Airline law ends long Tarmac delays, fine threat improves performance

by Tom Johansmeyer on

The world didn’t end. No logistical disasters emerged. In fact, everything got a hell of a lot better.

Several months ago, the prospect of a maximum three-hour tarmac delay had the airline industry proclaiming the arrival of the four horsemen. They claimed that it would severely disrupt the industry to have to give passengers the option of getting off the plane would lead to chaos. People would be furious by a lone passenger wanting to bring the plane back to the gate, and crews would be forced to operate within the constraints of customer demands (you know … like other businesses).

Well, the airline industry doesn’t appear to be any worse off than it was. In fact, it looks like the new three-hour rule is having a positive effect. Three-hour tarmac delays have effectively disappeared, and on-time arrivals have improved overall. Everything seems to be running better than it was before the airlines faced fines of up to $27,500 per passenger.

How big a different did it make?Well, only four planes sat on the tarmac for more than three hours in April. In March, 25 hit that mark, and April 2009 had an astounding 81 planes on the tarmac for that long.

So, you’re probably wondering if the airlines stacked the deck, canceling flights to protect their stats and mitigate the risk of having to yank planes back to the gate or shell out big bucks fines. Year over year, the DOT reports that cancelations fell approximately 50 percent, with only 3,637 of 529,330 flights getting chopped.

Overall, on-time performance for the 18 airlines that report to the U.S. Department of Transportation climbed to 85.3 percent in April – up from 79.1 percent in April 2009 (and better than March’s 80 percent. Most of the late arrivals were caused by aviation system delays (e.g., bad weather or heavy traffic).

Efficient use of New York airspace and generally calm weather contributed to the improvement. LaGuardia‘s on-time rate surged to 87.4 percent from 67.4 percent. JFK showed a similar improvement – from 67.3 percent to 83.5 percent.

U.S. Airways led the pack in on-time performance among major airlines and followed Hawaiian and Alaska Airlines in the total market. American Airlines was the bottom of the barrel for the large carriers, with its sister carrier, American Eagle, sucking most among all airlines.

Let’s do the math on this. Holding airlines accountable and offering up the threat of hefty fines for mistreating passengers didn’t jeopardize their ability to operate. If anything, it led to improved results. For once, it seems, the government got it right. If that sounds weird, think of an airline that takes off and lands on time. Weird, right?

Virgin America: Financials prove service makes a difference

by Tom Johansmeyer on

We’ve all gotten used to bailing out airlines that can’t figure out how to take care of their paying customers, operate profitably or otherwise get their respective acts together. And, there really isn’t much hope of this situation changing. To be an airline, in general, is to be dysfunctional … until you look at the new entrant, Virgin America. The privately held carrier announced on Friday that its revenue surged 38.3 percent from the third quarter of 2008 to the third quarter of 2009.

The airline has amassed a collection of awards to back up its commitment to customer service, including “Best Domestic Airline” in Travel + Leisure‘s 2009 World’s Best Awards and “Best Business/First Class” among domestic airlines in Condé Nast Traveler‘s 2009 Business Travel Poll. And, the fact that the 1,500-person company is adding jobs in this market — beating both the recession and its worsened form in the travel business — suggests that it is possible for an airline to not just survive but actually succeed.

David Cush, Virgin America’s President and CEO, says, “Despite an uncertain economic climate since our 2007 launch, we’re pleased to report steady and strong financial performance and our first quarterly operating profit.” He adds, “At a time when flyers are more discerning than ever, it is clear that our low fares, award-winning guest service and innovative amenities continue to convert a growing network of loyal travelers. We look forward to bringing our unique value proposition to more travelers as we grow in 2010 and beyond. ”

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But, enough of the soft stuff — let’s turn to the numbers. That’s where you’ll find the truth in these matters. Cost containment and operational efficiency helped Virgin America post a record load factor of 86.6 percent, an increase of 5.2 percentage points year-over-year. Costs per available seat mile were pushed down 33.9 percent (24.4 percent ex-fuel), and operating income swung from a $54 million loss in the third quarter of 2008 to a $5.1 million gain this year. Along the way, Virgin America realized a mishandled baggage rate of 1.18 per thousand — three times better than the industry average. And, it attained an on-time rate of 87.2 percent.

Sorry to go “quant” and dwell on the numbers a bit, but they speak to a common theme here at Gadling: whether the airlines are doomed to fail … and be propped up by the government taxpayers and fail again … and so on. Virgin America’s proved that an airline can amass 1.1 million loyalty program members and fly 5.8 million passengers in just over two years and still find a way to get into the black. There is probably market share gain in this airline’s future, but it is making a big mistake: by not screwing up, it’s taking a pass on all the free money the feds are more than willing to give to an industry that refuses to help itself.