Ticket distribution costs ANALYSIS - Airlines target


By Kyle Peterson and Karen Jacobs


CHICAGO/ATLANTA
Mon Jan 10, 2011 10:31pm IST


CHICAGO/ATLANTA (Reuters) - A feud between American Airlines (AMR.N) and several companies that sell its tickets shows new determination by airlines to lower costs and could spell new business challenges for online travel agents.


American is steering those third-party sellers toward its in-house technology that the airline says will save it money and allow customers to shop for flights based on more factors than just fares. This is needed, the airline says, because carriers now charge separately for so many travel-related perks and items such as bag checks, meals and priority seating.


But a shift to new technology operated by American and its peers could disrupt the lucrative business model now favoured by travel agencies like Orbitz Worldwide (OWW.N) and Expedia Inc (EXPE.O) and the companies that provide the data they publish.


AMR is leading the charge to cut distribution costs because several of its key distribution contracts expire in 2011. Other airlines may follow suit and force more changes to the business model, said Andrew Watterson, an airline consultant at Oliver Wyman, a management consulting company.


"This dust-up will change the economic landscape of this relationship," Watterson said.


"There are sophisticated actors trying to change, improve and benefit from how we search. We can't even imagine what our experience is going to be like in five years," he said. "But we do know over the next year or two the economic, behind-the-scenes, who-gets-paid-what will change dramatically."


COSTS UNDER SCRUTINY


The cost of ticket distribution is a relatively low-ranking line item for major airlines, whose top two expenses are fuel and labour. But airlines are looking especially hard at their non-fuel costs as they claw their way back to stability from a downturn that saw soaring oil prices and sagging travel demand.


AMR's distribution costs, which are listed as commissions, booking fees and credit card expenses, were $853 million in 2009. That figure includes AMR's American Eagle regional airline.


For United Continental Holdings (UAL.N), which is the parent of the newly merged United Airlines and Continental Airlines, the combined distribution expense number for 2009 is $1.21 billion.


The showdown between American and the third-party sellers follows a court decision in December that allowed American to stop selling tickets on Orbitz. American shunned Orbitz after the agency refused to use American's new "direct connect" technology for selling its flights.


The third publicly traded U.S. online travel agency Priceline.com (PCLN.O) still carries American tickets, and some experts believe the company has agreed to use American's technology.


Meanwhile, Sabre Travel Network, a unit of Sabre Holdings, said it would halt its distribution deal with American in August -- a month before the end of its contract. Sabre is one of several of several global distribution systems like Galileo and Amadeus, which act as pipelines to bring fare and flight information to travel agents.


"We oppose American's efforts to impose a costly and unproven system on travel agents and travellers," Chris Kroeger, senior vice president, Sabre Travel Network, said in a statement.


We strongly agree with the many industry and consumer groups who believe American's actions will make it much harder and more costly for agents and consumers to easily comparison shop among airlines, which will result in increased prices for consumers," he said.


Expedia also has dropped American Airlines tickets from its listings, charging that the airline's new commercial strategy is "anti-consumer" and "anti-choice."


Delta Air Lines (DAL.N) announced last month that it removed its flight listings from smaller online sites CheapOAir.com, OneTravel.com, and Bookit.com. Last week, the Atlanta based carrier said it has notified Airfare.com, CheapAir.com, Vegas.com, AirGorilla.com and Globester.com that it would end participation on its websites in the United States and Canada Jan. 7.


"Delta continues to evaluate its online distributors, and intends to be more selective in its use of online travel sites in the future," spokesman Trebor Banstetter said in a statement.


CUTTING OUT THE MIDDLE MAN


Southwest Airlines (LUV.N) sells its fares mostly through its own website, Southwest.com, a move it says helps keep costs down.


The discount carrier said more than 80 percent of its transactions were done at Southwest.com. It also works with a couple of global distribution systems to ensure that its fares are available to business travellers.


Michael Van Houweling, senior director of marketing at Southwest, said the carrier sold tickets through online travel agencies at one time but has for the past decade pursued "a very pure online distribution strategy." He said the airline at present has no plans to re-evaluate that practice.


Southwest, which does not disclose its distribution costs, says its more exclusive online distribution strategy keeps lower costs but also helps build customer loyalty.


"Because in many cases we don't have a third party helping sell our fares, that does help reduce our distribution costs," Van Houweling said in an interview. "It's a more effective way for us to distribute our fares from a cost perspective."


Other airlines hope to see similar benefits. The Open AXIS Group, which was founded by North America's largest airlines, promotes a more modern forum of content distribution.


"This is a battle that's been going on for 15 years and it's just the most recent skirmish," said airline consultant Robert Mann. "But it seems to be the most contentious."


"While American is most upfront about it, everybody else is egging them on. They may not be saying so, but they're definitely egging them on," Mann said. "If American looks like they're going to make an end run around this thing, everyone else is going to be right behind them."


(Reporting by Kyle Peterson and Karen Jacobs, editing by Dave Zimmerman)

Storm Pounds Boston After Dumping New Snow on New York



By Brian K. Sullivan - Jan 12, 2011 12:18 PM MT
A storm that dropped more than 9 inches of new snow on New York City pounded Boston with blizzard conditions, disrupting travel and prompting Massachusetts’ governor to declare a state of emergency.
More than 2,900 flights were canceled, mostly in the Northeast, according to airline reports compiled by Bloomberg. Amtrak suspended service between New York and Boston after a tree fell on an overhead power line near Sharon, Massachusetts, and the National Weather Service reported downed trees and power lines across the area.
Heavy snow will fall in waves on Boston and eastern New England for the rest of the day, said Alan Dunham, a weather service meteorologist in Taunton, Massachusetts. The storm was off the coast of Massachusetts at midday and strengthening, Dunham said.
“It will take a couple of hours for some these heavier bands to come through,” Dunham said. “There will be spots that see a foot and a half to two feet of snow by the time it is all said and done.”
Boston officials shut public schools, asked non-essential city workers to stay home and urged other businesses to let employees work from home, according to the city website. Governor Deval Patrick mobilized 250 National Guard troops and opened three shelters.
Power Failures
More than 71,000 customers were without power in Massachusetts and Rhode Island, according to statements from NStar and National Grid. Heating oil futures surged to a 27- month high on the New York Mercantile Exchange on speculation that snow and cold in the Northeast will increase demand for heating fuel.

