More A380 Services Start – Air France to Washington Dulles and San Francisco; Lufthansa to Miami

by: Siva Vayali - June 10th, 2011   Filed under: Airlines, Airports Add Comment

Starting June 6, 2011, Air France started its Airbus A380 Super Jumbo services to Washington Dulles and San Francisco International from Paris-Charles de Gaulle. The service to Washington Dulles would operate year around. The SFO service would be a summer only affair (ends in September 4, 2011). Air France already operates A380 services from Paris CDG to New York JFK and Montreal, Canada.

In the meantime, Lufthansa inaugurates its A380 service to Miami on June 10, 2011 (on the Frankfurt route). Lufthansa already operates A380 services from Frankfurt to New York JFK and San Francisco. All Lufthansa services are  operated year around.

Air France A380 - Courtesy: Air France

Air France A380 - Courtesy: Air France

Happy Flying!!!

BTW, don’t expect a 380 service from any US carriers or British Airways. They have no A380 in their order books. Their plan is to have the B787 Dreamliner as an alternative to the Airbus Super Jumbo. The earliest available delivery date for the B787, which Boeing keeps deferring, is fall 2011.

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SkyTeam/Delta Plans To Reduce Winter Transatlantic Capacity By 15%

by: Siva Vayali - May 19th, 2011   Filed under: Airlines, Airports 1 Comment

Delta Air Lines today announced plans to reduce the transatlantic capacity by 15% during winter. Delta’s President Edward H. Bastian made this announcement during the presentation in Bank of America Merrill Lynch Investor Conference. This is in contrast to the original plans to increase the capacity. Delta itself will reduce the transatlantic capacity by 10–12 % (against the original plan to increase the capacity by 3–4 %). The JV partners will reduce the capacity by 7–9 % (against the original plan to increase it by 7–8 %).

Transatlantic business has been the weakest link during the March quarter and almost entirely contributed to the year-over-year profit decline. Delta is planning to align its revenue, capacity and structure to build a sustainable business model at $3+ per gallon jet fuel. Delta anticipates the jet fuel price to be $3.20 for the June quarter and $3.10 for the September quarter. Because of the additional expenses due to fuel, Delta plans to keep other costs flat by reducing capacity, retiring more aircraft.

Memphis hub reduced: Delta already indicated that it would reduce the departures from Memphis by 25%. Even though Delta claims that the reduction in departures will not significantly reduce the ASM, I do not believe it. Would Memphis be next Cincinnati? Would it cut the daily Memphis – Amsterdam service? It is possible.

New York and Atlanta will have minimal impacts: New York JFK and Atlanta would retain most of its routes as JFK has the best O&D traffic and ATL is the world’s largest connecting airport. But expect frequencies to be trimmed on many sectors, especially from ATL.

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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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Washington Dulles to have underground Metro Rail Station

by: Siva Vayali - April 7th, 2011   Filed under: Airports 4 Comments

Washington Dulles International Airport (IAD) has been my home airport for the past 15 years. So, when the airport authority made its decision on the location of the Metro Rail station, it prompted me to write down my thoughts on it.

Dulles Main Terminal - Courtesy: Metropolitan Washington Airports Authority

Dulles Main Terminal - Courtesy: Metropolitan Washington Airports Authority

Dulles used to be one of the most derided major airports in the United States. Located 23 miles West of downtown Washington, it was considered as a white elephant when opened in 1962. Most flights to the nation’s capital operated out of the close-in National Airport (since then renamed as Ronald Reagan Washington National Airport). With a signature Main Terminal, designed by the famous Finnish American Architect Eero Saarinen (who also designed the famous Gateway Arch in St. Louis and the futuristic TWA terminal in New York’s JFK airport), Dulles has one more unique feature: the mobile lounges. These odd looking vehicles transport passengers between terminals and planes.

Dulles has come a long way. A Perimeter Rule was put in place by the US Congress prohibiting long distance flights from National. The Washington DC area expanded rapidly and Northern Virginia became a hotbed for technology companies and government contractors. Dulles has become the busiest airport in the region, outpacing National and Baltimore Washington International. It is one of the major international gateways in the country today with United Airlines operating a major hub.

The major renovation programs in Dulles have helped it improve the standing among passengers. The recently launched AeroTrain connects the main terminal with all Concourses except Concourse D. I thoroughly enjoyed it on my recent trip to India. Even though the mobile lounges are still used to transport arriving international passengers, the train covers majority of the departing passengers. The redesigned Concourse B is also an excellent facility where most international airlines operate. But Concourses C and D are a different story. It is a shame that United has to operate its hub out of these outdated facilities. The airport authority and United have indefinitely shelved the plan to replace these facilities. Hopefully, a day will come to sunset these old structures.

The final piece of the puzzle is the metro rail access to the airport. Construction of Phase 1 is in progress. Phase 2 will bring the rail to the airport. The contentious question is the location of the airport station. With soaring costs, the original plan to build the station right under the main terminal was rejected. Two alternative proposals were put forth: an underground station closer to the main terminal and an above ground station farther away from the main terminal. The airport authority was right in selecting the underground station. This is more convenient to passengers with much shorter distance to cover than the above ground station. I know it is going to cost more. But, the long term vision of more user friendly station should be given preference over the short term, cheaper alternative that is not user friendly. I remember that when the Metro opened the station in Reagan National Airport, I avoided using it to the airport because my flights departed from Terminal A, which is a long walk (or take a shuttle bus). When Terminal B/C opened and connected directly to the metro station using the covered walkway, it was more convenient. A longer walk to the Terminal from the station could deter the passenger from using the rail, especially in Dulles with lots of international passengers.

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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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American Airlines and British Airways optimize their schedule on New York – London route

by: Siva Vayali - March 18th, 2011   Filed under: Airlines, Airports Add Comment

American Airlines and British Airways have finally managed to optimize their schedules in the New York JFK – London Heathrow sector. It is the most lucrative transatlantic air travel market. Thanks to the joint venture between AA, BA and Iberia, the service dubbed as London Express, ups the ante against other major players in the market: Delta Air Lines (from JFK), Virgin Atlantic (from JFK and EWR) and Continental (EWR), part of the new United.

AA, BA and Iberia - Part of Oneworld - Courtesy: Oneworld

AA, BA and Iberia - Part of Oneworld - Courtesy: Oneworld

New York – London air travel market is one of the most competitive in the world.  The Oneworld alliance is already the most dominant player in the market. With this schedule alignment, it is trying to protect its market share against increased competition from Delta and the new United. From March 27, AA/BA will have near hourly departure from New York JFK in the evening. With BA’s multiple departures from Newark to Heathrow and from JFK to London City, Oneworld covers the entire geography of London and New York. Continental recently announced increasing its services from EWR to LHR.

Competition is heating up on many US – London routes. Oneworld has optimized its schedules on Chicago – London, Miami – London and Boston – London routes. This comes around the same time Delta announced its Miami – London and Boston – London services (ironically from the slots it got from Oneworld as a part of the Anti Trust Immunity approval from US DOT/EU competition commission).

It would be interesting to see how the landscape unfolds! Let’s wait and see!

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