American: Protecting its New York Turf



By Ted Reed 08/18/10 - 01:53 PM EDT


DALLAS (TheStreet) -- After 84 years of operating in New York, American Airlines(AMR) is not backing down in the face of dramatic expansion by its competitors.


"It's a major issue for us to protect our turf here," said Art Torno, a 31-year American veteran who took over as vice president for New York in March. A big advantage for American, Torno said, is the $1.3 billion terminal the carrier opened at Kennedy Airport in 2007. "That terminal is the place to be, one of the finest in the country," he said. "It's modern, state of the art and roomy."

Now American is trying to squeeze more synergies out of the terminal. (Kennedy is among the few airports where terminals can be dedicated to a single airline.) For instance, it will move in more alliance partners now that regulators have approved a trans-Atlantic joint venture and may soon approve a trans-Pacific joint venture as well. American also wants to boost its level of cooperation with JetBlue(JBLU), Kennedy's largest domestic carrier, to enhance the feed to its international flights.


One thing American cannot afford to do is stand still, because competitors are ramping up dramatically in New York. Delta(DAL), already growing in New York, said last week it will spend $1.2 billion to upgrade its terminal at Kennedy.


Meanwhile, United(UAUA) awaits regulatory approval for a planned merger with Continental(CAL). Perhaps the biggest single prize in the merger is Continental's Newark hub, which will become the New York gateway for the world's biggest airline.


The Newark hub means that "Continental is in the driver's seat" in New York, said Stifel Nicolaus analyst Hunter Keay.


But the region is too important for any Big Three airline to step back. "No one has retreated," said consultant George Hamlin. At LaGuardia, US Airways(LCC) sought to tactically pull back by trading slots to Delta in exchange for slots at Washington Reagan National, but regulators blocked that deal.


Kennedy is the epicenter because three of New York's four principal airlines operate hubs there. In March, American signed a deal with JetBlue that included an interline agreement and some slot trades. Now efforts are underway to expand on that. For instance, as TheStreet reported previously, American and JetBlue are talking about a code share, an extremely close cooperative agreement in which carriers can write tickets on one another's flights.


Unfortunately, the lack of a shared terminal means 90-minute connect times between flights, when an hour or less is typical for dual-airline connects. At Kennedy, connecting passengers must take a bus between terminals and pass through security a second time. But Torno said American and JetBlue envision a bus that would keep connecting passengers on the sterile side of security, reducing the connect time to 60 minutes. Conceivably, the bus will begin running whenever the code share starts, but the two carriers are not rushing to expand the agreement. "We're taking baby steps to make sure what we are doing makes sense," Torno said.


As far as American's partners in the Oneworld alliance, they too could be housed in American's terminal. Currently, partners including AirBerlin, Finnair and Malev are occupants. "We would like to see a facility that is the Oneworld New York gateway," Torno said. "We're in deep negotiations with British Airways to come in, [although] we're not close to finalizing them." Iberia could also be an occupant, as could Japan Air Lines, assuming an application for trans-Pacific joint immunity is approved.


Similarly, American's joint venture partners are moving to house their sales teams in a single midtown office building. "We will co-locate in one office, with fully-integrated sales forces working side by side." Torno said. "When we go to negotiate a deal, we will go in together."


As for LaGuardia, the close-in New York airport, American ranks second to Delta. In 2009, according to figures compiled for TheStreet by OAG Consulting, the combined passenger total for Delta, Northwest and regional affiliates was about 6 million passengers. American and American Eagle carried 4.7 million passengers. Third-place US Airways and regional affiliates carried 4.2 million passengers.


November schedules show that Delta will provide 33% of LaGuardia capacity, while American will provide 20% and US Airways will provide 19%, said OAG. American has been building its LaGuardia schedule, adding American Eagle flights to Minneapolis, Atlanta, Raleigh-Durham and Charlotte on CRJ-700 regional jets that have first class cabins, as well as increased mainline service to Miami and Chicago.


Despite all the improvements, Avondale Partners analyst Bob McAdoo said he views American as New York's no. 4 carrier. The Kennedy terminal is spacious and imposing, but American doesn't utilize it sufficiently -- which is why alliance partners are being welcomed with open arms.


Additionally, he said, American has not sought to provide the type of classic hub that Delta has. While Delta has 876 weekly departures from Kennedy, not only to major cities but also to Akron, Burlington, Vt., and Indianapolis, American has just 426. "I look at the number of cities one guy brings to town versus another, the number of possible connections," McAdoo said. "It's one thing to say 'New York to London Heathrow is wonderful' and 'I have some good markets.' It's another to say, 'I have a hub.'"


Torno said the American strategy in New York, as elsewhere, is to serve the best, most profitable routes, such as Heathrow and Los Angeles and Chicago, and, in January, Tokyo Haneda as well as Tokyo Narita.


