Airline Profits? Peter asked about airline profits

Here’s some data from Q3 of 2010:

U.S. Airline Profits for 3rd Quarter, 2010 in Millions $


Note that United and Continental have merged, but they provided a profit split in their report.

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Frequent Traveller Nightmare Part 2: Traveller heal thyself

As I wrote, some people are not in a position to slow their travel.  Sales people need to see customers, and indeed there is a different social dynamic that occurs in person versus remote.  However.

If one visits a site like flyertalk.com, where one sees the sheer mountain of complaints against the airlines, there must clearly be a better way for many people.  There was a person at my company, for instance, who would commute to his customer in New York from the middle of England – on a weekly basis.  Apart from what that costs in terms of dollars to our company and greenhouse gas emissions, it costs the individual too.  Why didn’t the management hire someone in the New York area to do the job?  Why didn’t they insist that he use TelePresence?

Well, watch this space: video is really coming into its own.  Cisco has led the way with TelePresence, and is doing its level best to bring people closer together through introduction of new products and services like ūmi.  If video can be made cheap enough, it hopefully means an end to at least some routine business travel.  Better placement of resources would mean an end to much more.

But beyond that, all of these people who complain about business travel on that web site look at it as if there is nothing they can do about it.  Really- to read someone who travels over 100,000 miles a year and took the time to complain leads me to ask the question I asked myself when I found myself miserably traveling: why travel if it is so miserable?  How about not traveling?  Or at least not flying?  Or at least reducing the amount you fly?  You’ll make yourself happier, spend less money, and reduce carbon emissions.

Here’s one reason not to stop flying: sending a message to the airlines.  They don’t care.  Not only don’t they care, but they’ve learned how to make money no matter what passenger demand they have, through the ability to easily adjust their fleet size, furlough employees, and cancel flights.  Load factor is the only thing they care about.  You can’t affect it.

By the way, people might think I find the airline industry uninteresting.  I don’t.  I think it’s fascinating, how planes are designed, how they’ve learned to make money in the worst of times, and how they’ve consolidated themselves into an oligopoly.  But I’ll watch from a distance as best I can, thank you very much.

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Frequent Traveller Nightmare Part 1: Why I don’t travel (that much)

I used to love to take a trip on an airplane.  And my airline of choice was United.  I flew on them because their planes were clean, they got me to where I wanted to go most of the time without a plane change (particularly when I lived in San Francisco), and I could follow all of the air traffic fun on my headset, giving me something the remote possibility of learning something, while mindlessly staring out the window.

Almost a decade ago my love affair with flying ended, sometime after the love affair with my (now) wife began.  We were often separated by hours of overnight flights and thousands of miles.  It was also a time when United went bankrupt while their planes were over capacity.  Since then, the Towers fell on 9/11 (I was in the UK at the time), and we’ve become so paranoid about our personal safety thanks to the Bush Era approach of leading from a position of fear that air travel has become a flying prison experience.  And so I have largely stopped.

My own personal travel has dropped from a peek of 120,000 miles per year down to roughly 30,000.  Yes, I still travel, but considerably less, and not often to America.  There are more than a few reasons for this:

  • Flying is expensive, especially for families.  I now have one.
  • Fuel surcharges that can be over 200% of the cost of the ticket (something that Continental misleads customers to believe it is entirely beyond their control).
  • Distance- this cuts both ways: I don’t need a plane (or even clothing) to see my wife and daughter, while my parents and American friends are much farther away, making the trip both more expensive and difficult.
  • Convenience- who wants to deal with the TSA?  To be fair, here in Switzerland they really do make it as painless as possible.  I have only ever once missed a flight here in Switzerland, when a train broke down, and the SBB actually rebooked me on the next flight before I arrived at the airport!
  • A long flight is hard on a child– any child.  Parents need to think long and hard before putting their children– and other passengers– through that.  We made that mistake by bringing our daughter on a long haul at the age of 4 months.  When she was sick.  Big mistake.  Even though the doctor told us it was okay for her to fly (he was wrong) in order to get to Florida.
  • But beyond that, anyone in the back of a long haul has a miserable experience ahead of them from the moment they board.  You can be assured that drinks on American airlines won’t be free, the movies will be lousy, and the food will be, if anything, worse than you remember.
  • Families have very few options to upgrade.  When I’ve done so, it hasn’t been worth it.  After all, what’s a comfortable chair if you can’t sleep because you need to attend to a child?