In Maine, state offices will close at 3 p.m. because of the snow, according to a statement. About 29 inches of snow had fallen in Newtown, Connecticut, by 1 p.m., according to that state’s Department of Emergency Management & Homeland Security.


Cities across the U.S. Northeast deployed thousands of plows and sand-spreaders to tackle the second major snowstorm in a little more than two weeks.

New York City declared a weather emergency, urging people to stay off the roads, as the storm moved in. Public schools remained open.

New York Snowfall


More than 12 inches of snow fell on parts of the Bronx and northern New Jersey while Central Park had received 9.1 inches as of 7 a.m., when skies over Manhattan began to clear, the weather service said. A winter storm warning for the city remains in effect until 7 p.m. The storm combined two systems, one from the Midwest and another that dropped snow across the South earlier this week, forcing the governors of Georgia and South Carolina to declare emergencies.


New York City had 1,700 plows ready along with 365 salt trucks to tackle the municipal street cleanup, according to Mayor Michael Bloomberg, founder and majority owner of Bloomberg LP, parent of Bloomberg News.

Crews were equipped with video feeds and GPS systems to pinpoint trouble spots, he said at a press conference yesterday.
The Metropolitan Transportation Authority, which operates New York City’s buses and subways, deployed de-icers and snow blowers and said all services were operational today. During a post-Christmas blizzard, 600 buses stalled and hundreds of commuters were stranded.

Christmas Storm


The storm that struck New York and the Northeast Dec. 26 and Dec. 27 dropped at least 20 inches of snow on Central Park and forced the cancellation of more than 8,000 flights. Some New York City streets were unplowed for days and garbage pickups were backlogged.

Bloomberg said today that the city’s 6,000 miles of streets would be plowed twice by the end of the day.


“Our goal for this storm was not merely to get back to business as usual,” Bloomberg said during a news conference at Emergency Operations headquarters in Brooklyn. “Our goal was to deploy a more effective snow response operation than ever, more aggressive and more accountable, based on the lessons learned from the last storm, and that’s what we’ve done.”

Forecasters are already looking ahead at a system that may arrive by the middle of next week, said Matt Rogers, president of Commodity Weather Group LLC, a commercial forecaster in Bethesda, Maryland.


Rogers said the computer models aren’t clear on the exact track the storm will take.
“But the bottom line is that by next week, we’ll be battling another winter storm threat,” he said.


To contact the reporter on this story: Brian K. Sullivan in Boston at bsullivan10@bloomberg.net.
To contact the editor responsible for this story: Dan Stets at dstets@bloomberg.net

American Way Magazine Commemorates 45 Years of Publication With a Full Redesign


 
Press Release Source: American Airlines On Tuesday January 11, 2011, 5:00 pm EST


FORT WORTH, Texas, Jan. 11, 2011 /PRNewswire/ -- American Way, the award-winning inflight magazine of American Airlines and American Eagle, commemorates 45 years of publication with a redesign which debuts with the first issue of 2011, onboard planes now.

"American Way is still the only inflight magazine published twice monthly, which is a great service to our frequent travelers," said Susan Gordon, American Airlines Publishing President and Group Publisher. "We pride ourselves on consistently delivering an industry leading magazine to our customers, so it makes sense to redesign the magazine as our culture changes."


Most notable will be the new American Way masthead, inspired by the typeface on a 1930s-era American Airlines DC-3. Redesigned departments include the combination of UpFront and DownLow to create a new super-department called Itineraries, as well as the addition of Briefs, which highlights both a celebrity and a destination.

"The goal was to bring a more contemporary and graphically pleasing palate to the magazine, while continuing to serve our readers as an invaluable source of information and entertainment," said David Radabaugh, American Way Design Director.
Other changes include the addition of new maps and helpful widgets, the organization of stories in a more reader-friendly format, and incorporating an unconventional approach to original photography and illustration. Every issue can be found online in its entirety at www.americanwaymag.com.


About American Airlines
American Airlines, American Eagle and AmericanConnection® serve 250 cities in 40 countries with, on average, more than 3,400 daily flights. The combined network fleet numbers more than 900 aircraft. American's award-winning website, AA.com®, provides users with easy access to check and book fares, plus personalized news, information and travel offers. American Airlines is a founding member of the oneworld® Alliance, which brings together some of the best and biggest names in the airline business, enabling them to offer their customers more services and benefits than any airline can provide on its own. Together, its members serve approximately 750 destinations in nearly 150 countries and territories. American Airlines, Inc. and American Eagle Airlines, Inc. are subsidiaries of AMR Corporation. AmericanAirlines, American Eagle, AmericanConnection, AA.com, We know why you fly and AAdvantage are trademarks of American Airlines, Inc. (NYSE:AMR - News)






AmericanAirlines® We know why you fly®

Japan Airlines and American Airlines Announce Joint Business Benefits for Trans-Pacific Consumers







Press Release Source: American Airlines On Tuesday January 11, 2011, 12:00 am


TOKYO, Jan. 11, 2011 /PRNewswire/ -- Japan Airlines and American Airlines today announced they have decided to commence their joint business from April 1, 2011, based on the expected start of revenue-sharing on applicable trans-Pacific flights. The airlines, after receiving regulatory approvals from the Japanese Government and the U.S. Department of Transportation, are using a phased approach to bring more travel choices and greater benefits to consumers as quickly as possible and to maximize the value for stakeholders.

Customers can expect to benefit from better flight schedules, expanded codesharing, more coordinated services, and greater access to a wider variety of fares. Japan Airlines will also co-locate in American's Terminal 3 at Chicago O'Hare International Airport effective March 27, when Japan Airlines' summer schedule begins. Additional consumer benefits over the coming months are expected as the cooperation level deepens between the two airlines.

In addition, to bring benefits to consumers sooner, Japan Airlines and American are announcing a jointly-formulated commemorative trans-Pacific economy-class airfare for sale in Japan from today for travel between Feb. 1 and March 31, 2011. Historically, routings involving both airlines were typically only available at much higher fare levels.


Customer Benefits


Japan Airlines and American exchanged data and analyzed traffic patterns and consumer demand. The following customer benefits were developed from that analysis and discussions between the airlines:
Alignment of the 2011 summer schedules, effective from March 27, 2011, for Japan Airlines and from April 5, 2011, for American Airlines, are expected to result in reduced connection and overall travel times, a better choice of flight times, and increased connection opportunities to destinations beyond gateway cities.


