Category: what if


Rethinking seasonality and charters

Filed Under: 2 cents, what if
Jun.01, 2010

Why not?

It’s time airlines began rethinking the concepts of seasonality and charters. Currently, seasonal services rely on predicted or proven demand swells to justify a change in capacity for a fixed period of time – usually on a recurring basis, most commonly up-gauging around holidays. There can be no doubt that this practice makes sense. However, given the cutthroat nature of the current aviation market I am surprised no carrier has taken it a step further and pursued a more aggressive approach where seasons are in fact not even a season long. This would involve one (or two, or three) off services between city pairs designed to aggressively target pockets of new revenue. The haphazard nature of this approach would make it seem almost like a charter service – and in many respects it would be – but with one key difference; airlines would no longer be the suitors, waiting around for clients to pitch them. Rather they would become the aggressors and would take the fight pitch to prospective clients.

Let me offer an example. I am attending the Microsoft TechEd 2010 tradeshow in New Orleans next week. Attendance is rumored to be hovering between 8,000 and 9,000 people. Given that it’s a Microsoft show it will come as no surprise that a large contingent will be making their way down to New Orleans from the Redmond, WA area. While there are countless one-stop possibilities to New Orleans from Seattle (to suit any airline allegiance) there is no direct service. For a sizeable portion of the people making this journey a direct flight would be too good to pass up, frequent flier miles be damned. All it would take is for Alaska Airlines (or any other major player in the northwest) to recognize the needs of their market and react. For this particular example I’m sure a few services straddling the tradeshow’s timeline would sell out in minutes. The same issue exists for Canadian attendees of the show – there is no direct service from New Orleans to anywhere in Canada. Would this not then be the perfect time for a Canadian carrier to offer “seasonal” services around this event to New Orleans from Toronto and Calgary? I’m willing to bet it would work. Inevitably airlines would cannibalize some of their own routes by adopting this approach but it would at the same time attract passengers that would preliminarily favor another carrier.

Pursuing opportunities like this would be straightforward. Route Ops teams at carriers would simply have to contact the largest convention centers around their continent(s) and get their annual schedules. With that information and some research into their attendees and organizers, opportunities like this would light up any airline’s route map like a Christmas tree.

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Short-cycle aircraft leasing

Filed Under: 2 cents, what if
May.20, 2010

Qantas parking lot at LAX by Kim Davies

When planes are on the ground they don’t make money. Why then do numerous carriers the world over allow their precious metal to sit on remote stands gathering dust for hours at a time awaiting their return rotations? Simply put, I think nobody has bothered to challenge the status quo. Look at LAX for instance. It has a hugely impressive offering in terms of trans-Pacific flight possibilities. What’s less impressive is the aircraft utilization of some of the operators. Let’s put Qantas under the microscope for a second. On most days they offer five services into LAX:


Flight Numbers Origin Arrives Departs Idle Time
QF0011/QF0012 SYD 9:40 22:30 12:50
QF0107/QF0108 SYD 6:45 23:50
QF0015/QF0016 BNE 11:00 23:30 12:30
QF0093/QF0094 MEL 7:20 23:20 16:00
QF0025/QF0026 MEL 6:30 23:40 17:10


Out of the flights listed in the above table QF107 continues on from LAX to JFK. The others sit on the ground doing nothing. What’s stopping Qantas from leasing out one or more of these idle frames to their alliance partners at American Airlines to conduct hub to hub runs out of LAX? The numbers would obviously have to be studied but I would imagine that AA could sustain a 747 or A380 service between LAX and at least one of its hubs. DFW alone sees 15 direct dailies from LAX including a 767 followed in quick succession by a 757 during the morning rush. Surely that pair could be replaced with a QF 388/744 with a return flight back to LAX in time for the late night departure down under? It’s a win-win for QF and AA.

Obviously an idea like this sounds simple on paper but requires a lot more thought to implement. In the example I have given – the QF-AA tie:

  • AA would need to ready a stable of pilots rated on the 744/388.
  • QF would need to be satisfied that their equipment and brand was being looked after.
  • “Operated by” stickers would need to be in place to appease the DOT.
  • Perhaps a ghastly OneWorld livery too.

These and a whole slew of other items must be addressed but in the end I think the possibility for this to happen is there. Beyond Los Angeles, San Francisco and Vancouver have planes that sit on the ground for long periods. A similar deal could easily be struck up between say Air New Zealand and United who already fly the 744.

