It’s time to stop waving the Open Skies banner

by Grant Martin on

Listen up bloggers and analysts: it’s time to stop chanting the “Open Skies” mantra and telling Americans that they’re going to find a ton of budget fares to Europe. It’s not going to happen immediately and there will not be a huge stampede to buy bargain basement fares this month.

I keep reading and hearing journalist’s shallow reports about how increased demand with the Open Skies Agreement means fares are going to be super cheap this summer. Yes, the new pact means that more routes will be available between the US and EU. Yes, more supply usually means lower prices. But have you guys really looked at the data? Have you compared this year’s load and pricing data against the last few years?

I’ve been keeping track of transatlantic ticket prices for a while now and can tell you that the current market prices are not much different from last year. There may be small deviations above or below, but I’m sure those fit into the noise of a ten year average and are largely not a function of Open Skies.

The fact of the matter is, routes didn’t come pouring into the market like a tidal wave once March 31 passed. Airlines are carefully integrating their routes and planning accordingly with seasonal and passenger loads and aren’t going to be getting into a fare ware during peak season. Even if they do decide to bicker over a few routes, the 20% savings off a 1500$ ticket is still going to be significantly more than the 400$ that you’re going to pay in February.

Open Skies comes at a time when tourist season is kicking into gear and jet fuel is at an all time high. These two factors alone should be able to single handedly negate any increase in supply. To that end, once demand goes back down this fall and more routes come into effect, we may see a decrease in fares to a reasonable rate. But my prediction is it will be only then, well after this year’s season has ended.

As travel writers and analysts, we need to be cautious not to jump on the Open Skies bandwagon because our Econ 101 teachers told us that prices could go down or because we have an interview on local news. This is a multi faceted market where route volumes do not solely dictate the market price. Keep an eye on the numbers and jump up and down when the prices drop; until then, Open Skies is just a few extra planes flying over the Atlantic and hopes for a cheaper ticket some day.

ATA files for bankruptcy, ceases all operations

by Grant Martin on

Passengers flying on ATA Airlines today are in for a surprise when they get to the airport. This morning, with practically no advance notice, the Indianapolis-based airline announced that they had declared bankruptcy, canceled all flights and ceased operations.

The cause of their collapse, in addition to the obvious stratospheric jet fuel prices, was in the loss of a key military contract that they had been relying on to maintain operations. Between those and and an extremely competitive market, the airline could no longer operate in the black.

Passengers in ATA’s hub cities, Chicago, San Francisco (Oakland), and Honolulu will be the most affected by the cancellations. If any of you have reservations and booked with a credit card, ATA suggests that you contact your credit card company for a refund. But if you paid by other means, you may have to jump through a few extra hoops before you get your money back; as our friends at Elliott.org write this morning, you’re going to have to file a claim in ATA’s Chapter 11 proceedings if you ever want to see part of that money again.

And so comes to close another small American budget airline, pushed out of business by high oil prices, competition and operating costs in a market that was just too tight to sustain it. With the collapse of the airline goes 2,200 employees, 29 aircraft and 35 years of hard work.

Farewell.

FAA whistle blowers blow and spill about Southwest Airlines violations

by Jamie Rhein on

Yesterday CNN broke a story that two FAA inspectors have decided to come forward and start talking. And have they talked. According to Bobby Boutris and Douglas Peters, the issues with Southwest Airlines not complying with FAA safety inspections is an old problem that the FAA has known about, but has ignored. Boutris and Peters, uncomfortable with the FAA protocol not being followed, decided to spill because they feel they owe taxpayers a job well done.

They said that FAA looked the other way when Southwest flew 70 airplanes–or more, 30 months past the time they should have had their rudders inspected. The rudder is one of those important parts. It’s connected to the steering mechanism. Another not inspected part FAA knew about according to these two? The fuselage, or the skin. This inspection finds cracks. There were 47 planes that weren’t inspected when they should have been. During inspection 6 of them had cracks that could have been dangerous. That’s a comfort. Glad they found those. CNN has not been able to snag an interview with FAA higher ups, thus far.

Today there’s a hearing on Capitol Hill with the House Transportation and Infrastructure Committee to help find out WHAT THE (fill in an expletive)?! CNN is staying up on this one. Boutris and Peters want whistle blower protection. I wonder who will play them in the movie version? Remember Russell Crowe in “The Insider,” the movie about the tobacco industry?

See previous Gadling posts about Southwest’s inspection story here, here, and here.

United to cancel 777 flights today

by Grant Martin on

Has the FAA been bringing the pain super fast lately? Last week we saw hundreds of cancellations on American Airlines and Delta Airlines flights because of potential issues with wiring harnesses underneath the aircraft. The issue was solely on their MD-80 aircraft, each carrier grounded a few flights, checked out the problem and everything got rolling again. What caused the inspections, however, was a flag raised by the FAA questioning the methodology of the inspections, not dissimilar to warnings raised earlier on Southwest 737s.

Now, United Airlines has discovered that one of the tests to check the fire suppression systems in their Boeing 777 cargo holds hasn’t been run properly, so they’re cycling all of those aircraft in to make inspections. Thirty one of the eighty four scheduled flights in total were canceled.

Why the sudden spate of aircraft groundings for maintenance checks? It might have to do with increased attention to aircraft maintenance issues as a result of the Southwest incident a few weeks back. Airlines are now probably scrambling to double and triple check their records to make sure that everything is up to snuff as the FAA and congress clamp down on quality.

A congressional hearing on the matter is scheduled for Thursday, at which point we’ll probably hear much more on United and maintenance checks in general, and what our fair politicians plan to do to keep things running smoothly. We’ll let you know how that goes.

New Virgin V Australia flights to fly between Sydney and Los Angeles

by Grant Martin on

Is Richard Branson singing you to sleep and feeding you oatmeal in the morning yet? No? Well then he hasn’t yet nuzzled his way completely into your life. Not to fear, you’ll be wearing Virgin loafers and listening to Virgin Radio on your Virgin phone some day soon.

Branson’s newest airline venture, an off-shoot of Virgin-Blue, the new Australian Low Cost Carrier, is called simply V Australia. He plans to fly routes between Sydney and Los Angeles on Boeing 777’s in direct competition to Australia’s national carrier Qantas, who currently has a stranglehold on the market.

Because of tight supply, Qantas has historically been able to charge around 1500$ for a round trip flight between the two cities. Branson hopes to kick off some serious competition on the route and this past Monday announced the first 1,000 tickets would be sold for 777$ — those sold out almost immediately.

For what its worth however, the Chipmunk-eque British billionaire did promise fares in the 375$ range sometime in the future. We’ll see if that ever comes to fruition.

Service is slated to start in December of this year, with tickets already on sale for journeys afterwards. Rest assured — Gadling will be on hand to test drive the new service too. Word on the street is that they’ll also be partnering with Northwest Airlines, so look forward to the potentials of mileage and booking alliances.

Check out V Australia’s website for more info and to book tickets.