US Airways merger wins backing from AMR bondholder group | CharlotteObserver.comhttp://www.charlotteobserver.com/2013/01/30/3820743/group-of-amr-bondholders-back.html#emlnl=Top_Stories%3A_Business_Review
The important thing to note in this, is that this merger is in the perceived interests of the investors, not Charlotte, and not necessarily the flying public. There is no CAB around anymore to be a champion of competition and service to communities.
Wednesday, January 30, 2013
Anti-Intellectualism in Raleigh? McCrory wants to revamp higher ed funding, takes aim at UNC-Chapel Hill | CharlotteObserver.com
McCrory wants to revamp higher ed funding, takes aim at UNC-Chapel Hill | CharlotteObserver.com
Anti-Intellectualism in Raleigh? Some people just don't get it. A university education is not vocational school, and lots of smart people study non-academic as in technological subjects. However lots of career fields - including teaching require knowkedge and thinking ability in the humanities, foreign languages, philosophy and religion. McCrory brings to mind Richard Hofstadter's Anti-Intellectualism in American Life. My graduate alma mater, Mr. Jefferson's University of Virginia was under attack last summer by an attempted coup on the part of business interests that think a university is in the business of making money rather than intellectual development - entrepreneurs who don't see the value of teaching German, Philosophy or other liberal arts.
Anti-Intellectualism in Raleigh? Some people just don't get it. A university education is not vocational school, and lots of smart people study non-academic as in technological subjects. However lots of career fields - including teaching require knowkedge and thinking ability in the humanities, foreign languages, philosophy and religion. McCrory brings to mind Richard Hofstadter's Anti-Intellectualism in American Life. My graduate alma mater, Mr. Jefferson's University of Virginia was under attack last summer by an attempted coup on the part of business interests that think a university is in the business of making money rather than intellectual development - entrepreneurs who don't see the value of teaching German, Philosophy or other liberal arts.
Monday, January 28, 2013
Etihad Airlines and the "New" Middle East
http://www.forbes.com/sites/kenrapoza/2012/10/11/etihad-airways-and-the-new-middle-east/
This interesting article from late last year is a bit Pollyannish. It compares apples and oranges. As an airline analyst I can tell you that the author "gets it" for some of the reasons he lists regarding Etihad's successful business model. A lot of it, however, as also is the case of Emirates and Qatar has to do with customer service as compared to legacy carriers - and on simple geography - as in real estate and regional planning - location - is everything for a hub airline. That's the apple... The GCC states are very well placed for linking long distance routes and connections. Where we get to the oranges is geography and other factors. Geography, however, is where things get complicated and where the author gets bogged down in the sands of Middle Eastern cultures, religions, and politics. He admits to never having visited the region and apparently bases his observations on the stock market and even CNN. As one who has been involved in the analysis and diplomacy of the region for more than three decades and has travelled there, I have to regard this analysis as superficial - maybe ok for buying some stocks but not for political investment and political risk forecasting. Neither Syria nor Iran will transform into a UAE or Oman or Qatar. The intersection of Shia Islam and Iranian politics and security policy will not easily lead to democratic change. The economic oasis of airline success could dry up if geopolitical forces shift to a conflict in the Straits of Hormuz or an Iranian attack on the GCC such as in response to an Israeli or other strike on Iranian nuclear sites. Etihad's success - no matter how great an airline it is (and it is) cannot be equated as a harbinger of progress in the Middle East.
