So, on Tuesday my college’s finance group went down to New York, and perhaps the highlight of the day was a tour of the New York Mercantile Exchange (NYMEX). Why is this important for an aviation blog? Well, NYMEX is one of the places crude oil is traded.
Unfortunately, photography wasn’t allowed. The best I could do is get this picture of the sign outside, and I even got yelled at for that!
Our tour guide was really informative, and I learned a great deal about commodities trading. What really impressed me was the hand signals traders use on the floor - it was pretty interesting to see in action. Unfortunatley, NYMEX (and other exchanges) aren’t as exciting to viewers as they once were. Much more trading is done electronically these days, so the trading floor is a bit quiter. The only busy area was where options for oil were traded. Apparently, options are still mainly traded through the traditional method since they’re more complex.
Anyway, it was certainly an interesting experience!
It came out yesterday that Southwest will purchase the remaining assets of ATA Airlines as a way to acquire the airline’s slots at LaGuardia. The press release was sent out today. 14 slots are involved in the deal (7 roundtrips). So, this plan seems to be (at first) a lot like the move into MSP - a relatively small operation (at first), but nevertheless it adds a new dot to the Southwest route map.
I think this is a great move for Southwest, and it certainly is a big step for them. I’ve felt that their attempts to attract more business passengers have been good efforts, not having New York in the system is a bit hole.
I was talking with one of my friends about the move, and we were trying to figure out what routes would get service, and we both agreed on Midway. In fact, I wouldn’t be surprised if all the flights ended up being Midway flights because of the relatively low number of flights. But we did talk about some other cities.
Phoenix and Vegas are out of the question (for now) because of the perimeter rule. We thought that Philadelphia and Baltimore were too close. While Florida is an option, those routes seem to be covered pretty well by AirTran and JetBlue. We did think a good hub connection could be Nashville.
Well, like I said, this is a big step for Southwest. The deal has to be figured out in bankruptcy court now. Hopefully soon we will see when Southwest will start service.
Minutes before I posted, I got an e-mail from Southwest with a link to the blog post about this by Schedule Planner Bill Owen, which I also think is worth a look.
So, apparently the whole Alitalia situation is still riddled with bickering. Reuters reports:
Alitalia has been canceling scores of flights daily since last Sunday, blaming a group of pilots and cabin crews who are up in arms over a takeover by Italian businessmen and have been following a strict “work to rule” protest.
Of course, the unions are sending the blame right back:
However, unions representing the pilots said the flight cancellations were unnecessary and were aimed at saving money and making it easier for the CAI investor group to take over the company while trying to turn public opinion against the unions.
You know what? I really don’t care what either side says anymore. This whole situation has dragged for far too long. The deal with CAI needs to be finished up and everyone should move on.
It’s been awhile since I’ve posted graphs with the spot prices of oil and jet fuel, so let’s take a look:
Basically, all of the gains since the beginning of 2006 have been erased. That’s fairly incredible. I saw gas around $2.15 yesterday, and it will probably be going down a bit more.
Nevertheless, I am shocked to say the least. I remember back in the spring in May that predicted that oil would be back in the $60 range, and I didn’t believe it. But now, look where we are - oil is below $60/barrel.
I think the important question is if oil will stay in this range - and I think it will for the short term. I am fairly confident that an increase in the price of oil will be an indicator that the slowdown is over. Obviously right now this is good for the industry right now when the airlines are paying spot prices (I think the topic of hedging has been beaten to death at this point). Will this change the strategy of some airlines? I think it is possible. For example, some airlines probably aren’t feeling as pressured to trim schedules and shift their fleets.
The latest edition of the Air Travel Consumer Report has been out for awhile, and I’m finally getting the chance to look at it.
This report contained the ontime performance of airlines for September, and it increased a few points compared to the same month last year (81.7% of flights ontime compared to 84.9%). Now, could this be due to the capacity cuts? Page 21 of the report talks about cancellations, but also lists the total number of flight operations. September 2007 saw 600,817 operations, and September 2008 had 540,908 - a 9.9% decrease. So, I think one could say it is certainly possible.
Mishandled bag reports were also down 5.36 per 1,000 passengers last year versus 3.86 per 1,000 passengers this year. As I discussed back in October, there is a good chance this decrease is due to the increase in baggage fees accross the industry.
Complaints were also down for the inudstry - down to 0.99 complaints per 100,000 passengers from 1.17 in September 2007.
AirTran sent off a press release today announcing that it would begin starting a $15 fee for the first checked bag. The $25 fee for the second bag remains the same.
Interesting how a mention of oil prices is absent compared to the press releases explaining the first round of fees from the airlines that came earlier this year.
So apparently the announcement of Volaris as a codeshare partner hasn’t gone over the best over at Southwest, at least according to some rumors I’m hearing - I first noticed a report of this on PlaneBuzz.
There was one comment on Southwest’s own blog that I found interesting as well, and there are a few like it. (Kudos to the Southwest blog team for letting employees express discontent freely.)
The potential for profit for the COMPANY is good, but employees that depend on seniority progression for their careers should be VERY scared. This is flying we should and could be doing and now we are going to facilitate through www.southwest.com and this codeshare Volaris’ growth while we remain stagnant! This should be potentially very concerning, especially to FA’s and pilots, but as well to other employee groups! We could do this OURSELVES and in very close to this timeframe. The same can be said for the WestJet codeshare. Troubling times folks… Our upper management is outsourcing our jobs/labor progression under this overly happy disguise because we as a group tend to be very trusting employees. Remember Herb is
There’s also a very long, detailed comment on the Dallas Morning News Airline Biz Blog, if you want to check that out. (Thanks to curbcrusher on FlyerTalk for pointing that out.)
Nevertheless, it is important to see how this situation develops, especially with Southwest in labor negotiations at present. This could be “growing pains” - plenty of airlines have codeshared successfully, and Southwest is just making its first steps in this area, or it could mean something more in the long run.
Regardless, this is all based on rumors this point, and as far as I know nothing official has come out from Southwest’s unions.
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