AirportBusiness Blogs

The more things change, and all that…

According to USA Today today, on Friday United raised fares by six dollars. Imagine that, six whole dollars. American, Continental, Delta, and Northwest quickly followed suit with identical fare increases.

That was on Friday. On Saturday, United lowered fares right back down, reportedly because not all airlines raised theirs. On Sunday, Continental, Delta, and Northwest also chickened out.

Danged if I can figure it. I am an airline customer myself. Typically, I shop for the best—cheapest—fares. But I have never—repeat, never—haggled over six dollars. If the airline I prefer charged me six dollars more, I wouldn’t change to save that six dollars. Does anybody choose one airline over the other to save six dollars? I kinda doubt it. So, why do five major airlines panic so fast when the world doesn’t match a six-dollar increase? Beats the heck outa me.

I got an interesting perspective from a legacy airline pilot at a breakfast meeting of the “Greater North Alabama Lying Pilots Coffee Drinking & Hangar Talking Society” this morning. He thinks that flying for the airlines will not remain a career position. He says: 1) It is no longer the wonderful, valued, job it once was, so many might drop out after a few years. 2) The airlines have a strong incentive to (gently?) encourage older—more expensive—pilots out and to replace them with younger—cheaper—pilots straight out of school. 3) More women are entering the pilot arena, and he wonders if they will stay the course or drop out “to raise children.”

I’ve known this pilot for 28 years. He is an intelligent student of the industry (although he does often and mistakenly disagree with me). I don’t know if he is right or not, and maybe that’s not the important issue at all. It seems much more important to me that he believes this about his career. He has the job he always wanted and worked like hell to get, but it isn’t as nice (or as hard to get) as it used to be.

I wonder how many other pilots feel the same way? Maybe more importantly, how many potential future airline pilots feel the same way?

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Two newspaper items caught my attention in the last week:

First, USA Today, October 23, breathlessly reported on the front page with big headlines “Fares climb 15% for holiday.” Well, duh.

Breaths there a reader who doesn’t know that airfares will rise for holiday travel? Particularly if you don’t get your ticket until a month before the holiday? Is this front-page news? Hey, if pax take advantage of low prices when demand is low, why is it a surprise that airlines raise prices when demand is high?

Second, The Wall Street Journal today reported on an airfare price war in the Hawaiian Islands. Now this is more interesting. Mesa moved into the inter-island market (with a new subsidiary called “go!”) and prices are down to $39 one-way from one island to another.

Not only that, but a federal judge, after reading an internal Mesa e-mail saying of competitor Aloha—”We definitely don’t want to wait for them to die, rather we should be the ones who give them the last push.”—has decided that “The evidence raises real doubts about the propriety of Mesa’s conduct.”

As WSJ said, that’s a little bold faced even for the “cut-throat, nasty” airline industry.

Funny thing is, this price war is in a declining market, and has done little to revive flagging inter-island sales. In spite of summer fares as low as $19 one way, traffic rose only 3.1%. (In times “BM”—before Mesa—fares ranged from $79 to $190.)

Once again it seems the airlines are on a kamikaze mission. Does anybody remember Peter, Paul and Mary singing, “When will they ever learn? When will they ever learn?”

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… one finds that things are good, for the most part. In business aviation, they continue to be downright bullish.
 

A few outtakes from the National Airports Conference, hosted by AAAE in New Orleans …
 
– Sharon Pinkerton, VP with ATA, offering the airline perspective: “We think the number one challenge for us is meeting (expected) demand.”
– James E. Bennett, head of the Metropolitan Washington Airports Authority cautions that just as the lack of ATC modernization will inhibit growth, so too will security demands.
– Andy Cebula, who heads up legislative affairs for AOPA, observes that, when it comes to VLJs (very light jets) and air taxi networks … well, in 18 years he’s seen a lot of charter network ideas come and go. Wait and see appears the best approach.
 

And how’s New Orleans doing? One indicator: Try to find a street sign that’s intact.
 

In Orlando, the annual NBAA convention attracted more than 31,000 attendees – a new record. What may be the record to watch is another year of absolutely bullish attitudes, and sales (as our website updates this week have recorded.)
 

The buzz-phrase to remember is “integrated solutions.” Signature, Jet Aviation/Midcoast, and others are stressing this approach to grow their businesses. It’s about examining how every service you offer may be of value to every customer. (Fuel customers in time buy maintenance services, etc.)
 

Thanks for reading. jfi

I write this from the National Airports Conference in New Orleans. I have learned more today than I can digest, so will not be imparting any great words of wisdom this week. This week, I will just impart a few observations…

First, this was my first trip to The Big Easy since Katrina changed the whole world down here. Everything I’d heard about the devastation is true. As I drove into the city from Slidell, LA, it seemed at first that it wasn’t all that bad. They must, I decided, have rebuilt the city already—or maybe it never was as bad as I heard. Then several facts hit all at once. In the first place, the blocks of apartment buildings, offices, homes, and the neighborhoods were devoid of people. Then I noticed the blown-out windows, the lack of any cars (moving or parked). Next came a sight I had never seen before—a large, closed shopping center. The stores were still there, but no people and, again, no cars. All told, the entire area was eerie and spooky.

Ah, but the French Quarter was much as it always had been—good food, loud people wandering around, and some of the best people watching in the country. Better yet, one of my favorite restaurants, Mother’s, was still open. The ferryboat still runs across the Mississippi to Algiers. Jambalaya and red beans on rice are still available on every corner, and it is still one of our country’s more interesting places.