Expanded codesharing is expected to result in more routing choices and more destinations. Including those announced today, Japan Airlines and American will codeshare on a total of 123 routes and will continue to expand our codeshare routes in the future.


Co-location at Chicago is expected to result in shorter connections and travel times, increased connection opportunities and greater convenience for customers beginning March 27.

Greater access to a wider choice of fares through fare alignment between the two airlines.
Increased mileage promotion opportunities for trans-Pacific customers.


Beginning this summer, an enhanced customer experience is expected due to content sharing on the airlines' websites, online booking capability and check-in regardless of which airline is being flown, more aligned operational policies and procedures, facility co-locations, and more coordinated pricing and programs for travel agencies and corporations.


The two airlines have begun sharing best practices and cultural insights to serve customers better.


Tokyo - Chicago and Dallas/Fort Worth


Chicago, used often as a transit point to and from other parts in North America to Asia, is a key gateway from which both Japan Airlines and American operate to and from Japan. To enhance the customer experience, the two airlines have agreed to realign their flight schedules to maximize the benefits of co-locating at Chicago. By adjusting the schedule of Japan Airlines' Narita-Chicago flight to depart earlier in the day and moving the American Airlines flight later in the day, the number of possible connections that can be made to other parts of the U.S. within three hours of arrival into Chicago increases from approximately 43 to 45 destinations. In addition, customers can now choose Japan Airlines for an earlier start in Chicago or choose American for more time in Japan.


Adjustments to the schedule of American's domestic flights arriving into Chicago and the departure time of Japan Airlines' Chicago-Narita flight allows customers on 44 flights from 42 points in North America to easily connect on Japan Airlines' Chicago-Narita flight within just two hours of arrival into Chicago. This is an increase of 22 flights and 20 destinations, allowing both airlines to capture greater travel demand. The reduced connection times and the increase in the number of possible connecting flights from American are expected to result in more customers transferring to Japan Airlines. In addition, eligible Japan Airlines customers are able to utilize American's Admirals Club Lounge in Terminal 3 at Chicago and this will become much more convenient for customers once Japan Airlines' planned relocation from Terminal 5 takes place.




American operates two flights from Dallas/Fort Worth to Tokyo's Narita Airport. American's flight departing from Dallas/Fort Worth at 12:50 and arriving in Narita at 15:55 has been scheduled to arrive at a time ideal for connections with reduced waiting time to multiple Asian cities to which Japan Airlines flies. The number of destinations that customers can transfer onto within three hours of arriving on that flight from Dallas/Fort Worth increases from four to 12 destinations. New connecting flight destinations include Beijing, Hanoi, Hong Kong, Nagoya (Chubu), Manila, Pusan, Sapporo, Seoul (Incheon), and Taipei. Customers can continue to connect to Osaka, Ho Chi Minh and Bangkok. East Coast customers who historically flew from Dallas/Fort Worth to Singapore via Narita on Japan Airlines will be able to fly from New York to Singapore connecting at Haneda in the future.


Tokyo-West Coast


Customers can fly between Los Angeles and Japan on either Japan Airlines or American. Customers will also have more schedule options for traveling between Japan and the U.S. west coast due to the changed departure times for flights between Tokyo and Los Angeles, which reduce the connection time from Japan Airlines' Tokyo Narita to Los Angeles flight to several popular U.S. destinations by one and a half to three hours. In the reverse direction, the connection time from several key U.S. destinations to Japan Airlines' Los Angeles to Tokyo flight has been shortened by one to two hours.


In addition, both airlines' customers can fly on Japan Airlines' new flight between Tokyo's Haneda and San Francisco (launched Oct. 31, 2010). The route connects two very popular travel destinations and provides a later departure option from Tokyo for customers.


Tokyo – New York


The Tokyo to New York route connects the two largest cities in the U.S. – Japan market. The addition of American's New York to Haneda route provides customers with a new early morning departure from Tokyo's Haneda Airport and a new evening option from New York to Tokyo that did not exist previously. Both airlines' customers benefit from a greater choice of airports (Narita or Haneda) and more schedule options while the airlines benefit regardless of which routing or airline is chosen. In addition, once American begins its new flight from New York to Haneda, it will begin sharing Japan Airlines lounge at Haneda.


Codesharing and Mileage Programs


Under the joint business agreement, Japan Airlines and American will gradually expand the number of codeshare flights. Japan Airlines will add its code to select American flights in the next few months to expand JAL's network in the U.S to include new destinations like Salt Lake City and Sacramento.


And on Jan. 27, American will begin codesharing on JAL-operated flights between Haneda and Singapore as well as Hong Kong, creating smoother connections with their new Haneda-JFK route when that route begins. Additionally, American will place its "AA" code on Japan Airlines' flights linking Narita with Vancouver. In addition, American will codeshare on Japan Airlines' domestic flights in March and details will be announced upon attaining government approval. Customers will benefit from being able to more easily purchase flights to more destinations as a result of the expanded codesharing, and the airlines will become more competitive in those markets.

Customers participating in Japan Airlines and American's mileage programs will continue to enjoy reciprocal benefits and are expected to benefit from opportunities to earn and redeem miles on each airlines' flights more easily as a result of the increased codesharing and new routes – Tokyo's Haneda to San Francisco (launched Oct. 31, 2010), New York's John F. Kennedy Airport to Haneda (scheduled to begin Feb. 18, 2011), Los Angeles to Shanghai (scheduled to begin April 5, 2011). In addition, mileage program members are expected to benefit from more promotional opportunities.


Business Benefits
Japan Airlines and American plan to share revenue generated from operations over the Pacific, regardless of which airline carries the customer beginning April 1, 2011. The companies' sales forces will work together to sell both brands in order to meet customers' needs through a process called "metal neutral selling". The combined sales forces will be able to offer customers a broader suite of products and services than in the past. In addition, the airlines will maximize synergies to strengthen their business and elevate their level of operational efficiency and productivity while reducing costs.


Expected business benefits include:

More coordinated pricing and programs for travel agencies and corporate customers.


Under the joint business agreement, Japan Airlines and American's sales forces can conduct activities in cooperation to promote themselves together, thereby boosting the productivity and efficiency of the sales teams, and increasing the opportunities for sales and publicity.


