Air China Expands its U.S. Network – Services to Washington Starts in June; Houston becomes daily

by: Siva Vayali - March 26th, 2014   Filed under: Airlines, Airports 2 Comments

Air China (CA) has announced firm dates for its Beijing (PEK) – Washington Dulles (IAD) service. The airlines application has been approved by the U.S. Department of Transportation recently. The four-times weekly service will start on June 10, 2014 with Boeing 777-300 ER. In addition to the large O&D market offered by the Washington-Baltimore area, Air China would get ample connection opportunities using the route operated by its Star Alliance partner United Airlines (UA). A mid afternoon arrival at Washington is timed to connect passengers to destinations throughout the East Coast on United’s extensive route network from Dulles. United Airlines already operates a daily IAD-PEK service.

Houston service goes daily

Staring March 30, 2014, Air China will also increase its frequency on the Beijing – Houston (IAH) route from four times a week to daily. The expansion comes within eight months of launching the service to Houston, indicating strong demand.

Covering all bases

With these new and additional flights to Beijing, Air China will serve all Star Alliance hubs in North America, except Denver, either using its own metal or through an alliance partner.

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Together, Air China, United Airlines and Air Canada will command a 75% share in the important North America to Beijing market. With extensive route network from their hubs, the alliance can connect any two destinations between China and North America.

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Turkish Airlines Announces flights to Houston

by: Siva Vayali - June 19th, 2012   Filed under: Airlines, Airports Add Comment

Turkish Airlines (THY), one of the fastest growing airlines in the world, yesterday announced flights to Houston George Bush Intercontinental Airport (IAH) from its hub in Istanbul’s Atatürk International Airport (IST). Starting in April 2013, the airline will operate four services per week using Boeing 777 – 300 ER aircraft.

Houston is a logical expansion point for Turkish Airlines. The airlines is a member of Star Alliance and Houston is a major Star hub. Houston, being the energy capital of the United States, has strong business traffic and Turkish can tap that using its excellent connections to oil producing regions of Asia and the Gulf. It will compete head-to-head with other airlines operating in the region: Emirates and Qatar Airways (Turkish bills itself as more of an European carrier than a Middle Eastern one as its main base Istanbul is in Europe though the rest of the country lies in Asia).

Turkish Airlines already operates daily services to New York JFK (JFK), Washington Dulles (IAD), Chicago O’Hare (ORD), Los Angeles International (LAX) and Toronto Pearson International Airport (YYZ), the last four being major star hubs. By operating flights to all major Star hubs, Turkish can provide onward connections to almost all points in North America. By the way, United Airlines (UA) starts its Istanbul flight from Newark (EWR) hub on July 1, 2012. United will use a B767 – 300 on this route.

One thing is clear: US Flyers will have more options to travel to one of the fast growing economies in the world and beyond.

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US Airways announces flights to Jackson, MS from Reagan but no details yet on the route for its long distance slot

by: Siva Vayali - March 5th, 2012   Filed under: Airlines, Airports Add Comment

I received few emails from our readers about announcement from US Airways about nonstop flights from Washington Ronald Reagan National Airport to Jackson, MS (JAN). I think they are under the impression that US Airways is utilizing the long distance slot to start service to Jackson. This is not correct. US Airways has not yet announced its plan for the usage of one slot pair permitted by DOT under the FAA Reauthorization Bill to start service to a destination exempted by the perimeter rule. The Jackson flight will be operated using the slots it gained by the slot-swap deal with Delta. I confirmed this with the US Airways Corporate Communications department.

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Under the FAA Reauthorization Bill, the four network careers (United, Delta, American and US) got exemptions to operate one round trip service to a destination beyond the 1250 statute miles limited by the perimeter rule. The careers did not get new slot pairs, but have to use one of their existing slot pairs to start this service. United, American and Delta already announced their routes for these exemptions.

Considering the fact that US Airways is the dominant career at Reagan National, it would take time to carefully evaluate its route options for the long distance slot. From Reagan National, it already operates three daily flights to Phoenix(PHX) and a one daily to Las Vegas (LAS). It would be very interesting to see how it would use the slot.

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United Flies Into A Smooth Switchover

by: Siva Vayali - March 4th, 2012   Filed under: Airlines 1 Comment

United Continental Holdings’ transition from two computer systems into one appears to be running without major glitches. The cutover occurred on Saturday early morning. Barring some minor incidents, the transition seems to be smooth. Some flights were delayed at United’s hubs in Chicago O’Hare and Washington Dulles.