"We may not be the biggest in New York," he said. "But we are big where it counts."


-- Written by Ted Reed in Charlotte, N.C.

American, JetBlue Negotiate Code-Share



By Ted Reed 08/16/10 - 04:21 PM EDT

American Airlines/JetBlue story updated with comments from JetBlue.


DALLAS (TheStreet) -- American Airlines(AMR) and JetBlue(JBLU) are negotiating a code-share agreement that could be in place as early as the first quarter of 2011. "We are negotiating, working towards perhaps a code-share in the future," Art Torno, American's vice president for New York told TheStreet. He emphasized that no agreement has been reached so far.

A code-share, which enables airlines to sell tickets on one another's flights, would be a natural step in the increasing cooperation between American and JetBlue, which in March announced plans to work together in New York where both operate hubs at Kennedy International Airport. The two carriers recently announced plans to enable customers to earn frequent flier miles on either airline on connecting flights.

The next step, said JetBlue spokesman Bryan Baldwin, is for the carriers to post interline itineraries on their websites.

"We've said all along that we are open to discussions with American to grow this relationship, but at this time we have no plans to enter into a traditional two-way code-share relationship with American," Baldwin said.
The initial deal involved an interline agreement enabling sales on one another's flights, but the proceeds are remitted directly to the operating carrier. In a code-share, revenue is pro-rated between the airlines and each airline can put its own code on the other's flight. Interline agreements are far more common: American has about 135 interline partners. Both arrangements enable baggage exchange between carriers.

Torno said he has worked closely with JetBlue CEO Dave Barger since the initial deal was announced, but the two carriers want to take things slowly. "We're taking baby steps to make sure that what we are doing makes sense," he said. "Whatever we implement, we want to make sure it works."

As the biggest aviation market in the world, New York is hotly contested. Delta(DAL) said last week it will spend $1.2 billion to upgrade its facilities at JFK .

Meanwhile, a merger between United(UAUA) and Continental(CAL) means the combined carrier will push more traffic through the latter's Newark hub.

Torno said American has a competitive advantage with its $1.3 billion JFK terminal and plans over time to move its alliance partners British Airways and Iberia into the terminal as well. Additionally, if a trans-Pacific joint venture with JAL is approved, that carrier would also be expected to move to the American terminal.
American's parent AMR closed down 0.72% to $6.85 on Monday, while JetBlue shares closed down 0.33% to $5.96.

-- Written by Ted Reed in Charlotte, N.C.

Howie Kurtz Scolds Media Over Coverage Of ‘Bogus’ Steven Slater Story                            

5:24 pm, August 15th, 2010


Howard Kurtz hates shark week. Kidding! Howie Kurtz simply does not approve of either Steven Slater nor the adoring coverage he received at the hands of the media. Especially the latter. Kurtz saved his Slater rant for the last few minutes of Reliable Sources today, the gist of it being that Slater could have killed someone, and the media has gone overboard in their coverage of his antics (cue: “those darn kids!”).

And here’s what left me with motion sickness: this JetBlue clown, the flight attendant who got ticked off at a passenger, then triggered the emergency chute at JFK Airport and slid his way out of a job and got himself arrested is actually being celebrated by the media.

Yes, I know, it’s August and he’s got over 200,000 Facebook fans. But Steven Slater could have killed someone on the runway with that reckless move. And yet, look at this — front page of “The New York Times,” front page of “USA Today,” front page of the New York tabloids, and television in a tizzy.

Yes, the media went overboard — as much as I enjoyed their coverage, by the end of the week the NYT appeared to have made Stephen Slater their personal mascot. However, in the grand scheme of overdone stories this year (and make no mistake this has been a banner year), overdoing a story 98% of the country enjoys hearing about seems to me to be a lesser sin than say, a beer summit clock

American Airlines in talks to revamp JFK terminal
Published: August 12, 2010 10:59 AM
Modified: August 12, 2010 12:03 PM


Carrier seeks to bring alliance partners British Airways and Iberia under one roof to counter Delta's $1.2 billion renovation at Kennedy.

 (Bloomberg) -- American Airlines is in advanced talks to bring alliance partners British Airways Plc and Iberia Lineas Aereas de Espana SA into one “premiere” terminal at New York's Kennedy airport to bolster overseas flights.
“It will require expansion and will be significant in terms of investment,” Art Torno, vice president overseeing American's New York operations, said in an interview. “When we finish that terminal, it will be a watermark for everyone to shoot for.”

Putting the Oneworld alliance members under one roof would help AMR Corp.'s American counter Delta Air Lines Inc., which unveiled plans yesterday for a $1.2 billion renovation at John F. Kennedy International Airport. American and Delta are vying for passengers in New York, the biggest U.S. aviation market.