This interesting article from late last year is a bit Pollyannish. It compares apples and oranges. As an airline analyst I can tell you that the author "gets it" for some of the reasons he lists regarding Etihad's successful business model. A lot of it, however, as also is the case of Emirates and Qatar has to do with customer service as compared to legacy carriers - and on simple geography - as in real estate and regional planning - location - is everything for a hub airline. That's the apple... The GCC states are very well placed for linking long distance routes and connections. Where we get to the oranges is geography and other factors. Geography, however, is where things get complicated and where the author gets bogged down in the sands of Middle Eastern cultures, religions, and politics. He admits to never having visited the region and apparently bases his observations on the stock market and even CNN. As one who has been involved in the analysis and diplomacy of the region for more than three decades and has travelled there, I have to regard this analysis as superficial - maybe ok for buying some stocks but not for political investment and political risk forecasting. Neither Syria nor Iran will transform into a UAE or Oman or Qatar. The intersection of Shia Islam and Iranian politics and security policy will not easily lead to democratic change. The economic oasis of airline success could dry up if geopolitical forces shift to a conflict in the Straits of Hormuz or an Iranian attack on the GCC such as in response to an Israeli or other strike on Iranian nuclear sites. Etihad's success - no matter how great an airline it is (and it is) cannot be equated as a harbinger of progress in the Middle East.
A US Airways and American Airlines Marriage: Good for Charlotte?
A US Airways and American Airlines Marriage: Good for Charlotte?
By Mark Carolla
Snobs from elsewhere in the US sometimes refer to Charlotte, North Carolina as “Mayberry with an Airport.” (Mayberry being the rural North Carolina town of an Andy Griffith Show and Mayberry RFD television comedy series of the 1960’s.) Charlotte, with its financial and business presence with several Fortune 500 firms located there, including several such as Chiquita Brands with international operations and equities isn’t exactly Mayberry. Notably, there are 194 German-owned firms in the Charlotte area including 59 U.S. headquarters; making Germany the most largely represented foreign country in the region. Charlotte Douglas Airport (CLT) is the sixth largest airport in the United States when it comes to flight operations, but about 90 per cent of passenger traffic is US Airways hub traffic connecting through CLT. CLT is home to over 15,000 direct airport jobs.
What will happen to CLT if US Airways takes over American? An excellent April 9, 2012 article by Ely Portillo in the Charlotte Observer quoted Aviation analyst Henry Harteveldt of Cambridge, Mass.-based Atmosphere Research Group, as stating it’s risky to invest in more capacity with the future of the airport’s No. 1 carrier up in the air. “Charlotte’s future is so heavily tied to US Airways’ status as an independent airline, and right now there is a lot of uncertainty,” he said. “There really is a risk.” (Read more here: http://www.charlotteobserver.com/2012/04/09/3158982/airport-bets-a-billion-on-future.html#storylink=cpy ) According to the same Observer article respected and veteran CLT Airport Director Jerry Orr “says he’s not concerned about the possibility of a US Airways merger. He said there always will be room in the Southeast for a hub besides Atlanta, and Charlotte Douglas can be that hub as long as it is well-run and stays low-cost for airlines. US Airways CEO Doug Parker says the airline remains committed to a Charlotte hub, even in the event of a merger. “I suspect in any sort of individual scenario that involves US Airways or any other airline in the future, that Charlotte will be a hub airport,” he told the Observer.” I hope that is the case.
This American livery + This US Airways livery =
This American livery and change for CLT?
Other communities in the United States have been shortchanged and hurt by the consolidation and formation of oligopolies in the airline industry in the advanced throes of deregulation. (Note: I am neither a fan of deregulation nor consolidation of the US Airline Industry and believe those factors have adversely affected customer service, the economics of aviation, jobs and professionalism and the availability of decent air transport to many communities.) As, I am currently associated as a political risk and international transportation and security advisor with Edna Chirico of Green Moose Consulting in Charlotte I find this history interesting if not compelling. Although my current specialty is transportation security, as a former Indications and Warnings analyst with the US Intelligence Community and keen observer of the airline industry I would respectfully advise Edna, Mr. Orr and others who care about and serve Charlotte to not be sanguine or Pollyannaish and to have a “Plan B” regarding the status of US Airways’ hub at CLT if the merger takes place. Here, again according to the Observer is what happened elsewhere in the US when airlines “consolidated:”
This American livery + This US Airways livery =
Other communities in the United States have been shortchanged and hurt by the consolidation and formation of oligopolies in the airline industry in the advanced throes of deregulation. (Note: I am neither a fan of deregulation nor consolidation of the US Airline Industry and believe those factors have adversely affected customer service, the economics of aviation, jobs and professionalism and the availability of decent air transport to many communities.) As, I am currently associated as a political risk and international transportation and security advisor with Edna Chirico of Green Moose Consulting in Charlotte I find this history interesting if not compelling. Although my current specialty is transportation security, as a former Indications and Warnings analyst with the US Intelligence Community and keen observer of the airline industry I would respectfully advise Edna, Mr. Orr and others who care about and serve Charlotte to not be sanguine or Pollyannaish and to have a “Plan B” regarding the status of US Airways’ hub at CLT if the merger takes place. Here, again according to the Observer is what happened elsewhere in the US when airlines “consolidated:”
· Pittsburgh International Airport, a former US Airways hub, was stuck with a new, $1 billion terminal after US Airways cut hundreds of flights there. Airport officials have said they expect to be paying back debt for the expansion until 2018. That, in turn, has kept its operating costs high.
