises anyway. (It may not have it afterwards either, which is why the promises should likely be scaled back.)

At this point, my assumption is that the only reason we haven’t seen the merger announced is because the current management team is fighting it. Everyone else seems to be in agreement that it’s the right way to go. If that’s true, then it will happen. There are a lot of great people at American and around the US who deserve just that. It will just take longer than it should. And there will be more pain involved in the process.

[Original child tantrum photo via Shutterstock]

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CF johalputt The Cranky Flier

03:55

Have you seen the supposed “safety rankings” for 2012 from the Jet Airliner Crash Data Evaluation Centre (JACDEC)? I know some of you have, because I’ve received emails about it, and it is a truly awful way to measure airline safety. You know I hate to give press to these types of things, but considering that I received emails on the subject, I thought it better to pick this apart instead of letting it stand alone, misleading people.

This safety ranking looked at 60 airlines and ranked them on a safety index. The safest airline in here was Finnair with a .005 ranking. The least safe was China Airlines with a 1.171 ranking. How do they come up with these numbers? Let’s just go straight to the horse’s mouth.

Based on our annual safety calculations which include all hull loss accidents and serious incidents in the last 30 years of operations in relation to the revenue passsenger kilometers (RPK) performed in the same time. We also took into account the international safety benchmarks such as the IOSA Audit and the USOAP country factor. Furthermore we included a time weightening factor which increases the effect of recent accidents and weakening the impact of accidents in the past. All calculation data ends after a period of 30 years. Fatalities are only counted when they were on board a passenger flight. No ground casualties or 3rd party fatalities in other aircraft. All accidents that fulfills the above mentioned criteria were involved in our calculation, regardless of causes or responsibilities.

That’s right. The “annual” safety ranking looks at accidents in the last 30 YEARS. This is a shockingly long time, and it makes no sense at all if you’re considering safety today. It also doesn’t take into account whether an accident was even the fault of the airline. Oh boy.

Let’s look at China Airlines, the worst airline on the report. There is no question that China Airlines was an unsafe airline back in the 1990s and early 2000s. It had multiple accidents that killed hundreds of people. The accidents were caused by everything from poor maintenance to crew mistakes and lack of coordination. The airline was a mess.

But since that last major accident in May 2002, over 10 years ago, China Airlines made big changes. The result is that there has been only one incident in the last decade. That one was partially due to a maintenance issue but also due to a manufacturing problem. Nobody died.

Now, this hardly makes China Airlines the safest airline around, but it also hardly seems fair to determine its safety currently from its 30 year history. The same goes for Korean Air.

Korean ranks as the fifth most dangerous airline in this year’s survey. Korean also was an airline I would have avoided in the late 1990s as a series of accidents plagued the airline. But Korean was a founding member of SkyTeam in 2000 and it has worked closely with several airlines to make sure its maintenance and crew practices were up to speed. The last incident in the database was in 2000, more than 13 years ago.

I think I’ve made my point, but I’ll use one more a little closer to home. How about SkyWest Airlines? You probably know SkyWest as a regional provider for just about every airline in the US. (Seriously – Alaska, American, Delta, United, and US Airways all use SkyWest.) When is the last time you heard about a safety incident with SkyWest?

Well, the last one that JACDEC counts was waaaaaay back in 1991 when a US Airways 737 landed on top of a SkyWest Metro. People often remember that accident, but it wasn’t SkyWest’s fault. Air traffic control made a fatal mistake. In fact, there is only one incident in the database that appears to be SkyWest’s fault and that resulted in no casualties.

Considering that SkyWest operates more than 1,500 flights a day, you would think that the airline would rank pretty well with such a strong record. But it doesn’t. It’s the tenth least safe airline on the list. That’s worse than airlines like Aeroflot and Alitalia. Though those airlines don’t concern me today either, it’s hard to believe that SkyWest’s record in the last 30 years is worse than Aeroflot’s.

Of course, this survey doesn’t even look at some of the more dangerous airlines out there – those who fly around hot spots in Africa or Indonesia. So if you’ve come across this study, I’d just disregard it.

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CF johalputt The Cranky Flier

03:54