Under the transition plan, United moved the reservation, frequent flyer and passenger information from United Airlines’ Apollo system to Continental Airlines’ Share system. This is a massive transition because the combined career has about 90 million frequent flyer members.

The combined website seems to function well too. Kudos to United for a job well done.

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American Airlines plans to firm up Qantas ties – A response to Delta’s tie-up with Virgin Australia?

by: Siva Vayali - May 16th, 2011   Filed under: Airlines, Airports Add Comment

American Airlines and Qantas today announced their intention to form a Joint Business Agreement on their services between the United States and Australia/New Zealand, within these regions and beyond to third countries. The irony is that American Airlines does not operate to Australia/New Zealand. So, this is not a revenue sharing agreement since AA does not generate anything.

Qantas B747 - Courtesy: Qantas

Qantas B747 - Courtesy: Qantas

American and Qantas are part of the Oneworld alliance and already place each others code on their respective schedules. So, what does this agreement bring to the table? The main reason behind this tie-up is the shift of Qantas’ services from San Francisco International Airport, where it has virtually no connection feed, to Dallas/Fort Worth International Airport, where American operates its biggest hub.

The idea makes sense on many fronts: Qantas had virtually no connecting traffic from San Francisco. It had to compete with United, which operates a major trans-pacific hub there with lots of feed from throughout the US and Canada. Shifting the route to DFW makes sense as it opens up the entire US and Canada to Qantas through American’s extensive network. This also gives Qantas a nice way to balance the US flights between a West Coast (Los Angeles) and a Midwest (Dallas/Fort Worth) destination offering better connections. For American, which does not have an aircraft that can stretch the DFW – Australia route nonstop, it offers a nice compromise by placing its code on Qantas’ Australian and New Zealand destinations. Qantas will operate only four services a week and hence it is a decent start. American might consider operating its own metal on this route (or from Chicago?) when it gets B787 dreamliner (expected in 2014).

It is interesting to note that this proposal comes in the wake of Delta Air Lines and Virgin Australia gaining approval from the US Department of Transportation for their alliance. Delta, which is expanding its presence in Los Angeles, already operates the Los Angeles – Sydney route. V Australia, which is the international arm of Virgin Australia, operates flights from Los Angeles to Sydney, Melbourne and Brisbane with connections throughout Australia and New Zealand.

So the competition in the US – Australia air service market is heating up. Qantas and United Airlines are the largest operators in this sector with Delta trying to gain some market share. With the Joint Business Agreement with American Airlines, Qantas, which is the largest player in the sector, is trying to protect its turf. United Airlines, the second biggest player in the sector, has Air New Zealand as the Star Alliance partner. United also has plans to start the Houston – Auckland route when it gets the B787. With Delta, finally getting approval for its alliance with a re-invigorated Virgin Australia, the battle lines are drawn.

Let the games begin!!!

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American Airlines Q1 Results – A Snapshot

by: Siva Vayali - April 20th, 2011   Filed under: Airlines 1 Comment

American Airlines today announced its Q1 results. As expected, the carrier lost money. Last year American outlined turnaround plan that would focus on its five cornerstone markets (New York, Chicago, Los Angeles, Dallas and Miami), implementing joint venture agreements on Trans-Atlantic and Trans-Pacific routes. The results reflect the fact that American’s efforts for a turnaround are hampered by the rising cost of fuel. As the only legacy carrier that did not declare bankruptcy, American continued to be hurt by its huge debt, higher labor costs and pension obligations.

Q1 highlights

  • Unit Revenue (PRASM) up by 5.2%
  • Passenger yield up by 6.2% (year-over-year)
  • Unit costs down by 1.8% (excluding fuel costs and special items)
  • Mainline capacity up by 2.7%
  • Joint business with British Airways and Iberia implemented on Trans-Atlantic routes
  • Joint business with Japan Airlines implemented on Trans-Pacific routes
  • Enhanced service at Los Angeles LAX (including new LAX – Shanghai route launch)
  • New agreements signed with Expedia (and Hotwire)
  • New agreement signed with Priceline
  • Law suit filed against Orbitz (and Travelport, LLC)