· Lambert-St. Louis International Airport started on a $1 billion expansion plan in 2001, the same year American Airlines bought bankrupt TWA, which had dominated the airport. Despite pledges to keep St. Louis as a hub, American cut hundreds of flights there and soon discontinued the hub, costing St. Louis direct service to many destinations. I am very familiar with that disaster for St. Louis and consumers. I used to fly between Washington Dulles on a comfortable MD-80 on TWA and for a bit after the hostile takeover on American. Soon you could only fly on United or American Eagle subcontracted “regional carriers” in cramped small commuter jets.
· Closer to home at Raleigh when American Airlines closed its hub in 1995 it was by far the airport's biggest tenant, at one point flying 73 percent of its passengers and offering about 200 daily departures. Raleigh’s airport managed to attract Southwest Airlines and other carriers, but never regained major hub status.
There are some geographic, operational and even historic airline considerations we need to consider if US Airways swallows American. First of all, there is opportunity in chaos, if the merger takes place it will take months if not years to rationalize American and US Airways respective route structures. CLT leadership or somebody working for and with them should be studying those now and thinking of this now. Also, CLT needs to be preparing a case as to why it should remain a hub.
Second, consider US Airways history: For Charlotte, there is one important word regarding the history of US Airways: Piedmont, the iconic North Carolina-based local service carrier of the 1950’s through the 1980’s. US Airways has a family tree of many former local service carriers such as Allegheny (which served mainly Pennsylvania and adjacent states) which merged in 1967 with Indianapolis-based Lake Central Airlines then in 1971 with Upstate New York and New England’s Mohawk, in 1987 the West Coast’s PSA; and in 1987 with Piedmont (a marriage Jerry Orr is quite familiar with). Then, in 2005 America West of Phoenix bought out and merged with US Air and became US Airways. The thing to consider is that US Airways is a hodge podge of a multitude of local service carriers that has taken decades to rationalize. Charlotte, as a former Piedmont hub might “go back to the future” and serve as a smaller American (US Airways + American, that is) hub for the Southeast utilizing for the most part “regional airlines” subcontracted aircraft in American livery. A review of flights out of Charlotte show that many with a US Airways flight number and painted in US Airways colors are not “real” US Airways flights but rather regional airlines contracted to US Airways. The opportunity in this chaos is that many passengers hate transiting through Atlanta.
( A Piedmont Martin 404) *
Third, we should consider operational geography. In US Airways acquisition of American US Airways would gain two important hubs at New York’s JFK and at Miami that are closer and less costly for fuel to Europe and Latin America and the Caribbean respectively than Charlotte. When we look at an airline route map a Mercator Projection is misleading as flights from Asia, Europe and the Middle East don’t come from the east over the Atlantic over Kitty Hawk, but follow a polar great circle. In some circumstances using Charlotte as a hub could cost a lot more in expensive fuel.
Third, we should consider operational geography. In US Airways acquisition of American US Airways would gain two important hubs at New York’s JFK and at Miami that are closer and less costly for fuel to Europe and Latin America and the Caribbean respectively than Charlotte. When we look at an airline route map a Mercator Projection is misleading as flights from Asia, Europe and the Middle East don’t come from the east over the Atlantic over Kitty Hawk, but follow a polar great circle. In some circumstances using Charlotte as a hub could cost a lot more in expensive fuel.