In my opinion if this type of short cycle leasing is ever going to happen the biggest possibility will be between the Virgin carriers. Virgin America are stable and expanding V Australia is making inroads on the US west coast. As both airlines take additional deliveries I think V Australia’s schedule will start to look more and more like Qantas’s which will create the perfect platform for Richard “fair dinkum” Branson’s Aussie carrier to short-cycle lease 777s to Richard “born on the fourth of July’ Branson’s American carrier. Of course such an action would set the “birthers” off and likely cause a ruckus on Capitol Hill, but guess what it would be a perfectly legal arrangement.

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Five things Bombardier must do help the CSeries fly

Filed Under: 2 cents, what if
Apr.29, 2010

CSeries family

CSeries family. Image from Bombardier Multimedia

Since it was announced in mid-2004 the Bombardier CSeries has been something of an enigma. Airlines have blown hot and cold on it. Bombardier themselves cancelled the program in early 2006, only to restart it a year or so later. The skeptics out there will have already written this plane off as yet another paper airplane that will never materialize. Until a prototype is built and takes to the skies there is little Bombardier can do to quiet these skeptics. Nor should they, they have bigger fish to fry to give the CSeries lift.

Here are five things I feel Bombardier can do to give this beauty a chance at the big time:

Broaden the marketing offensive. By this I mean Bombardier should work to bring the CSeries into the public eye. Any airline worth its salt already has the CSeries on its radar but in this age of viral media and consumer loud-mouthing Bombardier needs to form a direct connection with the flying public not just the carriers they sell to. The strongest message they can use to foster this relationship is their “lean, clean, green” advantage. Picture a hybrid car commercial except with a plane “With 70% advanced weight-saving materials, 20% less fuel consumption and greatly reduced noise and emissions nothing in its class comes close to the CSeries. Demand the CSeries next time you fly.”

Get a celebrity voice. If Bombardier are really smart they will implement their marketing offensive with the help of a celebrity endorsement (Please don’t let it be Celine Dion ;)). The amount of influence and reach movie stars, musicians and pro-athletes have on the web and on TV is astounding. Bombardier needs to cozy up to one or more stars to drive the CSeries name home. That should be fairly easy given the existence of Flexjet and its clientèle.

Assuming that Bombardier have done their due diligence and targeted airlines whose 320 and 737 fleets are getting on in years they need to swing for the fences. That is to say they should create demand, rather than wait for demand to surface. How do they do that? Create an off-the-shelf airline and find investors to back it. My suggestion: survey and spec’ an LCC operation for South America using the CSeries and get investors on board. There is a real LCC void in South America right now and the first one in stands to make a lot of money.

Up-sell CRJ operators. The messy nature of the airline business has lead many airlines to farm out regional flying to smaller operators – a space in which the CRJ is popular. Such operators typically have lower operational costs than their larger colleagues. In the current economic climate, this has put many of them in a stronger position than the mainline carriers they fly for – strong enough to venture out on their own on certain sectors albeit under a weaker brand name. Consider that one of the orders Bombardier has secured came from Republic Airways Holdings, a company which has its roots in regional flying through its Chatauqua Airlines, Shuttle America and Republic Airlines arms. There are a number of other similar circumstances to investigate.

Address short runways. These are a great niche that the CSeries – certainly a variant of – should be able to handle. Airports such as LCY and SDU would be prime targets. Especially LCY given it is served by Swiss who already have an order in place for the type.

Satisfy Swiss. With all due respect to other buyers Swiss is currently the Bombardier CSeries’ star customer. Do what it takes to make them happy. As a former colleague of mine loved to say “nothing succeeds like success.” With one such marquee success story in the bag others will follow. There is so much opportunity within the Lufthansa Group and the Star Alliance that Bombardier simply can not afford for this relationship to be anything but a success.

Bombardier have the desire and the know-how. At this point it’s a question of will. Bonne chance!

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Why Air Canada needs the 787

Filed Under: 2 cents, what if
Apr.19, 2010

We’re in the second quarter of 2010, which means that in a parallel universe somewhere Air Canada is dotting the umlauts (even in this parallel universe it’s worthwhile running things past zee Germans) and crossing the t’s in the final ramp up to entry into service (EIS) of the 787-8. If only the same thing was happening in this world. The 787 – when it arrives – will be a godsend for Air Canada.

Despite the severe delays in the 787 program Air Canada unlike certain other buyers have kept fairly quiet. There have been no brash statements made to the media or Boeing, no threats to cancel the order, and no toys have been thrown. It’s been business as usual. Is this inactivity just a manifestation of Canadian sensibilities? It could be but I doubt it. Ever since the 787 order was finalized (and subsequently grown through the conversion of options) the exact role the 787 will play has not been publicly revealed. The tune emanating from Air Canada circles has been that the 787 will be a straight swap for for the current 767 fleet. Sure they both seat about 210 passengers but a straight swap would require only 30 frames, not the firm 37 (+23 options) currently on the books. That indicates an eye on growth. Where? The answer to that lies in the 787′s superior range.