The cost and scope of the possible changes at American's Terminal 8 are still under discussion with British Airways, Spain's Iberia and the Port Authority of New York and New Jersey, which oversees JFK, Mr. Torno said.
Any investment would be in addition to the $1.3 billion that Fort Worth, Texas-based American spent on a terminal renovation completed in 2007, he said. The 1-million-square-foot facility is American's primary international gateway in the eastern U.S.

American, British Airways and Iberia couldn't begin talks on a single terminal until after July 20, when they won final U.S. approval to jointly set prices, sell tickets and schedule trans-Atlantic flights. That venture doesn't cover other Oneworld members, which include Japan Airlines Corp.
“New York is really a battle for market share,” Mr. Torno said. “I don't think anyone can own New York. Our reaction is a competitive response to protect our interests here in the world's largest aviation market.”

American is adding 15 new destinations from New York this year and 33 additional flights. It will announce more schedule changes involving its alliance partners for the summer of 2011, he said.

Delta will renovate Kennedy's Terminal 4, which is used by foreign carriers, and link it with Terminal 2, where the Atlanta-based airline has flights.
The 1960s-era Terminal 3, formerly used by Pan American World Airways, will be demolished to make room for parking jets. Delta will begin work next month and finish by mid-2013. JFK is a Delta hub for overseas flights and became a focus for expansion after the airline's 2007 bankruptcy exit.

American also is remodeling Concourse D and Concourse C at New York's LaGuardia airport, where its domestic flights are based. The carrier, which is investing about $30 million in the projects, is considering whether to connect the two terminals or build an additional Admirals' Club lounge, Mr. Torno said.

Filed Under : American Airlines, Commercial Real Estate, Delta Air Lines, Port Authority of New York and New Jersey

Upset flight attendant grabs beer, activates chute, goes home 


Witness says Steven Slater looked 'happy' — but is he facing more stress?

A JetBlue flight attendant got into an argument with a passenger on a jetliner arriving at John F. Kennedy International Airport Monday, then grabbed a beer from the galley, deployed an emergency exit slide and fled the plane, authorities said.
And though he could be seen smiling as authorities led him away from his nearby home in the Belle Harbor section of Queens, Steven Slater's acquaintances and his apparent profile on a social networking site indicated that he has been dealing with some stressful events in his life.
Slater was ordered held on $2,500 bail, WNBC's Tim Minton reported. Slater faced charges of criminal mischief, reckless endangerment and trespassing, and was in custody overnight.

By Monday night, several Facebook pages had been set up in tribute to Slater, who is facing charges of criminal mischief, reckless endangerment and trespassing, with many users of the social networking site expressing support for him for walking off the job. One such page had more than 16,000 fans early Tuesday.
Twitter users also showed support, with declarations such as "Free Steven Slater!" and "Steven Slater is totally my new hero."

Slater was working on JetBlue Flight 1052 from Pittsburgh when he got into an argument with the passenger, who was pulling down baggage from an overhead bin, the Port Authority said.

The luggage apparently hit Slater in the head and he asked for an apology, but the passenger refused, the agency said.s the plane was landing, Slater got on the public-address system and cursed at the passenger, the Port Authority said.

He then grabbed at least one beer, activated the slide, slid down and went to his car, it said. Port Authority police were notified about 25 minutes later.

Phil Catelinet, a passenger on the flight, said on the TODAY show that Slater " was smiling — he was happy he had done this. He was happy he was done with his job at JetBlue."
"I think it's funny that he could quit his job that way … [but] I don't think he thought this through."


'One day at a time'

A MySpace profile appearing to belong to Slater notes that: "Beating alcoholism and substance abuse 'one day at a time' has opened up new worlds of opportunity for me, and I am so thankful to those who have guided me along the path to successful living, and given me new wings to fly. See you above the clouds. ..."
Slater's former roommate, John Rochelle, told The New York Times that Slater was rarely home, and often traveled to Thousand Oaks, Calif., to care for his ailing mother.

A neighbor of Slater's mother told the newspaper that he had also cared for his father, who died of Lou Gehrig's disease.

"It could be the pressure of his mother's illness, because that's not the type of behavior or conduct that Steve exhibits," neighbor Ron Franz said. "He's a very conscientious, responsible individual."

A woman who answered a phone at a previous residence listed for Slater in Thousand Oaks, Calif., identified herself as his mother but said she wasn't speaking to the media.
 The district attorney told NBC News that Slater had not yet been arraigned, but that was likely to happen at a Tuesday morning court session.

JetBlue Airways Corp. said in a statement that it was working with the Federal Aviation Administration and Port Authority police to investigate the matter.
It said the safety of its customers and crew members was never at risk. JetBlue would not say how long Slater had been employed by the company.

A National Transportation Safety Board official said the incident was a result of "a little too much cabin pressure."
The Associated Press and NBC News contributed to this report.