The Air Carrier Cold War

The Air Carrier Cold War

After reading the “Little Airlines, Big Idea’s” article, I was amazed that these business models have not taken off sooner. For years, infant airlines have been trying to grow in a land dominated by bullies. But they all had one flaw; they tried growing right under the legacy carriers noses. Airlines like La Compagnie and WOW have been able to grow and expand in the relive unregulated safety of the rest of the world.

Taking a closer look at some of the business models, these tow companies have tried different approaches to ultra low cost air fares. La Compagnie looked at the difference in price seating. Business class transatlantic at 5000 to 9000 a ticket vs 1000 for coach. Looking at what Southwest did for point to point travel, they did the same thing. Now all seats are the same class with the same service. With the new model, La Compagnie has been able to increase its passenger count and increase business overall.

WOW looked at another American Carrier that has been making headway, Spirit Airlines. They have a base airfare, very cheap and will get you were you need to go. How they make money is with the add-ons. Everything from legroom to baggage and meals is extra but it allows people to customize their trips. They pay only for what they want, and the airline doesn’t lose money paying for extras.

Both these airlines have made these business models a reality. But in order to make them work they have had to make some modifications. La Compagnie is utilizing the exceptional service (French wine and food for every passenger) and passenger comfort to entice passengers. WOW utilizes the tourism industry, and little sought after routes to score big business. Both airlines are utilizing smaller more efficient aircraft. This allows for less downtime and lower operation costs. La Compagnie takes seats out of its 757s while WOW utilizes narrower A320s. Both strategies mean that there is less capacity risk. That, combined with the lower fares means that there will always be full seats. Nothing is more depressing for an air carrier than looking at empty seats on a plane. “An empty seat, by any other name… is still a loss”

If I was to guess as to which one would be more successful… I couldn’t say. Both have their advantages and disadvantages. When it comes to competition, Legacy carriers have bled themselves to try and save a tenth of the market share and put others out of business. So I guess the overall edge would have to go to WOW. Snatching up all the unwanted routes still means you have business; you’re not fighting for other carrier’s passengers. Besides, plenty of passengers are willing to go a little out of the way for a cheaper fare.

The question has been asked, will these models affect the global industry. I looked at this a different way. I think the smaller models have affected these global carriers. Looking at the US, The legacy carriers have dominated the skies and forces smaller airlines out. They can’t be taken on in a direct pricing battle but carrier such as Southwest and Spirit have found ways around that and have started to thrive. The global market took a look at this and decided to do the same thing. The larger airlines dominated the main routes, they charge higher fees and will bully out competition. Now, these smaller airlines are finding loopholes and strategies to beat the larger carriers without going head to head with pricing wars. Will the larger carriers, be defeated? Probably not, but I do seem them losing a pretty large share to the ultra low cost carriers (ULCCs) and eventually the two will cohabitate based purely on routes. The only question that remains, is which side of this “Cold War” will they be on?

References

http://www.forbes.com/sites/garywalther/2014/09/25/la-compagnie-the-upstart-business-class-only-airline-with-the-best-ny-paris-business-class-fare/

http://www.washingtonpost.com/blogs/wonkblog/wp/2014/10/29/this-airline-is-making-flights-to-europe-as-cheap-as-99/

Space the Next Frontier?

By now you have read or at least heard of the Virgin Galactic accident. On 31 October 2014, Space Ship Two crashed to Earth after experiencing an in-flight anomaly. Space Ship Two's tail system was supposed to have been released for deployment as the craft was traveling about 1.4 times Mach; instead, the tail section began pivoting when the vehicle was flying at Mach 1. The crash caused one fatality and one serious injury. Space Ship Two was manufactured by The Spaceship Company (TSC)

The Spaceship Company is an aerospace production company founded by Virgin Group TSC’s launch customer was Virgin Galactic. By July 2014, TSC was only halfway through the completion of a second Space Ship Two, and had commenced construction of a second White Knight Two. Virgin Galactic is a British commercial spaceflight company within the Virgin Group which hopes to provide suborbital spaceflights to space tourists, suborbital launches for space science missions, and orbital launches of small satellites. Further in the future, Virgin Galactic plans to provide orbital human spaceflights as well. 