Guidance

  • Planning to reduce the domestic capacity and increase international capacity
  • Planning to retire 25 more MD-80s in 2011
  • Fuel is the biggest concern
  • Cost of fuel expected to be $3.10/gallon for Q2 and $3.07/gallon for 2011
  • For Q2, 49% of fuel hedged at average cap of 2.66/gallon and 39% of fuel hedged at average floor of $2.04/gallon
  • For entire 2011, 41% of fuel hedged at average cap of 2.63/gallon and 35% of fuel hedged at average floor of $2.02/gallon
  • Cost per Available Seat Mile (CASM) is expected to be about flat to 2010, excluding fuel and potential new labor costs
  • Other concerns include Labor Contracts, Facilities and Healthcare costs
 

  • Unit Revenue (PRASM) up by 5.2%
  • Passenger yield up by 6.2% (year-over-year)
  • Unit costs down by 1.8% (excluding fuel costs and special items)
  • Mainline capacity up by 2.7%
  • Joint business with British Airways and Iberia implemented on Trans-Atlantic routes
  • Joint business with Japan Airlines implemented on Trans-Pacific routes
  • Enhanced service at Los Angeles LAX (including new LAX – Shanghai route launch)
  • New agreements signed with Expedia (and Hotwire)
  • New agreement signed with Priceline
  • Law suit filed against Orbitz (and Travelport, LLC)
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Thoughts on Lufthansa’s selection of Miami as the next A380 destination

by: Siva Vayali - March 31st, 2011   Filed under: Airlines, Airports 1 Comment

Lufthansa today announced that Miami would be the next US destination to be served by Airbus A380. The world’s largest passenger airplane would replace the Boeing 747 currently operated on the Frankfurt – Miami route.

Lufthansa A380 - Courtesy: Lufthansa

Lufthansa A380 - Courtesy: Lufthansa

Lufthansa’s selection of North American destinations for A380 is interesting:

New York JFK is currently served four times a week using A380. The JFK service will become a daily on A380 starting April 10, 2011 (this means LH will delay the resumption of A380 service to Tokyo Narita, suspended due to the recent Tsunami and Earthquake, for a longer period). San Francisco will be served using A380 starting May 10, 2011. Miami will get A380 service starting June 10, 2011.

The JFK service is a no-brainer. The interesting thing to note here is Lufthansa’s preference of Miami and San Francisco over Newark Liberty (EWR), Chicago O’Hare (ORD) and Washington Dulles (IAD), all Star Alliance hubs and major gateways for LH. As more A380’s join the fleet, these gateways would get the service, but right now, they are not included.

There could be several reasons for this. I believe the following reasons played a major role in the selection process.

1. Single daily flight is easy to upgrade: Miami, with just one flight per day, and virtually no connection traffic, gives Lufthansa the flexibility to switch the metal from B747 to A380. San Francisco, though a Star hub, is also served by a single Lufthansa flight. So, it is easy for LH to replace the B747 with A380. Newark, Chicago and Washington need multiple flights from Frankfurt, as Lufthansa connects majority of its US bound traffic from these hubs through Star partner United. From these hubs, Lufthansa needs multiple frequencies a day to provide better connection options to its frequent flyers.

The exceptions to this theory are Toronto (YYZ) and Los Angeles (LAX), both Star hubs with a single Lufthansa flight (though Toronto is served by 2 daily flights from its anchor Air Canada).

2. A380 better than B744 on non-hub cities: Operating an A380 is more cost effective than a B744. Lufthansa’s B744s have poor customer reception. Replacing them with A380 would provide a better chance to protect its turf in hubs dominated by other carriers (MIA is a good case – it could deter American Airlines from starting a competing service).

3. Alliance Partners have a say in equipment upgrade: United and Air Canada have a transatlantic joint venture with Lufthansa and the schedules at Star hubs are coordinated between these carriers for optimal connections. United, being the anchor at EWR, ORD and IAD, has to make sure parity of service quality with Lufthansa in these hubs. So, United may be less receptive to LH upgrading these routes with A380, because its own product would fall behind in quality. The same argument goes for YYZ and Air Canada.

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So, my prediction is this: the next Lufthansa destination for A380 will be Los Angeles, followed by Houston and Boston.

Newark, Chicago, Washington and Toronto will have to wait get their turns.

Moral of this analysis: sometimes, being a hub with multiple daily flights to a destination can be a drawback to get better service!!!!

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