Odds and Ends: Change fees; Two ex-NTSB members rap Boeing, FAA, current NTSB

About those change fees: Last week we reported from the US Airways Media Day and among the topics was that of change fees. US Airways matched United Airlines to charge $200 if you change your ticket. Here’s an article about how to deal with these fees.

Here’s another article about change fees, and how they’ve soared in recent times. If you think fees in the US are bad, look at the table and note in particular Ryanair’s fees–this carrier is notorious for charge for everything, and at steep prices, something subject to this funny video:

[youtube http://www.youtube.com/watch?v=ZAg0lUYHHFc&w=560&h=315]

Why are fees becoming so prevalent? Because this is where airlines are largely making their profits. US Airways said last week it expects to earn $600m from fees this year. This is more than its entire profit from 2012. This means airline operations lose money and profits come from the fees.

Also on US Airways: we also reported last week about some outstanding labor issues between the IAM at US Air and the TWU and American Airlines. An agreement over the weekend was reached about merging these two workforces under one union banner, according to Terry Maxon at the Dallas Morning News.

Ex-Members Rap FAA, NTSB: We bet they won’t be invited to a reunion. James Hall and John Goglia, former members of the National Transportation Safety Board, had harsh words to say about the FAA, Boeing and the NTSB over the certification of the Boeing 787 and the subsequent fix. Hall said the FAA needed to recertify the airplane, not just the battery.

Ethiopian Airlines resumed service with the 787 over the weekend, while Japan’s ANA engaged in a proving flight. This Wall Street Journal article (via Google News, so everyone should be able to read it) references additional measures required by Japan.

US Airways Execs talk to us about fleet plans, change fees and the AA livery

We had the opportunity to sit down for a one-on-two interview with Scott Kirby, President of US Airways, and Derek Kerr, EVP and CFO, during the annual media day. We covered labor, fleet planning, change fees and the new American Airlines livery.

When we talked right after the merger was announced, you indicated that all the labor problems at US Airways were solved and you had agreements with American’s labor groups. Yet I read about continuing labor issues. Bring me up to date about this.

Derek Kerr: I think what we’re talking about is we have a road to solve all the labor problems. The contracts have a methodology for the pilots and flight attendants for who we’re going to get there. The only thing we have right now is our ramp and mechanics. We don’t have a deal with our ramp and mechanics and we’re negotiating that today. That is in normal negotiations. We’re going through with a mediator. That really is the only area where we are working on from a stand-alone perspective to try and get a deal done with our group. It’s a little complicated because we are trying to work the two groups (TWU represents American Airlines, IAM represents US Airways-Editor.) From the standpoint of where we are today, we have to road to get the pilots done. We have the road to get the flight attendants done. We have the ramp and mechanics on [the American] side complete. We have a six year deal. We’re trying to get our group together with that.

American is taking about 65 A319ceos. US Airways has a large fleet. You indicated when we talked right after the merger was announced that you expected to use some of US Airways’ 319s on American routes, but at that time it was too soon to draw any conclusions about the integrated fleet plan. What is your thinking today?

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US Airways Media Day-Part 3

Bev Goulet, SVP and Chief Integration Officer, American Airlines

Robert Isom, EVP-Chief Operations Officer, US Airways

Elise Eberwein, EVP People, Communications and Public Affairs

BG:

  • Merger benefits flow to shareholders and stakeholders, employees, customers, and communities.
  • This will be subject to a lot of scrutiny. Delta-Northwest, Continental-United, Southwest-AirTran all had skepticism.
  • We’re taking a different path.

RI

  • You go through a period of time where the public sees intense integration. People forget everyone has issues with reservations integration.
  • Mergers are difficult, but we can’t take a break. We operate through the merger.
  • Customers won’t threat us as one airline until we act, look and feel like one airline.
  • Media will never let us live it down if we screw up.
  • 110,000 employees have to be motivated. Enough people to fill Michigan stadium.
  • 6,700 flights serving 41% of world’s population.
  • AA-US will have more than 1,500 aircraft, more than Airbus and Boeing combined delivered in 2012.

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USAirways Media Day-Part 2

Robert Isom, EVP-COO

  • 2012 had more zero flight cancellation days than  the prior seven years combined.
  • Best operational performance metrics since the US-HP merger.
  • 2012 topped on-time performance of legacy carriers (Hawaiian tends to be better-Editor).
  • US Airways ranked #2 in 2011-2012 after Delta is four key metrics. Was last in 2007.
  • The more compliant you are with safety will translate to reliability, efficiency, service. It serves all your goals.
  • The distinguishing factor is what happens when things don’t go right.
  • We want to build on momentum from record-setting 2012.

Andrew Nocella, SVP Marketing and Planning

  • Phoenix equals 24% of flying; Charlotte 36%; Philadelphia 34%; Washington DC 6%; other 1%. Dramatic change from 2006 when core flying was 83%; now it is 99%.
  • Now have 243 slots in Washington DC, from 193 from pre-Delta transaction.
  • London Gatwick may be a great airport but London Heathrow is a more profitable airport. Began CHL-LHR March 30 with A330-300.
  • 16 A321s coming into fleet this year to replace and up-gauge the airline in 2014/15. 767s start leaving the fleet this year.
  • Contracts for 159 USAirways Express aircraft up for renewal, or 2/3rd of US regional fleet. Too small to be profitable now.

