Archive for April, 2008
April 4th, 2008
File this under “unsurprising news at a surprising time”. Ultra-low-cost carrier Skybus is shutting down. While not said on their Web site, a press release the company just sent out indicates it’s also filing for bankruptcy. It joins ATA Airlines and Aloha Airlines, which also abruptly shut down this week.
The controversial Skybus, which offered fares as low as $10 but then charged for pretty much anything else, didn’t even last a year. Fuel prices have gone up around 60 percent in that time, according to the International Air Transport Association. A bad time to start up an airline, especially one relying on untested routes like Gary to Greensboro and Milwaukee to Columbus and using a model not seen in the US before (though popular in Europe with Ryanair). I don’t think it’s the last we’ll see of that model, but at least now I don’t have to write the phrase “ultra-low-cost carrier” anymore.
It’s no secret Chicago Rockford International Airport had spoken to them over the past year about coming here, but nothing got too serious and they chose Milwaukee and Gary instead. Poor Gary. You think RFD has problems keeping airlines? Gary is back down to none, though they’re working on some possibilities there.
Who will go down next?
April 4th, 2008
Everything has increased except my paycheck (Data courtesy of AAA’s fuelgaugereport.com):
Gasoline: Rockford jumped four cents to $3.39 a gallon today, while the state as a whole increased almost two cents to $3.43. We no longer have the sixth-highest gas prices in the state, we’re up to third. The record national average increased more than a cent to $3.30 a gallon. Illinois continues to have the sixth-highest gas prices in the country.
Diesel: Rockford increased less than a cent and remains barely at $4.09 a gallon. About half the state increased today, but we still have the third-highest diesel prices in the state. The state average remained at $4.14 a gallon and the nation remained at $4.02. Illinois is tied for the 11th-highest prices in the country.
April 4th, 2008
Tuesday night, Colbert went off on the trials and tribulations of the airline industry. I laughed my fool head off as my poor wife rolled her eyes.
Check it out here (Warning: some language here may not be suitable for children).
The money quote -Â “If I want to fly cheap on a plane that might not have all the parts, that’s my choice. I say let the free market decide which wires are necessary to deploy wheels for landings.”
April 4th, 2008
Maybe “No Frills Airlines” will take its place.
(Courtesy of “Mad TV”)
April 3rd, 2008
More mixed messages (Data courtesy of AAA’s fuelgaugereport.com):
Gasoline: Rockford dropped two cents to $3.35 a gallon Wednesday. The state as a whole stayed right at $3.41. We have the sixth-highest gas prices in the state, slipping behind Peoria. The national average increased a fraction of a cent back into a record at $3.29 a gallon. Illinois has the sixth-highest gas prices in the country.
Diesel: Rockford increased just over a cent back to $4.09 a gallon. We were one of only two metro areas to increase today and now have the third-highest diesel prices in the state. The state average remained at $4.14 a gallon and the nation dropped slightly to $4.02. Illinois has the 12th-highest prices in the country.
April 3rd, 2008
Allegiant Air just released its March and first quarter numbers, showing it continues to fly against the national trend with its growth.
The highlights:
- Another three months of more than 50 percent growth in passenger numbers year-over-year. Interestingly, it’s not just from having new flights - the passenger growth rate exceeded the increase in departures. Basically, there are plenty of new routes, and older routes gained popularity.
- To further prove that last point, the load factor (how full the planes were) for the quarter was 86.9 percent, up from 82.5 percent last year. For March, it was 90.8 percent.
- The average stage length (how long routes are) continued to drop as the airline focuses on shorter routes to maximize profits while fuel prices increase. Allegiant’s model is such that they make more of their money on hotel bookings, vacation packages and products and services sold on flights than they do from your actual airfare. If they can cut the length of their flights, they can actually increase profits by cutting costs without hurting revenue as much. That’s why you see the average stage length down to almost 900 miles.
What does this mean for Rockford?
- We’re holding up our end of the bargain, growth-wise. In the first quarter, Rockford’s Allegiant routes increased passenger totals by 36.2 percent, according to numbers provided by the airport. While most of that was from having two routes we didn’t have last spring (Phoenix/Mesa, Ariz., and Fort Lauderdale, Fla.), our previously existing routes grew by 7.4 percent themselves. Meanwhile, in March Rockford’s Allegiant routes grew by 44.5 percent; the previously existing routes grew by 15.1 percent.
