Red or Blue…What’s a Girl To Do?

If you’re looking to fly between New York JFK and San Francisco, you’ve got a bevy of airlines to choose from. In terms of in-flight services, however, there are two standouts in the crowd – US low-cost operators JetBlue Airways and Virgin America.

Though located on opposite sides of the USA (JetBlue at JFK and Virgin at San Francisco), the similarities between these two Airbus A320 operators are obvious (and well-reported). But competition is going to get even more fierce in the coming months. Here’s why.

JetBlue CEO Dave Barger today revealed the all-economy carrier is looking at allowing customers to pay more for greater seat pitch in the cabin. Translation - JetBlue wants to provide a business-class seating product (it’s just not clear yet if that is what the airline will call it). The plan will be unveiled by the start of the second quarter.

This development is not entirely a surprise. JetBlue last year reduced capacity on its A320s to accommodate additional legroom in the front of the cabin. But, from an in-flight perspective, it brings the eight-year-old airline into closer competitive range to start-up - and two-class operator Virgin.

Added to that, both carriers are very serious about driving ancillary revenue. Virgin will shortly permit passengers to order a variety of upscale items via its “Red” seat-back in-flight entertainment (IFE) system, which uses Panasonic hardware and has about as many bells and whistles as a domestic traveller could ask for.

JetBlue, on the other hand, recently launched a “cashless cabin” whereby it accepts major credit or debit cards for in-flight purchases using handheld devices. Passengers can currently purchase alcoholic beverages this way, but in-flight offerings will be made available in the future.

There is at least one major area where JetBlue and Virgin will try to differentiate themselves. The former plans to offer a limited in-flight connectivity service for free to the entire cabin via technology from subsidiary LiveTV. The latter intends to charge for broader AirCell connectivity in its main cabin. Time will tell which will be the better path to travel.

Nonetheless, both carriers deserve to be commended for figuring out what US passengers want – live television, connectivity and a credit-card swipe.

As Dave Barger said today at the Raymond James conference in New York: IFE is now “the cost of entry” for airlines. “Eight year old kids are making purchasing decisions” in the cabin!

(Photo above left of Virgin America's IFE system; below right of LiveTV promo shot from Livetvifs.com)

JetBlue to Defer Delivery of 16 A320s; Sell-off Six Aircraft This Year

A plan has been revealed by JetBlue Airways to defer delivery on 16 Airbus A320s and sell at least six of the type this year.

JetBlue has been mulling options for its fleet since deciding to slow capacity growth for the year. During an earnings conference call this morning, JetBlue executives revealed that 16 A320s - which had been scheduled for delivery in the 2010 to 2011 timeframe - are being deferred until the period of 2012-2013.

The carrier has also brokered commitments to sell six A320s for 2008, including two sales announced during the previous earnings call.

Additionally, JetBlue exercised three E-190 options in the fourth quarter 0f 2007. These are due for delivery next year.

By year-end, JetBlue's fleet will comprise 110 A320s and 36 E-190s. "This may change if additional sales opportunities are realized," says JetBlue.

(JetBlue logo from www.JetBlue.com)

American says New-Design Narrowbody Needs to Show “Significant” Step-up in Fuel Efficiency; Actively Searches for MD-80 Replacement

With 300 aging Boeing MD-80s on its books, American Airlines is actively searching for a replacement aircraft. But should the US major wait until Airbus and Boeing launch successors to their highly-successful narrowbody programs (not likely to occur until at least 2015 if not later) to place a significant new order, or should the airline place more incremental orders for current-model types? The latter appears a likely tide-over method. And what about Bombardier's proposed 110/130-seat CSeries? Is that a viable consideration for the Oneworld alliance member in light of its anticipated 2013 entry-into-service?

I asked these questions to American and here is what one of the carrier's prominent spokesmen had to say:

“Obviously [MD-80 replacement] is something we’re in very close contact with all the manufacturers [about]. Of course Boeing and Airbus are our suppliers for the mainline, and then we have relationships with some of the other guys through American Eagle and that sort of thing,” says the spokesman, adding: “I’m sure we’ll look at the timing too with whatever anyone puts out there.”

But a new-design aircraft’s time-to-market is not American’s only consideration. “This is not just a timing question. We want to make sure the decisions we make … are the right decisions," says the spokesman.