US Airways Media Day-Part 1

We’re at the US Airways Media Day and we’ll provide updates throughout the day.

First up is Doug Parker, CEO of US Airways and the new CEO of American Airlines when the merger is consummated.

Doug Parker:

  • This media day is a little bitter-sweet. It’s the last one we will do here in Phoenix. (This is #13.)
  • We’ve talked about consolidation over time, how US didn’t have to participate but would be better if it did. We talked about what the industry needed to do to be better. We talked about a lack of focus on labor, which was dysfunctional, a lack of discipline. The industry was improving on all fronts. Today the industry is much better with the exception of government policy.
  • In 2010 I talked about the lack of profitability with oil a problem.
  • In 2011 talking about how the recovery was real, in good and bad. Oil prices was as high as in 2008. US made over $100m, a $1bn turnaround from 2008.
  • In 2012 we talked about how we were in a position to make a choice for a merger, not because we had to.

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Odds and Ends: Boeing earnings call; US Airways Media; 787 update Day

There’s a lot of news happening today and tomorrow.

NTSB Hearing: The NTSB hearing on the Japan Air Lines Boeing 787 battery fire is today and tomorrow. This can be followed live (and later archived) here.

Boeing Earnings Call: This is Wednesday, April 24. This can be followed here. Expect a fair amount of discussion about the impact of the 787 battery issues on earnings. Ordinarily we’d have our usual live running coverage but instead we will be at the…

US Airways Media Day: This airline has an annual media day and it was scheduled for today a long time ago. We’ve been a regular at this, and due to the pending American Airlines merger, apparently there is going to be big press demand: they had to move the venue from headquarters to a hotel location in Scottsdale. We’ll have several updates throughout the day.

787 Update: LOT Polish Airlines expects to return its two 787s to service in June; Ethiopian this month; the Japanese airlines could return the airplane to service this month but ANA plans up to 200 test flights first, so this will slip to May and perhaps June. It’s unclear when Japan Air Lines plans a return-to-service (RTS). Qatar Airways wants to RTS this month. United Air Lines appears planning next month.

Flaws escape FAA certification

Bloomberg has a good story looking beyond the Boeing 787 issues at the FAA’s reliance on industry to certify airplanes. The story details a number of cases where flaws crept through the system, leading to deaths–a circumstance, of course, that did not happen with the 787.

Safey Flaws

We have written a couple of posts about the relationship between the FAA and industry in response to focus following the 787 battery issues. We pointed out this relationship is nothing new.

The Bloomberg piece is well worth reading.

US Airways’ 757 problem

Notation: Lan Chile has canceled Boeing 787 flights through June.

US Airways has a large fleet of aging Boeing 757s it needs to replace. The problem is, a carrier official says, neither the Airbus A321neo nor the Boeing 737-9 MAX can do what needs to be done: Phoenix-Hawaii non-stop in both directions with maximum payload under all conditions.

The distance is 2,910 miles, well within the advertised range of 4,200 miles for the A321neo and 4,137 for the 9 MAX. But Derek Kerr, executive vice president and chief financial officer says fleet planners have yet to be convinced either plane can replace the 757W, which is uniquely able to handle the hot, summer conditions at Phoenix, where temperatures often soar to 110F degrees or more.

US Airways is one of only two legacy airlines in the US that has yet to order the MAX or the NEO (Delta Air Lines is the other). A year ago, US Airways CEO Doug Parker told us that the value proposition of ordering the neo still was unconvincing given the price premium sought by Airbus. Kerr told us last week that the large, outstanding order for the current generation A320 family as replacements for the oldest jets–and the lack of a true replacement for the 757–meant the airline wasn’t in a hurry to place an order for re-engined aircraft.

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Washington State air facilities that could close with sequestration

The FAA has released a list of air traffic control facilities that could close with Sequestration, which is due to take effect March 1.

The following facilities in Washington State are on the list:

ALW Walla Walla Regional Walla Walla WA
MWH Grant County International Moses Lake WA
OLM Olympia Regional Olympia WA
PAE Snohomish County Airport (Paine Field) Everett WA
RNT Renton Municipal Renton WA
SFF Felts Field Spokane WA
TIW Tacoma Narrows Tacoma WA
YKM Yakima Air Terminal/McAllister Field Yakima WA

Additionally, the over night shifts in the following control towers are at risk:

BFI Boeing Tower Seattle WA
GEG Spokane Tower Spokane WA

The FAA warns that passengers at TSA lines could be up to three hours and tarmac delays at major hub airports could be up to 90 minutes.

Odds and Ends: 787-10/777X; 737NG engine issues; American-US Airways

787-10/777X: Aspire Aviation has this long analysis of the current status of these developmental programs.

737NG Engine Issues: Aviation Week on February 8 had a report of thrust irregularities on the Boeing 737NG. The Seattle Times reported it on line last night and in print  today. And then the  Seattle media went mad. We’re perplexed. The issue goes back five years, it happened 32 times and not since December when a fix appears to have–fixed it. What’s the big deal?

American-US Airways: The long-awaited merger was announced today and to our great relief, the US Airways management will run the place. American CEO Tom Horton is booted upstairs to non-executive chairman, much as was Glenn Tilton in the United-Continental combination. Unfortunately the AA-US merger keeps the awful tail livery rolled out by Horton a few weeks ago.