Flight Global and T2Impact Launch LCC Report

The definitive study on LCCs for 2009.

European Top 15 Airports Traffic Reduction

Have a look at this chart. If you cant see it - you can view it here:

http://www.anna.aero/2008/11/14/european-winter-capacity-down-by-2-point-3-percent/?utm_source=anna.aero+newsletter&utm_campaign=a8eb24f1b6-week_68_October_2008_anna_aero_newsletter&utm_medium=email

this shows the capacity cuts in % terms of the top 15 European airports. The numbers are based on OAGs information.

One item I should draw to your attention is that what used to be regarded as Scheduled (the former First Choice flights at LGW) are now reclassified as charter.

Still this makes for somber reading.

Cheers

Capacity Trimming at US Airlines

Perhaps slash and burn would be more appropriate.

But here is a quick round up of what is going on at the US majors:

Continental - slowing deliveries but since they are pretty much stocked with narrow bodies they should be fine. The big issue is the late delivery of the 787s.

Southwest - deferred 4 2008 deliveries by 4 years. Also may still slow deliveries for 2009 and beyond. With their planes currently flying around 1/3rd empty - they have quite a lot they can do.

Big Delta, massive restructuring of the RJ fleets has seen several hundred Canadairs sent away. Even some new Embraer E-Series have left the fleet. Expect DC9s to disappear. Look for more 757s for international and indeed the use of some of the new 787-700s in long haul. Not sure I would really feel that great going from Atlanta and New York to Africa on a 757. Big cuts in the DC9 fleet are a foregone conclusion. Those old birds should be taken out at dawn and shot.

Alaska - The Canadairs are gone and slowing deliveries of the 737-800s caused mostly by the Boeing strike will probably hold up for 2008/9 but I suspect we shall see deferrals

United - cutting 100 planes (nearly 25% of the fleet) was a big thrust. They still haven't cut back enough staff but that's another story. United has taken a financial hit by writing off the deposits on several airbus planes. Up to 42 deliveries could be cancelled.

The only one changing is American. They are accelerating the 737-800 deliveries and ordering up to 100 787s. At the same time not waiting for the 787s they have ordered a lot of winglets for the 767s.

"Given the cost efficiency of the 737-800 vs. the MD-80, this makes a lot of sense, particularly in this volatile fuel environment," American CEO Gerard Arpey said. "We’re going to continue to look for opportunities to move even faster." I guess he has not looked too closely at the numbers. right now the MD80 is a very efficient aircraft for its size. Just ask Allegiant who is picking them up almost as fast as American and others are dropping them.

Cheers

New DL Yanks SEA-LHR

Another city pair gets the bullet in January. Interestingly enough they have already allocated the LAX-LHR slots to JFK-LHR. So that leaves us with a conundrum - where will the slots go to?

I would hazard a guess at a retry with BOS-LHR to challenge VS and the hopeful partners AA and BA - but why do that than if that alliance happens DL would have a shot at one of those pairs anyway.

Nope I am going to say its likely to go to SLC-LHR.

In the short term the slot pairs will be shunted around since DL had such an awful set of slots for the new services from ATL and JFK.

Cheers

Southwest ties with Volaris - LCC Triumvirate?

Southwest Airlines and Volaris the upstart Mexican airline have today announced their long awaited tie up.

Southwest previously announced a northern alliance with Westjet.

So let's speculate at the moment that this in turn shields each other's market and creates a Non-GDS based alliance of almost biblical proportions.

The 3 airlines represent the pinnacle of the North American version of the LCC model. Each is very strong in their own right and all 3 will create a partnership that could knock the pants off any player or even combination of players north of the Panama Canal.

This will put a crimp in the style of JetBlue's southward expansion and also start a rush to further non-GDS based alliances.

I would take issue with the "seamless" integration statement in their PR release. That is a little over the top.

And yes that crumbling sound you hear in the background IS the sound of the GDS model falling.

Cheers

So who is doing due diligence on LTE?

LTE (the former Spanish Affiliate of LTU) is continuing to operate its leasing and charter operations. In the mean time while banned from operating a scheduled service it is having its books evaluated by someone from Europe.

Our speculation is that it is Grupo Marsans who owns Air Comet (and absorbed the rump of Air Madrid in 2006) and Aerolineas Argentinas and who just placed a mammoth order for 61 Airbus liners included some A380s!!!

Other possible alternative players are Vuelling/Clickair (doubtful as they have their own merger to manage), Spanair is a basket case so that leaves Iberia who it would doubtful would do this. Hence we think Grupo Marsans

Cheers

Look for new posts coming in June

Sorry we have not been able to post for a while here. However the regular T2 Blog has been rolling along.

New Posts will come along in June if we are able to get the reports out

Cheers

Timothy

Adieu Virgin Blue LCC

We are gathered here today to acknowledge the sell out and passing of our friend and former classmate Virgin Blue.

Effective today they are no longer a Low Cost Carrier but a conventional airline. Witness what they have done:

No Longer 1 Aircraft type - they now have 2 actually 3 but whose counting
No Longer a single class - they have 2 classes
No Longer web only airline - they are available in the GDS
No Longer one size fits all....
Profits are no longer ascending.

So we say Adieu Virgin Blue. Alas I knew her when she was a true Virgin. Now she is developing some decidedly matron like attributes. Just like Qantas.

Jetblue sounds more and more like a .....

Full Service Network carrier.

Eschewing its routes even further - JetBlue is continuing its inevitable march away from the LCC model to that of a FNC. Let me count the ways:

Aircraft - Jetblue uses aircraft from not even the same manufacturer, today it flies Embraer E-Series as well as the Airbus A320.

Airports - Jetblue mostly serves mainstream airports of its 54 served online cities very few are considered purely secondary airports (EG Long Beach). It serves most of the top 25 markets in the country with the exception of Dallas and Atlanta.

It participates in the GDS fully

Etc etc

And now add Fully Refundable fares. Here are the rules from the website.

"The fare rules for JetBlue Refundable Fares are as follows:
This is a refundable fare.
Reservations made with this fare may be changed or canceled for a refund up until the time of departure.
After departure, any unused funds will be converted to a JetBlue credit which is valid for future travel for up to one year from date of issuance.
Name changes are permitted.
All fares are subject to change until purchased. "

So Jetblue sounds very "un"LCC like. It joins AirTran and now Southwest in moving further away from the LCC model. Herb is not even off the board and things are not too promising over at Love Field.

Bottom line: JetBlue is NOT a pure LCC any more. While it has returned to profitability for the first time since 2005 it clearly has moved away from its roots. This move is not confined to the USA. In Europe we also see EasyJet behaving the same way.

What's left?

Higher fares and labour unrest.

Lets hope these dont happen any time soon

Cheers

Timothy