Fourth, consider the important German market. US Airways is a member of the Star Alliance, but not the IS Star Alliance linchpin that United is. American is the US bulwark of the Oneworld Alliance, and the new carrier would probably affiliate that way. That raises questions on Lufthansa’s flight from Munich to Charlotte if there are no Star Alliance regional connections to connect with in Charlotte – shifting connections to United at the closer to Europe Dulles Airport (IAD) hub in Northern Virginia.
Consider Latin America, Chiquita and Brazil. Will 700 Chiquita staff in Charlotte justify non-stops daily from the Caribbean and South America rather than using the myriad of current American flights into their fortress Miami? Unfortunately Miami’s role as “the Capital of Latin America” and cultural and immigration heritage links mitigate against a shift in many American flights to Charlotte especially as it would cost more in fuel costs. Then again, the opportunity in this chaos is that many passengers hate transiting through Miami with its awful Immigration and Customs lines, and perhaps the Latin American Chamber of Commerce in Charlotte can play a role in influencing future US Airways decisions.
In short, Charlotte remaining a US Airways hub in its current state is not a done deal. There will be an uncertain course for the Charlotte Airport and its boosters (which I regard myself) to navigate in coming months. We have a lot of work ahead of us.
* Postcard available from Aviation Hobby Centers http://tamcosystems.com/store/index.php?main_page=product_info&products_id=466 )
* Postcard available from Aviation Hobby Centers http://tamcosystems.com/store/index.php?main_page=product_info&products_id=466 )
Saturday, January 26, 2013
Mali Conflict Highlights New Military and Security Challenges
http://blogs.telegraph.co.uk/news/davidblair/100200080/the-fight-against-al-qaeda-in-mali-could-be-a-sign-of-how-the-wests-wars-are-fought-in-future/?goback=%2Egde_4657639_member_208292595
This item in the UK's Daily Telegraph highlights the nature of conflict in the post Afghanistan and Iraq Era. One of the characteristics of conflict in North and Sub-Saharan Africa is that they may hinge on company and battalion size engagements rather than armored divisions and large air forces. They also, as in the case of Afghanistan also involve complicated ethnic and religious relationships. Threat and political risk analysts will not have an easy time advising clients investing in Africa nor in advising on transportation security.
This item in the UK's Daily Telegraph highlights the nature of conflict in the post Afghanistan and Iraq Era. One of the characteristics of conflict in North and Sub-Saharan Africa is that they may hinge on company and battalion size engagements rather than armored divisions and large air forces. They also, as in the case of Afghanistan also involve complicated ethnic and religious relationships. Threat and political risk analysts will not have an easy time advising clients investing in Africa nor in advising on transportation security.
Friday, January 25, 2013
Resuming Business As Usual Difficult For Arab Airlines
Resuming Business As Usual Difficult For Arab Airlines
This excellent AviationWeek and Space Technology article spotlights how the darker side of the Arab Spring; the Terrorist and Insurgent Threat in the Maghreb; and Israel-IAEA-Iran Confrontation all loom as factors airlines and the tourist industry must cope with. This linked article doesn't even really explore the Iranian situation in relation to the geography of Dubai and Doha. Political stabilization is imperative for Egypt's tourism economy, and the turmoil in the area can impact the economics of the airline industry, cruise industry and tourism.
Political Risks and Threat Assessments will be of increasing importance for those involved in commerce in and with this area.
This excellent AviationWeek and Space Technology article spotlights how the darker side of the Arab Spring; the Terrorist and Insurgent Threat in the Maghreb; and Israel-IAEA-Iran Confrontation all loom as factors airlines and the tourist industry must cope with. This linked article doesn't even really explore the Iranian situation in relation to the geography of Dubai and Doha. Political stabilization is imperative for Egypt's tourism economy, and the turmoil in the area can impact the economics of the airline industry, cruise industry and tourism.
Political Risks and Threat Assessments will be of increasing importance for those involved in commerce in and with this area.
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