In the future, the two airlines plan to jointly sell Japan Airlines' premium economy product; which is expected to make both airlines more competitive in the marketplace. American's customers will have a new travel option that did not previously exist.


Japan Airlines and American both offer first class service on most of the trans-Pacific routes, allowing first class customers to enjoy the increase in flight options.


Expected investment and operational efficiencies gained from co-locations at airports, offices, joint lounge operations, and other operational synergies are expected to make both airlines stronger.

Purchase of Japan Airlines and American's applicable trans-Pacific flights from either airline's website increases the exposure and sales opportunities for the two brands. Customers will benefit from more convenience as they will be able to select flights and gain access to information about both airlines through one channel.


Japan Airlines and American are also exploring potential opportunities to utilize each other's online presence around the globe with the goal of enhancing customer service.


The new ability to coordinate on pricing, network and schedule, products and services is expected to result in greater revenue and market share as Japan Airlines and American become more competitive with other airlines partnerships. American will be able to sell more destinations within and beyond Japan than before Open Skies and the joint business with Japan Airlines. Conversely, Japan Airlines will be able to sell more destinations in North America.


Over the past several months, Japan Airlines and American have deepened their relationship, which began more than 15 years ago, by sharing best practices to improve their individual operations so as to increase their competitiveness in their respective regions and enhance customer service.


For instance, Japan Airlines has begun to implement business management and profit-forecast procedures shared by American, and teams from both airlines have been exchanging best practices in such specialized fields as maintenance, fleet planning, and information technology. The result of adopting American's profit-forecast concept is expected to enhance Japan Airlines profit forecast capability – providing more time for the airline to make adjustments to business changes. American has been discussing Japanese culture with Japan Airlines to better understand how to serve these customers better. For example, by making American's public address announcements more conversational and using new phrases that better describe situations, these announcements are more meaningful to Japanese customers.


From Jan. 17, American will relocate its Asia-Pacific Regional Office in Tokyo from the Chiyoda district to Shinagawa, moving into NRE Tennozu Building where Japan Airlines' headquarters is housed. In New York, Japan Airlines moved its administration office into the same building as American on Lexington Avenue on Oct. 28, 2010. The office co-location will allow Japan Airlines and American Airlines employees to work more closely together.

Stakeholder Benefits


Stakeholders, business partners, and employees are expected to benefit from the trans-Pacific joint business from the anticipated improved financial position and stability of the airlines, reduced costs, and increased competitive position. Specifically,

Each airline is expected to have a greater ability to invest in its people, products, services and fleets over the long term.


The alignment of policies and procedures is expected to improve the customer experience between the two airlines and to simplify employees' jobs and increase job fulfillment by making it easier to serve customers.


In the process of the collaboration, employees from Japan Airlines and American are expected to have the opportunity to develop new skills and knowledge through sharing best practices and culture.



In addition to implementing the joint business, Japan Airlines and American will maintain and enhance their relationships with other members of the oneworld® Alliance in seeking to provide customers continuous service improvements.


"We are delighted to begin bringing our customers the benefits of our joint business with American Airlines," said Japan Airlines President Masaru Onishi. "With our complementary strengths, the Japan Airlines-American team is well positioned to pursue further service enhancements for our customers and greater synergies for our businesses. Japan Airlines is strongly committed to our corporate revitalization, and I am confident that this joint business will raise our competitiveness in this vital region, improve our profitability and aid us in achieving our goal."


"We are pleased to partner with Japan Airlines to bring expanded benefits to our customers," said Tom Horton, American Airlines President. "We firmly believe our joint business will benefit all stakeholders – our customers, our financial partners, and our employees. Japan Airlines has been an excellent partner, and together, we are preparing for the next decade – a decade that is likely to see growth in air travel between North America and Asia."


Visit www.aa.com/moreasia for additional details on the customer benefits associated with the American Airlines and Japan Airlines joint business.

American files lawsuit against Sabre American files lawsuit against Sabre




(IF SOUTHWEST CAN SELL TICKETS ONLY ON ITS WEBSITE, THEN BRAVO TO AMR) Ed./blog



Dallas Business Journal - by Candace Carlisle , Staff Writer
Date: Monday, January 10, 2011, 5:42pm CST


Fort Worth-based American Airlines Inc. has sued Sabre to stop the company from downplaying American flights displayed to travel agents.


American says it could lose countless sales, if Sabre is allowed to favor listings of other airlines in data searches, according to a lawsuit filed in a Tarrant County court Monday.

The lawsuit follows a decision by Southlake-based Sabre Holdings Corp., a company that provides airfare information to travel agents, lowering the airline’s displayed position. The company also plans to dump American’s information from its system in August, a month before Sabre’s contract with American officially expires.

Sabre’s decision is part of the fallout in a battle between American Airlines and the travel industry after American announced it would like to reduce the middleman costs and direct travel agents to the airline’s website.


Along with the lawsuit, American filed a temporary restraining order prohibiting Sabre from continuing the lowered display of American flights, said a spokesman for the airline.

“We are gratified that, after a contested hearing, the court has granted American’s request for interim relief, to be in effect until the court considers American’s request for longer term relief,” the spokesman for the airline wrote in a release. “American intends to vigorously pursue its litigation against Sabre, including seeking damages for other violations of our agreements.”


Monday’s lawsuit marks the latest announcement in the battle ...


Fort Worth-based American Airlines Inc. has sued Sabre to stop the company from downplaying American flights displayed to travel agents.


American says it could lose countless sales, if Sabre is allowed to favor listings of other airlines in data searches, according to a lawsuit filed in a Tarrant County court Monday.


The lawsuit follows a decision by Southlake-based Sabre Holdings Corp., a company that provides airfare information to travel agents, lowering the airline’s displayed position. The company also plans to dump American’s information from its system in August, a month before Sabre’s contract with American officially expires.


Sabre’s decision is part of the fallout in a battle between American Airlines and the travel industry after American announced it would like to reduce the middleman costs and direct travel agents to the airline’s website.
Along with the lawsuit, American filed a temporary restraining order prohibiting Sabre from continuing the lowered display of American flights, said a spokesman for the airline.


