San Francisco International Airport

Air New Zealand hones in on long-haul restructure as first half profit falls

Air New Zealand is nearing a conclusion of a restructure of its loss-making long-haul network. At the peak of losses in the six months to 30-Jun-2011, the operation lost in excess of NZD1 million (USD833,700) a week. While the losses were exacerbated by high fuel prices and weakened demand from the Feb-2011 Christchurch earthquake and the Mar-2011 Japanese earthquake and tsunami, ANZ has seen the entrance of price-aggressive long-haul carriers that give reason to strategically enhance its position across all markets.

CEO Rob Fyfe has said no long-haul market has been significantly positive or negative, unlike with Qantas’ Aug-2011 restructure in which losses had been heavy in Europe and Asia. Adjustments to the long-haul network, some already implemented with others to be announced in coming weeks, comprise adjusting frequency and capacity to existing and new routes, working with partners, bolstering ancillary revenue and evaluating aircraft capacity as well as fare and product structure.

New Cebu Pacific long-haul operation could push out Philippine Airlines but may require hybrid model

The new plan from leading low-cost Filipino carrier Cebu Pacific to offer long-haul services from 3Q2013 represents not just the fourth low-cost long-haul operation in Asia, but the first time such a carrier has potential to force a full-service rival – Philippine Airlines (PAL) – out of business.

Cebu Pacific will benefit from the Philippines’ extremely price sensitive market that has seen LCCs achieve a staggering 80% share of the domestic market and a fast-growing share of the regional international market. Demand for low-cost long-haul services will come primarily from the large visiting friends and relative (VFR) and migrant worker market. But Cebu’s new low-cost long-haul operation will also benefit from growing tourism and potentially the ability to transfer passengers over a geographically convenient hub if Cebu decides to stray from its original point-to-point model.

While PAL is the nation’s sole long-haul carrier, its lack of global alliance membership, relatively small domestic operation and higher cost base create low barriers for entry. National sentiment for Asia’s oldest airline may run high, but as seen in the Philippines’ domestic market, passengers vote with wallets.

Virgin America targets US Airways with launch of Philadelphia service in April

Virgin America will continue its strategy of targeting fortress hubs with service to Philadelphia commencing in Apr-2012 from Los Angeles and San Francisco. Virgin America will take approximately one-quarter market share on both routes at the main expense of Philadelphia's hub carrier, US Airways. Philadelphia is a key step in the development of Virgin America's network as it will give the carrier service to all five of the largest metropolitan areas in the US and eight of the top 10, with only Atlanta and Houston still missing from its network but likely to be added before the end of 2012.

Virgin America's first flights to Philadelphia, its 17th city, will arrive on 05-Apr-2012 with double daily service from Los Angeles on the carrier's 137-seat A320s. A third daily frequency will be added on 01-May-2012. Services from Virgin America's San Francisco hub commence 10-Apr-2012 with one daily frequency, increasing to double daily on 01-May-2012.

Slots continue to make news in the US, first at New York and change comes to SFO

The US aviation landscape is again being affected by the scarcity of capacity in two of the nation’s important metro areas. Last week the FAA gave its blessing to the slot swap between Delta and US Airways at New York’s LaGuardia and Washington’s Reagan.

Virgin America’s David Cush says the airline's unique formula will drive success

There is an assumption that all new airline startups are built on the model pioneered by Southwest: low costs, low fares and simple operational models. While true much of the time, there are instances when a low cost platform has been the basis for an upgraded product. Such is the case at Virgin America, the US bearer of the Virgin brand and designed to provide a distinct type of service to the market.

In an extended interview with Virgin America’s President and CEO, David Cush, he summarised the airline’s appeal by stating that, “With us, you always get a good ride”.

That is a claim generally substantiated by overwhelmingly positive customer responses as well as a lengthy list of awards already collected by the 4-year-old carrier.

The busiest US air market is dominated by Southwest as others continue to cut-back

The battle for the north-south California traffic has a winner: Southwest Airlines. In a recent announcement, Delta Air Lines became the latest carrier to announce it will trim capacity between San Francisco and Los Angeles – from 77 to 49 weekly frequencies. The flights are all operated with regional jets and provide connections from SFO to Delta’s larger network at LAX.