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Archive for January, 2008

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Ryanair, long known for its saucy and subversive ads, is in hot water over an ad featuring French president Nicolas Sarkozy and his lady love, Carla Bruni. With rumors of their engagement swirling around Paris, the ad shows Bruni musing at Ryanair’s low fares: “With Ryanair, my whole family will be able to come to my wedding.” Funny, of course, but policy-related? Why, yes. Sarkozy and Bruni have sued the scrappy Irish airline over their inclusion in the ad, he for €1 and she for €500,000. (A settlement is likely.)

As often happens with Ryanair’s ads, the controversy has generated much more attention than the ad itself. Ryanair CEO Michael O’Leary relishes the attention: “This is the most fun you can have with your clothes on.” The airline’s entire corporate image is endearingly crass. It recently offered “a free night of passion” in an Irish hotel to the winners of a “snogging” contest, referred to its main competitor as “Lazyjet,” distributed a racy charity calendar (those who objected “were probably just jealous”), and vigorously lobbied against the government entities it crosses.

Sarko vs. Ryanair [Things with Wings]

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DOJ OKs TPG & YX

I was trying to see how many acronyms I could get in one title. Not too many, I guess.

  • But, speaking of antitrust, the Justice Department has given the all-clear on TPG Capital’s purchase of Midwest Airlines (YX) with dominant regional neighbor Northwest holding a “passive stake.” Holly Hegeman says AirTran wins. Cranky offers up a Photoshop illustration of what might happen next.
  • JetBlue is sponsoring its own pilot recruiting and training program. [Aero-News.Net]

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Any prospective airline merger will have no small obstacle in the Justice Department’s Antitrust Division, which assesses the potential competitive effects of tie-ups. If it finds fault with a coupling, its threat to sue is usually enough to deep-six the merger plan.

DOJ reviews every proposed merger according to its Horizontal Merger Guidelines: (more…)

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Merger myths busted

Over at Things with Wings, Hubert Horan has a list of merger myths being floated by those with a narrow financial interest in consolidation.

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  • China is organizing the domestic investors in its jumbo jet program. [ATW Daily News]
  • The Israeli government is taking on a greater share of El Al’s security expenses, and in return, the flag carrier is giving up some of its long-haul route monopolies, opening the routes to domestic competitors. [ATW Daily News]
  • A Southwest 737 slides off a snowy runway in Spokane. No one is injured, but trial lawyers are looking for a payday. [Aero-News.Net]

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My article on recent labor-related congressional action that can make airline mergers easier is up now on Forbes.com.

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I’m working on a long post about the dynamics of the pilot shortage (and tracking down some hard data), but here’s a look at how the looming shortage of pilots is putting less experienced crews in the cockpit and (eventually) forcing airlines to up pilot pay. As for that whole “high salaries await pilots” thing, put the numbers in perspective with the helpful tools at Airline Pilot Central.

Airlines scramble to fill cockpit vacancies; high salaries await pilots [New York Daily News]

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  • The Washington state senate is weighing a state passenger’s bill of rights. Why? “Inspiration for this bill came from my own experience of sitting on a runway for four hours,” says the sponsor. Argh. [ATW Daily News]
  • New Kentucky governor Steve Beshear wants to get his hands on any potential Delta-Northwest merger. [Today in the Sky]
  • China plans to build ninety-seven more airports by 2020. Interesting fact: “almost four out of 10 Chinese don’t have an airport within 100 kilometers (62 miles) of their home.” [Bloomberg via Planenews.com]
  • . . . and you don’t expect Nigeria to be the site of aviation progress, but the government is privatizing six of Nigeria’s busiest airports, including the gateways in Lagos, Abuja, and Calabar. [This Day]

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More merger skepticism

There’s a good article today in the Atlanta Journal-Constitution about value of airline mergers. The AJC focuses on lessons for its hometown airline, Delta. It confirms what I wrote on January 17, exposing the flaws in the US Airways-America West merger obscured by Wall Street’s enthusiasm. Some key points:

  • Mergers often look good on paper – and can boost shareholder profits in the short run – but the successful union of two geographically and culturally different airlines saddled with their own problems isn’t guaranteed.”
  • US Airways, though, suffered more fundamental problems. International flights – the biggest moneymakers and the industry’s future – account for only 20 percent of US Airways’ business. And customer service took it on the chin: lost reservations; delayed flights; long check-in lines.”
  • “‘It was absolutely one of the messiest operations I’ve ever seen,’ [airline consultant Mike] Boyd said. ‘A merger does not enhance customer service; it makes it more difficult. Passengers pass on their problems to every employee they meet. That makes their job harder. That’s another reason why a lot of these alleged synergies don’t exist.'”
  • [U]nions representing pilots, mechanics, ramp and baggage handlers and flight attendants remain contract-less more than two years after the merger was announced. Dueling, east-versus-west pilots’ unions, in particular, trouble investors.”

Read the whole thing.

US Airways’ saga offers cautionary tale for Delta merger [Atlanta Journal-Constitution via Today in the Sky]

Image credit: Flickr user Cubbie_n_Vegas. Used through a Creative Commons license.

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In an otherwise unremarkable editorial today, the Washington Post lets slip some factual and logical errors about airports.

The Post assails the Federal Transit Administration’s decision to put the kibosh on the long-planned extension of DC’s Metrorail system to Dulles International Airport. The only transit connections to DC’s major international airport are a bus line from just outside downtown and an express coach from a suburban Metro station. I use Metro almost every day, but while a connection to Dulles (and the fast-growing suburban areas of Reston and Tyson’s Corner) would be nice, I am of no opinion as to whether it’s worth the $5 billion-and-growing cost.

But I am happy to poke a finger in the Post‘s eye for its silly and fact-challenged opening paragraph, a histrionic howler that does no service to what follows:

The international airports in Chicago, London, Hong Kong, Tokyo and Sydney are served by passenger rail lines. Those in Kampala, Ulan Bator and Tegucigalpa are not. The Bush administration has now, for all intents and purposes, decided that Washington, D.C., belongs forever in the second category and not in the first.

First, some facts: Kampala has no international airport. Uganda’s main airport is located in Entebbe, twenty-plus miles from Kampala. Tegucigalpa has an international airport, but its short runway makes it of little use for international flights (the only two of long distance are to Houston and Miami). The main international airport of Honduras is in San Pedro Sula on the other side of the country. San Pedro Sula’s airport has more than ten times the passenger traffic of Tegucigalpa’s. So really now, Post, a little research might have helped your case.

But even so, does the lack of rapid rail transit really make Dulles comparable to Mongolia’s Genghis Khan International Airport? Not really. This is a classic example of an overgeneralization: if some world-class airports have rapid rail transit, then all should. It’s also a shameless ploy to make Washingtonians feel inferior to residents of other great cities. Here are some airports in the Post‘s first category: Friedrichshafen, Germany (pop. 60,000); Pisa, Italy; and Trondheim, Norway. These small airports have rapid rail transit links. And here are some world-class airports with no rapid rail transit links: Denver, Dubai, Kuala Lumpur, Las Vegas-McCarran, Melbourne, Miami, New York-LaGuardia, Prague, Sao Paulo-Guarulhos, and Toronto-Pearson.

I’m not trying to argue that Dulles should not have a rail link, but only that the Post‘s attempt to get support for one by an appeal to inferiority is specious. Make the argument for rail links based on evidence and reasoning. This kind of half-cocked appeal to prestige, when adopted by policymakers, usually results in bad policy.

Dulles Derailed [Washington Post]

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