Anything you can do I can do better
Consider the reach of the 767 (10,549 km) vs the 787 (14,700 km1) from Toronto:

767 vs 787 ex Toronto

767 vs 787 ex Toronto

What about Vancouver?

767 vs 787 ex Toronto

767 vs 787 ex Vancouver

That band in the middle reflects areas that the 787 can reach that the 767 can’t. The 787 puts most of the far East and all of the Asian Subcontinent and Africa within reach. No stops. No weight restrictions. No problems. Consider some of the cities that fall into this band: Delhi, Mumbai, Karachi, Colombo, Dhaka, Johannesburg, Seoul/Incheon, Auckland, Bangkok, Manila. Surely some of those are viable from YYZ?

Aotearoa Dreamin’
With well timed connections onto Australia I find it impossible to believe that Toronto-Auckland could not work. NZ serves Australia extensively and is a member of the Star Alliance. There is a natural fit. Given ETOPS requirements YYZ-AKL is a stretch but should be possible. Granted Air Canada could serve other locations (than Sydney) in Australia using the 787 from Vancouver (see Fig 2 above) or indeed add YVR-AKL but I think that would cannibalize from the existing Vancouver-Sydney service. The bigger wrinkle here is that Air New Zealand have also ordered the 787 and will likely deploy it to North America and are already well established in both markets. Time to play the Star Alliance Kooperation über alles card.

Next stop Jozi
There is likely already enough demand between Toronto and South Africa to merit a daily service. Middle eastern and European carriers dangle special fares to South Africa to their Canadian web visitors. Obviously this is in part due to the upcoming football World Cup but this practice has been in place for a long time. Even if Canada-South Africa traffic is put aside one can not ignore the additional reach attainable through South African Airways’ network.

A doosra for Delhi
Routes to South Asia pose another challenge. Those of you that follow Air Canada will know that they have already tried (and failed) to establish a presence in India. The reason for this retreat was simple, they just didn’t have the right plane and positioning to compete. The 340s were too big and by many accounts too thirsty for the job and the short-lived Toronto-Zurich-Delhi runs on 767s were also not hitting the mark. There is a lot of capacity and competition between Canada and India. In fact you can probably fly one-stop to Delhi from Toronto through no less than a dozen cities but no matter how good the in-flight product is I doubt it can compete with a painless, direct service – price sensitivity be damned. The question for me is not whether AC will re-enter the region it’s more where and when. Delhi is the obvious choice.

Asia pacifically
Incheon and Bangkok are also interesting. Canada and Korea have an open skies arrangement in place and Canada and Thailand have a fairly open Air Services agreement in place. They are both of course also Star Alliance hubs and either could be used as a staging ground from which to target pacific rim traffic.

And then there’s Manila. At first glance it seems like fairly random destination to throw into the mix but when you consider that Filipino-Canadians are the third-largest Asian-Canadian group in Canada after the Indian and Chinese communities it’s not so far fetched.

All of the above completely ignores both Calgary and Montreal, two cities with great potential. It also ignores the additional frames and operational flexibility that will be made available when the 787s start arriving in earnest. Most importantly I have ignored visa hassles. Considering that nationals of  many (if not all) of the countries now in scope – thanks to the 787 – need transit visas to get to Canada through Europe and the United States. These visas are both slow to obtain and expensive.

The variables and possibilities are staggering but the promise of the 787 is undeniable. Let’s hope Air Canada has something interesting in store. What do you think? Am I off my rocker?

Notes
1] I took the average of the two projected ranges here.

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What Air Canada and WestJet can do to fight off Porter

Filed Under: what if
Apr.12, 2010
Possible offsite check-in locations.

Possible offsite check-in locations.

In just three (or so) years Porter has gone from being a boutique operation to being a true contender. In fact they will soon offer more frequencies between Toronto and Ottawa, and Toronto and Montreal than either WestJet or Air Canada – every hour and every forty minutes respectively. Of the many things that make Porter appealing convenience is king. Not free drinks, not free WiFi. Convenience.

A couple of months ago I had an unbelievable experience with Porter; it took less than 15 minutes from my home to YTZ and less than seven [sic] minutes to check in and clear security. Try doing that at Pearson.

So the question becomes how can Air Canada and WestJet combat Porter’s YTZ offering? The answer is simpler than you might think. Buses. No, not the kind of buses built in Toulouse. Regular wheels-on-the-bus-go-round-and-round buses.