As for the convention itself, to paraphrase Winston Churchill, never have so many provided so much information in such a short time. Some really heavy hitters were on the program on opening day. The opening session alone included a panel of high up officials from AAAE, AOPA, ATA, and airports from California to D.C. The president of American Eagle Airlines spoke at lunch, then we moved into afternoon sessions with more impressive folks enlightening us on environmental issues, ground handling, and attracting new air service. The day ended with a night at the House of Blues. Quite a day.

I learned a lot and will try to relate a more organized view of the conference next week.

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… the Boyd Group of Englewood, CO was hosting its 11^th annual Aviation Forecast Conference. Broad brush, one message is that 50-seat regional jets are on their way out — not unlike the quick departure of turboprop commuters in the early 1990s … which, of course, were replaced by the 50-seat RJs. 

Mike Boyd, centerpiece of this event, likes to take a brash approach to airline forecasting, which is what this meeting is about. Yet, he also likes to take a very studied approach. Track the records. His team’s forecasts are a bit more brazen, a bit more in your face, and often accurate. He gets his face on CNN a lot. 

He saw RJs coming; he saw (sees) RJs going – at least the smaller ones. Among the high-powered airline and OEM execs presenting, not one argued the point. (Of course, at 8,200 feet where the meeting was held, a case can be made for a lack of oxygen.)  Therein lies the rub, at least for smaller communities. According to Boyd and others, the expectation is that the 50-seaters will be replaced by 70-seaters and larger as carriers ‘right size’ markets and airplane economics. Sounds good from an airline financial point of view. But for some communities, that 20 seats can make a difference in how a carrier views a market. Boyd asks, What is the strength of your feed into a hub? A cornerstone to his argument: He sees the hub-and-spoke carriers leading the charge in 2007 and beyond. 

Thanks for reading. jfi  

Hey, folks, aviation is interesting again—at least to the media.

The October 16 issue of Fortune is typical. The Business Life section features “Secrets to Smarter Travel,” including “300-day-a-year traveler who spills all his tricks,” and “Road Warriors: The husband and wife edition,” plus a comparison of business class seats and what to do during layovers in 15 exotic spots around the world.

The implication is that if you but read all of this you will breeze through airline travel smiling like the people in airline ads. As the song says, tain’t necessarily so.

Truth is, my airline travel has very little in common with these folks. That 300-day-a-year fellow seems to spend most of his time going to exciting places on a budget that makes me look like a hitchhiker. I tend to  visit truly exotic places such as—so help me, this is true—Herculaneum, Missouri and Yellvlle, Arkansas. Both are nice places, but getting there includes driving for awhile after you get off at the nearest airport.

Business class seats? Wadda I care? Most of my flights don’t even have business class seats. If they did, I couldn’t afford them.

That 300-day-a-year fellow states flatly that “Only amateurs check bags when they’re traveling for business.” Sounds great, but I wish he’d tell me how to carry on a couple of suits plus—repeat, plus—a computer, handouts for a few hundred folks, a big box of books, and one CD for each book.

This article, like so many, includes tips that don’t apply to my travel, or tips that I already know. So, why do the newspapers/magazines run so many of them? Because they sell newspapers/magazines. Evidently there are more people every year who believe—or desperately hope—that somewhere there really does exist the Holy Grail of airline travel.

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… showing where some focus will be in the year ahead, as the industry reevaluates how the system is funded. Notably, FAA acting Associate Administrator for Airports Kate Lang, speaking on the business of airports, says, “Airports would like more control, and I hear your voice.”

Later this month, the DOT Inspector General’s office will release a study on how emergency monies were distributed and spent in the aftermath of Hurricanes Katrina and Rita. It could be revealing on setting priorities and mechanisms in the future.

And, a session that included reps from the I.G.’s office and the Government Accountability Office indicate where their attention will be focused in the next year – barring, of course, additional direction from Congress. The I.G. is studying runway incursions, including Chicago Midway/Southwest; improvements to the national airspace system; inactive AIP grants; AIP prioritization; how set-asides are being used; ATC modernization and controller staffing; and, who is using the system and how they’re using it.

At the GAO, upcoming studies include: the impact of very light jets (VLJs); the Airbus A380; runway safety; air ambulance safety; and, ATC modernization.

In May 1999, my Airport Business column was written about renting a car in Boston, Taxachusetts. The fees and taxes added 49.55%—repeat, 49.55%—to the price of the rental car, and I was mad about it.

Earlier this year, I included that column in my book,  “Ground Clutter, The Book,” and it made me mad all over again.

Today, I reserved a rental car at Boston Logan Airport. Now I’m really mad.

Today, folks, the taxes/fees added 57.7% to the price of the rental car. 57.7%. That is highway robbery. They should be ashamed. Hell, King George himself would have been ashamed.

In 1999 and again today, $10 of that was for a “Convention Center Charge.” They are charging me to pay for their convention center. (In 1999 the rental car lady told me they had been collecting that $10 for more than a year but had not started work on the convention center. I wonder if they have started since.)

Now, I guess, they want me to pay for their failed Big Dig, too.

There is one reason why they charge such rapacious fees/taxes: The local politicians figured out long ago that I—and others from out of town—can’t kick them out of office. It’s as simple as that.

There is some trace of hope. Just recently the largest rental car companies banned together and swore to stop or reduce this larcenous greed all over the country. More power to them, and may they succeed.

55.7%. Can you believe it?

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