On Friday I spoke at the Phoenix Shy Harbor International Aviation Symposium, I’m not usually one for the aviation business-related events, but they wanted me to add comment on loyalty programs and also elite benefits and the intersection with ancillary revenue, so they had me out and the panels turned out to be fascinating.
@CrankyFlier in particular did an outstanding job live-tweeting the event, so if you’re curious for the raw commentary you might check it out or hash tag #PHX2012.
Some of the fascinating things I heard:
- Scott Kirby, on my panel, likes what John Pistole is doing at TSA to be more efficient. I wouldn’t give him that sort of credit, though in a sense compared to Kip Hawley — aside from protecting federal employee unons — that might well be true.
- Willie Walsh likes bankruptcy when a partner does it but not when a competitor does it. He noted that the new ‘low cost carrier’ Iberia Express is Iberia, feeding its hub with 2-cabin service, but with lower labor costs (he just calls it lower cost. They couldn’t negotiate lower labor costs with their trade unions, so they started a separate airline to lower those costs. He had a great line about oft-neglected ground operations, “we don’t lose bags in the air.”
- Doug Parker doesn’t like industry consolidation (!). This tied for ‘best quote of the conference’ but he demurred on that honor (for understandable reasons, cough). He also noted that putting movies on airplanes makes no sense anymore, since everyone has their own entertainment. He could see streaming it to individuals’ players, but not installing equipment at each seat.
- Ben Baldanza of Spirit is an unabashed exponent for his business model. There’s no shame in the fees. I liked him a lot, even if I don’t want to fly his airline.
- Dave Cush of Virgin America was another interesting guy, about 25% Wifi penetration on their San Francisco – Boston flights though speeds slow to a crawl in the Northeast. He noted the importance of airport expenses, Miami has gotten way too expensive which is why they fly to Ft. Lauderdale, and their customers don’t care. (Panel consensus was that people don’t want fancy airports, they want in and out of the airport quickly, so make it nice – with free wi-fi, a nod to conference hosts Phoenix airport — but don’t waste money on amenities.
Cranky tweeted a couple of interesting comments made before I arrived at the event:
Air China “when airports like BOS, DFW, IAH, and PHX ask when we’ll fly there, we say go ask Boeing” – 787 delays
Delta VP “economics of the [50 seat RJ] is very challenging right now” – would like to shrink that fleet “substantially lower”
Regarding the Virgin America comment: wifi “speeds slow to a crawl in the Northeast.” Why is that? More users or satellite reception? Interesting comment.
@”Delta VP “economics of the [50 seat RJ] is very challenging right now””
Just flew that one to BWI. VERY challenging to SIT in as well. Exit row gives you an extra 1/2 in. It is painful, unless you’re short.
Although a UA 1K, I’ve flown Spirit twice, DCA-FLL, both times in a “Big Seat.” I thought the crews on both flights were among the most energetic, efficient and enthusiastic crews I have ever encountered.
Parker, of course, was joking when he said he was “against” industry consolidation. Consistent with previous comments, he did say it was “not a strategic imperative anymore” (obviously true, given that US is profitable despite sky-high fuel prices). Parker also said that there might be more transactions anyway — because it would be profitable. With US reportedly briefing AA creditors this past week, it seems pretty obvious there will be at least one more transaction attempted.
I also thought Scott Kirby’s comments about onboard wi-fi were interesting. Confirming most folks’ suspicions, he said the buy-rate was only in the mid-single digits — and that you needed about 15% buy rate to make money on it. He also said, essentially, that pax want it — even though they don’t want to pay for it. Given this reality, does anyone know how gogo actually makes money, or who bears the risk for installation? US just announced that they’re going to put wi-fi on almost all their planes and, given US’s bean-counter reputation, I don’t think they’d do this if it was going to cost the airline a lot of money.
“Shy” Harbor. LOL.
@iahphx Gogo currently is relying on private aircraft for a disproportionate share of their revenue
Makes sense that private aircraft would use it more. Anecdotally, I’ve heard that most of the commercial aircraft use of wifi has been from business travellers — who can expense it. Consumers just are accustomed (or willing) to pay for internet. But folks love free internet. If somebody can figure out a way to commercially “sponsor” onboard wifi, demand would soar.
I hate the CRJ with a passion at I am 6′ 4.” Deltapoints had already commented that they seem determined to decrease the number of these turture devices. I honetly think it will be a net benefit to me in Sioux Falls. While I suspect the number of MSP flights will drop, I bet I will get more planes with 2 cabins and we may finally get a Salt Lake City flight which need. Man, do I miss the DC9…..