All of this boils down to the fact that the average flight to the U.S. costs us around $3,100.  It’s about 1/3 that to elsewhere within Europe.  Compare that with the $388 it used to cost me to go from San Francisco to the East Coast.

This leaves business travel.  I have reduced that as well.  A lot.  Some people aren’t in a position to do so, I am, and I have.  It has helped that my company now discourages travel where four years ago people would just as soon hop an airplane than pick up a phone. Now we have TelePresence, WebEx, and all sorts of other collaboration tools at our disposal.  I applaud the change.

But even when I do travel, within Europe I prefer the train when it is feasible.  I recently chose the train over the plane to get from Zürich to Maastricht.  That turned out to take only about an hour longer without a plane than it would have taken with.  But it cost quite a bit more.  Within Switzerland I always use the train to Geneva.  No reservations required, and it just works.

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Department of Stoopid: Virgin Airlines asks US flyers to avoid them

CNN reports that a Virgin Airlines flight diverted to Bradley International Airport in Connecticut sat on the tarmac for four hours, without so much as offering water.  The excuse used is that the airport is not equipped with a suitable customs facility (Bradley has exactly one connection outside the United States – Toronto), but once again we see an inability to manage risks.  What was the risk to passengers versus the risk to others by letting them sit in the terminal until appropriate customs people had arrived?

But our story doesn’t end there.  As you may recall, airlines may now be fined for such behavior, but there’s a catch: the rule applies to domestic flights.  A Virgin spokesman said that because they are a UK-flagged carrier they are not subject to U.S. laws.  If that is indeed the correct logic, and that you’d receive the protection with a US carrier, then Virgin is encouraging you not to fly their airline.  Go figure.

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iPhone: Good or Bad for the Industry?

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Before Apple released the iPhone it irked me that the pace of technology for cell phones lagged at an incredibly slow pace, the user interfaces were crap, and the deal between cell phone providers and service providers seemed to completely leave the consumer out of the value chain.

Apple changed all of that by going “over the top”, picking a winner in each market, but limiting what deal those winners would get.  That was great, and really stuck it to SPs (who got rich anyway).  They’re trying to do the same thing with the iPad, but in the meantime Apple has changed the accepted development model for businesses.

It used to be that you needed rich web connectivity, and that was good enough.  Now you have to have an Apple app in order to reach all of those customers who love their iPhones.  Good examples of this include Facebook, Airlines, and even that dinosaur who is responsible for Formula 1 promotion, Bernie Ecclestone.  Yes, even F1 has an app.

Here’s the problem: many of the Apps are nothing more than shells for garbage that companies want to shovel at you, and they don’t want others using their data”.  A perfect example is American Express, who requires an app in order to view flight reservations.  THERE ALREADY ARE MANY SUCH APPS. One of them is your calendar program.  One thing you might want to do is download reservation information into your calendar.  But American Express‘ travel web site GetThere.Com won’t let you do it.  You have to download their app.

And GetThere is getting sneakier, as they no longer send many corporate travelers a full reservation in email, but instead simply send a pointer to their web page.  Why are they doing this?  Because they don’t want others like TripIt to capitalize on “their” (really your) information.

And so there seems to be no incentive for these bad players to be good players in an iPhone world, in spite of the fact that there are perfectly capable standards and programs and libraries to deal with much of stuff that’s being exchanged.  What can be done to change that?

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