When researching rules I came across quite a few rules and regulations. Just to show how regulated space flight is and will be here is a small sampling of already published rules;

14 CFR Parts 401, 415, 431, 435, 440 and 460, Human Space Flight Requirements for Crew and Space Flight Participants

14 CFR Parts 405 and 406 Civil Penalty Actions in Commercial Space Transportation

14 CFR Parts 401, 411, 413, 415, and 417 Commercial Space Transportation Licensing Regulations

14 CFR Parts 405 and 406, Civil Penalty Actions in Commercial Space Transportation

14 CFR Parts 401, 411, 413, 415, and 417, Commercial Space Transportation Licensing Regulations

14 CFR Parts 401, 417, and 430, Licensing and Safety Requirements for Operation of a Launch Site

14 CFR Parts 400, 401, 404, 405, 406, 413, 415, 431, 433, and 435, Commercial Space Transportation Reusable Launch Vehicle and Reentry Licensing Regulations

Space tourism seems to be a very niche market. For Virgin Galactic to make any serious money they may have to depend on its plans for suborbital launches for space science missions, and orbital launches of small satellites. Until there is a place for the tourist to go (Moon or Space Station maybe) the market will always be niche for tourism and in that case not even the general public, but more so for the affluent.

Qualifications were the hardest thing to find. According to the FAA, pilots must poses and carry an FAA pilot certificate with instrument rating. In addition, a class one medical is required.  There will be additional requirements like the ability to wear a pressure suit and operate the aircraft (fighter pilots have the edge there) and be confident in emergency procedures and quick thinking.  While these are there barest of requirements, companies will have their own standards and qualifications they will be looking for.

References:

http://commons.erau.edu/cgi/viewcontent.cgi?article=1001&context=ww-graduate-studies

https://www.faa.gov/about/office_org/headquarters_offices/ast/regulations/

Colgan and Cargo

Colgan and Cargo

As with any media covered loss of life, the governmental agencies will always feel pressure from the public to implement some new law or regulation to prevent such loss in the future. In the case of Continental Connections Flight 3407 operated by Colgan Air, this proved true yet again.

One of the biggest changes was in hours required in order to get your Airline Transport Pilot certification. Now pilots are required to have 1500 hours of flight experience (Imposed by Congress, not the NTSB recommendations) before they can be certified. Rules and regulations governing how many hours pilot can work and required rest cycles have also been implemented. Pilots must have 10 hours of rest per day and 8 hours of uninterrupted rest. Until the crash, regional carriers were putting crews in the air with as little as 250 hours of flight experience for first officers and 8 hours of rest were required and this included travel to and from the hotel.

While the Regional Airlines were hit with these new regulations, the Major Airlines were not as effected since many or their pilots were pulled from the regional’s with well over 1500 hours of flight experience. Cargo pilot duty time generally still follows the old regulations of 8 hours daily rest and 24 hours per week and flight experience remains the same.

People have speculated on why the Cargo carriers have been excluded from these recent rule changes. Personally, I feel that this is appropriate considering that the rule changes were implemented under pressure from a misunderstanding public. Since cargo carriers do not carry passengers, the perception is that the regulations are for the safety of passengers only. It’s really more of a form of appeasement for the public perception. Airline pilots have to acquire experience through flight hours. Imposing higher requirements almost eliminates entry level positions and stretched the current workforce thin. It boils down to quantity over quality.

If these new rules were implemented in the Cargo Carriers as well, companies like Kalitta could not be a starting point in my aviation career. Pilots have used the cargo carriers and regional’s to build hours for their Airline Transport Pilot Certificates. Instead, I would be forced to continue as a CFI flying back and forth to the practice areas instead of learning new airports and planes. When asking anyone in the aviation field if the new requirements will be effective, the answer will almost always be “No”. Even the most experienced pilots can still make mistakes (Both Colgan Pilots had over 2000 hours). The real change can be made by competency checks and flight reviews. Only then can we truly assess the quality of the current pilot force.

References:

http://www.usatoday.com/story/news/nation/2014/02/11/colgan-air-crash-prompts-safety-regulations/5372353/

http://www.ntsb.gov/doclib/reports/2010/aar1001.pdf