“We are gratified that, after a contested hearing, the court has granted American’s request for interim relief, to be in effect until the court considers American’s request for longer term relief,” the spokesman for the airline wrote in a release. “American intends to vigorously pursue its litigation against Sabre, including seeking damages for other violations of our agreements.”


Monday’s lawsuit marks the latest announcement in the battle between American and the travel community, which has included Orbitz and Expedia pulling American's flight information.

Mistakes Led Planes Toward Near-Collision
January 8, 2011


By ANDY PASZTOR



The National Transportation Safety Board said a series of slip-ups by pilots and air-traffic controllers twice put a US Airways Group Inc. jet and a Boeing 747 cargo plane on a near-collision course over Alaska last year.


Communication lapses by both sets of pilots, compounded by lax controller procedures, temporarily cut off radio contact between the relevant controller and the planes.


The board's report on the May incident, released earlier this week, indicates that the US Airways plane with 138 people aboard ended up flying 100 feet under the altitude of the Cargolux cargo jet. The planes were separated by less than one-third of a mile horizontally, as they maneuvered in good weather near the international airport in Anchorage, Alaska.


The report comes amid heightened concerns about reported controller errors nationwide, which have increased recently and last year prompted the Federal Aviation Administration to launch various safety initiatives. The safety board also has stepped up its scrutiny of midair near-collisions.


In the May incident, the US Airways Airbus A319 arriving from Phoenix encountered a wind shift and its crew decided to break off the landing approach and climb away from the airport. At the same time, the larger cargo plane was departing from a different runway. According to the safety board, misunderstandings between controllers and lax communication procedures by both cockpit crews resulted in the flight paths of the two planes converging twice during the incident.


The board found that the controller monitoring the A319's progress failed to keep proper track of its speed and direction, and didn't coordinate with another controller handling takeoffs and landings. The second controller tried but failed to contact the planes about the impending conflict, but both crews were tuned into another radio frequency.

After the A319 pilots had the cargo jet in sight, they failed to acknowledge instructions to maintain visual separation. Once again, controller instructions led the flight paths of the two planes converge.


The board's report indicates that a collision was avoided because the pilot flying the A319 temporarily stopped the controller-ordered turn and then heeded an onboard emergency collision-avoidance warning to descend.
Separately, the FAA on Friday released final safety mandates for many older Boeing 757 and 737 models, covering enhanced structural inspections of more than 1,300 jetliners. The rules, made public by the FAA, are designed to prevent hazardous fuselage cracks that could result in reduced structural integrity and rapid aircraft decompression.

Boeing previously issued nonbinding safety bulletins covering both widely used models. The mandatory FAA rules—slated go into effect in the next few weeks—cover more than 630 older 737 models and an additional 680 older 757s.

The 757 rule was prompted by a sudden rupture and decompression suffered by an American Airlines 757 on a flight from Miami to Boston in October. Nobody was hurt, and the AMR Corp. unit's plane returned safely to Miami, despite a one-foot tear in its aluminum skin. But the FAA's mandate, which the agency considers "interim action" pending further moves to resolve underlying safety issues, entails repetitive inspections ranging between 30 and 300 flights.

The 737 rule calls for certain structural checks ranging from every 3,000 to 4,500 flights, and it also spells out a repair that would terminate such repetitive inspections.

Write to Andy Pasztor at andy.pasztor@wsj.com

Boeing plane orders soar as airlines rebound

by Veronique Dupont Veronique Dupont – Thu Jan 6, 5:42 pm ET


NEW YORK (AFP) – US aerospace giant Boeing on Thursday said orders for commercial aircraft soared amid a "spectacular" 2010 recovery for the airline industry, but deliveries fell.

 Boeing said it had orders for 530 planes in 2010, a 31 percent increase from the year before, despite problems with its new 787 Dreamliner.

The company said the jump in orders, up from 405 in 2009, came as "air carriers transition from economic recovery to expansion."

Boeing's European arch-rival Airbus is expected to publish its own annual orders tally by the end of the month. In late November, Airbus was trailing, with 388 orders compared with Boeing's 484, after European firm saw some 50 order cancellations.

"Our airline customers are doing well and it's been a good year for us at Boeing," Randy Tinseth, head of marketing for Boeing Commercial Airplanes, told AFP. "2010 in many ways was really a spectacular year."


Passenger traffic was up eight percent, cargo traffic jumped nearly 20 percent, and airlines collected higher ticket prices, while fuel prices were "within expectations," he said.

Most of Boeing's 2010 orders and deliveries were for the medium-range Next-Generation 737.


There were 486 orders for the firm's best-selling plane and 376 deliveries.
"The Next-Generation 737 set a company delivery record for the second consecutive year," Jim Albaugh, president and chief executive of Boeing Commercial Airplanes, said in a statement, adding the 737 was "the industry's most in-demand airplane."

The 787 program is running three years behind schedule amid a string of production problems.
A November fire during a test flight led the company to halt all test flights while the problem was assessed and fixed.

Boeing announced a delay in the first 787 delivery to Japan's All Nippon Airways, previously scheduled for the 2011 first quarter, but has not set a new delivery schedule.


"The 787 Dreamliner continues in flight test," the Chicago-based firm said in the statement, adding that it plans to provide guidance on 2011 commercial airplane delivery when it releases year-end earnings on January 26.


Boeing said it maintains a strong order base of 3,443 unfilled commercial airplane orders.


The US giant, the world's second-biggest commercial aircraft maker after Airbus, delivered 462 planes in 2010, down from 481 the prior year.


Tinseth said the 2010 drop in deliveries was the result of ramped-down production in the face of the global economic crisis.


In 2010, Boeing announced it would ramp up production to meet strong demand.


The production rate of the Next-Generation 737 will accelerate to 35 a month in early 2010 and to 38 in the 2013 second quarter.
Production of the 777 will grow from five to seven a month in mid-2011, and to 8.3 units in the 2013 first quarter.

Boeing said the first delivery of its new jumbo cargo plane, the 747-8 Freighter, which also has seen a number of delays, is now set for the middle of this year.
The passenger version, the 747-8 Intercontinental, is expected to be delivered by year-end.


Still, the 2010 pace of deliveries remained far below the record 620 deliveries reached in 1999.


Though Boeing did not provide guidance on 2011 orders or deliveries, Tinseth was upbeat about the outlook for the airline industry.

"We expect 2011 to be another year of profitability for the airlines."

