Monthly Archives: December 2008

Azul Brazilian Airlines Begins Operations.

Posted on December 17, 2008 by | Leave a comment

David Neeleman, the visionary founder of JetBlue Airways, has successfully started a second carrier: Azul Brazilian Airlines (Portuguese: Azul Linhas Aéreas Brasileiras S/A). Announced a little while back, the airline that many have anticipated arrived this week – boasting 5 cities with just a few Embraer E190/195 series aircraft. The low-cost carrier charges fares similar to bus fares. The bus ride on some of Azul’s routes can take up to 33 hours, meanwhile Azul gets you there in 2 hours. A great idea!

Azul, which means “blue” in Portuguese, is based in Sao Paulo but maintains a hub at Viracopos-Campinas International Airport (located in Campinas, Brazil – about 62 miles northwest of Sao Paulo). The carrier has orders for 36 E-195 aircraft, worth about $1.4 billion, and leases a few E-190s from JetBlue Airways. Although it may not be the best time to lease an aircraft, Azul is overcoming this, and is working deals; including other Embraer operators, the Brazilian Development Bank, and a German bank. The comfy and roomy Embraer aircraft aren’t a surprise to Neeleman followers – since JetBlue has the largest fleet of the E190 class. You might even be able to say that Azul is Brazil’s JetBlue.

David Neeleman has a talent for the industry. Just look at JetBlue, the carrier that launched in 2000, and now is the seventh largest airline based on traffic. I think that soon Brazil will see fierce competition brewing among GOL, TAM, and Azul. According to the Wall Street Journal, Neeleman says that planning the airline was a lot of fun, ”now is the hard part. You’ve got to operate it and make money.” That’s true for all airlines right now, but I think Azul is in great hands.

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American Airlines Leads the Pack for Baggage Revenue.

Posted on December 16, 2008 by | Leave a comment

A recent article written by WSJ’s The Middle Seat Terminal reported the winner of the baggage revenue contest: American Airlines. Yes, American collected the most baggage fees; meaning checked bag fees, overweight fees, and oversized luggage fees. The key number is $164 million dollars in baggage revenue for the airline (first 9 months of the year). Other winners included Delta’s $116.5 million and US Airways’ $93.3 million. That’s a nice hefty sum of cash, isn’t it?

Although you might expect the revenues to follow the “who’s the largest airline” pattern, or the “who boarded the most passengers” suit, this is not so. Remember, airlines implemented this at different times.  American was first to implement the fee with $15 dollars, then followed US Airways with second baggage fees. Southwest Airlines, the carrier that boards the most passengers, doesn’t charge baggage fees (they have done a nice job with their ads – exposing competitors’ profit schemes). It’s a new and innovative way for airlines to gain more revenue. I know people who refuse to fly carriers that charge baggage fees. Passengers don’t like it, so why not take it away when you can? Airlines might be able to churn up profits once again – since the price of fuel has fallen quite a bit.  It may not be a bad idea to take them out? It’s up to the financial analysts of the airlines to determine whether this will work or not. 

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Competition Watchdog Says 13 Airlines Price Fixed.

Posted on December 15, 2008 by | Leave a comment

Forbes reported last night that the New Zealand competition watchdog is taking legal action against 13 airlines and 7 individuals for alleged price fixing / cartel behavior in the air cargo industry. The 13 airlines said to be prosecuted are: Air New Zealand, British Airways, Cargolux International, Cathay Pacific, Emirates, Garuda International, Japan Airlines, Korean Airlines, Malaysian Airline Systems, Qantas, Singapore Airlines, Thai Airlines, and United Airlines. Yes, that’s quite a hefty list of airlines; some of the largest airlines in the world. Although the list is known, no basis for the charges has been revealed yet. Some airlines, like Air New Zealand, are willing to co-operate with regulators but they are frustrated with the fact that regulators have not shared any evidence with the airline.

The list is striking. It’s amazing that as many as 13 airlines, and some of the largest, colluded just to get higher profits. Some of these airlines are among the highest respected carriers in the world – at least in my view. I am interested in the evidence that the competition watchdog has to make these allegations. Needless to say, New Zealand is far away from many of the countries to which it exports / imports, it’s no doubt that it hurts New Zealand , as a whole, since consumers have to pay much heftier shipping expenses. I’ll keep you posted on this issue if new updates appear. 

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Dan’s Saturday Links #23

Posted on December 13, 2008 by | Leave a comment

Here’s another set of links from my blog, Things in the Sky:

  1. United has unveiled a new product called Premier Line, which for a fee provides access to priority screening among other things. Ben over at One Mile at a Time has the details.
  2. Here’s an update on Ryanair’s attempt to take over Aer Lingus.
  3. United has announced details of a codeshare with EgyptAir.
  4. Mokulele Airlines and Westjet have announced a partnership. Mokulele has also partnered with Alaska.
  5. Southwest ground crews are beginning informational pickets at some airports.
  6. AirTran announced service to Branson, Mo. (the first airport completely financed with private money) this week. Brett Snyder (aka Cranky) has some good insight on the announcement, and he visited the airport recently.
  7. As a way to build up some cash, United sold 15 757s and is leasing them back.
  8. Should the airline industry receive some government money in a future stimulus package? Today in the Sky has a good article about this issue.

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