- Our planes are more crowded than Allegiant’s in general, according to airport calculations. In the first quarter, Rockford’s Allegiant flights were on average 89 percent full; in March alone, they were a whopping 95 percent full.
- So why are we getting less, not more flights? Stage length - every single one of our routes are longer than Allegiant’s system average, from RFD- Las Vegas (1,450 miles) to RFD-Orladno/Sanford, Fla. (1,030 miles). That’s the biggest barrier to Allegiant’s growth here - its focus cities are so darn far away from Rockford. We need some “world-class leisure destinations” that are closer than 900 miles away!
Anyway, this is further proof that Allegiant’s model seems to be working. I’ll be looking forward to its 1Q financial numbers. According to USA TODAY, if oil prices average $100 for the year, only two airlines would show a profit: Allegiant and Southwest.
April 3rd, 2008
How sudden was this? Even the staff at Midway didn’t know about it until it happened.
And the key nugget from the press release I posted earlier:
With the shutdown of all operations and cancellation of all ATA flights, ATA is no longer able to honor any reservations or tickets. ATA customers should seek alternative arrangements for current and future travel. To that end, ATA has contacted the airlines that serve ATA destinations and asked them to provide assistance to ATA customers. A list of other airlines that serve ATA destinations and additional information for ATA customers is available at www.ata.com. Customer information has also been posted at all ATA ticket counters and is available at (800) 435-9282. Customers should visit ata.com for updates as additional information becomes available.Customers who purchased tickets from ATA using a credit card should contact their credit card provider directly for more information about how to obtain a refund for unused tickets. Customers who purchased tickets from Southwest Airlines for flights operated by ATA through its codeshare agreement should contact Southwest at (800) 308-5037 for more information.
I checked out the Web site, and it indeed has helpful info. It’s also sad, because at the top of the page is a graphic celebrating “35 years: 1973-2008″. That was intended as an anniversary note, now it’s an epitaph.
April 3rd, 2008
First it was Aloha Airlines and Champion Air.
Now, ATA is shutting down.
Puts things into perspective - RFD lost a couple of routes, but these whole airlines are going under elsewhere.
It’s a shame on ATA - I used to fly them from Midway to LaGuardia in NYC. Not the best planes or service, but cheap prices and a convenient connection. They always seemed like one of those Midway-based airlines that could make something work at RFD too. Guess not.
April 2nd, 2008
Hey, a drop’s a drop, right? (Data courtesy of AAA’s fuelgaugereport.com):
Gasoline: Rockford dropped a fifth of a cent, remaining at $3.37 a gallon Wednesday. Most metro areas in the state also dropped, albeit slightly (except for Springfield, which dropped a whole three cents … party at Aaron Chambers’ place!). The state as a whole dropped almost a cent to $3.41. We’re tied for fifth in the state in highest gas prices. The national average remained virtually unchanged today at $3.29 a gallon. Illinois is tied for sixth-highest gas prices in the country.
Diesel: Rockford dropped a whole cent (golly gee wow) to $4.08 a gallon, while the rest of the state jumped around. The state average remained at $4.14 a gallon, and we’re fifth in the state in diesel prices. The nation increased less than a cent to $4.03. Illinois has the 14th-highest prices in the country.
April 2nd, 2008
I’ve gotten several calls that are basically variations on the theme, “If diesel fuel is cheaper to make, why does it cost more than gasoline?” The shift happened around 2004, according to the U.S. Energy Information Administration, and has only gotten worse. According to AAA’s fuelgaugereport.com, the nation’s average diesel prices were 16 cents higher than gasoline prices a year ago; Now they’re 74 cents higher.
The EIA takes a stab at explaining this:
Historically, the average price of on-highway diesel fuel was usually lower than or close to the price of regular gasoline. In some cold winters demand for distillate heating oil pushed diesel fuel prices higher. Since September 2004, diesel prices have been higher than regular gasoline prices almost continuously for several reasons:
- High worldwide demand for diesel fuel and other distillate fuel oils, especially in Europe, China, India and the United States, and a tight global refining capacity available to meet demand.
- The transition to lower-sulfur diesel fuels in the United States is affecting diesel fuel production and distribution costs.
- The Federal excise tax on on-highway diesel fuel is 6 cents per gallon higher (at 24.4 cents/gallon) than the tax on gasoline.
I know that’s little comfort for those feeling the pinch, but it’s at least part of the explanation. I think the first point - increased global demand - is a key all around.
Have a question about transportation related topics? Contact me at 815-897-1343 or tbona@rrstar.com and I’ll do my best to find an answer.
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