American Airlines, Flight Attendants End Mediated Talks Without Labor Deal



By Ed Dufner - Jan 6, 2011 5:26 PM



AMR Corp.’s American Airlines and its flight attendants failed to reach an agreement on a new contract as they finished three days of mediated talks, the first such session in almost eight months.


The session in Nashville, Tennessee, extended negotiations between the two sides into a fourth year, after discussions began in June 2008. The Association of Professional Flight Attendants represents almost 18,000 employees at the Fort Worth, Texas-based airline.

American “made proposals on benefits and some premium/training pay, which put some money in one pocket, yet took it from another,” Laura Glading, president of the association, said today in a hotline message to members.


The airline remains “committed and dedicated to this process in order to reach a new agreement,” Missy Latham, a spokeswoman, said in an e-mailed statement. The National Mediation Board is overseeing the talks.

To contact the reporter on this story: Ed Dufner at edufner@bloomberg.net.


To contact the editor responsible for this story: Ed Dufner at edufner@bloomberg.net.

US Airways to Halt Customer Calls to Manila



By Ted Reed 01/06/11 - 04:37 PM EST


TEMPE, Ariz. (TheStreet) -- US Airways(LCC_) said it will close its Manila call center this year, continuing a trend for airlines to close offshore reservations call centers, which often disappoint consumers.

The major U.S. carriers have always had most of their call centers in the U.S. Delta(DAL_), United(UAL_) and US Airways added off-shore centers in the early half of the last decade, when the industry lost about $40 billion and four major carriers sought to reduce costs in bankruptcy.
US Airways opened the Philippines center as a temporary measure under a 2004 agreement, negotiated during its bankruptcy, with the Communications Workers of America, which represents its agents. "We agreed in 2004 that they could temporarily outsource this work," said CWA spokeswoman Candace Johnson. "There were going to be layoffs and the company said there wouldn't be, in exchange for allowing this work to be done offshore."


Johnson said the carrier has indicated that new jobs will be created for agents in the U.S. when the Manila center closes. US Airways, which currently employs about 1,200 reservations agents, is reviewing how the change "will affect staffing at our domestic call centers in Reno, Phoenix and Winston-Salem," said spokeswoman Michelle Mohr. The changes will occur by October, she said.


In 2006, US Airways brought back 600 reservations jobs from Manila, Mexico City and San Salvador to the U.S. "Our reservations team does a much better job than those the work has been outsourced to," said US Airways CEO Doug Parker, in a May 2006 interview with TheStreet. "Despite our efforts to improve the outsourcing, it will never be as good as having our own employees do it."


In the interview, Parker credited intensive cost-cutting for making it feasible to bring work back. "The lesson here is that when you get to where pay scales are outside of market rates, jobs go outside," he said. "But when you can do stuff in-house close to as efficiently as it can be done outside, you would always prefer to have it done inside."


It is not unusual for U.S. consumers in any industry to complain when their phone calls for assistance are routed to offshore locations, often in the Philippines or India, where agents speak English (but not American) and may not fully comprehend the full scope of a problem that is brought to their attention.

Dogfight Erupts in Plane Ticket Sales


BUSINESS JANUARY 6, 2011

A battle to reshape the way airline tickets are sold escalated Wednesday, in what could become an industry-wide showdown between carriers and middlemen.
In a retaliatory move against American Airlines, Sabre Holdings Corp., a middleman for many carriers' seats, said it is raising the fees it charges American to distribute its fare information and sell its seats through thousands of travel agents.
Sabre also said it will display American's flights less prominently than rival airlines in its vast booking system.


The jab follows efforts by American, the third-largest U.S. airline by traffic, to sell more of its tickets directly to consumers, a strategy designed to cut costs and give the airline more opportunities to court customers. As a result, the carrier, a unit of AMR Corp., has been butting heads with online travel agents as well.


Sabre is a breed of intermediary known as a "global distribution system," or GDS, which consolidates fare offerings from hundreds of airlines to share with travel agencies. For years, many airlines have paid these intermediaries to channel the bulk of their tickets to customers. Closely held Sabre, based in Southlake, Texas, owns the largest GDS.
The dust-up could spread to other airlines and intermediaries in the coming months as more third-party contracts come up for renewal and carriers seek to gain more control to boost profit margins.


"There's going to be a shoot-out in the airline distribution corral," predicted Henry Harteveldt, a travel industry analyst at Forrester Research.


Such disputes could make it increasingly difficult for consumers to comparison shop as fewer airlines funnel their offerings through common platforms. Delta Air Lines Inc., the No. 2 U.S. airline behind United Continental Holdings Inc., last month decided to stop supplying seat inventory to three small online agencies.

Several major online travel agents are owned by the same companies that own GDS operators. Orbitz Worldwide Inc. is 48%-owned by Travelport Ltd., a major GDS operator. Sabre owns Travelocity, a big online travel agent.


Before Christmas, American pulled its fares from Orbitz. Another major online travel agency, Expedia Inc., yanked American flights from its website on New Year's Day after they also failed to settle on new terms.

American Airlines currently sells about two-thirds of its seats through outside parties. It spends about $1 billion annually on ticket distribution.

Expedia lashed out at American last weekend for trying to replace the distribution model with the direct-connect network that American has developed in recent years to hook up directly with travel agencies. It called American's push "anti-consumer'' and "anti-choice,'' arguing costs would jump for travel agents and there would be less pricing transparency for consumers.


American said it remains in "active discussions'' with Expedia and Orbitz and that it hopes to reach deals even as it tries to change how tickets are sold. The airline also said Wednesday it continues "to work in good faith'' with Sabre.


Sabre wasn't always a nemesis: It used to be a unit of American Airlines, created back in the 1960s to help travel agents. Sabre, which was spun off from AMR in 2000, was acquired by private-equity firms Silver Lake Partners and TPG in 2007.

Tensions between airlines and GDS providers have been rising for a while. Giovanni Bisignani, head of the International Air Transport Association, an umbrella group for global airlines, called GDS "leeches" in a speech last summer.


GDS providers say they provide a valuable service to airlines and consumers at a competitive price. Sabre estimates GDS fees make up about 1% of overall costs at many airlines.


New technology is pressuring the GDS providers, but they wouldn't be easy to replace. Sabre and others manage webs of complex and rapidly changing information provided by the airlines, including the number of seats available on flights all over the world at any given moment and the fares at which they are offered. Individual airlines don't possess that breadth of information.