American must also “consider fleet commonality, training, maintenance”. It’s “not just when we can get it”, he notes.

Fuel efficiency, for example, “needs to be significant” step up. “I don’t think there is a magic number…but we’re also looking at the potential for … government and environmental emissions issues and less fuel means less emissions. So there is a lot to that and so yes, it has to be significant."

There is a balancing between how many current generation narrowbodies are purchased as MD-80 replacements and “at what point does the actual assuredly of a new generational narrowbody” [prompt] that transition, he says.

While a final decision awaits, American has been pulling forward orders for Boeing 737-800s, and adding incremental orders on top of that. If Boeing sticks with a 2015 launch of its narrowbody successor, it’s clear that American will “need to definitely bring in a sizable number of existing technology types…because with the 300 MD-80s, it took many years for those to arrive and will take several years to replace them all as well”.

(Photo courtesy of American's web site http://www.aa.com/aa/i18nForward.do?p=/aboutUs/ourPlanes/boeingMD80.jsp )

A350 Gets Another Shot in the Arm After TAM Firms Order

It seems like only yesterday (well, Paris in June) that TAM was readying to announce whether it would affirm its original order for Airbus A350 aircraft or acquire Boeing 787 twinjets. At that time, TAM president Marco Bologna predicted an announcement would come within 30 days. True to Bologna's word, the Brazilian carrier signed a MOU for 22 A350 XWBs on June 28 2007.

Sadly, about three weeks later, TAM was faced with a tragedy of significant scale, when one of its Airbus A320s crashed on landing at Sao Paolo. The catastrophe claimed 199 lives. In the wake of the accident, TAM's focus rightly shifted to investigating the cause, and tackling a new climate of fear in Brazil (as well as media speculation over the crash), rather than acquiring new aircraft.

Today the carrier reaffirmed its position as a major player in Latin America by firming up its order for 22 A350 XWB models 800 and 900. The aircraft will be delivered from 2013 onwards.

TAM also confirmed the acquisition of four A330-200 aircraft with deliveries from 2010 onwards and of 20 more aircraft from the A320 family. According to the price list, the total value of the 46 aircraft is approximately $ 6.9 billion.

The deal is also very good news for Airbus, which saw TAM order four more Boeing 777-300ERs last year (for a total of eight). During a recent interview with Airline Business, Bologna explained the Boeing purchase. "We had to increase capacity and we could do this only by increasing the size of the aircraft," he said. The airline compared the Airbus A340-600 and the 777-300ER and in August ordered another four 777-300ERs for delivery in 2012.

(Photo courtesy of Agencia Brasil http://upload.wikimedia.org/wikipedia/commons/3/36/TAM_Linhas_Aéreas_Flight_3054.jpg )

Body Count: JetBlue and Southwest Eye Aircraft Offload (Plus Titbits on that AWAS A320 Deal)

It’s lucky for JetBlue Airways and Southwest Airlines that the market for Airbus and Boeing narrowbodies remains strong (at least for now). Both US low-cost carriers are readying to offload excess assets to keep capacity growth in check.

JetBlue has confirmed it will only increase capacity this year by between 6% and 9% compared to the 11% to 13% range advised for 2007. To accomplish this, the carrier is considering selling more aircraft (in addition to the two A320s it will sell in the second quarter), returning leased aircraft and postponing deliveries (pretty much what it did last year). Having this sort of flexibility, says JetBlue, is an asset. (Photo from www.jetblue.com/about/whyyoulllike/about_whyairbus.html)

It’s an all too familiar story. Among a bevy of US carriers cutting capacity in the face of rising fuel costs and a potential slowdown in demand, Southwest in December said it will slash as many as 10 737s from its already-amended growth plan (which includes the disposal of some owned 737-700s). The carrier’s new plan calls for a net addition of no more than 10 737s this year.

On a separate note, Irish lessor AWAS - which today placed a firm order for 75 Airbus A320 family aircraft - has confirmed the following:

1) The company can pick and choose the mix (A318s/A319s/A320s/A321s).

2) Deliveries of new Airbus narrowbodies to AWAS will begin in 2010; an end date has not been disclosed.

3) An engine selection for the 75-strong order has not yet been made. AWAS is currently in talks with manufacturers.

So is there room for AWAS to swap out later deliveries should a Airbus narrowbody successor come on board? What do you want - all the answers?