Like many places around the world, the ability to check in for flights should be extended from the airport to satellite locations around the city. The obvious locations would be major subway stops and malls. With a system like that in place passengers would only have to worry about getting to say Bloor and Yonge where they would be able to check in and then mentally check out needing only to deal with security once at the airport. It’s really about changing the perception people have of getting to Pearson. The aforementioned buses would provide ferry service to and from Pearson. This would make the trek less of an issue and would reduce the amount of time passengers would have to spend milling around in lines once at the airport. If necessary AC and WS could charge a fee for such a service or perhaps even restrict check-ins to Eastern triangle flights. This small addition would really make a compelling argument to fly out of YYZ.

The Toronto Transit Commission (TTC) already serves YYZ but service is sketchy and there are no kiosks or airline personnel to check passengers in offsite. The TTC has announced the intention to serve YYZ with light rail but that service will not be available for the foreseeable future and AC and WS both need to act now to fight the bleed to YTZ.

Add into the mix that the expansion of YTZ will inevitably mean longer lines and wait times and AC may not even need to fight to fly out of YTZ. In fact I would hazard a guess that the cost of setting up an operation such as the one I’ve described would be less than the legal fees AC will incur in their fight to get off the ground from YTZ.

What do you think?

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How long till we see alliance-based advertising?

Filed Under: what if
Mar.03, 2010
AC ship C-FMWY on final approach at LHR

AC ship C-FMWY on final approach at LHR – photo by Johannes Pape

Before heading out to Vancouver to catch the Olympics I sat down to contemplate Air Canada’s decision to splash out significant cash to be in the Olympic advertising picture. If reports are to be believed, Air Canada paid anywhere between 15 and 30 million dollars (US) for the privilege of being an “Official Supporter” of the Vancouver 2010 Olympics.

My question is why? Let’s be honest, the Air Canada balance sheet does not exactly show a lot of wiggle room for costly ego projects. Is it just a case of private enterprise trying to capitalize on patriotic fervor? Future arrangements would suggest that this might be the case; British Airways has locked up similar rights to London 2012 and Aeroflot has locked up Sochi 2014. However, lessons – as the old adage goes – are best learned from the past, not the future. Let’s not forget that Ansett Australia, Canadian and Pan Am all held similar designations for Olympic Games past (Sydney, Calgary and Sarajevo respectively) and none of them are still alive and kicking to talk about the value of those investments.

I’m not saying that the money AC sunk into the games was not worthwhile I’m saying they (and others in the future) should augment their approach – they should attain these designations at the alliance level, not the airline level. I doubt the Vancouver Olympic Committee would have had too much issue with making the Star Alliance (rather than Air Canada) an official supporter. After all they would still get their money, likely even more than AC ultimately forked over. Were such an arrangement made, I’m sure the stakeholders within the Star Alliance would have been able to come to an agreement determining how much each member carrier should contribute – even allowing uninterested members to opt out.

Consider the medal count against the countries of origin of Star Alliance carriers:


Country Gold Silver Bronze Total Star Carriers
1 US flag USA 9 15 13 37 US Airways, Continental, United
2 Germany 10 13 7 30 Lufthansa
3 Canada 14 7 5 26 Air Canada
4 Norway 9 8 6 23 SAS
5 Austria 4 6 7 17 Austrian
7 Korea 6 6 4 16 Asiana
8 China 5 2 4 11 Shanghai Airlines
8 Sweden 5 2 6 13 SAS
11 Switzerland 6 0 3 9 Swiss


To me the above table screams lost opportunity. Air Canada would still have received enough coverage at home to keep WestJet at bay and it would have further benefited from revenue sharing arrangements with a number of its partners – all of whom would also have been able to exploit patriotism in their back yards.

I understand how complex it would have been to facilitate an arrangement such as the one I have described, but I really do feel it would have been a worthwhile exercise. Besides, the top dog at AC is a former lawyer and an expert in such matters and might have been able to handle the legalese himself, saving a few more bucks.

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Stunning South African Airways livery

Filed Under: what if
Jan.08, 2010

There are many schools of thought when it comes to airline liveries. Some settle on a design and stick with it for as long as possible. Others prefer radical periodic change. I fall into the intersection of these two groups; I say keep updating your livery till you have found one that is strong, timeless and recognizable. Once such a livery is in place keep the fundamentals unchanged but constantly evolve it. This seems to be a sound approach. KLM, Air France, Singapore Airlines and Emirates (amongst others) all appear to follow this philosophy – special liveries notwithstanding – and every single one of them is a world class carrier. Enter the following design:

Stunning South African Airways livery

Stunning South African Airways livery by Raydon Designs

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