Global distribution systems typically receive about $3 from airlines for each leg of a domestic flight they help book and share some of that money with travel agencies.

American, based in Fort Worth, Texas, is pushing travel agencies to bypass GDS and connect directly with the airline. Airlines make much of their money now on separate fees charged to consumers for baggage and other services. Selling tickets directly gives them opportunities to upsell to consumers, offering special deals or upgrades along with a ticket purchase. Airlines say tailoring such offers to consumers is more difficult through a third party.

Other major U.S. airlines largely have stayed quiet during the escalating war between American and its distributors. American has more contracts expiring earlier with GDS providers and travel agencies than many rival airlines, placing it at the front of the line.

But many big airlines increasingly are eager to cut distribution costs and steer more business to their own websites. Several have spent heavily in recent years to refurbish those websites and boost their offerings and draw more traffic.


Global airlines such as American risk reaching fewer potential customers by going it alone. Much of their revenue comes from purchases by corporate travel management companies, which rely on GDSs to book tickets.

A handful of U.S. airlines already bypass intermediaries to sell almost all of their tickets directly to consumers. That list includes domestic discounters Southwest Airlines Co. and JetBlue Airways Corp. But they remain exceptions and their share of corporate customers lags rival carriers.


American Airlines' contract with Sabre expires in September, but Sabre said the higher booking fees for American and the airline's lower placement in Sabre's distribution system is effective immediately.
Sabre has been in talks with American about renewing the contract but "to date the discussions have not been productive,'' Chris Kroeger, a senior vice president at Sabre, said in an interview.

Several travel groups have criticized American for trying to weaken common GDS distribution channels.


"Business travel buyers will ultimately foot the bill for marketplace fragmentation caused by airline initiatives that push the travel distribution marketplace in the wrong direction—away from transparency and competitiveness and toward confusion and higher costs,'' Mike McCormick, head of the National Business Travel Association, said in a statement Wednesday.

—Susan Carey contributed to this article.


Write to Mike Esterl at mike.esterl@wsj.com

Why It's Not A Good Idea To Piss Off A Crew Member 

• I only give buddy passes to peope I hate. Then I can gleefully relish when they get stranded in Senegal for 10 days

• From a First Officer...On a DC-10 in Chicago, waiting for pushback. F/As call the cockpit; there’s some kind of conflict in coach. Captain’s reading a magazine, I’m the plumber. He says “go back there, boy, and see what the problem is.”In mid cabin, a 40-ish woman is arguing with two F/As who are telling her there’s no more room for hanging bags in the closet (remember those “up and away” hanging closets?) so the bag would have to be checked. I take the garment bag, assure the woman that I will personally get a gate check tag, and put it in the cargo hold myself. I get a tag from the gate counter, go downstairs onto the sub-freezing ramp in shirt sleeves and place the bag in a cargo module about to be loaded. Then I personally take the claim check to her in the main cabin. She just glares at me and says, “You f___cking assh_le.” Without saying a word, I went through First Class, out the L-1 door to the jetbridge, then downstairs AGAIN freezing in shirtsleeves, found her garment bag, ripped the destination tag off, then walked over to an MD80 going I have no idea where and threw her bag into the forward cargo hold. Thawing out on the flight deck, the captain’s still reading his magazine. “Problem solved, boy?” “Yessir. All taken care of.”

• From a Flight Attendant...Upon securing his area. A passenger demands a beer. the crew smiles graciously and says “I will be back with your beer Sir”. He then says : “I want it now!” loudly. he replies, “of course sir, I will get it now”. He goes back to the galley. Picks a nice, warm heineken, shakes it, and goes back to the customer with coasters, nuts, and every possible tidbit to make him happy. Seconds later he hears his whole area laughing their heads off. The twat had beer all over his face… Neighbors cracking up next to him telling him to ask politely next time and avoid self-embarrassment. 

•  From a passenger...An FA taught me a great trick on how to get the person in front of me to not lean back in their seat. as flying from the UK to NY on Virgin Airlines and I was stuck in the last row and in the middle. I was in hell. The person in front of me proceeds to lean their seat-back all the way the instant we take off and of course I couldn’t lean mine back at all as my row was up against a bulkhead wall. There wasn’t enough room between my nose and the seat-back in front of me to fit a paperback book–it would touch the chair and my nose…I crawled out and went to the rest room. A nice FA pulled me aside and said, “Here take this.” It was a small mister from the first class travel bags. She gave me the following advice while keeping her voice low. “Ask them nicely if they wouldn’t mind not reclining their seat back so much. If they don’t respond simply pretend to sneeze a couple of times. On your third sneeze use this and spritz the bugger on the back of the head a little. Works every time!” and gave me a wink.I thanked her and crawled back in to my seat. After a few minutes of going cross eyed and having the hair on the back of their head nearly grace my nose I followed her instructions. The man in front of me basically told me what I could do with my suggestion. I waited five minutes and proceeded to sneeze then spritz. That seat back flew up almost instantly and I spent the remaining 9 hours in comfort.

And so it goes....

Can you charm your way into upgrade?



By A. Pawlowski, CNN


Flight attendants don't have the power to upgrade passengers in flight, but many people still try to schmooze them.

Many travelers wonder if good looks and charm can still help secure an upgrade. Flight attendants say passengers often approach them with upgrade requests. Some passengers use excuses like broken reading lights to try to get upgraded. It's much harder to charm a gate agent into an upgrade than in the past


An easy smile and a charming personality can take you a long way in life, but can they also help you fly in style?
Air travelers are always hunting for ways to upgrade to first or business class and for many, curiosity lingers about whether good looks or strategic friendliness can help secure a more luxurious trip -- even in these tight times for airlines.


Stories on travel message boards and some real-life examples suggest it's possible.


Take this season's finale of the hit reality-TV show "The Amazing Race," which created a bit of a controversy when the winners, Dan and Jordan Pious of Rhode Island, apparently flirted their way to the front of the plane.


The brothers were able to move from coach into the first class cabin on a flight from Shanghai, China, to San Francisco, California -- albeit toward the end of the flight rather than at the beginning -- and were the first team off the plane when it landed.


The last-minute upgrade happened after one of the men established a friendly rapport with a flight attendant and asked her about some empty seats he saw at the front of the plane, The Providence Journal reported.

