American and US Airways reached a settlement with the U.S. Department of Justice.
We learned Tuesday that US Airways and American Airlines have settled their antitrust lawsuit with the U.S. Department of Justice and several state attorneys general.
The deal, as expected, requires the combined carrier to divest itself of assets in some major business markets — mostly New York and Washington, but also other places, like Chicago, Boston and Los Angeles. Many experts believe American and US Airways did pretty well in the deal, and I agree. The new American should be at least as strong as competitors Delta and United. The biggest divestiture comes in the form of slots — or takeoff and landing rights — with the new airline losing 34 slots at New York La Guardia and 104 at Washington Reagan.
My job is to focus on West Coast aviation. So let’s take a look at the nuts and bolts of what the DOJ Settlement means for LAX.
Frontier Airlines believes there’s space for a third ultra low cost carrier in the United States. Do you agree?
I linked to it earlier today, but I think it’s worth taking another look at Brett Snyder’s interview with Daniel Shurz, Senior Vice President – Commercial for Frontier Airlines.
In one of the most interesting parts, Schurz says the U.S. market needs more ultra-low cost carriers, like Allegiant and Spirit. He says the airlines we now view as low cost — Southwest and Jetblue among them — are not really LCCs in the European model.
Into and out of the UK on intra-Europe flying, ULCCs account for over 50% of capacity. In all of Europe, it’s just over a third. Spirit and Allegiant represent slightly below 3% of US capacity. Even if you include Frontier, we want to get to the ULCC point, it’s still under 4.5% of the capacity. I think that leaves a significant opportunity for ULCCs in the US market, and I think it leaves an opportunity for differentiated strategies across the ULCCs.
Frontier has been making a play not only in its long-time home of Denver, but also in smaller airports in the Northeast, such as Trenton, N.J. Shurz tells Snyder that the region is ripe for an ultra low cost carrier.
And the world has changed. I think you’ve done work, Brett, to show how much domestic fares have risen notably on one airline, but also generally. And that’s what’s creating opportunity for ULCCs in the country. It’s that fare umbrella. The northeast never had low fares to the same extent since Southwest was never that big in the Northeast. And their failure to succeed in Philadelphia has led to fares rising. One of the things about Wilmington is that even though Baltimore fares are lower than in general in the northeast, they’re significantly higher than they were 5 to 10 years ago.
I’m not sure whether Frontier will be successful as the third ultra low cost carrier in the United States. But I do think the market needs more low-fare airlines to undercut carriers like United, American, Delta and even Jetblue and Southwest. It’ll be interesting to see what happens.
Do you think Frontier can make it? The airline likely will be sold in the next few days to Indigo Partners, a Phoenix investment firm.
JetBlue Airways and Delta Air Lines are wasting no time ensuring that passengers will soon be able to use their electronic devices in all stages of flight.
JetBlue could be first, with an airline spokeswoman telling me it could be as quickly as this afternoon. “JetBlue will allow the use of PEDs as quickly as we receive approval from the FAA,” spokeswoman Sharon Jones said.
Delta, too, is moving quickly, though it may not be ready until Friday. Here’s what Delta officials have to say:
Delta Air Lines is ready to allow its customers to be the first to use their portable electronic devices below 10,000 feet as early as Nov. 1, 2013 pending Federal Aviation Administration approval. All Delta aircraft have completed carrier-defined PED tolerance testing to ensure the safe operation of passenger portable electronic devices during all phases of flight and Delta’s plan has been submitted to the FAA for approval.
As I reported earlier this morning, the Federal Aviation Administration will allow airlines to set their own rules regarding whether passengers can use iPads, iPhones, Kindles and other similar devices during the entire flight, including takeoff and landing. The airlines will have to prove to the FAA that that the devices will not conflict with flight operations.(Currently, devices must be shut off at altitudes lower than 10,000 feet.)
Even under the new system, customers will not be able to make calls or use their phones to transmit data on any airline. So “airplane mode” will still be useful.
Like a lot of customers, I’m impressed that JetBlue and Delta are moving so fast on this. But I imagine that all airlines will move relatively quickly. There’s no reason for them to be at a competitive disadvantage.
What’s the target market for Long Beach Airport?
According to some materials I obtained last week from the airport, it’s the 1.5 million potential passengers living within about 11 miles of the airport. Not a bad home market, especially considering the airport is about halfway between Los Angeles International Airport and John Wayne Airport in Santa Ana. The demographics are strong.
In my story about Long Beach Airport’s strengths that ran earlier this week, airport manager Mario Rodriguez said the ‘yields’ airlines get a little higher the farther south you go in the catchment area. Essentially that means that the closer you get to Orange County, the higher fares passengers are willing to pay.
If you believe this slide, below, Long Beach officials are pleased with the stature of the airport, which is limited, by noise regulations, to 66 commercial departures daily. (Only 41 of those flights can be on relatively large airplanes, like the A320 and 737. The other 25 slots go to so-called commuter airplanes, like the CR2 and CR7. Many of those slots are unused.)
According to Long Beach officials, the airport could probably grow slightly if noise restrictions loosened. (That’s probably a moot issue. While I haven’t been covering the airport for that long, I don’t think city council leaders are prepared to make substantive changes to the ordinance.)
JetBlue is naming its new first class cabin, “Mint.” Photo courtesy of the airline.
You’ll have to wait until next June to try it out, but JetBlue Airways officially unveiled its new “first class” product on Monday at an event in New York City. The product will only be available on certain transcontinental routes.