"We were chatting for several hours," Dan Pious told the newspaper. "You build up a relationship over that time. I think she liked me and naturally she wanted to help us. It was huger than huge."

His brother Jordan Pious described the situation more colorfully.


"There was a flight attendant that really took a liking to my brother and he milked it for all it was worth," he told RealityTVworld.com.

Passengers watch 'like hawks'


So if you spot some empty seats in first class -- a rare sight these days -- and turn on the charm, is there any chance you'll find yourself in a nicer cabin?


It's virtually impossible, flight attendants said. They don't have the power to upgrade passengers; in fact, they can get in trouble for trying to do so.


"I don't think that there are too many flight attendants who would be willing to risk their job to upgrade somebody," said Sara Keagle, a veteran flight attendant for a major U.S. airline who podcasts about the industry for Upgrd.com.


In recent years, the only passengers for whom she's ever seen a flight attendant take that risk are military personnel.

In any case, the other passengers are always watching "like hawks" and would be quick to complain to the airline about someone else's preferential treatment or broadcast their displeasure on Twitter, said Heather Poole, who has been working as a flight attendant for 15 years.

If you're still tempted to try, you should know that being flirty or overtly friendly wouldn't influence Keagle or any crew members she knows, she said. Still, people slyly approach her to ask for an upgrade all the time and they often flash money in addition to a smile.

"They just try it and ask if they can be moved up and the answer is always no," she said. The most she's been offered is $100, Keagle said.

In some cases, turning on the charm can have the opposite effect and make the crew suspicious of your motives, Poole said.

"That actually puts my guard up even more, especially when they use my name," Poole said. "That's a signal to me. ... 'How are you doing today, Heather?' 'So Heather, how is the flight looking?' and I'm already like, here we go."

She estimated that someone asks her if they can move to first class on every other flight.


Besides using charm, some passengers pretend they're on their honeymoon or use excuses like malfunctioning seats or broken reading lights to try to get upgraded, Poole said. None of these generally work.
Schmoozing on the ground


While the chances of being moved up to first or business class during a flight are close to nil, the odds are better on the ground before you take off.


Gate agents do have the power to upgrade passengers free -- if economy class is overbooked, for example. But it's much more difficult to score an upgrade than it used to be.


For one thing, airlines have gotten more aggressive with upgrading their elite fliers, so the first class cabin is often full before you even get to the airport, said Brett Snyder, who runs the blog The Cranky Flier.


Many airlines have also clamped down on the freedom that gate agents have to make upgrading decisions, he added.


Still, being friendly can get you noticed.


"The life of a gate agent can be a very difficult one, in particular when the weather is bad and there are a lot of delays and cancellations and a lot of craziness," Snyder said.

"So certainly a reason that a gate agent would want to upgrade you is maybe you're just being nice and you'd be amazed at how rare that might be."


One of Keagle's friends was recently stuck at an airport because of storms and delays and ended up behind a passenger who was mean to the gate agent. When his turn came, Keagle's friend made sure to be pleasant.

"He was the next passenger in line and he was nice and the next thing he knew, she was bending over backwards to help him out and he ended up in first class," Keagle said.

The Suitcase With Wheels Turns 40



Travelers Around the World Today Are Pulling Suitcases With Wheels

ABC NEWS

It seems like such a simple concept, but when Bernard Sadow decided to put wheels on a suitcase 40 years ago, it was a revolutionary idea.


"At this time, there was this macho feeling. Men used to carry luggage for their wives. It was like the natural thing to do, I guess," Sadow said.


Sadow changed all that. Today, every traveler seems to be pulling or pushing a suitcase on wheels. We are used to everybody, from the youngest kids to the elderly, making their way through long airport terminals with bags rolling behind them.

It was more than 40 years ago when Sadow, his wife and two kids were coming back from a vacation in Aruba, changing planes in Puerto Rico.

"I ended up carrying two 27-inch cases, packed to the brim because we had the kids with us. And they were very heavy," Sadow told ABC News.

As he was lugging the bags across the airport, a man went by with a piece of heavy machinery on skids, skids with wheels under them.


"He was pushing it along effortlessly. I said to my wife, 'That's what we need on luggage, we need wheels,'" Sadow, now 85, recalls.


After the trip, Sadow -- who eventually became president and owner of U.S. Luggage -- went to his Fall River, Mass. factory and started experimenting with wheels.


His first prototype had four steel trunk coasters fitted under a suitcase. A piece of rope was attached so the bag could be dragged. It looked like a dog leash. A few tweaks and he took a model to New York to try and sell it to the big department stores.


"Everybody I took it to, threw me out -- from Sterns, Macy's, A&S, all the major department stores," Sadow said. "They thought I was crazy, pulling a piece of luggage."


Finally, Jerry Levy, a vice president at Macy's, got to see the bag.


"He walked around his office with it," Sadow said. "He had to foresight to realize what it was."


Levy called in Jack Schwartz, the original Macy's buyer who had rejected the bag a few weeks earlier. The order: buy it.


In October of 1970, a mannequin appeared in Macy's, pulling luggage on wheels.


"The people accepted it immediately. They could see what it was doing. It took off. It was terrific," Sadow said.

Suitcases With Wheels are Now the Norm


U.S. Luggage applied for a patent in 1970 and it was approved in 1972. But other luggage makers soon went to court and eventually got the patent broken. It took another 20 years to get rid of the dog-leash style straps and include a retractable handle.

Today, virtually every luggage manufacturer makes a suitcase with wheels, although some do it better than others.

"I think it was a pretty huge change to how people traveled," said Richard Krulik, the current CEO of U.S. Luggage and Briggs & Riley Travelware. "It's made everything much faster-paced and more mobile."

Travelers are now more independent and are able to easily take their bags from a plane to a car to their hotel room without help.

"It's almost strange to imagine luggage that doesn't have wheels," Krulik said.


Heather Poole, a flight attendant for a major airline who writes a popular blog about flying, calls the rolling bag "the best thing to happen to travel."


"To me, it's weird not to see somebody not rolling a bag," she said.


There is one catch.


"Because people can manage their bags on wheels, they overstuff them and they can't manage them when they're not rolling them," Poole said. "If they hadn't been able to roll it through the terminal, they probably wouldn't have packed it that heavy."